greenback with United States six per cent. bonds, as provided by the act of February 25, 1862, was repealed By the terms of the act of February 25, 1862, under which the greenback was issued, the right to exchange it for United States bonds was distinctly guaranteed, and was in the nature of a contract, made by the government with the holder, and to abrogate this right was an act of repudiation. The motive which inspired the act, was to still further depreciate the paper of the government. It is a fact worthy of note, that when Congress perpetrated this act of repudiation, "no doleful sound came up from the caverns of the bullion brokers or the saloons of the associated banks," nor was there any howl heard from the gentlemen of the press, who were so quick to detect repudiation in Mr. Stevens' bill to restore the legal tender act to the condition in which it first passed the House.* NATIONAL BANK BILL. On the 2d of February, 1863, the National Bank bill, as prepared by Mr. Spaulding in December, 1861, was reported, with alterations and amendments, from the Finance Committee to the Senate by Mr. Sherman. The debate upon it began in the Senate on the 9th, and on the 12th (three days after) the bill passed by a vote of 23 to 21. It was taken up in the House on the 19th, and passed the next day by a vote of 78 to 64; and received the President's signature March 25, 1863. (See Chapter on National Banks.) The money power now had matters all its own way, and was in a situation to prey upon the government and people at its pleasure. Duties on imports were payable in gold; interest on the bonds of the United States were payable in gold; the exchangeability of the greenback with bonds had *See Speech of Hon. Thaddeus Stevens in the Appendix. been abrogated; the country was flooded with evidences of indebtedness of the government in all forms and shapes, such as demand notes, Treasury notes bearing interest, mutilated legal tender notes, certificates of deposit, certificates of indebtedness, etc.; and a banking bill, authorizing the issue of $300,000,000 in bank notes had been passed. The following statement of the public debt (January 2, 1863) will show exactly the amount and character of the indebtedness of the government at this time: 114,115 48 104,561 64 2,750,350 00 139,998,000 00 38,458,008 50 66 41,777,628 16 14,913,315 25 Old funded and unfunded debt.... Treasury notes under acts prior to 1857... 66 66 66 subsequent..... Treasury notes seven-thirty per cent. interest Temporary deposits at four per cent..... five per cent........ 66 United States notes, legal tender and receiv able for customs.. United States notes, legal tender... pay and other creditors, due but not paid Total funded and unfunded debt to January 2, 1863, according to the books in the Treasury Department. . . . . 223,108,000 00 6,844,936 00 110,321,241 65 59,117,597 46 .$783,804,252 64 The time had now arrived to put the $500,000,000 of United States bonds authorized by the act of February 25, 1862, on the market. Notwithstanding the urgent need of the government during this time, Secretary Chase had held these bonds back for over a year on the pretence that the restriction to a sale at "market value" prevented him from negotiating their sale to any considerable amount. Mr. Gurley, of Ohio, effectually disposed of this plea in the course of his speech on the nine hundred million loan act. He said: "He did not agree with the Secretary in several things contained in his report; the banking scheme, which the Secretary admits would not afford any immediate relief, should be rejected; we need a sensible, practicable plan that will furnish immediate means to pay the army and navy. He insisted that Congress, by the act of February 25, 1862, authorized the Secretary to sell $500,000,000 six per cent. 5-20 bonds at 'the market value thereof,' which he had not done, as intended by Congress, and the consequence was that the soldiers and sailors were not paid, as they ought to have been before this time. * *). The words 'market value' do not mean par value, nor any specified time or sums. The market value was the price they would bring when offered in the market. There has been no business day or week since the law was passed, when any of the many agents of the Secretary in New York could not have placed one million, or several millions, in the market, and sold them somewhere near par, to raise money to pay the army and navy." In May, 1863, Jay Cooke, "an enterprising banker" of Philadelphia, was employed to dispose of the five-twenty bonds. The Secretary of the Treasury, up to this time, had put out only about $25,000,000, leaving $475,000,000 yet to be sold. No effort was made by Mr. Cooke to negotiate these bonds with bankers or capitalists, but (to quote from Spaulding), "the editors of newspapers and others were enlisted to bring the advantages of the loan before the people, in order to make it a great popular loan, to be taken by them in large and small sums in all the loyal States. Mr. Cooke succeeded admirably in this undertaking. The loan became very popular, and was taken extensively by farmers, mechanics and laboring people, in all the towns, villages and cities over the country. By the first of July, 1863, the amount of $168,880,250 of these bonds were taken; and by the first of October following, $278,511,500 had been taken up; and by the 21st of January following the whole sum of $500,000,000 had been taken at par, and the rush was so great near the closing out of the loan, that nearly $11,000,000 extra had been subscribed and paid for before notice could be given to sub-agents that the amount authorized by that act had been taken up. Congress, however, soon after authorized this extra sum to be issued." * * 'Hugh McCulloch also bears testimony as to what class of people took the 5-20 bonds. In a letter to the New York Tribune, dated at London in September last, he said: “I recollect the time when subscribers for United States bonds were regarded as patriots, and I happen to know to what class they belonged. With rare exception they were not capitalists. The purchasers of our bonds were the patriotic men of all parties, chiefly men of moderate means, who were resolved that the Union should be saved, no matter at what cost of money or blood." It may be interesting to state that Mr. McCulloch was not one of those who were resolved that the Union should be saved, no matter at what cost, etc. At the time he refers to, he was a country banker "of moderate means," somewhere in the State of Indiana, and was solicited, we believe, by the Sub Treasurer of the United States, Mr. Cisco, to have his bank take and dispose of some of "our bonds." He treated the request with contempt. This matter was so well known at the time of his appointment as Secretary of the Treasury, as to be talked of on the streets of Washington, and was hushed up by his friends only with great difficulty. The partial legal tender Treasury note (greenback), issued by the government, now constituted the medium of exchange of the nation. Its legal tender property gave it the power and functions of money, to measure and exchange values. The legal tender money of a country is the measure of all values and the basis of all money contracts among its people; consequently prices in the United States came to be regulated by the greenback and not by gold. Any one can satisfy himself on this point by comparing the market prices of any of the leading products of the country for a given time with the fluctuations in the price of gold. Secretary Chase referred to this fact in his second annual report, in which he said: "That such is the case (no redundancy of the cur rency) may be reasonably inferred from the fact that the prices of many of the most important articles of consumption have declined or not materially advanced during the year. Wheat, quoted at $1.38 to $1.45 per bushel on the first of November, 1861, was quoted at $1.45 to $1.50 on the first of November, 1862. Prime mess pork on the first of November, 1861, was quoted at $15 to $15.50 per barrel, and on the first of November, 1862, at $12.50 to $13. Corn sold on the first of November, 1861, at 62 to 63 cents per bushel, and on the first of November, 1862, at 71 to 73 cents. comparison between the prices of hay, beef, and some other staples of domestic produce, at the two dates, exhibits similar conditions of actual depression in price or moderate A |