general election, and a Democratic House of Representatives was elected by an overwhelming majority.

When Congress met in December, 1874, it was apparent that some measure, looking to the relief of the oppressed industries of the country, must be adopted. The result of the election also occasioned great consternation among the bullionists and bondholders. Their plans had not been fully carried out. Specie resumption had not yet been attained. They could manage Congress as it was then constituted, but their influence with a new Congress was not so well assured. An act to force specie resumption was at once prepared and entrusted to that subservient tool of the money power, Senator Sherman. It was introduced in the Senate at an early period in the session, was passed by both houses and was signed by the President on the 14th of January, 1875. In order to deceive the public, banking was made free, a measure that had been contemplated from the beginning, and which, as has since been fully demonstrated, could contribute nothing to the relief of the public. The banks at the time had abundance of currency, and there were several millions of bank note circulation assigned to States having less than their quota, not yet taken. It is now possible for the bondholders to inflate the bank currency of the country to the full amount of the bonded indebtedness of the Federal Government, about $1,700,000,000. That advantage is not taken of this act to increase the bank note circulation is due entirely to the specie resumption act. Banks, on the contrary, are withdrawing their circulation and going out of business. Two hundred National Banks have already withdrawn their circulation, as is disclosed by the records of the office of the Comptroller of the Currency, and four hundred more are engaged in doing the same. The amount of National Bank note circulation withdrawn during the past

year is $13,482,546, and the legal tender notes held on deposit for the redemption of National Bank notes in process of retirement amount to $27,098,429, making in all a contraction of $40,580,975. During the same period the greenback circulation has been contracted $11,244,752, and the fractional currency $2,758,278.

AN EXTRAORDINARY ACT.

The specie resumption act, passed in January, 1875, provided for the retirement of the fractional currency issued by the government. Long before specie payments are resumed the nation will be deprived of a circulating medium of any kind. Under the specie basis system of banking, as it existed before the war, the people were frequently driven, in times of great stringency, to use the notes of individuals, firms and corporations, which circulated under the name of shinplasters, and cities, towns and boroughs were obliged to issue promises to pay, which were commonly known as scrip. To prevent the people, in the approaching stringency, from availing themselves of even this method of relief and to give the National Banks absolute control over the circulating medium of the country, an act, approved February 8, 1875, was passed by Congress, which imposes a penalty of ten per cent. on any individual, firm, association, city, town or municipal corporation, except National Banks, that shall issue or use such notes. This bill was smuggled through Congress under the title of an act "To amend existing customs and internal revenue laws and for other purposes," and reads as follows: "Section 19. That every person, firm, association other than National Bank associations, and every corporation, State bank, or State banking association, shall pay a tax of ten per centum on the amount of their own notes used for circulation and paid out by them."

"Section 20. That every such person, firm, association,

corporation, State bank, or State banking association, and also every National Banking association, shall pay a like tax of ten per centum on the amount of notes of any person, firm, association other than a National Banking association, or of any corporation, State bank, or State banking association, or of any town, city, or municipal corporation, used for circulation and paid out by them." The National Banks evidently expect, in due time, to furnish the entire circulation of the nation, including fractional currency.

When specie resumption takes place it will be found that the greenbacks will all be in the possession of the banks. The reserve held by the National Banks, on the first day of October, 1875, amounted to $235,000,000. They have still over two years to gather in the greenbacks that are still outstanding. On the 1st of January, 1879, the government will be called upon to pay the sum of $300,000,000 in specie to redeem the greenbacks. The banks will then be in possession of abundant specie, furnished at the expense of the people, to enable them to begin banking on a genuine specie basis, in the manner in which banking was conducted prior to the war. In the meantime the nation will be entirely stripped of a medium of exchange, involving an almost entire cessation of production, attended by general ruin and bankruptcy. The suffering, want and misery, which the people of the United States will be called upon to endure, during the next few years, on account of the machinations of the money power, will be terrible beyond that experienced by any nation in modern times, not even excepting the experience of the people of Great Britain, under like circumstances, in 1819-25. (See next chapter.) Beyond that it is idle to speculate, for then there will probably be no National Banks, unless the liberties of the American people shall, in the meantime, have been entirely subverted.

CHAPTER VIII.

THE RESUMPTION OF SPECIE PAYMENTS.

A PREMIUM was placed on gold by the first legal tender act, passed February 25, 1862, which declared that interest on United States bonds and duties on imports should be paid in coin. This was not only unnecessary, but was in violation of the plainest principles of public policy. The people were obliged to respond to the requirements of the government, and a medium of exchange was absolutely necessary to enable them to render their resources available, to the government. It was manifest that this medium of exchange had to be supplied by the government, and it could be done only by issuing public notes, made a full legal tender. In no other way than by making the public note a full legal tender was it possible to place the people all on the same platform with respect to the government and to each other, and compel each individual in the nation to bear his proportionate share of the public burden. These principles were fully embodied in the original legal tender act as it passed the House of Representatives, but the sharks of Wall street and the money power generally perceived that if it became a law they would be deprived of all power to shave either the government or the people. The passage of the bill, therefore, met with a desperate opposition in the Senate. In the conference between the committees of the' Senate and the House which followed, the Senate committee' was stubborn and the House committee was obliged to yield. The Hon Thaddeus Stevens declared, whilst shedding bitter tears over the result, that the House committee did not yield

until it found that either the banks must be gratified

country be lost.*

was

or the

The only plea or justification offered for making the interest on the bonds payable in gold was that it would induce capitalists to invest in them. Subsequent events have wholly disproved the necessity of any such step. As a matter of fact the war carried on for over a year with partial legal tender paper money (greenbacks), and the $500,000,000 of bonds authorized by Congress were in the end taken at par by the people (not capitalists or bankers) out of a spirit of patriotism. If further proof is required it is to be found in the fact that the currency, bonds of the government to-day command a higher premium than the gold bonds, simply because they have a longer time to run. Having made the interest on the bonds payable in gold, duties, on imports were made payable in gold in order to obtain the gold to pay the interest on the bonds. This was also entirely unnecessary. No bonds, as we have mentioned, were issued. for over a year, and as the interest would not fall due until six months after they were issued, the government would then have had, ample, time to devise a way to obtain the necessary gold.

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The effect of making the interest on government bonds and duties on imports payable in gold was to impose a tax on all foreign commodities for the benefit of the bankers, bullionists and bondholders, and to greatly disarrange the monetary affairs of the country. A great many people are partially reconciled to the payment of this tax under the mistaken belief that it inures in some way to the advantage of the government. Such is not the fact. Commodities are purchased abroad with American products; and the price of American products abroad is regulated solely by the laws of

*See page 200,