I

the whole. The amendment that I asked to be put upon that bill was not put upon it; so that the Senate voted to appropriate to the parties mentioned in the proviso the whole sum pro vided by the board. Now, here is a joint reso. lution which offers to them the same opportunity to sue in the Court of Claims that it provides for these other contractors who did not have anything from the naval board. think, as the parties named in the proviso have taken one judgment from the Secretary of the Navy and taken another from the board constituted by the Secretary of the Navy and approved by the bill which passed here the other day, that, so far as those suitors are concerned, there should be an end of litigation, and if this resolution passes at all it should pass only for the relief of those who did not get a judgment for anything from the naval board.

Mr. HENDRICKS. I move to amend the amendment by adding the following:

Upon any vessel upon which an allowance was made by the board organized under the act of March 2, 1867.

So that the proviso will read:

Provided, That no claim shall be so referred under this act in favor of Secor & Co.; Perrine, Secor, & Co.; Harrison Loring; the Atlantic Works, of Boston; Aquilla Adams; M. F. Merritt: Tomlinson, Hartupee & Co.; or to Messrs. Poole & Hun; or any or either of them, upon any vessel upon which an allowance was made by the board organized under the act of March 2, 1857.

The amendment which I propose to the amendment of the Senator from Wisconsin will make this legislation agree with the bill that passed the Senate the other day.

Mr. HOWE. I hope the amendment of the Senator from Indiana will not be agreed to. The effect of it is to just divide the bill of par ticulars which has been tried by this naval board. Each of these parties mentioned in the proviso has had a judgment there, a judgment in their favor. That judgment only included a part of their claim; but so far as the judgment was in their favor they have taken the benefit of it. The judgment was upon some of the items in their claim, and the judg ment went against them upon some other items. The Senator proposes that they shall stand by the judgment upon those items where judgment was in their favor and that they shall go into the Court of Claims under this resolution to recover for those items on which judg ment went against them before the naval board. If the Senate agrees to it of course I cannot help it.

Mr. CRAGIN. I hope the amendment to the amendment will be adopted. If it is adopted, it leaves all parties standing upon an equal footing. Secor & Co. built about one fourth of all the iron-clads built for the Government. By the bill that passed the other day they were allowed on three vessels; on the others they were allowed nothing. There are reasons why they should be allowed on the others just exactly as good as there are why other parties should be allowed. The reason for referring this subject to the Court of Claims is this: these claimants came before the Committee on Naval Affairs and asked us to examine their claims; but they told us at the same time that they were aware we had not the time to investigate these matters; that they involved the examination of large numbers of witnesses, and of long and continuous accounts, and if we would allow them, if we had not the time to examine them, to go to the Court of Claims to institute and prosecute this examination, they would be satisfied, and the Committee on Naval Affairs agreed to this. It is just and right, in my judgment, and I hope that course will be taken.

The PRESIDENT pro tempore. The question is on the amendment of the Senator from Indiana [Mr. HENDRICKS] to the amendment of the Senator from Wisconsin, [Mr. HowE.] Mr. HOWE. On that question I ask for the yeas and nays.

The yeas and nays were ordered.

• Mr. HENDRICKS. To illustrate the force of the amendment, I will state to the Senate

just this: taking as an illustration the firm of Secor & Co., I believe they constructed either seven or nine iron-clads; I think every one of those vessels was in battle and did efficient service. This board has allowed upon either two or three of those vessels. The plans and specifications were changed regarding the others, but they have had no allowance upon them. Now, my amendment proposes that in regard to the vessels upon which an allowance was made by the board they shall not go before the Court of Claims; but in regard to the vessels upon which no allowance was made they shall stand just like the other contractors.

The question being taken by yeas and nays, resulted-yeas 23, nays 18; as follows:

YEAS-Messrs. Anthony, Buckalew, Cragin, Davis, Doolittle, Drake, Ferry, Fowler, Harlan, Hendricks, Johnson, Nye, Patterson of New Hampshire, Patterson of Tennessee, Ramsey, Sherman, Sprague, Stewart, Sumner, Van Winkle, Vickers, Wade, and Willey-23.

NAYS-Messrs. Cameron, Cattell, Chandler, Cole, Fessenden. Frelinghuysen, Howard, Howe, McCreery, Morgan, Morrill of Maine, Morrill of Vermont, Morton. Pomeroy, Trumbull, Williams, Wilson, and Yates-18.

ABSENT-Messrs. Bayard, Conkling, Conness, Corbett, Dixon, Edmunds, Grimes, Henderson, Norton, Ross, Saulsbury, Thayer, and Tipton-13.

So the amendment to the amendment was agreed to.

The amendment, as amended, was adopted. Mr. DRAKE. There is a verbal amendment which ought to be made in the joint resolution. The resolution undertakes to set out the title of the act of March 2, 1867. It says, "An act for the relief of certain contractors, and so forth." I wish to have the title set out in full. I move to strike out the words “and so forth," in the fifth line, and to insert "for the construction of vessels of war and steam machinery." That gives the title to the previous act in full.

The PRESIDENT pro tempore. That amendment will be made if there be no objection.

The joint resolution was reported to the Senate as amended, and the amendments were concurred in. The joint resolution was ordered to be engrossed for a third reading, and was read the third time.

Mr. WILLIAMS. I ask for the yeas and nays on the passage of the resolution.

The yeas and nays were ordered; and being taken, resulted-yeas 24, nays 14; as follows:

YEAS-Messrs. Anthony, Cattell, Conness, Cragin, Davis, Drake, Ferry, Fowler, Hendricks, Johnson, Morton, Nye, Patterson of Tennessee, Ramsey, Sherman, Sprague, Stewart, Sumner, Trumbull, Van Winkle, Vickers, Wade, Willey, and Yates-24.

NAYS-Messrs. Buckalew, Cameron, Chandler, Cole, Doolittle, Fessenden. Frelinghuysen, Harlan, Howe, McCreery, Morgan, Morrill of Vermont, Williams, and Wilson-14.

ABSENT-Messrs. Bayard, Conkling, Corbett, Dixon, Edmunds, Grimes, Henderson, Howard, Morrill of Maine, Norton, Patterson of New Hampshire, Pomeroy, Ross, Saulsbury, Thayer, and Tipton-16. So the joint resolution was passed.

Mr. HOWE subsequently said: I ask unanimous consent to correct an error in an amendment made to a joint resolution passed this morning for the relief of certain contractors for vessels of war and steam machinery. I moved a proviso intended to exclude from its operation all that were included in a previous bill which had passed the Senate. I omitted the names of Messrs. Harlan & Hollingsworth, who were introduced into the previous bill by an amendment. I had not the bill as it passed the Senate before me. To put that firm on the same terms as all the other contractors they should be inserted in the proviso. The only regular way, I suppose, is to move a reconsideration.

Mr. SHERMAN. I suppose the correction can be made by unanimous consent.

Mr. HOWE. I hope the Senate will consent unanimously to insert the name of Harlan & Hollingsworth in the proviso.

The PRESIDENT pro tempore. The amendment may be made by unanimous consent. Is there objection? There is no objection; and the amendment will be made.

PENSION BILLS.

Mr. VAN WINKLE. I hold in my hand

three Senate pension bills which have been returned from the House of Representatives with amendments. The amendments are similar, and are not concurred in by the Committee on Pensions. The committee report them back adversely. I therefore move that the Senate disagree to the amendment of the House of Representatives to one of the bills, say the bill (S. No. 184) granting a pension to Mrs. Corcoran, and ask for a committee of conference on the disagreeing votes of the two Houses; and the others can lie on the table.

The PRESIDENT pro tempore. The Senator moves that the Senate disagree to the amend ment of the House of Representatives to Senate bill No. 184, and ask for a committee of conference on the disagreeing votes of the two Houses.

The motion was agreed to.

Mr. VAN WINKLE. I move that the committee of conference be appointed by the chair.

The motion was agreed to; and the President pro tempore appointed Mr. VAN WINKLE, Mr. TRUMBULL, and Mr. EDMUNDS.

Mr. VAN WINKLE. I move that the other bills with the amendments lie upon the table.

The motion was agreed to; and the bill (S. No. 425) granting a pension to George Bennett, and the bill (S. No. 280) granting a pension to Michael Hennessy, of Platte county, Missouri, with the amendments of the House of Representatives thereto, were laid on the table.

MESSAGE FROM THE HOUSE.

A message from the House of Representatives, by Mr. MCPHERSON, its Clerk, announced that the House had passed a joint resolution (H. R. No. 291) giving additional compensation to certain employés in the civil service of the Government at Washington, in which it requested the concurrence of the Senate.

NATIONAL BANKS.

The PRESIDENT pro tempore. The special order is now before the Senate.

The Senate, as in Committee of the Whole, resumed the consideration of the bill (S. No. 440) supplementary to an act entitled "An act to provide a national currency secured by a pledge of United States bonds, and to provide for the circulation and redemption thereof," approved June 3, 1864, the pending question being on the amendment of Mr. MORRILL, of Vermont, to the amendment proposed by the Committee on Finance as the fifth section of the bill. The amendment of the committee is in these words:

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.

The amendment of Mr. MORRILL, of Vermont, is to add to the amendment of the committee the following words:

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

Mr. SHERMAN. The Senator from California [Mr. COLE] has the floor on that ques tion.

Mr. MORTON. Is it in order to offer an amendment to the amendment of the Senator from Vermont?

now.

The PRESIDENT pro tempore. Not just It would be an amendment in the third degree. Mr. MORTON. I will ask to have my amendment read for information.

The Chief Clerk read the proposed amendment, as follows:

Provided, That the United States notes so retired shall not be obtained by the sale of bonds, but shall be taken from the funds in the Treasury, collected in the ordinary way.

Mr. COLE. Mr. President, I could hardly persuade myself to allow the vote to be taken upon this part of the bill without tendering a few suggestions to the Senate upon it. This

fifth section provides for the issuance of $20,000,000 of additional circulation for the use of those States and Territories in which the amount of banking circulation already issued is less than five dollars per capita. It is intended in some degree to equalize the circulation under the laws of the United States authorizing the issue of national bank currency. I do not wish to commit myself to the system of national banks by anything I shall say in favor of this amendment. I look upon it only as some relief for a portion of the United States from the great embarrassment under which that portion is at present suffering.

to population. I do not contend that it should be distributed according to population entirely; but that there should be some reference to population I think a very clear proposition. But if this be absurd it is an absurdity into which the Congress that passed the law fell; for in the seventeenth section of the act of February 25, 1863, authorizing these national banks, we find the following provision:

"That the entire amount of circulating notes to be issued under this act shall not exceed $300,000,000, $150,000,000 of which sum shall be apportioned to associations in the States, in the District of Columbia, and in the Territories, according to representative population, and the remainder shall be apportioned by the Secretary of the Treasury among associations formed in the several States, in the District of Columbia, and in the Territories, having due regard to the existing banking capital, resources, and business of such States, District, and Territories."

Thus it will be seen that by a provision of the law half of it was to be distributed accord

be an absurdity clearly it is one into which Congress itself fell.

The South and West, as is well understood I believe by all Senators, are greatly in need of money. This addition of $20,000,000 to them in the form of banking capital or bank issues will afford them only slight relief. It will not entirely meet the emergency. It will not relieve them to any very great extent, but it will affording to representative population; and if that some relief provided they avail themselves of the offer and take this circulation. Mr. President, those States and Territories of the West and South are the poor portion of the Republic. They are the laboring portions, the productive portions. The other parts of the Union, the North and the East, possess nearly all the capital of the nation. They are the manufacturing portion, the trading portion, the wealthy portion.

There is at present a very great inequality in the distribution of this bank capital; and to this I wish to call the attention of the Senate. In New England at present there is upward of one third of this banking circulation. The total amount issued under the law of 1863 authorizing these national banks is $300,000,000. Of this the New England States have $104,959,981. That amount is apportioned to the people of New England, who constitute only about one twelfth of the total population of the nation. New England and New York, which together contain only about one fifth of the total population of the country, have at present upward of seven twelfths of the entire circulation issued to these national banks. The twelve States comprising New England, New York, New Jersey, Pennsylvania, Ohio, Indiana, and Illinois possess of this $300,000,000 of bank circulation some $265,000,000; and those States contain a population, according to the last census, of less than sixteen millions, certainly at this day less than half the population of the Republic. In all the other thirty-two States and Territories, including the District of Columbia, which must contain a population of about nineteen millions, perhaps at this time twenty millions, there is distributed of this circulation only about one ninth, or $35,000,000

all told.

This, as will be seen, is a very great inequality in the distribution of this circulation. The $20,000,000 that are to be authorized under this fifth section of the bill are to be distributed among some twenty-four States and Territories, and they are the States and Territories that lie west of the Mississippi and south of the Ohio and the Potomac, including the State of Wisconsin. These twenty-four States and Territories, all of which possess less than five dollars per capita of this bank circulation, will be the States and Territories among which the $20,000,000 additional will be distributed. These States and Territories possess at present only about $20,000,000 of banking capital; and I think it will be ascertained by referring to the census that their total population, including the blacks, is about half the population of the whole country, and if this bank capital or circulation were distributed according to the population they would be entitled to $150,000,000. It will appear from these figures that these States which possess nearly all of it enjoy a great money monopoly, for such it really is. This remark is particularly applicable to New England and New York, which possess upward of $177,000,000 of this currency.

But we were told on Friday, by the Senator from Massachusetts [Mr. WILSON] that it is absurd to distribute this circulation according ||

But this circulation is not to be distributed in accordance with wealth. It is to be distributed for the accommodation of the people and in accordance with the business requirements of the people. A larger proportion of it is required in new countries in accordance with the amount of business than in old countries or well-established communities. In the commercial centers, as, for instance, New York and Boston, there are such institutions as clearing-houses. Banks are abundant there through which the business is done by a system of checking, a system of credits. I presume not one tenth of the business in the city of New York is done by the actual use of money, but, on the other hand, by the use of credits and checks. It is very different in the new States, where the population is scattered, where people are strangers to each other, and have but little credit upon which to rely. There business has to be done upon a money basis. There is need, therefore, in nearly every transaction, of money with which to perfect it. There is, therefore, much difference between the older communities, these business centers, and the new States and Territories in this respect.

The proposition that is pending here is not to withdraw any of this circulation from the States which now possess it. It is conceded by this bill to be proper that the States which now possess this circulation should retain all they have. There is no disposition at all to interfere with them. The proposition is to provide some circulation, a small amount, for this portion of the Union, where it is at present exceedingly scarce.

It is well understood that business is very much impeded in the West and South for the want of money; and if capitalists are found there who can invest in United States bonds to the amount of $20,000,000 and deposit them with the Treasurer and draw ninety per cent. of bank notes, which they may in turn lend to their neighbors for such security as the neighbors can furnish in the particular localities, why should not they be allowed to do this? It is a privilege that is now only enjoyed by the people of the East and the North. At present the South and the West depend to a very great extent upon the East and the North for the money with which to prosecute their business; but the business capacity and wealth of the people of the South and the West are not understood at the North, or where these banks are located; and so they have no credit there, and, as a consequence, if money is borrowed where they have no credit a larger interest is to be paid, and it is not an unusual thing for the people of the West and the South to pay enormous interest, often as high as two per cent. a month, a ruinous rate.

But whenever the proposition is made from any quarter to furnish these people with circulation, which they so much stand in need of, the cry of inflation is raised. This is a sort of hobgoblin or bugbear brought forward for the purpose of frightening the representatives of

the people from furnishing this needed circulation. It is a specious cry. If there is a liability to inflation by the issues of more bank circulation, certainly there must already be inflation in New England and New York, where they have greatly surpassing their proportion of that already issued; but they at the North and East do not complain of inflation. They are full of money and bank circulation; they have it in abundance, and they wish to retain what they have, but are at the same time unwilling to furnish those portions of the Union that are in want of it with a small proportion, such as may afford some accommodation to those sections. The people of the West and the South of these twenty-four States and Territories, if furnished these $20,000,000 of circulation, would be in some degree independent of their more wealthy neighbors at the North and East; and to put them in this condition will not result at all in an unfavorable inflation of the currency. It cannot have that result; it cannot produce that effect.

But the statement that is made for the purpose of preventing this addition to the circulation is that it will impair the public credit. Let us for a moment examine that. The public credit does not depend upon the amount of circulation; it depends upon the success of business, upon the productive industry of the country, upon its growing wealth; and everything that tends to check the productive industry of the country, everything that has for its object the suppression of labor and industry, must affect the public credit unfavorably.

The Secretary of the Treasury has made a recommendation that this circulation be furnished at the South. I believe at some time he has recommended also that a portion of the circulation that has been furnished to the East or North, particularly to New England and New York, shall be withdrawn and furnished to these more destitute sections. In a letter of the Secretary, dated in 1866, I find the following paragraph:

"I also think it a matter of great importance that provision should be made to meet the wants of thoso States which have been in rebellion. Banking facilities are necessary to develop the industrial interests of the South, and to stimulate the production of those staples which enter so largely into the financial interests of the country. At the same time it would be wise policy to afford the people of that section an opportunity to become pecuniarily interested in the successful maintenance of the Government of the United States; and, inasmuch as Congress has assumed entire control of the currency of the country, and, to a very considerable extent, of its banking interests, prohibiting the interference of State governments, it would seem to be the plain duty of Congress to make adequate provision to meet the business wants of all sections of the country in the way of banking facilities."

That recommendation has been entirely disregarded thus far, and always upon the plea that there would be something wrong and detrimental to the country in adding to the circulation.

The proposition contained in the amendment of the Senator from Vermont to withdraw an equal amount of greenbacks to the amount of bank circulation which is allowed to be put forth, is not one that meets my approval. It would be necessarily adding so much to the interest-bearing debt of the country, unless the amendment proposed by the Senator from Indiana should prevail with it. We have not the greenbacks or United States notes with which to make the exchange, or with which to supply the deficiency; they must necessarily be raised by issuing interest-bearing par bonds; there is no other way we have for raising them, and it would therefore be a conversion of $100,000,000 of non-interest-bearing securities into so much bearing interest. This, in my judgment, would be a proposition most unfavorable to the Government, and it would not at all relieve the country from the stringency in the money market. It would leave the amount of money in the country precisely as it is. It would afford some little relief in this point of view; it would allow this banking circulation to be taken in those Territories and States where it is now scarce, but that is all the relief

that would flow from it; and as the drainage of money is from the West and South to the East and the North, there would, in a little while, unquestionably be the same dilemma under which those sections of the Union are now suffering.

The amount of money afloat at present is much too small, as I believe, for the business requirements of the country. The total amount of circulation is something less than seven hundred million dollars; the amount of United States notes is about three hundred and fifty-six millions; the amount of fractional currency about thirty millions; the amount of national bank circulation is $300,000,000; the amount of gold perhaps on the western coast would bring it up to about seven hundred millions. If the population is thirty-five millions, this would be only twenty dollars per capita to the whole population, and this in a depreciated currency which is equivalent to gold or silver to only about fourteen dollars per head. This is less by far than is used in the other civilized and commercial countries that compete with the United States in business and wealth. In England, I think, the amount per capita is at least twice that. In France it is as much as in England, or more. I have not before me the figures, but, if I remember well, such is the fact.

In my opinion it is the duty of the Government to provide the kind of money that is needed by the people. That is a sovereign power. It is provided by the Government in nearly all the civilized countries. The Government takes it upon itself to fix the value and denomination of coins. The Government does not furnish the gold and silver; it issues the gold and silver in the form of coin to those who bring them to the Government for the purpose of being reduced to coin; and there has never happened such a thing in modern times as a Government refusing to coin gold and silver for those who have gold and silver to be thus converted. There has never been an attempt to restrict the amount of hard money in any country. There has never been any complaint on the ground that there was too much good money afloat, and why should there be a distinction between the money that is made of gold and silver and that which is issued by the Government as representatives of the value of gold and silver? There is, in my opinion, no good reason to be urged why the Government should not take it upon itself to issue the representative of money which is in the form of paper the same as it takes upon itself to fix the value of coins and the description of money when we are without paper. The only duty on the part of the Government is to see that the money which is issued as the representative of gold and silver shall be well secured, and this plan has been adopted by this Government in the banking system that is in vogue. The Government has required security to be deposited in the Treasury; upon that this representative of value is issued. As long as this money is well secured why should not the amount that is to be issued be left to the requirements of business? If any person or any section of the country has the security to tender to the Government for this representative money why should not that section of country or that individual, if it be needed by the requirements of business, be permitted to put his securities in that form in which they shall be available to him? The whole duty of the Government will be to see to it that the securities are perfect and abundant. The laws of trade can safely be trusted to fix the amount of good money that may at any time be required.

The only danger that has ever manifested itself of too much money in a country has been of money that has not been properly secured or money of low value. There is danger of inflation when coins are reduced in value by the addition of alloys. There is danger of an inflation of the currency when the securities are inadequate, when there is no disposition, it may be, or no purpose on the part of those

who issue it to redeem the money that is put afloat. In such a case it is an object on the part of those who have the issuance of the money to put forth as much as they can, as much as they can persuade people to receive. It is a gaining operation with them. But if they are to leave on deposit the value of the money which they receive, it will be different if the deposit can be of more value to them, can be used in some way better than in the form of money, they will so use it, and there is no danger whatever of the country ever becoming flooded with good money.

The banking system we now have I believe to be the best that has ever been adopted in this country. It is the safest we have ever had. It is not a new system; it had been adopted in many of its features in several of the States of the Union. It had been recommended by writers on political economy long before it was adopted by the United States Government. I find in a work published in 1852 on the Progress of Nations by an author of considerable notoriety, Mr. Seaman, the exact plan of the present national banking system of the United States laid down in detail. I believe it to be the very best system that has thus far been adopted, but it is defective in many respects. It would be better, in my judgment, if there could be great freedom on the part of all the citizens, who have the securities that are required by the Government, to surrender to the Treasury and receive in lieu of them United States notes, rather than to leave the bonds to draw interest for those who deposit them as security. This would result in withdrawing from our interest-bearing indebtness at least, the $300,000,000 that are now issued as national bank circulation and replacing them with a like amount of non-interest-bearing greenbacks. We should thus save at least $25,000,000 a year interest. The interest that is now paid in gold on this amount is $18,000,000, equivalent to $25,000,000 in greenbacks or United States notes.

Besides, this system of banking is liable to many abuses. It is a very great privilege to those who can avail themselves of it. It certainly amounts, on the part of those who receive it, to a privilege of drawing double interest upon their capital. They take their bonds to the Treasury, leave them on deposit, and receive ninety per cent. of circulation which they loan out upon interest. Thus the bankers receive interest not only upon the $100,000 deposited with the Treasury, but also on the $90,000 of circulating notes which they receive. Then, why may not a man who receives his $90,000 in circulation immediately convert that again-less the amount to be kept on hand-into United States bonds in some other bank, or invest it in some other banking operation, and receive circulation again to the amount of, perhaps, seventy odd thousand dollars? After he has received his new circulation, why may he not again invest it in United States bonds and receive ninety per cent. again, and so multiplying his interest until he receives thirty or forty per cent. on the original investment of $100,000? To be sure there is a provision in the law that the persons receiving the circulation shall not use it in a way to increase their banking capital; but that prohibition applies only to the bank to which the circulation is issued, and what is to hinder a person receiving the circulation first issued from making the same disposition of it in some other bank?

The fact is, Mr. President, this banking privilege that is granted by the laws of the United States is an exceedingly advantageous one, one of immense value to the people who have so hastily and early availed themselves of it. It is of great advantage to the people of New England and New York, who have absorbed so large a portion of it; and I do not wonder very much at their extreme anxiety to prevent any addition to the amount, or to prevent the people of the South and the West, where there is more poverty and more destitution, from adding to their independence of the

section where this banking capital has been taken up.

I believe, Mr. President, that there should be no hesitation on the part of the Senate in affording this little measure of relief to these destitute portions of the country. It will add to their productiveness. At present they are in a withered, decaying condition; they are paralyzed for the want of circulation; they are unable to move their crops for the want of money; and if this relief is not permitted, they will decline in wealth, they will continue in their present condition of poverty and distress, and after a while will become even less productive, and as a consequence less advantageous to the wealthy portions of the Union, the East and the North. Whatever is done to encourage industry, whatever is done to add to the productiveness of the South and the West, will but add to the general prosperity of the nation and improve its credit. I hope therefore, Mr. President, that this amendment will be acquiesced in.

Mr. MORRILL, of Vermont. Mr. President, when a gentleman sets out with an unsound principle at the start and claims that paper money is just as good as gold and silver coin, you may expect that fallacy to run through his entire argument. Now, I am surprised at the disinterested generosity of the Senator from California. If there is a Senator on this floor who ought to be a stickler for a speedy restor ation of specie payments, it is the Senator from California; for by an irredeemable paper currency the relative power of gold is lessened, the purchasing power of it is vastly diminished, and this is an evil under which the people of California and all other gold and silver producing States and Territories have been groaning for years, ever since the introduction into the country of this unusual flood of paper money, and yet the Senator from California proclaims here that paper money is just as good as gold or silver.

Mr. COLE. I am sure the Senator from Vermont does not intend to misrepresent me. I spoke of paper money well secured, secured by the value it represents.

Mr. MORRILL, of Vermont. I understood the limitations which the Senator laid down, and he evidently meant that the kind of paper money which we have issued is just as good as gold or silver and just such as he is ready to issue $20,000,000 more of without conditions. Does not the fact stare him in the face that gold is forty per cent above paper? Is not that a significant showing of the fallacy of his argument? Have we not enough of that kind of circulation? If we had not too much of it, it would be at par, or else we have destroyed the credit of our country-an idea that I do not admit; but I will say that we are in danger of destroying it when we take steps in the direetion of expansion instead of contraction.

But the Senator goes on further to state that when this paper money is issued by a party who manifests no purpose of redeeming it, then it is of less value. Here is an example: there is a proposition before us which proposes not to redeem any portion of this paper money, but to increase the amount of it by the sum of $20,000,000, and yet the Senator from California is one of the earliest opponents of an amendment offered by me providing that if the national banking circulation shall be so increased, we shall retire an equal amount of United States notes.

But the Senator from California has iterated and reiterated the idea that the North and the East possess the wealth of the country, and are opposing this measure for increasing the circulation. Why, sir, a Senator from New England [Mr. WILSON] has proposed to increase it five times the amount proposed by the bill of the committee. Only one of the Senators from New England, the Senator from Connecticut, has shown any disposition to oppose the proposition, although I think the whole Senate will be justified in opposing it if it comes in the shape of a naked expansion of paper money. Why, then, does the Senator from

California come out here with a statement that New England and New York are particularly averse to this increase of banking circulation, or averse at all to allowing other parts of the country to enjoy the same privileges which they enjoy? Fix your laws as you please, and the North and the East will try to endure it; but the evil of an inflated currency is not a local one; the whole country has an interest in getting out of the present quagmire, not in plunging deeper into it.

I have sometimes thought that some gentlemen in the West, if they could get a measure before the Senate that would confiscate the property of the widows and orphans in the East, for they own a pretty large share of what there is there, would be willing to do it. Why, sir, the wealth that has been accumulated in New England and the North has been the slow growth of two centuries. Can gentlemen expect that new States like California, Nevada, and other of our western States, as prosperous and flourishing as they may be and I rejoice that they are--are going to jump at once into the wealth and the civilization of centu ries? Have these States any less banking capital now than they had before the creation of the national bauking system? I should like to know if the creation of the national banking system has diminished the amount of banking capital of any of those western States about which we hear so much. Did they not help to establish the new system? The people of iny State when this system was adopted had a banking sys.em with which they were content, and they had a much larger circulation than they now have. It was a system that contributed largely by the taxes imposed upon it to the support of the State government. Our people went into the national banking system reluctantly; and it was not until after forcible measures of legislation were adopted, a year subsequent to the passage of the banking law, that the North generally adopted it. They went into it because they found that their capitai was to be slowly but surely confiscated if they did not go into it. They went into it because they had the capital and the Government needed it. Was there any more reason why the western States should not go in than the eastern? 1 do not like to hear the eastern and northern States reproached for stepping forward at a time when the Government was in peril and bringing forth their treasures-the careful savings of generations of men-to the support of the Government. Why did not the West step forward and avail themselves of the privilege? They say they have the meaus now, and they must have had the means then or they accumulated it during the war. They had the same opportunity that we had, and money is worth as much in the West for banking purposes as in the East; much more; the dividends are larger.

Now, Mr. President, for all the wealth that is accumulated in the East and the North mer work there more hours per day, and their capi tal is employed at a less price, than in any other portion of the Union. Why, sir, the men in the Northeast work from twelve to fourteen and fifteen hours a day; and that is the way they accumulate wealth; they loan their capital for six per cent., and that is the way they accumulate their wealth. That is not the case with the western States. There their climate is such and their facilities in the way of agriculture are such that they do not work but half the year anyhow-the winter is a holiday-and they work a very small number of hours usually when they do work; and when they loan their capital their laws permit them to take ten per cent., and in some places permit them to take

obvious that our United States notes are considered worth less in the market than any other securities that we have? Why should we not either retire them or refuse to put out anything more akin to them, or anything to compete with and depress them still more? Our bonds sell for one hundred and ten or one hundred and twelve, making them ten or twelve per cent. above our national bank note circulation. Our people believe one will be paid and fear as to the other. It seems to me that it is perfectly plain we have got too much currency of some sort out already; and if gentlemen in the West or in California or in any other section of the country expect to make bank note circulation available in their localities until we resume specie payments they are very much mistaken. While there is a suspension of specie payments the capital will flow to the Atlantic coast-to the money centers of the country. It will flow to places where you can find room for all sorts of trade and speculation; you cannot find it in the interior. In my own State the circulation runs off to the Atlantic coast; you cannot keep it in the interior; it will go where there is the greatest opportunity for speculation. When there is anything in the interior which can be purchased at a profit, then paper money will find it out, but not till then.

I hope, Mr. President, that the proposition which I have presented will commend itself to the judgment of the Senate. If we cannot take any active steps by which we are to resume specie payments, let us certainly beware of taking any steps which are to retard that event.

Mr. CONKLING. Mr. President, to vote for the fifth section of the bill without amendment is to favor an inflation of the paper currency of the country; and although the proposed issue is limited to $20,000,000 now, still the proposition is to enter again upon a policy of expansion. I am compelled, in this view, to vote against the section; and the query in my mind is whether the provision will be rendered admissible by either of the amendments sug. gested. Before remarking upon this, I have a word to say in reply to the honorable Senator from California.

Nothing that he has said, and nothing that can, in truth, be said, will call upon any Representative of the State of New York to apologize for her part in the financial experience of the country since the war began. The State of New York has nothing in that regard to regret or excuse. Far from it. She has done too much and suffered too much to be taunted for any shortcoming or any favor she has received. Her connection with the present banking system is no exception to the claim I thus make for her. When rebellion raised its hand New York had a banking system of her own, matured and perfected by long expe rience, which supplied the wants of her people, and comported with her vast resources and her great commerce.

We were satisfied with it. It was, in my belief, a better system than that under which we are living now. Regarded in respect of its relations to the Government, it was free from one contradiction found in the present system which has not yet been reconciled to the satisfaction of unbiased and discerning men.

The general banking system, regarded as a fiscal problem between the Government and the people, involves an interest in coin of six per cent. per annum upon bonds exempt from taxation, paid by the United States to corporations for circulating a currency for which the United States are ultimately responsible, and which currency they might themselves have issued without the expense of one farthing beyond the paper and engraving and the cost of striking it off. 1 ha heard a great many financiers deal with this point, and I have never heard it so disposed of as to make it appear a good fiscal arrangement for the Government of the United States.

Without pursuing this I repeat that New York had a banking system satisfactory to herself, a system carefully guarded, and the

people of New York were content; a system guarded against inflation, for, although banking circulation was based upon mortgages of real estate, and so far unchecked in volume, it was also based upon State stocks to the extent of one half, which stocks could never be increased a farthing without a popular vote of the people of the State cousenting to the

increase.

In this way it will be seen the basis of banking while flexible was safe from undue expansion.

Thus the people of the State of New York had provided for themselves a banking system ever within their own control, ever secure in its workings, under which they had a currency and banking facilities adapted to their wants. When the war broke out the banking interest like all others were asked to come forward and lay their offerings upon the altar of the country. Which interest was it, I ask, that leaped forward with a bound sooner than the banks and the capitalists of the State of New York? Without having the figures before me, and speaking only from recollection, I assert the banks advanced to the Government their entire capital, and then, as the trustees of their depositors, they advanced a sun which surprised the nation and the Government.

After this, despite all this, the banks of New York, in common with the banks of the other States, were subjected to national legislation, the long and short of which was to tax them out of existence, and they were compelled to lie down upon a Procrustean bed of national finance and be shortened if they were found too long, or stretched if they were found too short.

Without dwelling upon the history of this transaction, Mr. President, I think it ought at least to exempt New York from invidious comments respecting her part in the revolution by which her moueyed institutions were swept away, and to exempt her citizens and her representatives from the necessity of defending their State in this behalf.

It is true, sir, that the Comptroller of the Currency departed and allowed others to depart from the letter and, I think, from the spirit of the law in distributing the bauk currency; and, as far as that is true, and as far as the inequality can now properly be removed without flying to other and greater evils, undoubtedly it should be done. It is proposed now to do it by a mere addition of $20,000,000 to the paper currency of the country. This is the proposition as it came from the committee. This has no objection for those, as the honorable Senator from Vermont says, who believe that a piece of paper with the stamp of the Government upon it is money just as valuable as a piece of coin of the same denomination. I am not of these believers. I believe that coin, like a barrel of flour or any other property, the product of human labor, has a value which consists in the fact that it represents the cost of production. And therefore it is, without entering into particulars, that I discard these theories of paper money. And because I do, without stopping to argue the question, I do not see how I can vote to increase, on any pretense, the volume of paper currency, whether the increase at the moment proposed be twenty millions or something more or something less. I believe that the good of the country, considered at large, and the individual prosperity and contentment of the people, consists largely in bringing down prices, in short, in restoring to wholesome relationships values and the medium paid for values; that is, in the restoration of specie payments.

I content myself with assigning these reasons for objecting to the provision as it was reported by the Cominittee on Finance. And now, Mr. President, I wish to ask the Senator from Vermont and the Senator from Indiana, and also the Senator from Massachusetts, if he means to renew hereafter the amendment proposed by him and withdrawn, to attend to the question presented by those amendments, and see whether upon the whole they help the case?