Recollections of Forty Years in the House, Senate and Cabinet Part 25

First--That the legal tender notes should be receivable for all claims and demands against the United States, of every kind whatsoever, "_except for interest on bonds and notes, which shall be paid in coin_."

Second--That the secretary might dispose of United States bonds, "at the market value thereof, for coin or treasury notes."

Third--A new section authorizing deposits in the sub-treasuries at five per cent., for not less than thirty days, to the amount of $25,000,0000, for which certificates of deposit might be issued.

Fourth--An additional section, No. 5, "that all duties on imported goods and proceeds of the sale of public lands," etc., should be set apart to pay coin interest on the debt of the United States; and one per cent. for a sinking fund, etc.

It was felt that if no provision was made for the payment of the interest on the bonds in coin, they would depreciate more and more, while such payment would tend, as it did, to maintain them nearer to their specie standard. In order to obtain coin for the payment of interest, provision was made that all duties on imported goods, and the proceeds of the sale of public lands, should be payable in coin and be set apart to pay coin interest on the debt of the United States, and one per cent. for a sinking fund to provide for ultimate redemption of the bonds. These amendments were considered of prime importance. It was felt that the duty on imported goods should not be lessened by any depreciation of our local currency. Such importations were based upon coin values, and the tax levied upon them was properly required to be paid in coin. This security of coin payment enabled the government to sell bonds at a far higher rate than they would have commanded without it, and tended also to limit the depreciation of United States notes. The bill and amendments were reported on the 12th, and became the subject of what was regarded as a very able debate.

There was decided opposition in the Senate to the legal tender clause, headed by Mr. Fessenden. Mr. Collamer, who also was opposed to it, made a motion to strike it out. Upon that subject I made my first lengthy speech in the Senate, a few extracts from which I insert:

"The motion of the Senator from Vermont now for the first time presents to the Senate the only question upon which the members of the committee of finance had any material difference of opinion, and that is, whether the notes provided for in this bill shall be made a legal tender in payment of public and private debts. Upon this point I will commence the argument where the Senator from Maine left it.

"In the first place, I will say, every organ of financial opinion --if that is a correct expression--in this country agrees that there is such a necessity, in case we authorize the issue of demand notes. You commence with the Secretary of the Treasury, who has given this subject the most ample consideration. He declares, not only in his official communications here, but in his private intercourses with the members of the committee, that this clause is indispensably necessary to the security and negotiability of these demand notes. We all know from his antecedents, from his peculiar opinions, that he would probably be the last man among the leading politicians of our country to yield to the necessity of subst.i.tuting paper money for coin. He has examined this question in all its length and breadth. He is in a position where he feels the necessity. He is a statesman of admitted ability, and distinguished in his high opinion. He informs us that, without this clause, to attempt to circulate as money the proposed amount of demand notes of the United States, will prove a fatal experiment.

"In addition to his opinion, we have the concurring opinion of the Chamber of Commerce of the city of New York. With almost entire unanimity they have pa.s.sed a resolution on the subject, after full debate and consideration. That resolution has been read by your secretary. You have also the opinion of the committee of public safety of the city of New York, composed of distinguished gentlemen, nearly all of whom are good financiers, who agree fully in the same opinion. I may say the same in regard to the Chambers of Commerce of the city of Boston, of the city of Philadelphia, and of almost every recognized organ of financial opinion in this country. They have said to us, in the most solemn form, that this measure was indispensably necessary to maintain the credit of the government, and to keep these notes anywhere near par. In addition, we have the deliberate judgment and vote of the House of Representatives.

After a full debate, in which the const.i.tutionality, expediency and necessity of this measure were discussed, in which all the objections that have been made here, and many more, were urged, the House of Representatives, by a large vote, declared that it was necessary to issue United States notes, and that this clause was indispensable to their negotiation and credit. . . .

"A hard necessity presses the government. $100,000,000 is now due the army, and $250,000,000 more up to July first. The banks of New York, Boston and Philadelphia, have exhausted their capitals in making loans to the government. They have already tied up their capital in your bonds. Among others, Mr. Vail, the cas.h.i.+er of the Bank of Commerce, the largest bank corporation in the United States, and one that has done much to sustain the government, appeared before the finance committee, and stated explicitly that the Bank of Commerce, as well as other banks of New York, could aid the government no further, unless your proposed currency was stamped by, and invested with, the attributes of lawful money, which they could pay to others as well as receive themselves.

"Bonds cannot be sold except at a great sacrifice, because there is no money to buy them. As soon as the banks suspended, gold and silver ceased to circulate as money. You cannot sell your bonds for gold and silver, which is the only money that can now be received under the sub-treasury law. This currency made a legal tender was necessary to aid in making further loans. I insisted that the bill was const.i.tutional. The Senator from Vermont has read extracts from the debates in the national convention, and from Story's 'Commentaries,' tending to show that Congress cannot authorize the issue of bills of credit. But I submit to him that this question has been settled by the practice of the government. We issued such bills during the War of 1812, during the war with Mexico, and at the recent session of Congress. We receive them now for our services; we pay them to our soldiers and our creditors. These notes are payable to bearer; they pa.s.s from hand to hand as currency; they bear no interest. If the argument of the Senator is true, then all these notes are unauthorized. The Senator admits that when we owe a debt and cannot pay it, we can issue a note. But where does he find the power to issue a note in the const.i.tution?

Where does he find the power to prescribe the terms of the note, to make it transferable, receivable for public dues? He draws all these powers as incidents to the power to borrow money. According to his argument, when we pay a soldier a ten dollar demand bill, we borrow ten dollars from the soldier; when I apply to the secretary of the Senate for a month's pay, I loan the United States $250.

This certainly is not the view we take of it when we receive the money. On the other hand, we recognize the fact that the government cannot pay us in gold. We receive notes as money. The government ought to give, and has the power to give, to that money, all the sanction, authority, value, necessary and proper, to enable it to borrow money. The power to fix the standard of money, to regulate the medium of exchanges, must necessarily go with, and be incident to, the power to regulate commerce, to borrow money, to coin money, to maintain armies and navies. All these high powers are expressly prohibited to the states and also the incidental power to emit bills of credit, and to make anything but gold and silver a legal tender. But Congress is expressly invested with all these high powers, and, to remove all doubt, is expressly authorized to use all necessary and proper means to carry these powers into effect.

"If you strike out the legal tender clause you do so with the knowledge that these notes will fall dead upon the money market of the world. When you issue demand notes, and announce to the world your purpose not to pay any more gold and silver, you then tender to those who have furnished you provisions and services this paper money. What can they do? They cannot pay their debts with it; they cannot support their families with it, without a depreciation.

The whole then depends on the promise of the government to pay at some time not fixed on the note. Justice to our creditors demands that it should be a legal tender; it will then circulate all over the country, and it will be the lifeblood of the whole business of the country, and it will enable capitalists to buy your bonds.

The only objection to the measure is that too much may be issued.

He did not believe the issue of $150,000,000 would do any harm.

It is only a mere temporary expedient. . . .

"I have thus, Mr. president, endeavored to reply to the const.i.tutional argument of the Senator from Vermont. Our arguments must be submitted finally to the arbitration of the courts of the United States. When I feel so strongly the necessity of this measure, I am constrained to a.s.sume the power, and refer our authority to exercise it to the courts. I have shown, in reply to the argument of the Senator from Maine, that we must no longer hesitate as to the necessity of this measure. That necessity does exist, and now presses upon us. I rest my vote upon the proposition that this is a necessary and proper measure to furnish a currency--a medium of exchange--to enable the government to borrow money, to maintain an army and support a navy. Believing this, I find ample authority to authorize my vote. We have been taught by recent fearful experience that delay and doubt in this time of revolutionary activity are stagnation and death. I have sworn to raise and support your armies; to provide for and maintain your navy; to borrow money; to uphold your government against all enemies, at home and abroad. That oath is sacred. As a Member of this body, I am armed with high powers for a holy purpose, and I am authorized --nay, required--to vote for all laws necessary and proper for executing these high powers, and to accomplish that purpose. This is not the time when I would limit these powers. Rather than yield to revolutionary force, I would use revolutionary force. Here it is not necessary, for the framers of the const.i.tution did not a.s.sume to foresee all the means that might be necessary to maintain the delegated powers of the national government. Regarding this great measure as a necessary and proper one, and within our power to enact, I see plain before me the path of duty, and one that is easy to tread."

The motion to strike out the legal tender clause in the bill was defeated by a vote of yeas 17, nays 22. The amendments proposed by the finance committee were agreed to substantially as reported by the committee. The bill finally pa.s.sed by a vote of yeas 30, nays 7. The House agreed to the amendment providing for the payment of the interest on bonds and notes in coin, and disagreed to the remaining amendments, and these were referred to a committee of conference, composed of Messrs. Fessenden, Sherman and Carlisle, of West Virginia, of the Senate and Messrs. Stevens, Horton, and Sedgwick, of the House. The conference met, and, after two or three days of full discussion, the material parts of the disagreements between the two Houses were settled. The provision that coin only be received for duties on imports, and that it be held as a fund to pay the interest on the bonded debt, was retained. The report of the conference was agreed to by both Houses, and on the same day the bill was approved by the President. Thus, the legal tender act, after a most able and determined opposition, became a law on the 25th of February, 1862.

It would be difficult to measure the beneficial results that rapidly followed the pa.s.sage of this bill. The public credit was greatly strengthened by the provision for the payment of interest in coin furnished by duties on imported goods. The legal tender clause was acquiesced in by all cla.s.ses, and we had, for the first time, in circulation national paper money as the actual standard of value.

It was silent as to time of its payment, but each note contained a promise of the United States to pay a specific sum, and the implied obligation was to pay in coin as soon as practicable.

On the 11th of July, 1862, a further issue of $150,000,000 United States treasury notes (or "greenbacks," as they were commonly called from their color) of the same description was authorized, and subsequent issues increased the total amount to $450,000,000, the extreme limit. By the act of March 31, 1863, fractional currency was authorized to an amount not exceeding $50,000,000, to take the place of fractional silver coins, which had entirely disappeared from circulation, and this amount was issued.

The pa.s.sage of the legal tender act was the turning point of our physical and financial history. Less than a year before the government was bankrupt; our bonds bearing six per cent. interest were sold at a discount; our national expenditures exceeded our receipts; loans could only be made upon the basis of coin, and this coin was disappearing from circulation. We had to appeal to the patriotism of bankers to accept the demand notes of the United States as money, with no prospect of being able to pay them. Our regular army was practically disbanded by the disloyalty of many of its leading officers. Was.h.i.+ngton was then practically in a state of siege, forcing me, in May, 1861, to go there at the heels of the 7th regiment of New York militia, avoiding the regular channels of travel. The city of Baltimore was decked under the flag of rebellion. Through the State of Maryland, loyal citizens pa.s.sed in disguise, except by a single route opened and defended by military power. The great State of Kentucky, important as well from its central position as from the known prowess and courage of its people, hung suspended in doubt between loyalty and secession.

In the State of Missouri, St. Louis was the only place of unquestioned loyalty, and even there we regarded it a fortunate prize that we were able to take the public arms from a government a.r.s.enal. The whole State of Virginia, with the single exception of Fortress Monroe, was in the possession of the revolutionary force.

But from the pa.s.sage of the legal tender act, by which means were provided for utilizing the wealth of the country in the suppression of the rebellion, the tide of war turned in our favor. Delaware, after a short hesitation, complied with the proclamation of the President. Maryland had, by clear and repeated votes and acts, arrayed herself on the side of the Union. Her rebellious sons who fought against the old flag could not tread in safety on a single foot of the soil of that state. Western Virginia, the eastern peninsula, and many ports on the eastern coast, were securely reclaimed. The State of Kentucky had distinctly, by the vote of her people, and by the action of all her const.i.tuted authorities, proclaimed her loyalty, and her sons were fighting side by side with the soldiers of other states to expel traitors who, in her days of doubt, had seized upon a small portion of her soil, which they still occupied. In the State of Missouri the const.i.tuted authorities, organized by a convention of the people duly elected, were sustained by physical power in nearly all the state, and the rebellion there was subsiding into bands of thieves, bridge burners, and small parties of guerillas, who could soon be readily controlled by local militia. In nearly every rebellious state, the government had secured a foothold, and an army of half a million men, armed, organized and disciplined, impatiently awaited the word of command to advance the old banner of our country against every foe that stood in its way. Where does the history of nations present an example of greater physical weakness followed so soon by greater physical strength? When have results more wonderful been accomplished in eight months?

At the beginning of the year 1862 we were physically strong but financially weak. Therefore, I repeat, the problem of this contest was not as to whether we could muster men, but whether we could raise money. There was great wealth in the country but how could it be promptly utilized? To that question the diligent attention of Congress was applied. The banks which had aided us with money were crippled and had suspended coin payments. The Secretary of the Treasury was begging at the doors of both Houses for means to meet the most pressing demands. On the 15th of January, 1862, the London "Post," the organ of Lord Palmerston, said:

"The monetary intelligence from America is of the most important kind. National bankruptcy is not an agreeable prospect, but it is the only one presented by the existing state of American finance.

What a strange tale does not the history of the United States for the past twelve months unfold? What a striking moral does it not point? Never before was the world dazzled by a career of more reckless extravagance. Never before did a flouris.h.i.+ng and prosperous state make such gigantic strides towards effecting its own ruin."

The legal tender act, with its provision for coin receipts to pay interest on bonds, whatever may be said to the contrary by theorists, was the only measure that could have enabled the government to carry on successfully the vast operations of the war. Our annual expenditures at that time were four times the amount of our currency; were three times the aggregate coin of the country; were greater than any ever borne by any nation in ancient or in modern times.

The highest expenditure of Great Britain during her war with Napoleon, at a time when her currency was inflated, when she made the Bank of England notes a legal tender, was but 100,000,000.

Antic.i.p.ating these enormous expenditures I introduced a bill which became a law on the 31st of July, 1861, which provided for a commission to examine and report as to the compensation of all offices for the government, the commission to be composed of two Members of the Senate, three Members of the House of Representatives, one officer of the navy, and one officer of the army, who were directed to examine and report, as soon as practicable, a fair and just compensation for each officer of the government, and such regulations as would secure a more economical collection of the revenue. When this bill was pending I stated its purpose and my hope to accomplish a reduction of the expenditures of the government, or, at least, an equalization of the salaries then paid to the different officers. We sought economy by the reduction of expenses.

I was chairman of this commission, and Senator Clark, of New Hamps.h.i.+re, was my a.s.sociate. The commission collected a ma.s.s of information, and upon it based several bills introduced in the second session of the 37th Congress. Some of these were made nugatory by the rise of prices, measured in most cases by the fall in value of our currency, but many of their provisions were ingrafted into other bills that became laws.

The organization of national banks, authorized to issue circulating notes, is so intimately connected with legal tender United States notes that I think it proper to consider them in connection, though the banking law did not pa.s.s until 1863. The two forms of currency, one issued directly by the government as lawful money of the United States and a legal tender, and the other issued by private corporations, but secured by bonds of the United States, const.i.tute a system of national currency which, organized in the midst of war, was an important aid to the government in its great struggle, and when placed at par with coin by the resumption act has proven to be the best paper money created by legislation in this or any other country.

The issue of circulating notes by state banks had been the fruitful cause of loss, contention and bankruptcy, not only of the banks issuing them, but of all business men depending upon them for financial aid. Inflation and apparent prosperity were often followed by the closing of one bank and distrust of all others. The notes of a broken bank were rarely paid, the a.s.sets of such bank being generally applied to the payment of other liabilities, leaving the loss to fall on the holders of the notes, mostly innocent persons of limited means. This led to the adoption in 1846 of the sub- treasury system, by which all payments to the treasury were required to be in coin, to be held until required for disburs.e.m.e.nts on government account. This protected the United States, but it did not save the people from loss, as, from necessity, they were compelled to use bank bills authorized by the several states, varying in value and security, and chiefly limited in circulation to the state in which issued. With a narrow view of the powers of the national government, Congress had repeatedly refused to authorize a national bank, a policy I heartily approve, not from a doubt of the power of Congress to grant such a charter, but from the danger of intrusting so vast a power in a single corporation, with or without security. This objection did not lie against the organization of a system of national banks extending over the country, which required every dollar of notes issued to be secured by a larger amount of bonds of the United States, to be deposited in the treasury of the United States, thus saving the note holder from all possibility of loss.

Secretary Chase, in his report of December 9, 1861, recommended that a tax be imposed upon notes issued by state banks and also that Congress should exercise its authority to establish a system of national banks, with proper safeguards and limitations. A bill was introduced for the latter purpose in the House of Representatives in 1861, but, owing to the urgency for legislation on war measures, it was not acted upon.

CHAPTER XIII.

ABOLISHMENT OF THE STATE BANKS.

Measures Introduced to Tax Them out of Existence--Arguments That Induced Congress to Deprive Them of the Power to Issue Their Bills as Money--Bill to Provide a National Currency--Why Congress Authorized an Issue of $400,000,000, of United States Notes--Issue of 5-20 and 10-40 Bonds to Help to Carry on the War--High Rates of Interest Paid--Secretary Chase's Able Management of the Public Debt--Our Internal Revenue System--Repeal of the Income Tax Law--My Views on the Taxability of Incomes.

Long before I became a Member of Congress I had carefully studied the banking laws of the several states. The State of Ohio adopted, in 1846, an improved system of banking. My study and experience as a lawyer in Ohio convinced me that the whole system of state banks, however carefully guarded, was both unconst.i.tutional and inexpedient and that it ought to be overthrown. When I entered Congress I was entirely prepared, not only to tax the circulation of state banks, but to tax such banks out of existence. But, while this feeling prevailed in the west, the opposite feeling prevailed in the New England and Middle States, where their banking system had been so improved that bank failures were rare, and bank bills were protected by mutual guaranties.

The Secretary of the Treasury had, in two annual messages, proposed a tax on the circulation of bank bills. He believed that the existing bank circulation prevented or embarra.s.sed the process of funding, by which alone the bonds of the United States could be absorbed. He was forbidden by law to receive bank bills in exchange for bonds or for any purpose, so that the current money of the people was not available for the purchase of bonds. This was an additional argument for taxing the state banks out of existence.

I introduced a measure for this purpose as an amendment to the revenue bill, but it was postponed to save it from defeat.

I introduced a bill in January, 1863, containing two sections, the first to levy a tax of two per cent. per annum on the circulation of all bank bills, and the second to provide for a tax of ten per cent. on all fractional currency under one dollar issued by corporations or individuals. Upon this bill I made a carefully prepared speech, not only defending the proposed tax, but declaring my purpose to urge a gradual increase of the tax until all state bank bills were excluded from circulation. As the reversal of this policy is threatened I feel justified in briefly restating the argument that induced Congress to deprive all state banks of the power to issue their bills as money.

I drew the distinction between the ordinary powers of banking and the issue of bank bills. I said that the business of banking proper consisted in loaning money, discounting bills, facilitating exchanges of productions by the agency of commercial paper, and in receiving and disbursing the deposits of individuals. The issue of bank bills was an exclusive privilege conferred only on a few corporations.

It was a privilege that an individual could not enjoy. No person could issue his bills in the form of paper money without a corporate franchise granted him and his a.s.sociates, either by a general banking law, or by an act of incorporation. All the business of banking might be exercised by private individuals except this franchise. There was no reason why any one individual or a partners.h.i.+p might not carry on all the business incident to banking except this one of issuing bills to circulate as money. The largest banking houses in the world did not exercise the privilege of issuing bills. The strongest banks in the United States, such as the Bank of Commerce of New York, had but little or no circulation, while the weakest banks supported themselves and made profit by issuing the largest quant.i.ty of bills authorized. The law then existing taxed heavily the business of banking proper. All commercial paper--checks, drafts, orders, bills of exchange, protests, bonds --every instrument that was used in the ordinary process of banking --was heavily taxed, while bank bills were not taxed at all. A private banker doing business had to pay a license of $100, but a bank of circulation was expressly exempted from the necessity of procuring a license. The tax law, as it stood, had this significant provision: "But not to include incorporated banks legally authorized to issue notes as circulation." Every commercial instrument was required to pay a stamp tax, but this did not attach to a bank bill. Bank notes issued for circulation were expressly excepted.

The only tax levied upon banks of circulation was a tax of three per cent. on the net income. This tax could be deducted from the dividend of the stockholders. The discrimination in favor of banks of circulation ran through all the tax laws, while other corporations, such as railroad companies, insurance companies and the like, were subject to heavy taxes.

The profits of banking were then very great. The average profits of the banks of New York were twelve and one half per cent. per annum. The burdens imposed upon the banks by their charters were lessened by the suspension of specie payments. When the banks had to keep in their vaults coin to the amount of one-third of their circulation, and were liable to be called upon any day for the redemption of their notes in gold and silver, they might claim exemption from taxes on their circulating notes. But during the suspension of coin payment there ws no such liability. Whether right or wrong the banks suspended specie payments, and increased their currency without paying either princ.i.p.al of it or interest, or tax on it, though in direct violation of law in some states.

I referred in my speech to an interview which was sought by the banks of our chief commercial cities with the Secretary of the Treasury, to which they invited the financial committees of the two Houses to hear their propositions for carrying on the financial operations of the government. We all went to the office of the Secretary of the Treasury, and the proposition was there made that the United States should issue no paper money whatever, that the specie clause, as it is called, of the sub-treasury act should be repealed, and that we should carry on the war upon the basis of the paper money of the banks, legalizing the suspension of specie payments, and that the government should issue no paper except upon an interest of six per cent., or higher if the money markets of the world demanded more. That was their plan of finance, the plan substantially adopted in the War of 1812, and which had been condemned by every statesman since that time, a plan of carrying on the operations of our government by an a.s.sociation of banks over which Congress had no control, and which could issue money without limit so far as national laws affected it. That was the scheme presented to us by very intelligent gentlemen engaged in the banking business. They were honest and in earnest, but it appeared to me as pretentious and even ludicrous.

It was claimed that a tax on banks interfered with vested rights.

I said that all taxes that were levied by the government were to maintain vested rights, liberty and life. All these corporate franchises were held subject to the power of taxation in Congress, which was sometimes necessary to be exercised in the most potent manner in order to maintain the government. The state could not, by an act of incorporation, place their property beyond the power of Congress. The only question was what rate of taxation ought to be adopted. The rate proposed--two per cent.--I insisted was not too high, because it was only one-third of the profit derived from the issue of paper money without interest, the princ.i.p.al of which was not paid in coin. I stated distinctly that the purpose of the bill was not merely to levy a reasonable tax on the banks, but also to induce them to withdraw their paper, in order to subst.i.tute for it a national currency. I then reviewed in considerable detail the history of our currency legislation, from the act chartering the first bank of the United States to the beginning of our Civil War, showing the view taken by the most eminent statesmen of our country in favor of the establishment of uniform national currency as the highest object of legislation. Mr. Madison said in his message:

"It is, however, essential to every modification of the finances that the benefits of a uniform national currency should be restored to the community. The absence of the precious metals will, it is believed, be a temporary evil; but, until they can again be rendered the general medium of exchange, it devolves on the wisdom of Congress to provide a subst.i.tute which shall equally engage the confidence and accommodate the wants of the citizens throughout the Union."

I said that when coin, the best of currency, was driven out of circulation, by the existence of war or extraneous circ.u.mstances, it was the duty of Congress to provide a subst.i.tute. In 1816 Congress did this by establis.h.i.+ng the Bank of the United States.

Most of the state banks shortly afterward exploded, and almost their entire issue outstanding at the time fell as a loss to the people of the United States. The Bank of the United States did furnish for a while a stable currency. After its charter expired in 1836, the controversy was between gold and silver, and paper money as a currency. Nearly all the statesmen of that time believed it was necessary to have a national currency in some form, but there was a part in the country that believed the only true national currency was gold and silver coin. After a controversy that I would not review, the sub-treasury system was finally adopted.

The government had then no occasion to borrow money. Its debt was paid off and there was a large surplus in the treasury, which was distributed among the states. The agency of a United States bank was no longer necessary to sustain the public credit. The object then was to secure a safe deposit and custody of the public revenues.

The state banks failed to furnish a safe redeemable currency. In 1837 their notes were in the hands of the people, depreciated and dishonored, if not entirely worthless. Therefore, I thought wisely, the sub-treasury system was adopted, by which gold and silver coin was the only money received or paid out by the government. I believed that such was a true policy in the absence of national banks. I also stated that if peace were restored to our country, we ought, as soon as possible, to go back to the basis of gold and silver coin, but, in the meantime, we must meet the exigencies of the hour. Paper money was then a necessity. Gold and silver were h.o.a.rded. War always had led, and always would lead, to the h.o.a.rding of the precious metals. Gold and silver flee from a state of war.

All nations in the midst of great wars have been compelled to resort to paper money. It was resorted to by our fathers during the Revolution. It was only by the use of paper money that England maintained her wars with Napoleon. At several periods during these wars gold and silver were at a greater premium in England than they were in this country.

I then proceeded to discuss the power of Congress to issue paper money. I quoted an extract from the report of Mr. Dallas, in December, 1815, in which he stated:

"By the const.i.tution of the United States, Congress is expressly vested with the power to coin money, to regulate the value of domestic and foreign coin in circulation, and (as a necessary implication from positive provisions) to emit bills of credit; while it is declared by the same instrument that 'no state shall coin money, or emit bills of credit.' The const.i.tutional authority to emit bills of credit has also been exercised in a qualified and limited manner. . . .

"The const.i.tutional and legal foundation of the monetary system of the United States is thus distinctly seen; and the power of the federal government to inst.i.tute and regulate it, whether the circulating medium consist of coin or of bills of credit, must, in its general policy, as well as in the terms of its investment, be deemed an exclusive power."

These extracts from a doc.u.ment of great ability, state the whole question in a few words. Congress has the power to regulate commerce; Congress has the power to borrow money, which involves the power to emit bills of credit; Congress has the power to regulate the value of coin. These powers are exclusive. When, by the force of circ.u.mstances beyond our control, the national coin disappears, either because of war or of other circ.u.mstances, Congress alone must furnish the subst.i.tute. No state has the power to interfere with this exclusive authority in Congress to regulate the national currency, or, in other words, to provide a subst.i.tute for the national coin.