Obrazy na stronie
PDF
ePub

instead of being economical, are the dearest and most costly way of carrying on the Government. I make that as a general remark; and now I would submit to the Senator from Pennsylvania himself if you can get a man who has the character, who can give the bond, a heavy bond being required, and who is qualified to undertake a business of this kind and assume the responsibility, for a less compensation than is proposed by the Finance Committee. You cannot. You do not want a cheap man to undertake to settle up the business of a bank with a million of assets. In the first place, the cheap man could not give the bond. You want a man who can give the bond, and who has a character that will warrant the assurance that the business will be done honestly. The amount of bond required is as the Comptroller shall direct.

Take the case of a bank where the assets are $1,000,000. I ask if you can find a man who is able to give the bond required, who is competent, who by his character can be trusted, who has the business ability, who will undertake to settle up the assets of that bank for|| less than $10,000? and that is about all he could get under the amendment of the committee. The Senator from Oregon [Mr. WILLIAMS] says it would be only about nine thousand dol lars. I say there is no competent man who will undertake to settle up the affairs of a bank involving $1,000,000, with all its responsibility, its trouble, and its anxiety, for less than $9,000. Such a man cannot be found.

Mr. CAMERON. I beg the pardon of the Senator from Indiana for interrupting him; but I will put this case to him: he is a lawyer living in the town of Indianapolis, following his profession, a man of ability and integrity; would he not undertake the settlement of the affairs of a bank in the city of Indianapolis for $9,000? It would not certainly take him a year to settle it up; and it would not interfere with his other business, for he could practice his profession at the same time. Then he should remember that the expenses of a receiver in the employment of a clerk, &c., are allowed.

Mr. MORTON. A lawyer who would undertake for the sum of $9,000 to settle up the affairs of a bank the assets of which are estimated at $1,000,000 would, I think, be regarded as a very cheap kind of lawyer, as a man who estimated his own services at a very low rate. I do not think I would undertake it at all, unless I was out of business.

Mr. HENDRICKS. Allow me to suggest that I do not think my colleague would make a very good receiver. He is too able a lawyer for the place.

Mr. MORTON. I thank my colleague for the compliment; but I will say this, that if I were qualified for the business, whether as a lawyer or a merchant, I would not undertake that sort of responsibility and labor for a less sum than is provided by the amendment of the committee, unless I was out of business, was hard up, and had to do something to make a living for my family.

Mr. JOHNSON. Very hard up?

Mr. MORTON. Yes, very hard up. Now, sir, I believe in paying men according to the responsibility and the character of the business they are called upon to do. The idea of a man undertaking to do a business involving the settlement of $1,000,000 for the same rate of compensation for which a clerk would be employed who has a regular and certain vocation is contrary to all our notions of the dispatch of responsible business.

If I was a stockholder in a bank, or if I was a creditor of a bank, and that bank had to be wound up in the way pointed out by this bill, I would rather pay a good compensation to the collector, and have him a responsible and first-class man, than to employ a cheap man at a low compensation and take the risk of having the whole thing fail and losing what I had in it. I think the compensation fixed by the committee is small enough in view of the responsibilities to be incurred.

I do

Mr. HOWE. Mr. President, I think attorneys ought to have a fair price for their labor, and I think receivers ought to have; but I respectfully submit that the Senator from Indiana marks his services rather too high. not want to underbid any of my brethren in the profession, but I do feel called upon to say, in the interests of my family who are suffering somewhat, that I will take this business of winding up all the national banks at something less than ten thousand dollars on the million. [Laughter.] It would amount to just $3,000,000 that would come into my pocket at that rate of compensation, and then the additional fees which are to be adjusted by the courts would enable me to hire every lawyer on this floor, secure every particle of professional and personal responsibility there is here, and pay for it. I think under these circumstances I should be willing, being backed up by all this professional talent and professional responsibility, to take $3,000,000 for my share; in fact, a little less than that. So I shall vote for the amendment of the Senator from Pennsylvania.

But I rose to call the attention of the chairman of the committee to one point. I understood the chairman, the Senator from Ohio, to say that to guard against the consequences of a resignation on the part of a receiver after he had collected a portion of the assets, they have authorized the Comptroller to retain a portion of the commissions until the work is closed up. If that is the purpose of the provision, it seems to me that some addition will have to be made to it, because while it authorizes the Comptroller to retain a portion of the commission until the job be closed, it does not leave him any sort of discretion as to what to do with those commissions.

Mr. SHERMAN. I will state to the Senator that I have already a memorandum prepared

on the bill before me for the addition of a few words to carry out the purpose in that respect.

Mr. HOWE. I merely wanted to call attention to that point.

Mr. CORBETT. I think that to meet the case, as stated by the Senator from Ohio, the provision ought to read something in this way: that the commission allowed shall be three per cent. upon the capital of a bank whose capital does not exceed $100,000; two per cent. upon the capital of a bank whose capital exceeds $100,000 and does not exceed $200,000; one and one half per cent. upon the capital of a bank of $200,000 and not exceeding $400,000, and so on, fixing the amount according to the capital of the bank instead of three per cent. upon the first $100,000 collected and a less amount on the subsequent sums collected, because it is evident to my mind that the most difficult portion of the collections is upon the amounts that are collected after the first $100,000 or $200,000. For instance, where the capital of a bank is $500,000, the first $100,000 will be collected with comparative ease, while the next $300,000 will be very difficult to collect. I think the provision ought to be amended in the way I suggest.

The PRESIDENT pro tempore. The question is on the amendment of the Senator from Pennsylvania [Mr. CAMERON] to the amendment of the Committee on Finance, upon which the yeas and nays have been ordered.

The question being taken by yeas and nays, resulted-yeas 23, nays 19; as follows:

YEAS Messrs. Anthony, Buckalew, Cameron, Chandler, Cole, Conkling, Cragin, Davis, Edmunds, Ferry, Fowler, Harlan, Hendricks, Howard, Howe, McCreery, Patterson of New Hampshire, Pomeroy, Ramsey, Stewart, Tipton, Vickers, and Yates-23.

NAYS-Messrs. Cattell, Conness, Corbett, Doolittle, Drake, Fessenden, Frelinghuysen, Johnson, Morgan, Morrill of Vermont, Morton, Ross, Sherman, Sumner. Thayer, Van Winkle, Willey, Williams, and Wilson-19.

ABSENT-Messrs. Bayard, Dixon, Grimes, Henderson, Morrill of Maine, Norton, Nye, Patterson of Tennessee, Saulsbury, Sprague, Trumbull, and Wade-12.

So the amendment to the amendment was agreed to.

MT. SHERMAN. I will now offer an amendment to carry out the idea of the Senator from

Oregon. I move, at the end of line sixteen of the pending amendment of the committee, to insert the words "which sum"-referring to the half allowance reserved-shall be paid to the receiver, or in case more than one receiver has acted, shall be apportioned among the several receivers by the Comptroller of the Currency, according to equity."

The amendment to the amendment was agreed to.

Mr. CORBETT. I suggest to the Senator from Ohio that the Comptroller should be directed to retain the one half, and therefore, in line fifteen, the word "may" should be stricken out and the word "shall" be inserted, so as to require the Comptroller to reserve one half.

Mr. SHERMAN. The amendment as it is leaves to the Comptroller the distribution of this fund, and it is scarcely worth while for us to interfere by any peremptory direction.

Mr. CORBETT. I merely make the suggestion.

Mr. SHERMAN. There may be cases where the full amount should be paid to the old receiver. I would rather leave it to the Comptroller.

Mr. FERRY. I move to amend the amendment by inserting after the word "courts," in the nineteenth line, the words:

And may invest the assets of the bank in their hands in bonds of the United States while the affairs of the bank are in process of liquidation, which bonds shall be deposited with the Treasurer of the United States, subject to the order of the Comptroller of the Currency; and the receivers shall also make report to the Comptroller of all their acts and proceedings, and the Comptroller shall be authorized to sell such bonds from time to time, in order to make the dividends and payments provided for in the fiftieth section of the act to which this act is supplementary.

The object of the amendment is to provide for an injustice in the practical operation of the present law. The fiftieth section now provides that all moneys received by the receiver in his administration of the affairs of a bank shall be paid over to the Treasurer of the United States, subject to the order of the Comptroller of the Currency, and that he shall make a report to the Comptroller of the Currency of all his acts and proceedings. The effect of this is that where the affairs of a bank are a long time in the process of liquidation— and they are frequently years, growing out of litigation-during the period of settlement the assets are deposited with the Treasurer of the United States, and if they are used at all the Government gets the interest upon those assets instead of that interest going to the stockholders, where it ought to go. I know of banks in process of liquidation, receivers appointed, where the receivers are now in litigation which must occupy periods of from two to five years. They are unable to invest the assets in their own hands, compelled to pay them over to the Treasury, where they lie idle; and thus, when the affairs of the bank are finally closed and the dividends declared, and what balance remains is ready to be paid over to the stockholders, the amount which might have been received by an investment in Government bonds, as provided for in this amendment, is lost to the stockholders.

Applications have been made to the Comptroller of the Currency to ascertain whether the receivers might, instead of paying over the cash, invest these assets in Government bonds, so that the income of these bonds might go to the stockholders when the bank is finally wound up; and they have been informed that as the law now stands there is no other course but to pay over the assets and let them lie idle. It has seemed to me, therefore, that this was a proper place in this bill to make an amendment to the law which is just and equitable, and, indeed, necessary to the true interests of the stockholders in insolvent banks.

Mr. SHERMAN. I do not like to make amendments here without careful examination; but I do not see myself any objection to this proposition. It simply enables the creditors of the bank to get the interest on the money while it is in process of liquidation.

Mr. FERRY. That is all there is of it. Mr. SHERMAN. I have no objection to it. The amendment to the amendment was agreed to.

The amendment, as amended, was agreed to. The next amendment of the Committee on Finance was to insert the following as the fifth section of the bill:

SEC. 5. And be it further enacted, That section twenty-two of the act aforesaid be so amended that the maximum limit of national circulation fixed by said act is hereby increased the sum of $20,000,000, which amount shall be issued only to banking associations organized in States and Territories having a less circulation than five dollars per each inhabitant, and so as to equalize the circulation in such States and Territories in proportion to population.

66

Mr. WILSON. I move to amend the amendment by striking out all after the words sum of," in the fourth line, and inserting :

One hundred million dollars, and in issuing such circulating notes preference shall be given to banking associations in States and sections of the country not adequately supplied with banking facilities. But whenever the amount of United States notes and eirculating notes of national banks combined shall be in excess of $700,000,000, the Secretary of the Treasury is authorized and required to retire and cancel United States notes to the extent of such excess until the whole amount of United States notes outstanding shall be reduced to $300,000,000.

And be it further enacted, That for the purpose of facilitating the resumption of specie payments the interest received by each banking association upon bonds owned and deposited with the Treasurer of the United States by such banking association shall be held as a reserve fund until the said banking association shall redeem in coin the currency issued by it; and the said specie reserve fund shall be used for no other purpose than for the redemption of said currency.

Mr. SHERMAN. Perhaps, in anticipation of the argument of the Senator from Massachusetts on his amendment, I had better state the reasons why the Committee on Finance reported this particular section, and withheld for the present any action upon the important questions raised by the amendment now offered by him. I appeal to the Senator whether, under the circumstances, he ought to open the whole currency question, as his amendment undoubtedly does? There is the same division in the Committee on Finance in regard to the question of currency, the relations of bank notes and United States notes that there is in the Senate and among the people of the country. After fully considering the matter we thought it best, in the midst of a heated political excitement, to avoid discussion of the whole question of currency which will be presented by this amendment, and which is necessarily involved in it. There are other bills lying on your table which involve the question. There is a bill which proposes to deal with the public debt, another which proposes to estab lish a free banking law, and contains the substantial provisions embraced in this amend

ment.

Now, is it wise at this period of the session, in the midst of an election campaign involving grave political issues, for us to commence the discussion of this question? If it is, as a matter of course each Senator will have his own project; and if the Senate determine that they will open this whole question the Committee on Finance will present their views and submit of the Senate, I may as well state now as hereafter the reasons why the committee offered this section.

Rhode Island, and Connecticut have from fifty to seventy dollars of banking circulation for each inhabitant, while other States have less than five dollars per inhabitant, so that there is gross inequality in the distribution of this banking circulation. As a matter of course, we all feel the necessity of avoiding this popular clamor.

During the last Congress, when the Senator from Maine [Mr. FESSENDEN] was chairman of the Committee on Finance, we had the whole subject under discussion. We had several bills proposing to deal with the equalizing of the currency of the national banks, and, after the most grave consideration, we found it very difficult to deal with. Perhaps the most proper way would be to withdraw some circulation from the States that have an excess and give it to those who have too little; but that would create embarrassment and confusion. It might cause distress to withdraw the banking circulation from Massachusetts, Connecticut, and other States, although there are some States that have less than five dollars per inhabitant. The Committee on Finance, after the most full reflection, have come to the conclusion that we ought to satisfy, to some extent, the demand of the western and southern States for additional banking circulation. We therefore propose to give to those States that have the least a small addition to their circulation. I have a table here which gives the banking circulation in each State at the present time, and it appears that Massachusetts, Rhode Island, and Connecticut have twice or three times the amount they are fairly entitled to, and the State of New York has about twice the amount it is entitled to.

Mr. WILSON. Will the Senator explain what he means by these States having more than they are entitled to?

Mr. SHERMAN. They have more than they are entitled to on the basis of the law, and I will explain in a moment what I mean by it. In my judgment, the Comptroller of the Currency made a great mistake in ever disregarding that provision of the law which required the national banking circulation to be distributed, one half according to population, and the other half according to resources. But I do not want to go into that question, and I make no complaint of anybody. There are some States that have less than five dollars of circulation per inhabitant, and less than one half their share upon any basis whatever which you can take; and it is but fair that they should have some addition. The States that will be benefited by the amendment of the committee, and get a slight addition to their circulation, are Virginia, West Virginia, Wisconsin, Iowa, Kansas, Missouri, Kentucky, Tennessee, Louisiana, Mississippi, Georgia, North Carolina, South Carolina, Arkansas, Alabama, Oregon, and Texas. These States have in some cases as low as forty-two, sixty-eight, and thirteen cents of circulation to each inhabitant. We propose to distribute among them $20,000,000 of circulation, which will give them all some banking facilities, and in the States where they need them most. It

States have been largely increasing since the census of 1860. The apportionment was on the basis of the population in 1860, but the western States have increased much more rap: idly than the eastern States since then, aud that makes the inequality still more gross.

Mr. HOWE, I wish to ask the Senator from Ohio if he supposes that in the distribution of the additional $20,000,000, provided for in this section, any single western State will get an additional dollar of banking capital? Mr. SHERMAN. I have no doubt of it. Mr. HOWE. It would take the whole of the $20,000,000 to bring the southern States up to an equality with the lowest of the western States, as low as they are.

There has been great complaint in the western and southern States in regard to the distribution of the national bank circulation. The amount is now limited to $300,000,000, and the limit has been reached, so that not one dollar of circulation can be issued to any new bank. This limit was fixed in the midst of a war, when eleven States could not get any of the banking circulation because they were rebel States involved in the war. It was done, also, at a time when in the western States, for want of means and facilities, and because of the high price of money, it was impossible to organize banks. This has created in the west- Mr. SHERMAN. But the Senator will ern and southern States great complaint. It observe that in some of the southern States has been especially pointed out by the people they may not be prepared to furnish the necesof the West that the States of Massachusetts,sary capital. Twenty millions of circulation, in

the opinion of the Comptroller of the Currency and after examination we thought sowill give to each of the States I have named some additional relief, not very much. The amount of $20,000,000 to be distributed is not very large; but there are objections to increasing the amount beyond $20,000,000, because if you go beyond that you raise the very question which the amendment of the Senator from Massachusetts now raises. If you propose to increase the amount more than twenty millions, many persons who are opposed to an inflation of the currency would think that in accomplishing a good thing we were doing an evil thing by raising the question of too great an issue of paper money. We all felt that no considerable increase of the banking circulation ought to be made until bank notes were equivalent to par in gold. All the committee propose to do is simply to answer a popular and equitable demand of some of the States for some additional banking circulation. My own opinion is that if it were confined to the southern States alone, probably not more than $10,000,000 would be absorbed until we can consider this whole matter. As Senators see, this is a temporary measure to answer a popular demand which is now a cause of great complaint. If we give this small relief, and the great and difficult questions of currency and finance go over until the next session, we may then be able to deal with them.

The Committee on Finance, under the circumstances, thought it better to give to these States that have so small an amount of circulation, some relief, little as it is, and leave the great questions of free banking, of a general increase of the banking system, of bank notes taking the place of United States notes, of the relative proportions of United States notes and bank notes, to be decided when we are all calm, after the results of the popular election. If these reasons are not sufficient, and the Senator's amendment prevails, as a matter of course it will open the whole subject, and I shall be prepared to propose various modifi

cations.

Mr. WILSON. Mr. President, it is true that the proposition I have made opens the question of the currency, but I found it open when I made the proposition. The committee opened it $20,000,000, and I propose to open it $100,000,000. That is the difference between us, with the exception that I do not propose to inflate the currency, whereas the committee propose to do so to the extent of $20,000,000.

The Senator says the committee have reported in favor of this addition of $20,000,000 to the national bank circulation, because there is complaint of inequality. Sir, there is complaint of inequality, and there will be after we give the $20,000,000, though perhaps not so much complaint then as there is at the present time. This, addition of $20,000,000 will do very little to equalize the circulation. The New England States. New York, and Pennsylvania, with a population of less than one third of the country, have more than two thirds of the national bank circulation. There is complaint about this inequality, and there

it

some plan of equalization is adopted. If our banks redeemed their notes in specie I should be in favor of a free banking system. It is the only sound policy. As we have not reached specie payments, we propose to regulate the amount of bank circulation.

The committee propose to increase the national bank circulation by the addition of $20,000,000, and of course to inflate the currency to that amount. My amendment proposes an addition of $100,000,000 to that circulation, to go to the States which are not adequately supplied with banking capital, and to withdraw $100,000,000 of greenbacks. Mr. CATTELL. No.

Mr. WILSON. Yes; I propose to have only a total circulation of $700,000,000.

Mr. CATTELL. We have now a combined circulation, United States notes and national bank notes, of only $645,000,000. ·

Mr. WILSON. In drawing the amendment I went on the assumption that the circulation was $700,000,000. We have $300,000,000 of bank-note circulation, and may have a circulation of $400,000,000 of legal-tender notes. I have no idea that any of the national bank circulation is to be withdrawn from any portion of the country. We were forced into this system by the needs of the country. We had $60,000,000 of banking capital in the State of Massachusetts when the war began. We received from it into our State treasury $600,000 a year in the way of taxes. We freely turned our State banks into national banks. We were pressed to do it, and we acted promptly. The same is true of the older States, and consequently they received more than their proportion of the national bank circulation of $300,000,000. Sir, I wish every legal-tender note could be converted into banking capital, and the banks forced to enter upon the policy of redeeming their bills in specie. Let us compel them to keep the specie they receive from this Government and use it for no other purpose but redemption. The banks are making large profits now, and will do so if we impose this condition upon them. It would be the beginning of a movement for returning to specie payments.

Mr. MORRILL, of Vermont. I propose to amend the amendment of the Senator from Massachusetts, by offering the following as a substitute, to come in at the end of section five.

The PRESIDING OFFICER, (Mr. PoмEROY in the chair.) The Senator's amendment will be in order when this amendment is disposed of. The pending amendment is an amendment to an amendment.

Mr. FESSENDEN. Let it be read, that we may hear what it is.

Mr. MORRILL, of Vermont. I will read what I propose. It is to add to the section:

And upon the issue of any increased national circulation provided for in this section the Secretary of the Treasury is hereby authorized and required to permanently withdraw an equal amount of United States notes.

Mr. President, if it shall be the sense of the Senate, in conformity with the views of the chairman of the Committee on Finance, not to raise great financial questions at the present time, I insist that we shall place this measure before the country so that it shall neither increase nor diminish the amount of circulation now in existence. I understood at the time we passed the resolution restraining the Secre tary of the Treasury from further withdrawing any part of the United States notes, that there was no member of the Senate, not even the chairman of the Committee on Finance, who would go for the increase of a single dollar more of circulation. Now it is proposed to increase the amount of banking circulation to the extent of $20,000,000. I do not object to that under the circumstances, provided we can withdraw an equal amount of United States notes.

not come back to the principle of retiring an equal amount of United States notes ?

I know it may be said that we are withdrawing a circulation that now bears no interest and issuing another that will bear interest. Mr. President, if that argument is valid to-day, there never can come a time when it will not be valid. If the argument is good to-day for not withdrawing the greenback currency, because it is of no cost to the Government of the United States, that argument will exist forever. I should regret to see the Senate taking a course that would seem to sanction such a policy as that.

I have expressed on former occasions my opinion in relation to this subject, and I do not propose to go into any argument now in relation to the impolicy of an irredeemable paper currency as it affects our industrial interests, or as it affects taxation or our expenditures. They are sufficiently obvious. But I do insist that if we are to launch this measure we shall launch it in such a way that we shall not raise the question as to whether we are inflating or diminishing the currency; that we shall do as much in one direction as the other. I should be glad to do very much more; I think it would be for the best interests of the country if we could do very much more; but I do not propose to occupy the time of the Senate. I have said all I desire to say on the subject.

Mr. CONKLING. Mr. President

The PRESIDING OFFICER. The Chair will state the question. The Chair understood the amendment of the Senator from Vermont to be an amendment to the amendment of the Senator from Massachusetts

Mr. MORRILL, of Vermont. I understand it is not now in order, being an amendment in the third degree, and therefore I withdraw it.

The PRESIDING OFFICER. The Chair now finds that the Senator from Vermont moved an amendment to that portion of the bill proposed to be stricken out, and therefore it is in order, and is before the Senate, because it proposes to amend that portion which the Senator from Massachusetts proposes to strike

out.

Mr. MORRILL, of Vermont. Then I offer the amendment.

Mr. CONKLING. Mr. President, I hope the amendment offered by the honorable Senator from Massachusetts will be rejected, because it is a direct proposition to inflate the currency, and that to a very considerable

amount.

Mr. WILSON. I have modified it in that respect.

Mr. CONKLING. Suppose we hear it read as it is modified.

The PRESIDING OFFICER. The amendment immediately before the Senate is the amendment of the Senator from Vermont.

Mr. CONKLING. I am aware of that, but I should like to hear the amendment of the Senator from Massachusetts, as modified, read. The PRESIDING OFFICER. It will be read for the information of the Senate.

The CHIEF CLERK. The amendment, as

the word "of," in the fourth line, and to insert:

Mr. President, there is no more imperious duty resting upon Congress at the present moment than to provide some way by which we can escape from the evils of an irredeem-modified, is to strike out all of section five after able paper currency. If the Senate are not prepared for a more rapid progress, let them institute free banking to take the place of our United States notes; but I do not believe that at the present moment we are prepared to mature such a system as will receive a majority of the votes of this body, or the other, at the present session.

I admit the inequality of the amount of circulation that is now held by the various States. It is reasonable and proper that we should sup ply the southern States with some means by which they can move their crops. At the present moment they are entirely destitute of any banking capital except in a very limited number of points. I do not suppose that all this amount will be required by the southern States; but if it were, I think they would have a right to monopolize it in preference to any other States. But if we grant this, shall we

One hundred million dollars; and in issuing such circulating notes preference shall be given to banking association in States and sections of the country not adequately supplied with banking facilities. But whenever the amount of United States notes and circulating notes of national banks combined shall be in excess of $650,000,000, the Secretary of the Treasury is authorized and required to retire and cancel United States notes to the extent of such excess until the whole amount of United States notes standing shall be reduced to $250,000,000.

Mr. CONKLING. Mr. President, so modified it is a proposition to inflate only to the amount of $5,000,000, as I understand it; that is, the difference between $645,000,000, the amount of currency now said to be outstanding, and $650,000,000, the amount proposed, and to substitute for a non-interest bearing currency national bank currency which indirectly bears interest, six per cent. being paid upon the bonds upon which it is based.

The same

objection is applicable, also, to the amend ment suggested by the Senator from Vermont, as that amendment provides for retiring United States notes in the same act by which we issue national bank currency, and for retiring an amount equivalent to the issue; and thus a currency which costs interest is to be put afloat to the amount of $20,000,000. It is true, no doubt, that it is to be based upon bonds already in existence, and so the interest account of the Government is not to be increased, unless bonds are to be issued and sold to get the $20,000,000 United States notes which are to be retired. Should this be necessary it does create a fresh interest account against the Government upon the whole issue proposed.

I rose, however, to avail myself of the liberty which other Senators have assumed, to say a word generally in reference to financial management. Considerable animadversion has been made in this Chamber, and in the country, upon the fact that the present Congress has not dealt with the question of funding the public debt; and to this particular point public attention has been largely attracted. Observers suppose that with an easy money market, and with securities of the Government maturing which are to be met by payment, the Secretary of the Treasury is issuing bonds bearing six per cent. interest, payable in coin, equiv alent to eight per cent. in currency, with exemption from taxation equal to upward of one per cent. more. This is thought a singular anomaly, when we consider the confidence established all over the world now in the stocks of the United States.

con

I was a listener recently to a conversation in which persons of some financial experience took part, at which this question was sidered, and at which the suggestion was made that this was not in any respect the fault of Congress, that it did not arise from a want of legislation, and that the Secretary of the Treasury had now all the power that could be properly conferred upon him to adapt the bonds he might issue to the best terms to be obtained in the money market. This suggestion was met by a denial--by a statement that the country constantly sustained a loss in this behalf, and that the loss was owing to the laches or default of Congress. It was asserted that the Secretary had no power, when making bonds for sale, to do anything except to issue six per cent. gold-bearing bonds, with at most a fragment of unexpended power remaining in reference to ten-forty bonds, a very limited amount, and that in no event could he issue a security free from a condition making it redeemable at the option of the Government at an early day, nor one the principal and interest of which were both payable in coin. For lack of these and other powers it was said he was constantly compelled to place the Treasury at a disadvantage in the market. If these things be true, if Congress in ignorance, in carelessness, or in willfulness, has gone thus far and done nothing, with such a duty before it, I hold myself responsible, amenable to great blame, as the humblest member of this body, for not giving my action to a matter which Í should hold to be of overmastering importance. But, sir, I repel this charge of responsi bility altogether. I deny that any part of the responsibility belongs to Congress. I venture to say that no legislative provisions could make the Secretary more absolutely master of the situation than he is now. No discretion more absolute, no option more unchecked, no position more unembarassed could well be assigned to a financial officer than that which under the law the Secretary has now, to go into the markets, not of our own country merely, but of the world, and negotiate any security which he sees fit to devise, payable at any time not distant more than forty years, payable the priucipal in coin and the interest in coin, or either alone payable in coin, and bearing such rate of interest, not more than six per cent. in coin nor more than seven and three tenths in currency, as he is able to adopt, and still negotiate the security he issues. If this be so, Mr. Pres

ident, am I not right in saying that Congress is entitled to be acquitted of all blame, if blame there be, although the acquittal of Congress should be the conviction of the Secretary of the Treasury?

I wish to call attention to the act of March 3, 1865, the first and second sections of which I beg to read:

"Be it enacted, de., That the Secretary of the Treasury be, and he is hereby, authorized to borrow, from time to time, on the credit of the United States, in addition to the amounts heretofore authorized, any sums not exceeding in the aggregate $600,000,000, and to issue therefor bonds or Treasury notes of the United States, in such form as he may prescribe; and so much thereof as may be issued in bonds shall be of denominations not less than fifty dollars, and may be made payable at any period not more than forty years from date of issue, or may be made redeemable, at the pleasure of the Government, at or after any period not less than five years nor more than forty years from date, or may be made redeemable and payable as aforesaid as may be expressed upon their face; and so much thereof as may be issued in Treasury notes may be made convertible into any bonds authorized by this act, and may be of such denominations-not less than fifty dollars-and bear such dates and be made redeemable or payable at such periods as in the opinion of the Secretary of the Treasury may be deemed expedient. And the interest on such bonds shall be payable semi-annually; and on Treasury notes authorized by this act the interest may be made payable semi-annually, or annually, or at maturity thereof; and the principal or interest, or both, may be made payable in coin, or in other lawful money: Provided, That the rate of interest on any such bonds or Treasury notes, when payable in coin, shall not exceed six per cent. per annum; and when not payable in coin shall not exceed seven and three tenths per cent. per annum; and the rate and character of interest shall be expressed on all such bonds and Treasury notes: And provided further, That the act entitled 'An act to provide ways and means for the support of the Government, and for other purposes,' approved June 30, 1864, shall be so construed as to authorize the issue of bonds of any description authorized by this act. And any Treasury notes or other obligations bearing interest, issued under any act of Congress, may, at the discretion of the Secretary of the Treasury, and with the consent of the holder, be converted into any description of bonds authorized by this act; and no bonds so authorized shall be considered a part of the amount of $600,000,000 hereinbefore authorized.

"SEC. 2. And be it further enacted, That the Secretary of the Treasury may dispose of any of the bonds or other obligations issued under this act, either in the United States or elsewhere, in such manner and at such rates and under such conditions as he may think advisable, for coin, or for other lawful money of the United States, or for any Treasury notes, certificates of indebtedness, or certificates of deposit, or other representatives of value which have been or may be issued under any act of Congress; and may, at his discretion, issue bonds or Treasury notes authorized by this act in payment for any requisitions," &c.

Mr. President, I stop here to analyze briefly these sectious before reading the succeeding act by which they are preserved and kept in force, and by which they live to-day for every purpose for which I have cited them. It will be observed, in the first place, that these provisions relieve the Secretary from all obligation to make bonds in form redeemable at the option of the Government at any period prior to their maturity. He may make them payable "at any period not more than forty years from date of issue." That is important because of the suggestion that one respect wherein Congress is in default is failing to clothe the Secretary with power to divest bonds of an early redeemability, which was supposed to impair their availability in the market.

I call attention next to the fact that bonds may be made payable-" the principal or interest, or both ""in coin," so that if there be any virtue in the fact that one act of Congress expressly authorized the issue of ten-forty five per cent. bonds, payable principal and interest in coin, here is the same provision. It may be nominated in these bonds as it is nominated in this statute that the whole debt, principal and interest, shall be payable in coin, and in nothing else.

Third, I call attention to the fact that as to the amount of interest there is no limit or condition, excepting that it shall not exceed six per cent.

Mr. HOWE. In coin.

Mr. CONKLING. In coin. I am speaking of coin-bearing bonds. I thank the Senator for the suggestion, in coin. If it is currency, it may be seven and three tenths per cent. Therefore, observe, Mr. President, that the Secretary may feel the pulse of the market all

the time. If he can float a five per cent. bond, he is at liberty to issue it. If he can float a five per cent. bond at twenty years, he is at liberty to issue it. If a bond for forty years will be better he can issue that. If he can negotiate a bond at three or four per cent., with a feature of early redeemability, he is at liberty to issue it, or he may make it payable at its maturity, and not before, and the whole of it absolutely in coin, or the interest alone in coin.

Mr. EDMUNDS. Will my friend permit me to ask him a question?

Mr. CONKLING. Certainly.

Mr. EDMUNDS. I wish to inquire how the Secretary of the Treasury, or anybody else, can float a bond, bearing less than six per cent. in coin, so long as the public have a legal right to make use of seven-thirty notes in conversion into five-twenty coin-bearing six per cent. bonds? Does not the law now authorize every holder of a seven-thirty note to convert it into a five-twenty bond? And if it does, how could anybody be induced to take a less than six per cent. bond, when all he would have to do in order to get one would be to buy a seven-t n-thirty note and convert it.

Mr. CONKLING. My honorable friend diverts me from the line of remark I was pursuing by a suggestion less pertinent than those he ordinarily makes. In the first place, I am not referring to bonds issued by the Secretary of the Treasury to the holders of seven-thirty notes. I am not speaking of bonds which holders of other securities have a right to demand. It is said that the Secretary is issuing five-twenty six per cent. bonds to retire compound-interest notes and three per cents., and for other purposes aside from converting the seven-thirty notes. The hypothesis, therefore, upon which the Senator bases his question is not the one before us.

But, again, the Senator will observe that I am discussing the question simply whether there is a legislative cure for the high interest complained of. It is not within the scope of my remarks to inquire whether the nature of the case admits of any improvement in the management of the finances; I am only arguing that the evil does not consist in a failure to legislate, and that Congress cannot provide a remedy. I am discussing not a financial question, not the feasibility of funding the debt at a lower rate of interest, but the naked question whether Congress is to blame because it is not done.

Mr. EDMUNDS. That is to say

Mr. CONKLING. I will state what I mean fully, if my friend will pardon me, as well without as with interruption.

I am discussing the question whether Congress, by legislation, can do more than it has done to invest the Secretary with power to adapt

(for I agree with him as to the law) whether the Secretary could do this until he had retired the seven-thirties which he was bound to take up with the five-twenty bonds.

Mr. CONKLING. The Senator obviously did not attend to my remarks, nor did he allow me to come to the concluding part of them, which will be presently, else he could not have misconceived me so far. I trust I am as sensitive as other Senators upon the point of repudiation; and of course I comprehend that when the holder of a Government security has an option to demand a bond of a certain kind, that bond he is to receive; and I cannot understand how the Senator supposed that I was drawing any such question into the contro

versy.

The financial statement which lies upon our tables will enable the Senator to see that there is an indebtedness matured and not presented for payment amounting to nine millions and something. The Senator before me [Mr. WILLIAMS] has the statement showing precise figures; it is nine millions and something. In addition to this, there are three per cents., and in addition to them, compound-interest notes, as to neither of which exists the option or obligation to which the honorable Senator refers. I am speaking of bonds issued to redeem these, or sold for money to pay these and other like obligations, if any other exist. I make the discussion therefore just as broad as the limits which can be addressed to the honest discretion of Congress; and Lproceed to inquire whether it is for lack of legislation, or for lack of anything that Congress can honestly do, that where the Secretary is at liberty to negotiate, he does it by issuing six per cent. coin-bearing bonds in place of more economical securities. I had called attention to the fact that the option was given him as to the form of the security, and touching the medium in which it was payable, both interest and principal:

"And any Treasury notes or other obligations bearing interest, issued under any act of Congress, may, at the discretion of the Secretary of the Treasury, and with the consent of the holder, be converted into any description of bonds authorized by this act: and no bonds so authorized shall be considered a part of the amount of $600,000,000 herein before authorized."

The Senate will see, without my dwelling upon it, the efficacy of this provision. I come next to the fact that by this act the Secretary is not confined in his negotiations to the American market, but may effect his transactions"In the United States or elsewhere, in such manner, and at such rates, and under such conditions as he may think advisable."

I think that is elastic, as much so as any legislator could make it.

Mr. President, if this act, with all these provisions, remains in being, I think I hazard

nothing in asserting that it covers all the ground which can be covered by legislation conferring such powers on the Secretary. Let me turn now to the act of April 12, 1866, and see whether the provisions I have read are in being or not. I ask the attention of Senators to its language:

"That the act entitled 'An act to provide ways and means to support the Government,' approved March 3, 1865"

the securities he issues to the demands of the market, and whether his failure to make better bargains for interest than he does is owing to a want of authority to gauge time, interest, and character of bonds. This is the whole of my inquiry. Thus the Senator will see, I think, that the suggestion he makes is not at all pertinent to the line of my inquiry; he will, I am sure, agree with me that if Congress were to impose upon the Secretary the duty, or give the Secretary the authority, to deprive the holders of the seven-thirties of their option to demand a certain description of bond that would be rank under any act of Congress, whether bearing interest repudiation.

Mr. EDMUNDS. Clearly.

Mr. CONKLING. Clearly; and the Senator will now see that I am not upon that branch of the subject, and am making no suggestion in reference to it. I am simply discussing within the limits of that domain which Congress or the Secretary could occupy without repudiation.

Mr. EDMUNDS. If my friend will pardon me, I misunderstood him. I understood him, in the outset of his remarks, to charge a degree of guilt on the Secretary of the Treasury in not having done something of this kind, and my inquiry was directed to the question

That is the act, a part of which I have just read

"shall be extended and constructed to authorize the Secretary of the Treasury, at his discretion, to receive any Treasury notes or other obligations issued

or not, in exchange for any description of bonds authorized by the act to which this is an amendment; and also to dispose of any description of bonds authorized by said act, either in the United States or elsewhere, to such an amount in such manner, and at such rates as he may think advisable, for lawful money of the United States, or for any Treasury notes, certificates of indebtedness, or certificates of deposit, or other representatives of value, which have been or which may be issued under any act of Congress."

Bear in mind he may sell them for any representative of value, coin, lawful money, or any other known circulating medium recognized by the laws of the United States, and the proceeds, the avails, are to be used in retiring the debt. Thus, by a plain process,

involving no circumlocution, the markets of the world are open to him. He may go with just such coin-bearing securities as he sees fit to issue, with interest not exceeding six per cent., nor running for more than forty years, and negotiate at the lowest rate of interest, and so far as the plighted faith of the Government does not stand in the way, do the very thing of which we talk so much, namely, fund the national debt at lower rates of interest.

Mr. MORTON. I should like to ask the Senator a question. As I understand, he accepts the amendment of the Senator from Massachusetts, as modified.

Mr. CONKLING. No, sir; I beg your pardon.

Mr. MORTON. Iso understood the Senator. Mr. CONKLING. I beg pardon of my honorable friend; he misunderstood me. I only remarked that the amendment of the Senator from Massachusetts, as modified, was an inflation to the amount of five millions, and would work a substitution of national bank currency for greenbacks" to the amount which is specified in the amendment.

[ocr errors]

I wish to make another observation on the general question. If it be true that six per cent. coin-bearing bonds are the best securities for the Government which can be negotiated now, nothing that Congress can do, without repudiation, or, indeed, with repudiation, would cure the evil of high interest, because the laws of trade, I think, would prove superior to the laws of Congress. Therefore, in order to suppose that there could be utility in legislation in the direction of funding the public debt at lower rates, you must assume that the Government could do better than to pay six per cent. in coin, or eight per cent. in currency, which it amounts to, and still more when you take into account exemption from taxation.

Taking, then, this hypothesis as the only one which utilizes the question at all, I submit that it is too clear to be questioned that the existing statute makes the Secretary of the Treasury absolute master of the position. If there be anything in the direction of such power which is not clear upon the face of these acts, I am unable to imagine it. While I have no wish to preach a crusade against the Secretary of the Treasury, or to attack him, or act as his keeper, I feel unwilling, as the humblest member of this body, that the assertion should go unchallenged, that upon us rests the responsibility of withholding legislation by the aid of which the Government would be able to cease paying eight per cent. interest in currency or six per cent. in coin, and fund the debt at three, or three sixty-five, or four per cent., as the case may be. It is only to absolve myself, and, as far as I am permitted to speak for others, to absolve them from responsibility, that I have called attention to existing statutes. From these statutes all may see whether it be true that but for the default of Congress we should borrow money more cheaply, or put out securities bearing a lower rate of interest.

Here I leave the subject.

ject, for I have over and over again attempted to secure the action of the Senate upon measures tending to reduce the rate of interest on the public debt, but I bow to the manifest will of the Senate not to take up this question at this session. Therefore I will not discuss it. I ought, however, to say, in justice to the Secretary of the Treasury, for I am not here as his defender, that the Secretary would naturally hesitate about assuming a responsi bility which Congress have not been willing to take. The Senator from New York is correct in his construction of the law. I have carefully studied the loan laws, and I believe that the Secretary of the Treasury has the power under existing law, especially under the act of April 12, 1866, to issue any class of bonds authorized during the war. I am sorry indeed that such a power was conferred upon him. It never was done with my consent. Congress ought to prescribe the mode and manner and form, and the limitations of every loan that is made; especially since the uncertainty of war is over. We might prescribe many provisions that would aid him very much to fund the public debt and reduce its burdens. For neglecting to do this, Congress is responsible. It is a very doubtful thing whether he ought to assume to exercise the power of issuing a new class of bonds after the subject has been so much discussed and has not been acted upon in Congress. He can now issue, and I think, negotiate at par, a five per cent. bond, principal and interest payable in coin. redeemable in ten, twenty, or thirty years, and perhaps sell it at a premium. Certainly he should never issue a six per cent. bond while the state of the money market enables him to borrow money at a cheaper rate. But he might very well hesitate in assuming to issue a new class of bonds when Congress hesitates and doubts in regard to the terms.

Mr. CONKLING. If the honorable Senator will allow me, I do not understand the remark which he makes and repeats. He says the Secretary might be excused from this when we ourselves refuse to take the responsibility. I beg to inquire of the honorable Senator how he can say that, if it be true that we have taken the responsibility of conferring upon the Secretary expressly this power most amply and fully? The Senator agrees with me in thinking that we have. How, then, can he say that we do not take or have not taken the responsibility? Surely we cannot take the responsibility of administering the Department, or determining how much on a certain day it is possible for him to do in the way of changing the rate of interest; but everything else, it seems to me, we have done.

Mr. SHERMAN. The Secretary has the undoubted power to issue any kind of speciebearing bond bearing an interest not exceed. ing six per cent., and any currency bond bearing interest not exceeding seven and three tenths per cent; but the Secretary would have to decide many questions before he could issue any bond whatever. Shall the interest be six per cent.? Shall it be five per cent.? Shall it be four and a half per cent.? Shall it be four per cent.? Shall it be three per cent.? We refuse to decide that question. He would have to decide it before issuing a single bond. Shall the principal of the bond be paid in gold and the interest be paid in gold? Shall the bonds be taxable, and to what extent? We will not decide these questions, and you cannot get a decision of any of these questions in this Senate.

Mr. CONKLING. We have decided it in this statute.

Mr. SHERMAN. Mr. President, the Senator from New York has gone outside of the merits of the proposition before us, and, as I stated before, it is my desire to keep the discussion as far as possible to the particular proposition before the Senate. I shall only make a few remarks, in reply to him, and not follow him into a very dangerous and dubious field of discussion. There is a great deal of feeling in the country as to the responsibility for a fact which I think is discreditable to the United States. While money can be borrowed by any private individual citizen on good securities for Mr. SHERMAN. No, sir; you have said three or four per cent. we are now paying eight to him in that statute, "You may issue any and forty hundredths per cent. for money. kind of bond; you may take the responsibilThe United States, the most powerful Repub-ity; but we are all at sea about what kind of lie in the world, is paying more for money than any other nation of the first rank. I think it is time that this should cease. The responsibility for that fact is not for me to determine. One thing I can safely affirm, that I am not responsible for delay in acting upon this sub

a bond you ought to issue; but if you do not issue such a kind of bond as we think you ought, we will attack you.' That is the position in which that statute places the Secretary of the Treasury.

Mr. CONKLING. I do not think so.

Mr. SHERMAN. I think it is. Now, Mr. President, there are many other points

Mr. MORRILL, of Vermont. The Senator from Ohio ought to add one other thing in justification of the Secretary of the Treasury, and that is, that nobody gets bonds paying six per cent. interest in gold without paying more than one hundred cents on the dollar for them.

Mr. SHERMAN. I ought to say also that the body of the bonds-I think nearly all the six per cent. bonds-that are now being issued are issued in pursuance of the plain provisions of the law in regard to seven-thirty notes. I cannot say now whether any have been issued beyond the amount used in the redemption of the seven-thirties.

Mr. EDMUNDS and Mr. WILSON. Not a cent.

Mr. SHERMAN. I am glad to hear that, because, I should think it almost a crime for the Secretary of the Treasury now to issue a six per cent. bond to pay a currency obligation.

Mr. CONKLING. Will the Senator allow me to make an inquiry?

Mr. SHERMAN. Certainly.

Mr. CONKLING. If that be so, if no bonds are issued except for the purpose of fulfilling this option given to the holders of the seventhirties, how could any legislation of ours aid the matter?

Mr. SHERMAN. I will answer that. The Secretary of the Treasury has been able to redeem the floating indebtedness, together with the compound-interest notes, mainly by surplus revenue. That resource is exhausted by the reduction of taxes, and he will undoubtedly have to issue new bonds for the debts now maturing. He will be obliged to take the responsibility of determining the direct question which you yourselves hesitate about; and that is, what kind of bonds shall be issued? How much interest shall be paid, &c.? It is manifest now from the state of the money market that the United States could go into the markets of the world with a twenty or thirty years' five per cent. bond and redeem the present matured six per cent. five-twenties. It is probable that a five per cent. bond payable twenty years after date would sell at a higher rate in gold than our five-twenties now do. That is the opinion of many eminent financiers, and I think it is correct. Over five hundred million dollars of the present five-twenties are payable at any moment at our pleasure. The only question is whether they are payable in paper or in gold. Pending that question, which we neglect to decide, pending that doubt, bonds running the long period of twenty or thirty years at a lower rate of interest would induce thousands of people, not only in this country, but in Europe, to take new five per cent. bonds in exchange for their six per cents. There are now many trustees all over this country, in every State of the Union who desire a five per cent. bond in exchange for those now payable. If the Senator will only think of the number of companies that are based upon trust estates, and who would gladly accept a long bond, running ten, twenty, or thirty years, in exchange for the bond that is now payable, he will see that the demand in this country alone will absorb a large number of these bonds.

Mr. CONKLING. Then why are not the bonds issued for the purpose?

Mr. SHERMAN. Simply because, I suppose, the Secretary does not want to decide the very question which Congress has refused to decide; that is, the character of that bond and what interest it ought to bear. But I will not debate that question.

Mr. POMEROY. There is nothing in this bill about bonds.

Mr. SHERMAN. That is true, and I ought not probably to have gone so far into the debate on that subject.

Mr. FESSENDEN. If the Senator will allow me, I will suggest what is the probable answer; and that is, we have gone upon a reg

« PoprzedniaDalej »