should not leave it to the Secretary of the Treasury to fix the length of time for which these bonds should run, ten, twenty, thirty, or forty years. I would rather have, and it is more proper to have, the judgment of Congress on that subject. I am therefore in favor of the first section of this bill. I believe we ought to pass it. I believe we ought to make the time specific. If I thought we could get the money on ten-year bonds, I should certainly vote for the amendment of the Senator from Maine; but my judgment is very much against it. Mr. MORRILL, of Vermont. Mr. President, I have been heartily in favor of the prac tice of the Government in keeping control of its loans, which has been eulogized by the Senator from Maine; but I ask whether it can be expected that we are to continue this controllability and yet obtain our money at a lower rate of interest. Whenever we succeed in obtaining a loan at a reduced rate of interest it is to be expected that we shall relinquish this control. It was only in order to obtain at some future time better terms that we made provision for this control; and if we continue the control in relation to the time when we are to pay these loans of course we must still pay a higher rate of interest for that control.

The Senator from Maine suggests that the parties who are to take this loan would very readily accept shorter bonds. I fear they would, at the rates fixed by this bill, and might make it so short that they would hardly take it at all. It is only in consequence of making a long loan that any inducement is held out to parties to take these new bonds. Now, the question fairly arises whether in this country a large loan can be obtained for a less rate than is proposed in this bill. After having given some attention to the subject I do not believe it is possible. Look abroad, where money is at the rate for private purposes ordinarily of not more than two and a half to four per cent. per annum, and yet the average rates paid by Governments are nearly five per cent. on national loans. In our own country there is scarcely any State in the Union where six per cent. is not paid by private parties. In some States, eight, ten, or even more. Is it to be supposed that in this country, when very large sums, sums in the aggregate of thousands of millions of dollars, can be obtained at less rates than four, four and a half, and five per cent.? I do not believe it. By this bill only $700,000,000 can be obtained at the rate of five per cent., and of course, if more bonds are negotiated, it must be either at four or four and a half per cent. In my judgment, that is as low as we can, in the most prosperous times, ever expect for many years to come, in a new country like ours of such vast extent, with so many opportunities for new enterprises, to borrow money. We cannot hope that the rate of interest will fall below that. There will be full employment of all the capital of the country at better rates. Only on the ground that we give better security than can be had elsewhere is there any chance of the success of this loan.

I am in favor of this measure because I believe it is wise, so far as the first section is concerned; I believe it is practical. I believe that if we pass it we can induce those who now hold our bonds to exchange them for the new bonds at a lower rate of interest; and at all events, if the parties who now hold bonds do not accept our terms there will be found others who will. If we are successful we shall certainly reduce the amount of interest that we are to pay, which is far better, in my judgment, than to raise taxes. I hope, therefore, that no amendment will be made to this part of the bill.

Mr. CATTELL. I said when I was last on the floor that I very much preferred the amendment of the Senator from Maine to that of the Senator from Missouri. I confess that the argument of the Senator from Maine in favor of the Government holding control of its loans makes a decided impression on my mind; and I should be very glad to vote for the amendment if I believed that funding would progress under this bill with that amendment in it; but

believing, as I do, that it would arrest the progress of funding under the bill, I shall be compelled to vote against it.

But, sir, I rose mainly for the purpose of making a statement in regard to the condition of our loans as bearing on this question. We now have some two hundred and twenty millions of five per cent. bonds which the Government will have the option of redeeming at the end of ten years from their date. We are now within seven or eight years of the time when the Government will have the right to exercise that option. It occurs to me that these $220,000,000 will be quite as much as we shall be likely to pay off by the expiration of ten years. In addition to that the bonds of 1881, of which we have issued $291,000,000, are really due and payable in thirteen years from this time, which comes so close upon the heels of the time fixed as the option by the amendment of the Senator from Maine that it seems to me it is not advisable to adopt it. We have something like five hundred millions of our debt falling within our power within from eight to thirteen years; so that there will be a sufficient amount of our obligations for us to take up in that time under any conceivable circumstances. For this reason I do not consider the amendment of the Senator from Maine so important as it would be if these circumstances did not exist. We shall have over five hundred millions to take up, as I say, nearly three hundred millions of which we must pay in thirteen years, and we have an option upon $220,000,000 more within eight years; so that we shall have control of one fourth of the whole amount of our public debt, by the terms of the bonds already out, within a short period of time.

Mr. FESSENDEN. May not the 1881 bonds be funded under this bill?

Mr. CATTELL. I apprehend that there is no probability that the holders of such bonds having thirteen years to run, without any question as to the payment of the principal in coinfor that question has not been mooted at all in regard to the 1881 bonds-will exchange them for five per cent. That is the point of difficulty I have in regard to this bill.

Mr. FESSENDEN. But I suggest to my friend that every law on such a subject as this is prima facie intended to be a permanent law. Suppose this law to be enacted and stand upon the statute-book when you come within a year or two of the time when the 1881 bonds are positively payable, would it be a strange thing if the holders should desire to convert them into these bonds? If so, they would be taken out of my friend's calculation.

Mr. CATTELL. Yes, sir; and my answer to my friend from Maine is, that the Congress of the United States I apprehend would be ready to say that no such bargain could be made under this law.

But, Mr. President, I only rose for the purpose of saying that really I concur in the argument which the Senator from Maine adduces in favor of the Government holding the controllability of its loans, but that I believe, in the language of the Senator from New York, in private conversation a moment ago, that this bill requires all the cork that is in it to float it; and I am under the impression that if you change its terms you will embarrass the process of funding.

Mr. MORTON. Mr. President, in order to make this funding proposal successful there must be some inducement for men to take the new bonds and give up the old ones. The Senator from Maine holds that the present five-twenties are payable in gold. The new bonds are to be payable in gold, and no more. What inducement can there be under his proposition to give up a six per cent. bond payable in gold in fifteen years and take a five per cent. bond payable in ten years? If you have to present some inducement, to give some advantage to the new bond over the old bonds, what is it except the length of time you give the new bond to run?

Mr. FESSENDEN. The Senator is mis

taken; the six per cent. bonds are redeemable to-day.

Mr. MORTON. Redeemable in gold only according to the Senator's theory. If he would adopt the idea that the present bonds are payable in legal-tender notes, I could understand his proposition. But he now proposes to exchange for the present five-twenties, payable in gold as he holds, new bonds drawing less interest.

Mr. FESSENDEN. It does not depend upon what I hold or upon what the Senator from Indiana holds. It depends upon the impression of the community with regard to the value and nature of the paper. I may hold that these bonds are payable in gold. The Senator from Indiana may hold directly the other way.

A large portion of the community does so hold. The Senator from Ohio, the chairman of the Committee on Finance, has intimated his opinion to that effect. Now, the idea is that there is this doubt hanging over them, not that it is positive one way or the other.

Again, the five-twenty bonds, whether payable in gold or payable in greenbacks, are redeemable to-day if the Government had the means of redeeming them. The time has arrived; the five years are out. Then there is this difference: that they take a bond that the Government has no power to redeem to-day and can only redeem in ten years at the shortest period, but at the same time free from all the doubts which now hang over the existing fivetwenties. That is the idea.

Mr. EDMUNDS. Mr. President, the way that I think doubts ought to be solved where they respect one of the parties to a contract is for the party to declare frankly and honestly where he stands upon that doubtful question; and if there is any real doubt or any supposed doubt as to what our obligation is, now that we are making new terms with our creditors, we ought to tell those creditors man-fashion what we mean; we ought to tell them either that we acknowledge what they understood to be the fair construction and the real spirit of our obligation when they lent us the money, and therefore say we mean to pay in coin or its equivalent; or that they were mistaken about it if they had any such idea and that we mean to pay them in a new promise to pay, what we call a greenback, which does not bear any interest, which is overdue on the face of it, and which we decline to pay until we get ready. We ought to be frank. I cannot endure the idea of a great Government like the United States, that claims to be the home of liberty and of all sorts of people who have escaped oppression and dishonesty everywhere else; the place where the American eagle is the greatest bird that floats, playing fast and loose with its creditors when it is trying to make a new loan, shaking a doubt at them instead of telling them plainly one thing or the other on that point. I do not think it is greatly to the credit of the United States that we should occupy such a position a great while. I am happy to say that, as I understand it, the party to which I belong has already got out of that position.

But, sir, I rose for the purpose of saying a few words in reply to the honorable Senator from Ohio on the question of how the fivetwenty bonds are payable. I am not going to weary the Senate by going over the whole argument or much of the history, but in five or ten minutes to come to the precise point on which he contended that the five-twenties of 1862, as they are ordinarily called, are not payable in coin, but are payable in currency, and to say that I think I can show-as I was about to say, to convince my friend-that he is laboring under an error. I understand him by his printed speech delivered on the 27th of February, 1868, to admit that down to the passage of the act of March 3, 1863, the true construction of the act of February 25, 1862, which was called the five-twenty act, was that the bonds issued under that were fairly and truly payable in coin.

Mr. SHERMAN. No, sir. My friend will allow me to state my position. I said that the question would never have been raised under the act of February 25, 1862. That law specifically declared that the United States notes should be a legal tender in payment of all debts, public and private; but it also said that the amount to be issued under that act should not exceed $150,000,000. I put the question to him for his answer, if no law had ever been passed changing the act of February 25, 1862, as to the limitation of the amount of greenbacks, has he any doubt that under that act these $150,000,000 of greenbacks would have been a legal tender for the principal of the debt issued under that act? I have not any.

Mr. EDMUNDS. When the Senator entered upon this discussion on the 27th February last, I endeavored by a colloquial debate to come to a precise understanding with him upon this very point; but after one or two interruptions, my friend from Ohio declined to be interrupted further, and went on with his speech, in which he said, referring to the position that I had taken in some previous observations:

"I anticipate the argument and wish again to refer to the act of February 25, 1862. This act further provides that the amount of legal tenders shall be limited to $150,000,000. It also provides that the holders of these legal tenders may at any time convert them into five-twenty bonds, the very bonds we are now discussing; and the second section goes on and provides for the issue of those bonds. If those bonds had been issued and negotiated solely under the act of February 25, 1862, it would have been irresistible logic that it was not contemplated that the $500.000.000 authorized by this act should be paid with $150,000,000 legal tenders, themselves convertible into bonds. But here is the weakness of the argument, in my opinion, of my friend from Vermont; no bonds were issued under that act."

Now, Mr. President, so far I am capable of understanding the force of language, the plain meaning of what the honorable Senator saidI believe I have read enough to show that that was lais point under that act-was that under the act of February 25, 1862, standing by itself and until subsequent legislation had altered it, the logic was irresistible that these bonds were not payable in the very notes that by the terms of the act itself were to be converted into the bonds. If therefore they were not payable in these notes, but were payable in dollars, as on the face of them they said they were, I take it the argument becomes irresistible that by force of that act the legislation as it then stood they were payable in coin. Now, how does my friend escape that? He escapes from it by the assertion of a matter of fact that no bonds were issued under that act. Now, let us see how that fact is. Being somewhat surprised at that statement of my honorable friend, because having been one of the people when these bonds were negotiated, and seen them issued from day to day, and having had something to do with inducing the people in my part of the country to take them, I always noticed that when the bonds came to the bank or express office, and were taken out and circulated, they said on the face of them that they were issued under the act of February 25, 1862, and the people believed it, and I believed it. Believing so I was somewhat astonished at the statement of my friend and I addressed an inquiry to the Secretary of the Treasury on the subject, as to when these respective bonds were issued, and I received this reply:

TREASURY DEPARTMENT, March 16, 1868. SIR: I have the honor to inclose herewith, in compliance with your request, the information desired in regard to the amount of subscriptions at the periods designated to the loan of February 25, 1862.

Also, canceled copy of $500 coupon bond of first series of said issue. The bonds of subsequent issues were precisely similar to the one inclosed except in the number of coupons attached. Very respectfully, your obedient servant, H. McCULLOCH. Secretary. Hon. G. F. EDMUNDS, United States Senate.

Mr. SHERMAN. How much after the 11th of July, 1862 ?

Mr. EDMUNDS. I am not able to state at this moment. Here is the form of a bond, the thing itself that the people saw and paid for and took, issued prior to the 3d of March, 1863, and during that period of time when, according to the construction that, as I understand the Senator himself in his speech of the 27th of February last, gave to the act of February 25, 1862, it was payable in coin.

The United States of America are indebted unto or bearer, in the sum of $500, redeemable at the pleasure of the United States after the 30th of April, 1867, and payable on the 1st day of May, 1882, with interest from the 1st day of May, 1862, inclusive, at six per cent. per annum, payable on the 1st days of May and November, in each year, on presentation of the proper coupon hereunto annexed. This debt is authorized by the act of Congress approved February 25, 1862.

L. E. CHITTENDEN, Register of the Treasury.

WASHINGTON, May 1, 1862.

With the seal of the Treasury I hold in my hand another of these bonds of 1862 issued after March 3, 1863, which, according to the argument of my friend from Ohio is payable in currency, and not in coin, as the first one is according to his own confession, as I understand his speech:

The United States of America are indebted unto , or bearer, in the sum of $500, redeemable at the pleasure of the United States after the 30th of April, 1867, and payable on the 1st day of May, 1882, with interest from the 1st day of May, 1862, inclusive, at six per cent. per annum, payable on the 1st days of May and November, in each year, on the presentation of the proper coupon hereunto annexed.

This debt is authorized by the act of Congress approved February 25, 1862.

WASHINGTON, May 1, 1862.

And signed and sealed as before it would be a little difficult for the common people, the widows, the farmers, the mechanics, even the bankers, or the lawyers who are supposed to understand statutes in the course of business, to understand when these papers were being put out in this form, that one of them was issued under the act of 1862, and was payable in coin, and that the other was issued in some other way, and was not so payable, when both of them bore on their face precisely the same terms, payable in precisely the same way, and were, as I will now show, issued solely under

the act of 1862 and no other act.

My friend still maintains that the act of March 3, 1863, operated to repeal the act of 1862, authorizing the issue of these bonds, and provided a new authority for issue, a new regulation for the mode of issue. If that were true, and these bonds were really issued under the act of the 3d of March, 1863, as the act that authorized their issue, then the bonds should have said so on their face, and the people having them would have been referred to the law, and would have been bound to take the law at their own risk as to what the form and legal effect of the promise was. But what did the act of 1863 say touching these bonds? That act was to authorize the Secretary of the Treasury to issue certain ten-forty bonds, as they are called, and certain Treasury notes, and the last part of the third section provided

as follows:

"And so much of the act to authorize the issue of United States notes and for other purposes,' approved February 25, 1862, and of the act to authorize an additional issue of United States notes and for other purposes,' approved July 11, 1862, as restricts the negotiation of bonds to market value is hereby

repealed. And the holders of the United States notes issued under and by virtue of said acts, shall present the same for the purpose of exchanging the same for bonds, as therein provided, on or before the 1st day of July, 1863, and thereafter the right so to exchange the same shall cease and determine."

All that the act of 1863 professed to do, giving it the broadest scope, was, as to the issue of these bonds, as to the authority of the Secretary of the Treasury to put them forth to the country to anybody that would take them, simply to repeal the limitation which had been before imposed on him that he should sell them at market value. The previous act had imposed on him a certain restriction as to the price he was to get for the paper. The act of 1863 repealed that restriction, and left the act

of 1862 in every other respect in force, furnishing the sole and only authority that ever existed to that time, or ever has existed since, for the issue of a single dollar of these bonds. There-, fore the honorable Senator from Ohio is mistaken in supposing that these bonds were not issued under the act of 1862. If they were not issued under the act of 1862 they were issued in violation of law, because the act of 1863 does not profess to authorize them to be issued at all; it professes to authorize the issue of another and different class and character of bonds, called ten-forty bonds, and refers to the act of 1862, as I have said, not to affect the authority to issue or the nature of the contract, or the character or redeemability of the bonds, but merely speaking to its own agent it informed him that he need not hold them up to a certain price as he had done before; and that is all it contains.

My friend says with an air of plausibility that in the mean time, on the 11th of July, 1862, an act was passed which authorized the increase of the legal tenders adding another $150,000,000 and that therefore the public must have been supposed to know that what was before the real and true construction of the act of February 25, 1862, had been changed by that. How did it change it? It did not profess to change it; it only said that so many legal tenders shall be issued, and being issued the act of February 25, 1862, operated upon them, also, as making them convertible into the same kind of bonds that had been authorized to be issued before; and how if it did were the public to know that? They were referred when these bonds were issued, to the act of February 25, 1862. The regulations and the law require that each bond shall show under what authority it is issued. The people were referred on looking at the bond to the act on which the bond was based, the act of February 25, 1862, bond which directed them where to find the and no other act. Looking, then, from the authority of the contract, it was the act of authority of law to show the true nature and February 25, 1862. The act declared the form in which these bonds should be issued and when they should be payable, and it declared that all the gold and silver received from customs should be set aside as a sacred fund to pay them and that the legal tenders that the law had provided for should be convertible into them instead of their being payable in legal tenders.

Looking to that act, my friend from Ohio, not capable of any other construction-looking as I understand him from this speech-it is to that act, I understand from this speech which is in print before me that the holders of these bonds would have been justified by an irresistible logic in supposing that they were to receive their pay in money. That is all I have to say.

Mr. SHERMAN. I only want to make one or two remarks in reply to the Senator from Vermont, because as the question he has debated is not involved in this bill I think it

ought not to be discussed now.

Mr. EDMUNDS. Pardon me, my friend opened the discussion himself on this bill by reiterating his opinions on these points.

Mr. SHERMAN. I still reiterate those opinions; and all I have to say in reply to the honorable Senator is that not a single bond was issued under the act of the 25th of February, 1862, until that act was changed in material and important provisions. I know that fact, and now call upon the Senator to answer me whether a single bond was issued under the act of February 25, 1862, until after the passage of the act of July 11, 1862, whether he knows of any?

Mr. EDMUNDS. I do not know whether it was so or not, because on looking at the Senator's speech, and endeavoring to get the information which would apply to his speech, I understood him to refer to the act of March 3, 1863, as an act which repealed some part of the act of February 25, 1862; but it seems, on looking at it, that the act of 1863, as well as

the act of the 11th of July, 1862, merely provided for an increase of legal tenders, making them convertible into bonds as before.

Mr. SHERMAN. I repeat, and no one who has gone through the history can contradict me, that no single bond was issued under the act of February 25, 1862, until after that act was changed in material respects. It is true all these bonds, in one sense, were issued under the act of February 25, 1862, as it was amended from time to time; and those amendments were adopted before a single bond was issued. The most material amendment was the act of July 11, 1862. By the act of February 25, 1862, $150,000,000 was the limit of legal tenders, and those legal tenders could be used to pay the principal of the public debt.

The Senator from Vermont cannot question that. Any bond issued under the act of February 25, 1862, could be used as a legal tender to pay the principal of the public debt, because the act of February 25, 1862, said in so many words that the notes issued under this act shall be a legal tender in payment of all debts, public and private. What language could be clearer? Therefore if the legal tenders were issued under the act of February 25, 1862, and the bonds issued under that act, one was convertible into the other, the bonds into the greenbacks and greenbacks into bonds. No language could be plainer than was used to effect that purpose; but this right of conversion was taken away by the act of March 3, 1863, and the limit on the amount of greenbacks was changed. This did not affect the legal obligation or the legal right to use greenbacks in payment of the principal of the bonds; but I will not argue the question; I will let it stand upon what I have said.

Mr. MORTON. Mr. President, the question as to whether the five-twenties are payable only in coin or may be paid in legal-tender notes has been brought prominently into this debate. The chairman of the Committee on Finance, who has had much to do with the financial affairs of this country for six or seven years past, insists that the Government has a right to pay the five-twenties in existing legaltender notes. I say "existing" as contradis tinguished from notes yet to be issued. The distinguished Senator from Massachusetts [Mr. SUMNER] on Saturday, in a very elaborate speech argued at length that the Government was compelled by law to pay these bonds in coin. An argument of great ability and length was made to the same effect by the Senator from Vermont early in the session. This question is not important beyond the time that the Government shall resume specie payments. Whenever we make the legal-tender note as good as gold then this question is settled. But it is an important question, and may be an important and troublesome question until that time occurs. I, for one, believe that the true policy for the Government is to take steps first and foremost to bring about the resumption of specie payments. I believe that that lies at the foundation of our financial troubles, and there is where we should begin.

I will remark that this question is entirely distinct from the question of the right of the Government to make a new issue of legal tender notes and pay off the five-twenties in that new issue. As I shall speak of the question, I shall speak of the right of the Government to redeem the five-twenties in existing legal-tender notes.

Mr. President, I believe that the law-and it is to the law that we must look in regard to this question after all-is with the Senator from Ohio on this question. When it is asserted that the Government is bound to redeem the five-twenties in coin I say it is not only without the law, but it is in express violation of at least four statutes. The law authorizing the tenforties declares that principal and interest shall be paid in coin. The several laws creating the five twenties declare that the interest shall be paid in coin, but are silent as to the principal of the debt, and do not say in what kind of

money the principal shall be paid. This silence is very significant.

But it is said by the Senator from Massachusetts and the Senator from Vermont that the Government is as much bound to pay the principal of the five-twenties in coin as if it was so expressed in the several acts authorizing and creating those bonds, and that there is no difference between the legal obligation of the Government in regard to the five-twenties and in regard to the ten-forties. Let me say to the Senator from Vermont and the Senator from Massachusetts that if they desire to ascertain the qualities and capacities of the legal-tender notes, what debts they will pay, and what debts they will not pay, they must look to the laws creating the legal-tender notes and not to the statutes authorizing the five-twenty bonds.

The act of February 25, 1862, by its second section authorized the first issue of five-twenty bonds, and by its first section the first issue of legal-tender notes; and in said first section declares such notes herein authorized shall be received in payment of all taxes, internal duties, excises, debts, and demands of every kind due the United States, except duties on imports, and all claims and demands against the United States of any kind whatsoever, except for interest upon bonds and notes, which shall be paid in coin, and shall also be lawful money and a legal tender in payment of all debts, public and private, within the United States, except duties on im ports and interest as aforesaid.

as a legal tender in payment of all claims and demands against the United States of whatsoever kind, except interest on notes and bonds," and this joint resolution was unconnected with any provision for the issue of bonds.

And again in February, 1863, an act was passed authorizing the issue of another $150,000,000 of legal-tender notes, including the $100,000,000 authorized by the joint resolution just referred to, in which it is declared in language somewhat different from the other acts, but in substance the same, that "these notes so issued shall be lawful money and a legal tender in payment of all debts, pubiic and private, within the United States, except for duties on imports and interest on the pub

lic debt."

Here are four plain, unequivocal, and em phatic declarations of the law, declaring that these notes shall be a legal tender in payment of every conceivable species of indebtedness against the United States. And whether the fact be agreeable or disagreeable it is one that cannot be overcome by argument or ingenuity,

But it is argued that Secretary Chase, and perhaps one or two Assistant Secretaries or chief clerks of the Treasury, gave it out in letters and speeches that these bonds would be paid in coin and that the bonds were sold upon such an understanding. It is to be noticed that in giving these opinions by the Secretary and the Assistant Secretaries or chief clerks, that it was predicated entirely upon the prac tice of the Government heretofore, and not The declaration is that such notes shall be upon any construction of the law authorizing receivable in payment "of all claims and dethe issue of the bonds or creating the legalmands against the United States of every kind tender notes. In none of these opinions is whatsoever, except for interest upon bonds and there any reference made to these statutes, and notes, which shall be paid in coin." More what was said seemed to have been said in comprehensive language could not be emignorance or indifference toward them, for no ployed, and you cannot conceive of any debt reference was made to them, and the opinions against the United States left out of this were predicated entirely upon what had been phrase save that which is specially excepted. the practice of the Government heretofore. It comprehends all claims and demands of These several acts creating the legal tender whatsoever kind. A bond is a claim; a bond were public laws, of which every man in the is a demand. The very exception proves that country was bound to take notice at his peril. bonds were comprehended in the phrase, for Every man in the country purchasing a bond if they were not there was no necessity for is excepting the interest upon them. But the stutute does not stop here. It goes on to say tautologically that such notesshall also be lawful money and a legal tender in payment of all debts, public and private, within the United States, except duties on imports and interest as aforesaid." Every debt which the United States owes is a public debt; it has no private debts, and a five-twenty bond is a public debt in the fullest sense of those words for which the law declares such notes shall be lawful money and a legal tender. Was ever a statute more comprehensive, unequivocal, or plainly written? If the effect of this language can be varied or destroyed by argument then no statute can be drawn which can withstand the lawyers' ingenuity. But there are three other statutes to the same effect with the one I have just considered.

The act of the 11th of July following provided for the issue of another $150,000,000 of

legal-tender notes, and declared like the former that they should be legal tender in payment of all claims and demands of whatsoever kind against the United States except interest on notes and bonds, and further declared that these notes

"Shall also be lawful money and a legal tender in payment of all debts, public and private, in the United States, except duties on imports and interest as aforesaid."

There are but two exceptions stated in the law, but it is sought by argument to establish a third, compared with which the two stated in the law are mere trifles.

This statute is unconnected with any provision for the issue of bonds, and was passed before any bonds were sold, authorized by the preceding act of February.

Again, in January, 1863, Congress passed a joint resolution authorizing the issue of another $100,000,000 of legal-tender notes, in which it was again declared that they should be received

presumed to know the character of the law creating the bond or the existence of any other law affecting the bond either as to time, manner, or mode of its payment.

In matters of such immense magnitude the nation can only be bound by the law. Its rights must be defined by the law, and by the law only. I cannot be bound by the opinion of public officers given either in ignorance or in violation of the law.

The Government of the United States, which has the power to borrow money and create a new loan, has put the terms of that loan into the law, and they cannot be varied by the opinion or the action of any public officer.

It would be a monstrous doctrine that the rights of the nation and of future generations, in matters of such immense importance, could be varied or changed by the illegal or unwarranted declaration of a public officer who has no power to say or do anything, except that which is conferred upon him by law. Nor can it be said that the good faith of the nation can be affected by its refusal to comply with the representations of a public officer, when those representations are made in direct conflict with a public statute of which he and everybody else is bound to take notice. Even in matters of private right and of the smallest importance men are presumed to know the law, and their rights are determined accordingly, and no man is bound by the act of his agent when that agent is acting outside of the authority or the presumed authority conferred upon him. Every man buying a bond of the Government must know that the liability of the Government could not be fixed or changed by a declaration of the Secretary of the Treasury, but that the liability of the Government must be determined absolutely and ouly by the law creating the bond or making regulations for its payment.

The good faith of the nation in a matter of this kind can only be measured by the promise given by the law-making power, which promise

must be in the form of a law. The Constitution declares that Congress shall have power to borrow money, from which it must be inferred that Congress and Congress only can prescribe the terms, limits, and conditions of the loan. The attempt therefore to erect a standard of good faith for the nation not only outside of the law, but in violation of its express provisions does the nation great injustice by contributing to place it in a false position before the people of other countries.

That is all I have to say on that question. If you prove that the Government is bound to pay these bonds in coin, you do it in the face of four direct and plain statutes as unequivocal as any statutes that ever were written.

There is the statute, plain, direct, even tautological upon this subject, declaring in not less than six or seven places that these notes shall be received in payment, and as a legal tender, in discharge of every claim and demand of whatsoever kind against the United States except interest upon notes and upon bonds, and then going on to say, as I remarked before, tautologically, that those notes shall be received as lawful money and as legal tender in payment of all debts, public or private, in the United States except the interest on notes and bonds as aforesaid. And yet in the face of language so plain, language that cannot be misunderstood, it is argued from day to day in this Senate that the Government is bound to pay the five-twenties in coin.

Now, Mr. President, this question is importaut or unimportant as Congress shall make it So. When we return to specie payments it is unimportant; as long as we fail to return to specie payments it is important. As I took occasion to say some weeks ago in the Senate, the first duty of Congress and the first great thing to do, in my opinion, is to take some direct step toward the return to specie pay

ments.

I will say further, that it is in the exist ing legal-tender notes that the Government has a right to pay those five-twenty bonds. There was a limit of $400,000,000 fixed by law to the issue of those notes. I believe that to pass that limit would be a violation of public faith; but that the Government has the right to pay the five-twenty bonds out of the existing legal-tender notes is as clear, in my opinion, as any right that is defined by any statute of the United States.

Mr. WILSON. I should like to ask the Senator what practical importance there is in maintaining that doctrine if we have got no greenbacks to pay the bonds with? I take it there is not anybody here who supposes, if we are limited to the present amount of greenbacks, that we have got any greenbacks to redeem the bonds with. Therefore the question is not a practical one in any sense of the word, it seems to me.

Mr. MORTON. I think I can answer that question. The Senator has kindly called my attention to a point that I had forgotten for the moment, and that right in connection with this funding bill. Four hundred million dollars of currency is enough in which to invest all the bonds authorized by this bill. It is not done at once. The Government sells $50,000,000 of these new bonds to-day, and receives pay in existing legal tender notes. Those notes are paid out to-morrow in the redemption of an equal number of existing five-twenty bonds; and so the process goes on. The Government can redeem the five-twenty bonds in the exist ing legal tender notes without issuing a new note, simply by selling the new bonds for legaltender notes, and applying those legal-tender notes in the redemption of the existing fivetwenty bonds.

That comes right down to this funding bill. This bill provides that the proceeds of the sale of these bonds "shall be exclusively used for the redemption, payment, or purchase of, or exchange for, an equal amount"-that is a very important phrase right there-" of the present interest-bearing debt of the United States. If you exchange them, it must be

done for par. If you sell these new bonds you must sell them for par. Then you cannot buy up the five-twenty bonds in the market. You cannot buy them unless you buy them for par, because you make the proceeds of these bonds take up and cancel an equal amount of the outstanding bonds. We will suppose that the Secretary of the Treasury has sold $100,000,000 of these five per cent. bonds at par. He has got $100,000,000 of greenbacks in the Treasury of the United States. How is he going to apply that to the extinguishment of an equal amount of the outstanding debt? The holders of the five-twenty bonds will not sell them to the Government on the market at par, because they are commanding a large premium. He cannot exchange bond for bond because the bonds to be exchanged for command a premium, whereas the new bond can only be sold at par; there is no premium on that. He cannot obtain the five-twenties by exchange; he cannot obtain them by purchase, because the law would require him to purchase the old bonds at par, and they are at a premium. Therefore, he cannot use the proceeds of the new bonds unless he avails himself of the right of the Government to redeem the old bonds in these legal-tender notes.

Mr. SHERMAN. The Senator is a little mistaken in regard to the legal effect. The plain meaning is that he shall only sell the bonds as he can redeem an equal amount. He would not sell these bonds at a less price than the market value of the five-twenties; but he can do that or make the exchange.

Mr. MORTON. I presume the chairman of the committee is entirely right upon that point; but the practical difficulty is that the Secretary cannot sell them for more than par; that will not be pretended, and he cannot buy the existing five-twenty bonds at par. So there can be nothing done in the way of buying them on the market. Then there can be nothing done in the way of exchange, because the old bonds command a premium, while the new ones do

not.

Therefore the holders of the old bonds would lose by the exchange. Then there can be nothing done with these bonds, unless he avails himself of the lawful right of the Government to take in these five-twenty bonds by paying them off in legal-tender notes. I have often heard it said that unless you issue more greenbacks, you cannot redeem the five-twenties in greenbacks. I bave shown that that is a mistake; that by selling the new bonds at par, to be paid for in the existing legal-tender notes, those notes, when thus received, can be applied in redeeming and absolutely paying off a portion of the existing five-twenty bonds.

I am in favor myself of passing the first section of this bill. I am in favor of making this offer. I am in favor of trying to give an additional value to these bonds by the length of time that has been fixed in the bill for them to

run.

That is the only advantage they will have over the old bond.

One word in regard to the amendment of the Senator from Maine, which is to make these bonds all redeemable at the pleasure of the Government after ten years. He takes away the inducement to buy these bonds. He says, however, that these bonds can be made available by the existence of a doubt in the public mind as to how they shall be paid, whether they shall be paid in gold or in greenbacks. I should like to ask that distinguished Senator if it is very broad statesmanship to hang a great measure of this kind simply upon a doubt existing in the public mind? I very much prefer making a frank statement of this question to the whole country. As the law is written, so it must remain; you cannot help it; you cannot rub it out; you cannot argue the seal off the bond; and the distinguished Senators to whom I have referred, with all their ability and ingenuity, cannot take a single word from these four statutes.

I am in favor of tendering this funding bill to the country. I hope it will be accepted; I hope it may be received; but, sir, to make a candid confession, I have very little faith in

any funding bill until such time as we have returned to specie payments. I believe we could return to them in a very short time by legislation in that direction. With a surplus of over eighty million dollars of gold in the Treasury, and with an accruing surplus from month to month, if we were simply to say that the gold we now thus hold and the gold we shall receive in surplus shall be applied to the redemption of these legal-tender notes it would send the premium on gold down one half at the very beginning. The very existence of that gold standing in the shadow behind these legaltender notes, although the Government has declared no purpose in holding that gold, has given strength and value to these notes, simply from the impression upon the part of the people of the United States that some time or other that gold will be applied to the redemption of these notes. I believe that the accumulation of surplus gold in the Treasury with what we now have, even for a year or a year and a half, would be sufficient to enable us to begin the work of redemption and place the legal tender notes at par, and then all these troublesome questions will disappear; but, sir, until that is done, they will remain to plague us.

Mr. FESSENDEN. I did not design saying anything on the particular matter which the Senator from Indiana has been arguing, for I think his speech is altogether out of place. We are discussing a particular point of construction upon the first section, and the bringing in here a discussion upon the question whether these bonds are in reality payable one way or the other strikes me to be a mere

Mr. MORTON. I should like to say to the Senator that his censure is somewhat misplaced. I did not bring that question here. It was brought here on Saturday by the chairman of the committee and by the Senator from Massachusetts, and to-day discussed just before by the Senator from Vermont and the Senator from Ohio. If there is anything wrong in bringing the question here I am not responsi ble; but I find it here, and I will say to the Senator that he cannot keep it out.

Mr. FESSENDEN. Oh, I shall not attempt it, Mr. President. I shall not attempt to keep anything out here on any question. I have seen for years that that is useless. Senators will discuss every conceivable question under the sun upon a bill whether it has anything to do with it, or not, and the time has gone by when I ever attemped to interfere with anything of that sort.

But I rose simply to say that so far as the remark I made had any application it was merely repeating a remark made by the chairman of the committee. I said that if it was true that this bill relieved the question of a doubt that of itself was an inducement to the change from one species of obligation to another; and I think it is an inducement, because it cannot be disputed that the question has been made a question of doubt; and that is all I said about it.

But, sir, I wish to repeat what I said before: if there are not inducements enough to affect the judgments of the community with reference to taking the new obligations without extending the time of redemption from ten years to twenty, in my judgment it had better remain as it is, and we had better pay six per cent. for a little time longer than to burden ourselves with any such obligation as that. That is my opinion about it, which I gave very distinctly. Why, sir, what is the object? This is called a funding bill. Is not our debt all funded now, pretty much? Certainly it is. It is merely to change the bonds, and the ostensible object is to hold out some inducement to take other paper at a lower rate of interest. Undoubtedly if taken it would save so much; but then do not all men inquire, what are we to gain? Are we in reality to be the gainers? Certainly not, if in the process of time, say ten years hence, it so happens that we shall be able to

redeem a large amount of our paper, as I think we shall be by borrowing at a lower rate owing to the improved state of our credit, and

by pursuing the course now proposed, we then find ourselves in a condition where we shall have to pay from twelve to twenty per cent. premium in order to get it. What do we gain by that? Nothing at all; we are the losers in the long run. Sir, it has nothing but the appearance of benefit about it, and that appearance is, in my judgment, delusive, and nothing compared to what we shall lose by putting ourselves in a position where we cannot lay our hands upon the funds within a long period of time if we desire to do so. I leave that there, because I do not like to repeat arguments that I have used; but I wish to be specifically understood.

Now, sir, the honorable Senator from Indiana argues this matter of the real character of the five-twenty bond upon the contract, upon the laws passed, as if there is no dispute about it. He states it strongly. He says in so many

words that there can be no doubt about it. That, I suppose, he only intends as another mode of saying there can be no doubt about it in his mind, because my honorable friend does not mean to say that the numbers of gentlemen who have expressed an opposite opinion are arguing what is nonsense and folly. Now, sir, I prepared a while ago, in the only way I ever do prepare, a speech upon this very question; and that is by studying the statutes and making some memoranda; and I thought at some period of time I would deliver that speech and express my opinions in detail and give my reasons for them; but my judgment is, that we have got to a period of the session when long speeches on questions that are not immediately pending are a little out of place, and that we had better devote ourselves to short discussions of the questions at issue. But for fear that there should be any misunderstanding about it, I will say in a few words-in hardly more than a sentence-that I came to an exactly opposite conclusion. I have no doubt that we are bound by every principle of honor, as expressed upon the paper and as connected with the contemporaneous exposition of the thing itself, to pay the principal of every bond we have issued in coin. That is my judgment, and I do not think I shall change it; and so positive am I that that was the understanding of everybody in the community that even if there was a narrow chance of escape by a technical construction of the paper itself I should deem myself dishonored, as a member of this body, if I should take the first step in any direction that would look like paying or attempt ing to pay our obligations of that description in paper. So that I am equally positive with my honorable friend on that subject.

Mr. MORTON. That is some relief to me. Mr. FESSENDEN. But I do say that gentlemen may make an argument on the other side, and although it does not address itself to my mind, it will undoubtedly to the minds of the community. My judgment, however, is, situated as we are at present, with the majority of the Senate subscribers to a platform which sets forth the noblest, most generous, manly, and statesmanlike principles with regard to the whole thing, that we had better adhere to it and not even raise or intimate a doubt upon what the country will do when it becomes necessary that it should do anything.

Mr. HOWARD. Mr. President, I do not rise to occupy the time of the Senate further than to say that I do not concur at all in the conclusions to which the honorable Senator from Indiana seems to have arrived in regard to the mode of payment of the bonds to which he has alluded. I believe that I was a member of the Senate and voted for every one of the statutes authorizing the issue of those bonds, and it never occurred to my mind that the Government of the United States was not under the obligations of honor and good faith to pay those bonds in coin, in that kind of metal out of which the dollar mentioned on the face of the bond is made. Those bonds stipulate that the Government of the United States will pay so many dollars to the bearer. What is a dollar? The old statutes of the United States

describe it, how it is made, of what metal it is made, and how much it weighs in silver, and also describes the same measure of value when made of gold.

Sir, we all know that the use of the greenback as a legal tender, as money, was expected to be temporary. It was one of those shifts to which we were driven by the pressure of the war. No member of the Senate, no member of the other House, as I understand it, supposed at that time that the bonds which we were issuing, and upon which we were acquiring loans of money, were redeemable merely in the depreciated paper currency of the Government. I hold the Government of the United States to be bound by the terms of its own contract, and by every sentiment of honor and justice, whatever may be the doubts that may be raised upon the language of the statutes, to redeem every bond issued by it in gold or silver coin, according to the terms of the bond itself. Sir, I think when we consent that those bonds may be taken up, or shall be taken up in the depreciated currency of the Government, when we refuse, in other words, to pay over to the honest bondholder the specie called for in his bond, or its equivalent, we contract a stain upon ourselves and upon the Government, whose servants we are, which will take a long time to wipe out. The good faith of a Government is as precious as the apple of the eye. When once that good faith is even suspected, its credit falls and sinks, and the character of its people, as well as the character of the Government, is injuriously affected. Even if there were a stipulation in those bonds that they should be payable in greenbacks, now that the country is reaching a period of peace and prosperity, I should hold it to be the duty of the Government, notwithstanding such a stipulation, to see to it that the honest bondholder was paid in coin. Sir, I dislike all such shifts as those. Let us meet our obligations like men, like patriots, and like a Government true to its own interests and entertaining a proper respect for the great people whom we repre

sent.

Mr. CAMERON. Mr. President, I have felt very sorry from the beginning that this question was brought before the Senate and before the country. I believe as early as February last the Finance Committee brought in a bill on this subject which did not meet the approbation of the Senate, and it was withdrawn Subsequently, in March, the bill in an amended form was brought in; but that has been withdrawn. And now, ten or fifteen days before the close of the session, we have brought before us again a question which cannot fail to do great harm. It seems to me as if this was done purposely to agitate the country improperly and injuriously to the Republican party. What good can arise from the discussion of this measure? Surely nothing good can come from it, but harm must result, because not one of our debts is now due, or will be for years. It would have been wiser to postpone this subject until the next presidential election had passed over, and the country should be in a condition to view it with that calmness with which it should always consider great financial questions.

I am one of those who believe that when you make a promise you should fulfil it; and I have such undoubted faith in the integrity of the people of this country that I do not believe there is a man anywhere entitled to confidence or respect who would countenance, or endeavor to give countenance, to those who would attempt to repudiate one penny of its obligations. If you repudiate a part of the interest you repudiate the whole debt. If you fail to pay in gold and silver, the currency of the world, you refuse to pay your debts. I do not believe anybody really intends to do that. I have in my life, at various times, seen parties springing up in my State, when she was in trouble about her finances, attempting to repudiate the debt of the State, and I never failed to see those put down and displaced. I never have seen a demagogue who, in my State,

asserted that he was unwilling to pay every copper which the State had contracted in the time of her need, that did not sink into political obscurity; and so it will always be.

But this is the practical question. What good can come from agitating this subject now? Why not better postpone the whole matter until after the election is over, and then we shall come here with new lights, with all the questions cleared off from the public mind except that of reconstruction; and when we have reconstructed the country, as was said wisely and ably by the Senator from Massachusetts [Mr. SUMNER] the other day, the resumption of specie payments will be easy. You must first reconstruct the country and have peace throughout our borders before you can attempt to talk about specie payments. When specie payments have arrived, as they will in a short time, nobody will talk about repudiation; nobody will moot the question whether these bonds shall be paid in gold or greenbacks. Greenbacks were an expedient of the war, and they answered a good purpose then. They saved the country. They enabled us to feed and clothe our armies. But they have done their work, and now they will go out of use directly.

I wish I could speak more at length on this subject to-day, for it is one which is most interesting to me, as it is of interest to every man who loves his country and who has a feeling of personal honor; but I am not well enough to do so, and I shall content myself, if the bill is to pass, by offering some amendments which I think will make it more acceptable to the country and better for the interests of the Gov. ernment. My opinion is that this is a scheme gotten up by the Treasury Department for its own use. I think there is something hidden in it, something not seen, or else it would not be so persistently pushed upon us. I remember that some time ago, perhaps in February, it was understood that after a certain section of the bill was disagreed to the whole bill was to fail. I think I remember particularly that we were told that the bill would not be urged after that date, after the vote against a particular section. I am positive of that. But if the bill is to be pressed, I shall try to make some amendments to it.

Mr. COLE. Mr. President, I am very much pleased with some of the remarks that the Senator from Pennsylvania has made; those of his remarks which go to the extent that this discussion is out of place. But I am unwilling to let the declarations that have been made by the Senator from Maine and the Senator from Michigan go to the country without expressing my views, which are not in harmony with theirs.

There are two classes of indebtedness in this country. Some of our obligations are payable in gold; others are not so specified, and are payable in the lawful money; and I do not know how those Senators discriminate between a portion of the obligations which do not call for gold payments and allege that they are payable in gold and another class of indebtedness of the same description, and recognize the right to pay the latter class in greenbacks. We are incurring liabilities every day. This is a very costly Government. The expenses amount to perhaps $300,000,000 a year, a large portion of which is payable in United States notes. It is just as dishonorable, and no more dishonorable in the Government to pay the current indebtedness in United States notes, as it is to pay other forms of indebtedness, where gold is not called for, in that same currency.

We cannot-the fact might as well be acknowledged-now pay our indebtedness in gold; at some day we hope to be able to do it. When we have improved our credit to such an extent that our obligations will be equivalent to gold then our payments will be in gold. But our credit is not to be improved by vain declarations. Our credit is to be improved by degrees, by adding to the productive industry of the country, the wealth of the country. That cannot be done in a day, nor by declara