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"To borrow money on the credit of the United States; "To coin money, regulate value thereof." — Constitution of the United States.

"I am not a believer in any artificial method of making paper money equal to coin when the coin is not owned or held ready to redeem the promises to pay; for paper money is nothing more than promises to pay." — GRANT'S Veto Message on the Senate Currency Bill.

CHAPTER XIX.

THE WAR DOLLAR.

THE campaign of 1868 was the beginning of a contest over public honesty not yet ended. The platform of the Democratic party submitted that, "Where the obligations of the government do not expressly state upon their face, or the law under which they were passed does not provide, that they shall be paid in coin, they ought, in right and in justice, to be paid in the lawful money of the United States." This meant to force the exchange of interest-bearing bonds for "greenbacks" not carrying interest. It was on that direct issue, keeping faith or breaking it, that the battle was fought. The incentive of the Democratic action was the belief that men had a natural bias for cheating, and would gladly avoid paying their debts if possible.

As the greenback stated on its face that it could legally satisfy all debts but interest and imposts, Democrats held that it could discharge public obligations. The most debasing appeals to cupidity and prejudice were made.

It was asked if the glutted bondholder should

have coin, and the hard-fisted ploughholder should have paper? It was openly said that the bonds were owed abroad, and "who cares if foreigners are not paid?" It was urged that the interest already paid had in some cases amounted to as much as had been received for the bonds; and so to "square off" would be about right. Republicans marched under the banners of public faith. Their fight is thus described: "On the one side are loyal multitudes, and the generous freedmen who bared themselves to danger as our allies, with Grant still at their head; and on the other side are rebels under the name of the Democratic party."

Republicans said, no matter if, by a quibble, we could slink out of the legal obligation to pay the bonds in coin: morally we were bound so to do, inasmuch as all parties at the time understood the contract in that way. The people declared their preference to be honest, and pay their debts when within their power. After pouring out the life-blood of the nation because they chose to fight rather than violate conscience, they spurned the temptation to wrong those who had loaned money to carry on the war, by taking advantage of a flaw or omission in the bond. The people elected Grant on the basis of honest payment.

"A great debt has been contracted in securing to us and our posterity the Union. The payment of this, principal and interest, as well as the return to specie basis as soon as it can be accomplished without material detriment to the

debtor class, or the country at large, must be provided for. To protect the national honor, every dollar of government indebtedness should be paid in gold, unless otherwise expressly stipulated in the contract. Let it be understood that no repudiator of one farthing of our public debt will be trusted in public place, and it will go far towards strengthening a credit which ought to be the best in the world, and will ultimately enable us to replace the debt with bonds bearing less interest than we now pay."

So said Grant in his first inaugural, and it led to the passage of the Public Credit Act:

"That in order to remove any doubt as to the purpose of the government to discharge all just obligations to the public creditors, and to settle conflicting questions and interpretations of the law by virtue of which such obligations have been contracted, it is hereby provided and declared, that the faith of the United States is solemnly pledged to the payment in coin, or its equivalent, of all the obligations of the United States not bearing interest, known as UnitedStates notes, and of all the interest-bearing obligations of the United States, except in cases where the law authorizing the issue of any such obligation has expressly provided that the same may be paid in lawful money, or other currency than gold and silver; but none of said interest-bearing obligations not already due shall be redeemed or paid before maturity unless at such time United-States notes shall be convertible into coin at the option of the holder, or unless at such time bonds of the United States bearing a lower rate of interest than the bonds to be redeemed can be sold at par in coin. And the United States also solemnly pledges its faith to make provision at the practicable period for the redemption of the United-States notes in coin."

This may be termed the loyal creed of honesty. It was carried over millions of Democratic ballots,

and but for the personal popularity of Grant might not have been so triumphant.

The currency of the war was not money, and did not purport to be any thing but the best substitute in the place of money, that, in the exigencies that existed, could be devised. It was a promise to the holder to produce money at the option of the maker of the promise. Its excuse

for being was the peril of the land. "Any thing is constitutional to save the country," said Lincoln when they told him his call for troops was unconstitutional. It was on that principle that the "legal-tender" note became the war dollar.

The country had to pay dearly for this introduction of paper currency. While war was destroying vast amounts of property, the use of vast amounts of this paper medium was required. When the destruction by war ceased, the paper volume was employed in piling up personal property of all kinds.

There was an overstock of railroads, mills, buildings, manufactured articles, which made an unnatural demand for labor at impossible wages.

A crash came, calamitous in its suspension of all departments of industry, fearful in its contraction of estimates, deplorable in its mercantile depression. It swept away incomes, drove labor to the wall, and caused want and hunger to come to centres of population, and poverty to visit homes where comfort and luxury had always been enjoyed. The prostration of thrift and commerce