CHAPTER XVIII

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THE MAINTENANCE OF A SOUND CURRENCY AND THE PUBLIC FAITH.

In 1873 the bubble of an irredeemable currency, inflated prices, and wild speculation burst in the United States, and the era of universal shrinkage, commercial collapse, and industrial stagnation began. The financial condition of the government and the people at once became the absorbing topic of public discussion, and for five years the questions connected with the currency and the national credit were those which most completely absorbed popular attention. Mr. Chandler's share in the prolonged controversy over the financial problem was a conspicuous one; he came into it equipped with clear ideas and a consistent record; he contended for the causes of rational finance and public honesty without wavering in the face of the strongest opposition, and without any departure from sound doctrine; and he saw the courage and persistence of those with whom he acted finally rewarded by the enlightenment of the people, the restoration of a convertible currency, and the raising of the credit of the United States to the highest standard. For obvious reasons his record upon all the phases of "the financial question" can be most satisfactorily treated in a single chapter. That record will show that he began at a point to which many other public men were brought only by years of education, and it well illustrates the clearness of his conceptions of the principles underlying questions connected with what may be called the practical departments of statesmanship.

Not the least of the difficulties, which at the outset confronted the administration of Abraham Lincoln, was the fact that the public treasury was empty and the national credit impaired. In October, 1860, the government had contracted a five per cent. loan of $7,000,000 at a small premium; four months later, a six per cent. loan had been sold with difficulty at about ninety cents on the dollar. It was true, by way of offset, that the country was in a generally prosperous condition. The commercial wrecks of 1857 had disappeared, crops were abundant, and general business had become again remunerative. This was an element of national strength, but it was not a quickly available resource. War meant large immediate expenditure, for which the means must be promptly provided. There was no time to create and organize upon an extensive scale the machinery of direct taxation, and some doubts were then felt as to whether the people would not grow restive under any general imposition of new burdens. The entire stock of coin in the North was estimated at but about $121,000,000, while the paper money in existence was exclusively composed of the notes of state banks organized under diverse and often insecure systems, and much of it circulated only at a discount. This condition of the currency created the fear that the rapid negotiation of large government loans could not be accomplished without the serious derangement of the money market; the withdrawal of considerable sums from circulation, even temporarily, business men believed would be impossible without great injury to domestic enterprise and commerce. All these circumstances forced the government (which found itself facing absolutely without preparation organized rebellion) to resort at once to the issue of a national paper currency in the form of non-interest-bearing treasury notes of small denominations. Congress, at its extra session in July, 1861, passed the necessary act for this purpose, and $50,000,000 of these notes ($10,000,000 more were subsequently authorized) were placed in circulation; originally they were made redeemable in coin on demand at any United States sub-treasury, and thus violated none of the established principles of sound finance. This expedient facilitated the negotiation of loans, and provided "the sinews of war" for 1861. But, when Congress met in December of that year, it had become plain that the struggle would be of indefinite duration, and that past expenditures would be greatly exceeded in the months to come. To add to the embarrassments of the situation, at about this time the banks of the North suspended specie payments, and the Treasury Department was compelled as a matter of self-protection to also stop redeeming in coin its own notes then outstanding. It was as a means of escape from this emergency, that the first issue of greenbacks was authorized (by the act of Feb. 25, 1862). These notes were not redeemable on demand, but to secure their free circulation they were made a "legal tender" for all purposes except the payment of duties and of the interest on the public debt. The abandonment of the self-operating method of redemption and the resort to the compulsion of the "legal tender" enactment, as a means of keeping these notes in circulation, constituted a step which the Thirty-seventh Congress took with extreme reluctance. A small minority of its members resisted this measure to the last, but what seemed to be the overshadowing necessities of the situation and the earnest appeals of Secretary Chase finally forced the passage of the law. Mr. Chandler was one of those who, without approving of the principle of this legislation, still voted for it, on the ground that it was essential to the public safety at that moment and justified by the urgency of the situation. But he regarded it as a temporary expedient, a mere plan for an emergency, and not as a permanent policy. The first act authorized the issue of $150,000,000 of "greenbacks" and directed the retiring of the $60,000,000 of treasury notes previously paid out; this $150,000,000 Mr. Chandler believed it was possible to so control and use as to avoid the evils inseparable from inflation. But the proposition to double the amount of "greenbacks," which came in less than half a year from the Treasury officials, he strenuously opposed. On June 17, 1862, he offered this resolution in the Senate:

_Be it Resolved by the Senate and House of Representatives_, That the amount of "legal tender" treasury notes authorized by law shall never be increased.

On the following day he called up this resolution, and said:

The effect of the recommendation (to issue $300,000,000 of "legal tender" notes) has been most disastrous. The mere recommendation, without any action of Congress on the subject, has created such a panic, and has so convinced the moneyed centers of the world that we are to be flooded with this paper, that gold has risen in price from two and three-quarters to seven per cent. premium. National credit is precisely like individual credit. It is based, first, on the ability to pay; and, second, upon the high and honorable principle which would induce the payment of a liability. When the proposition to issue treasury notes was first made, it was received with great apprehension by Congress and by the nation.... There was at that time a vacuum for $50,000,000 that must be filled from some source.... I then believed that $100,000,000 was requisite, and that $100,000,000 was enough. I believe so now. When you issue $100,000,000 of currency you must either find a vacuum or you must create one for it. A hundred millions in addition to the existing circulation would at any time create great disturbance in the financial condition of this country.... The moment you authorize the issue of $300,000,000 your coin will rise to ten or twelve per cent., and your notes will full to 90 or 85. The result will be that the government will be paying just so much more for every article it purchases than it would if you kept your circulating notes at or about the value of coin.

Again, the moment you reduce the value of these notes, even to the point at which they now stand, even to seven per cent. discount, you drive out of circulation the coin of the country. The temptation is too strong to be resisted to use something else besides coin for change and for small circulation. Are we to be reduced to a shin-plaster circulation, as is the case to-day all through the South? That will be the result if you force upon the country an amount of circulating notes beyond its requirements.... I consider it a duty we owe to the country, a duty we owe to ourselves, to proclaim that under no circumstances shall a currency, irredeemable in coin, beyond the present issue of $150,000,000, be thrust upon the money markets of the country.

But the pressure toward a reckless currency expansion was irresistible, and the pending bill passed. Mr. Chandler's prophecies were promptly verified, for the gold premium rose and the "shin-plaster currency" made its appearance with but little delay. Moreover, these issues only stimulated the thirst they were intended to quench, and the general inflation of prices soon again produced an apparent scarcity of currency. Early in 1863 a demand came from Mr. Chase for authority to increase the "greenback" circulation to $400,000,000. Congress granted this application, but Mr. Chandler opposed it, saying in the Senate:

When the first proposition was made to issue $150,000,000 of treasury notes, I favored it; but when the proposition was made to increase that to $300,000,000, I opposed it.... I prophesied what the result of thus thrusting $300,000,000 of irredeemable paper upon an already overstocked market would be. I said it would carry up coin to an unlimited extent. The result has proved that my predictions were true. Now it is proposed to issue $400,000,000; we propose to thrust them upon an already over-supplied market.... It is our duty to protect the people, so far as in our power, from this great depreciation in the specie value of the circulating medium, and this we can only do by decreasing its volume.

The general positions which he stated thus early Mr. Chandler firmly held throughout every stage of the subsequent contest over the "currency question." He believed that irredeemable paper money, although issued by the government itself and made a "legal tender" by supreme authority, was an unmixed evil; that only the most imminent peril could justify an even temporary resort to its use; that it ought never to be employed except within narrow limits; that any excessive issues, if made, should be promptly called in; that it should be made redeemable on demand in coin, "the money of the world," at the earliest possible moment; and that ultimately it should be wholly withdrawn from circulation by the issuing power. Accordingly, he opposed the propositions to still further increase (to $450,000,000) the issue of "greenbacks," supported the principle (while objecting to some of the details) of the act of April 12, 1866, ordering their steady contraction, and was opposed to the act of Feb. 4, 1868, stopping such contraction. The reduction in the volume of the "greenbacks" he believed to be an indispensable preliminary to the resumption of specie payments, saying in the Senate: "The government will never resume so long as it has $400,000,000 of outstanding demand notes." As he opposed during the war excessive issues of the "greenbacks," so after it closed he steadily favored the reduction of their volume with the view to the early restoration of their convertibility and their final redemption and canceling. The hesitating and halting policy, which perpetuated all the unwholesome influences of inflation and added to the severity of the inevitable collapse, was followed against his protest and in the face of predictions, which were inspired by his intimate knowledge of natural commercial laws, and were verified by the event.

In the constant discussions of financial measures during the war, Mr. Chandler did not earnestly oppose the frequent resort to the issue of irredeemable paper without offering as a substitute policies which he believed would yield relief, equally adequate, much less costly, and far less unwholesome in tendency. He proposed to provide the means for meeting the enormous expenditures required of the government by more thorough direct taxation and by larger loans; and he believed that increased imposts, by strengthening the credit of the government, would greatly improve its standing as a borrower in the money markets of the world. Briefly, the policy which he favored, in lieu of the mass of temporary expedients which were adopted, was this: (1.) Declare that the issue of "legal tender" treasury notes should not exceed $150,000,000, and thus stop their depreciation by ending all fear of their inflation. (2.) Tax freely, and by this means convince the world that the United States could and would redeem its treasury notes and pay the interest and principal of its bonds. (3.) Use the credit thus created to borrow on the most advantageous terms, and avoid all measures that might in any way tend to impair the negotiable value of, or the general confidence in, the national securities. He developed these general ideas repeatedly in his speeches and votes, while questions relating to them were before Congress. On May 30, 1862, he said in the Senate:

We voted at an early day in the session that we would raise a tax of $150,000,000 from all sources.... What was the result of that vote? On the very day that that solemn pledge was given to the country and the world ... the six per cent. bonds of the United States stood at 90 cents on the dollar in the city of New York. To-day with an expenditure of more than a million dollars a day, ... under this simple pledge in advance, of what you would do, your bonds have gone up from 90 cents to above par, and are now sought for, not only at home but abroad. If you violate that solemn pledge given to your country and to the world, what will be the effect on your securities? Let Congress violate that pledge, and you will see your bonds not only not worth 104½ but you will see them below 85.... The world abroad does not believe your simple asseveration that you would impose a tax, but the people of this Union do and consequently they themselves have carried your bonds from 90 to 104½. But the world does not take them. Impose your tax; carry out your solemn pledges, and you will see your bonds eagerly sought for in the moneyed centers of the world.... I hope we shall not only carry out this pledge which we have given, but I care not if we exceed it.... Under this pledge ... you are now able to borrow money at six per cent. instead of seven and three-tenths, and you are to-day reaping the reward of your pledge of good faith.

All just tax measures Mr. Chandler vigorously supported, as furnishing the solid basis of national credit and public integrity, and time established the ability and the willingness of the people to sustain this war burden. Had the heavy taxation been accompanied by an adherence to sound principles in the management of the currency and a resort to borrowing when needed, it would have reduced the cost of conquering the rebellion by at least $1,000,000,000, probably by nearly one-half.

The maintenance of the public credit at a high standard was exceedingly important during the war, but it was of no less moment after the collapse of the rebellion, and is as great to-day as it has ever been. On no public question was Mr. Chandler more vigilant and outspoken than on this. Any attack on the integrity of the national promise represented by the bonds of the United States he denounced vigorously, whether it took on the form of the taxation of these securities, or of propositions to pay them in depreciated currency, or of bald repudiation. On May 20, 1862, he said, upon the proposition to tax the bonds:

I believe it to be for the best interest of the government--not for the benefit of moneyed men, not for the benefit of moneyed institutions, but for the benefit of this government--to proclaim in advance that we will never tax these bonds. I believe we shall receive the _quid pro quo_ now, to-day, or whenever we negotiate. It is for our interest, not for the interest of moneyed institutions, to offer these bonds. Here is the best security in the world, and we proclaim to the world, if you take these bonds they shall never be taxed. I believe we shall realize more to-day, or to-morrow, or this year, or next year, for these bonds by that course, than if we were to impose a tax of one and a-half, or three, or five, or any other per cent. These bonds are negotiable. We are the negotiators. They are not in the hands of third parties. We are to borrow for our daily wants, ... and I believe it to be for the interest of the government to declare in advance that there shall never be a tax of any sort, kind or description upon these bonds which we are now offering to the world in such enormous quantities.

Mr. Chandler said, in 1868, in a public address at Battle Creek, Mich., (on August 24):

The national debt is a sacred obligation upon this government, and it is to be paid, every dollar of it. But it is a Democratic debt, every dollar. If anybody should talk of repudiation it should be the Republican party, who had no instrumentality in creating it. But did you ever hear a Republican talk of repudiating it? It is a large debt. It is the price we pay for government. Is the government worth the cost? If it is, then the debt is not only an honest debt, but it has been worthily contracted. The Democrats propose to pay this debt in greenbacks, and they propose to pay the greenbacks by issuing more greenbacks. What do we gain by that? Issue $2,500,000,000 more greenbacks and they would not be worth the paper they are printed on, because the supply would flood the country and be greater than the demand.... It is a measure of fraudulent repudiation. In five or ten years the country might recover financially, but we would never wipe out the national disgrace that would follow that repudiation. It means the absolute annihilation of all values. These extra issues would be utterly worthless.

Mr. Chandler accordingly voted for the act of March 18, 1869, which formally declared that the United States would redeem its "greenbacks" and pay the interest and principal of its long term bonds in coin, and which was simply a new pledge that the government would do what it was already honorably bound to do both by fair construction of its own legislation and by the explicit and repeated promises of its agents. The full maintenance of the public faith, both as a matter of honor and of wise policy, he always upheld, and saw his arguments sustained and his prophecies made good in the steady improvement of the nation's credit and the refunding of its debt at greatly reduced rates of interest.

Of the national banking system Mr. Chandler was an original supporter. He regarded it as certain to become a lasting feature of the fiscal system of the United States, and as destined to ultimately furnish the paper money of the Union. The uniformity of its circulation, the security afforded to bill-holders, and the excellent results attending its method of governmental supervision, he considered as unanswerable arguments in favor of its permanent maintenance. It was his firm opinion that ultimately these banks would furnish all the national currency, and that their notes would supplant the "greenbacks." If national banking should be kept free, and redemption in coin required by law, he believed that the result would be a thoroughly-secured and readily-convertible paper currency, whose volume would be controlled by commercial demand and not by legislative caprice or political agitation, and which would lubricate and not obstruct the machinery of trade.

When the national bank bill first made its appearance in Congress, Mr. Chandler (in February, 1863) favored it as a measure of relief offering a quick market for $300,000,000 of government bonds, and as sure to supply "a better currency than the local banks now furnish." Holding the views he did, he supported the measures which promised to substitute bank notes for "greenbacks," although he opposed those which contemplated any expansion of the aggregate volume of both issues. For instance, in 1870, when the inflation element in Congress introduced a bill to add $52,000,000 to the national bank circulation (banking was not then free, it not being deemed prudent to leave the issue unlimited while all the paper money was irredeemable), he offered on January 31 an amendment to make the sum $100,000,000 and to withdraw "greenbacks" to an amount equal to the bank notes issued under this provision. He said:

The simple effect of my proposition, if adopted, will be to keep the circulation to a dollar where it is. If no new banks are started, no greenbacks are withdrawn, and if banks are started anywhere, then an amount of greenbacks must be withdrawn equal to the amount of national bank bills put in circulation. Should the whole $100,000,000 be taken we will be just $100,000,000 nearer to specie payments than we are to-day, ... and in the meantime the amount of national currency will not be changed in the slightest degree.

MR. SUMNER: There is salvation in that.

MR. CHANDLER: Of course there is salvation in it; that is why I offer it.

All proposals made at the time to increase the aggregate paper circulation he resisted, saying:

That is a step in the wrong direction.... If you let it go out that this is to be the policy of Congress, you will see gold go up immediately, ... because it will show that the Congress of the United States is in favor of expansion instead of a reduction of the currency.

After the panic of 1873, when there was such a universal clamor for further inflation, and scores of propositions were introduced to add many millions to the existing volume of "greenbacks" and of bank notes, Mr. Chandler again insisted at all proper opportunities that resumption was the most essential step toward financial soundness, and that the substitution of bank notes for "greenbacks" would aid greatly both in reaching and in maintaining specie payment. On Feb. 18, 1874, he offered an amendment to a pending bill, directing "the Secretary of the Treasury to retire and destroy one dollar in 'legal tender' notes for each and every dollar of additional issue of bank notes," and spoke upon this proposition at length. He did not urge it as a complete remedy for the existing situation (contraction and resumption would alone furnish that), but he said:

This is a step in the right direction. In 1865 I advocated upon this floor the substitution of bank notes for greenbacks as a step toward the resumption of specie payments, and a rapid step toward that resumption. I am now simply advocating what I advocated then.

Mr. Chandler's wishes on this subject were not gratified at that time nor during his life, but before his death he saw the demand that the Treasury should cease to be a bank of issue approved by the soundest financial sentiment of the country. His belief, that the paper money of the Union should be furnished by commercial institutions operating under properly regulated governmental supervision, that is, by the national banking system perfected and enlarged, has been long held by the ablest and clearest students of monetary problems in the United States; it is to-day constantly growing in popular strength, and the result it aims at will form part of any durable settlement of "the currency question."

In 1873 the vacillating and halting financial policy of the nation--which had tried and abandoned contraction, and while looking toward the resumption of specie payments had, in fact, retreated from it--bore fruit in speculative collapses, followed by a panic in business circles and widespread commercial disaster. Congress met amid the crumbling of unsound enterprise, and was called upon to meet a terrified demand for a renewed inflation of the already excessive volume of irredeemable paper. To cure the fever, men demanded more miasma. To repair the ruin, which all history proved to be the natural result of an oversupply of currency, it was proposed to still further increase that supply. Measures to this end were introduced at once, and pushed with great vehemence. They were sustained by a misled but powerful public sentiment, which was especially strong in the West and influenced the great mass of that section's representatives at Washington. Mr. Chandler never served his country better than he did in that hour. Unmoved by the clamor about him, and refusing to listen to the cries of even his own people when they demanded false leadership, he firmly resisted every measure of inflation and every suggestion that added embarrassments to the business of the future, or increased the difficulties of preserving the public faith. The pressure in favor of the inflation bill which President Grant vetoed was unusually strong. The Western Congressmen were almost a unit for its passage, but no solicitations, no force of numbers, prevented Mr. Chandler from opposing and denouncing it. His speech in opposition to this bill (on Jan. 20, 1874) commenced with one of his terse sentences, which went straight to the marrow of the situation, and furnished a motto for the cause he championed. It was, "We need one thing besides more money, and that is better money." This phrase furnished the text for many addresses and editorials, and stood upon the title-page of the weekly circular issued by the friends of a sound currency in Boston during the controversy which preceded the passage of the Resumption act of 1875. In the same speech Mr. Chandler said:

To insure prosperity we ought to have something permanent, something substantial. Then the business of the country will conform itself to the facts and regulate itself accordingly. This panic (of 1873) was exceptional, as indeed all panics are. A panic among men is precisely like a panic among animals. I once saw 2,000 horses stampede, and they were just as the same number of thousands of men would be in a panic. It is the feeling of animal fear, and one encourages the other, and so it goes on until it becomes a perfect insane rush for something, nobody knows what. Prior to this late panic, as is well known, many of our capitalists had over-invested in wild railroad schemes; they had undertaken to do impossible things; when the panic struck them it ought not to have had the least effect outside of Wall street and operators in railroad stocks. But the panic swept like a tornado all over the land, affected values everywhere, values of all kinds. Whoever had money in bank sought to draw it out and hide it away. The panic was universal, and yet this nation was never more prosperous than it was the day before the panic struck. And to-day there is as much money in the Union as there was then. Every dollar that was here then is here now. Besides, the enormous borrowers, the men who would pay any price for money--one-half per cent. a day, one per cent. a day, or any other given price--have failed and gone out of the market. And now the money is seeking the legitimate channels of commerce for interest and use.... The best time for the resumption of specie payment that has occurred since the suspension was in 1865, at the close of the war, when gold had fallen from over 200 to 122. In a few days values had shrunk, and the people of the nation were comparatively out of debt, and were ready then for a resumption of specie payments, but the government was not. The government owed more than $1,000,000,000, that was maturing daily in the shape of compound interest notes, seven-thirties and other obligations that must be funded or disposed of. Hence the government was not prepared for specie payments at that time, although the people were.... From that day to this we have been drifting and floating further and further away every hour from the true path--the resumption of specie payments. I have advocated from the first the earliest possible payment in coin. I believe there is no other standard of value that will stand the test, and I believe the time has arrived, or very nearly arrived, for coming to it. I have not the same timidity in fixing a date that some of my friends on this floor have. I believe that if we were to resolve to-day that we would resume the payment of our greenbacks in coin on the 1st day of January, 1875, and authorize the Secretary of the Treasury to borrow $100,000,000 in coin to be used in the redemption of the greenbacks, and sell no more gold until the 1st of January, 1875, on that day we would have $200,000,000 of coin in the Treasury for the redemption of the greenbacks. I am not

## particular as to date. I merely suggest the 1st of January, 1875.

But I would accept an earlier date than that if it were deemed more advisable, but certainly I would not extend it more than six months thereafter....

It is no part of the business of this government to issue an irredeemable currency. We cannot afford to place ourselves beside the worn-out governments of Europe--we cannot afford to place ourselves on a par with Hayti and Mexico. We are too rich a people to do it; and it is a disgrace to us as a nation that we have allowed it to continue one single hour beyond the hour when it was in our power to remedy the wrong.

The proposition to increase our paper currency is a step in the wrong direction, and I, for one, am utterly opposed to taking even one step in the wrong direction when I know what the right direction is.

As part of the same general discussion, Mr. Chandler made a carefully prepared financial speech in the Senate on Feb. 18, 1874, in which he first graphically sketched the history of "wild-cat banking" in Michigan, and then said:

After the failure of these banks the cry was still, "More money; and we must have more money; the country is suffering for more money." The cry was responded to, and more money was furnished. The Treasury of the State of Michigan, already owing $5,000,000, undertook to furnish more money, and the State issued treasury notes _ad libitum_, and the "more money" men got more money until the value of the state treasury notes, which have been paid to the last dollar at par, ran down to thirty-seventy cents on the dollar; and almost every city in the State, including the city of Detroit, responded to the cry of "more money," and issued shin-plasters; and individuals, realizing that "more money" was needed, issued shin-plasters. So the State of Michigan was flooded with more money.

Well, sir, you can see at a glance that the State of Michigan needed more money. We had as a people been speculating almost to a man. It was not confined to the merchant, the banker, the man of wealth; but the mechanic, the farmer, the laborer, every man who could buy a piece of property of any sort, kind, or description, bought it, ran in debt, laid out a town, sold the lots, gave a mortgage, and then wanted "more money" to pay that mortgage.

When the collapse came it was absolute; there was no mistake about it; the collapse was perfect. Then the people of Michigan had enough of "more money;" and when our constitutional convention met, as it did a few years later, they put into the constitution a clause prohibiting the Legislature forever from chartering a bank or affording the means of furnishing "more money;" and the people acquiesced in it. They had enough of the "more money" cry; and for twenty-five years there was no more cry in the State of Michigan for irredeemable money.... The losses to which I have referred did not fall upon the moneyed men of the State of Michigan, the men who were in sound condition. They fell upon the laboring man, the farmer, and the mechanic. They fell upon the men who could least afford to submit to the loss. So it is now. Why, sir, our values are fixed by a foreign market, and in coin. There is not a bushel of corn or a bushel of wheat raised in Indiana, or Illinois, or Michigan, the value of which is not fixed by the foreign value in coin of that particular article. When you enhance the cost of production by an inferior currency you put that loss upon the producer, and the loss falls not upon the wealthy man, but upon the laborer and producer. Money will take care of itself all over the world. If it is not safe in this country, it will find a country where it is safe, and it will go to that country, no matter where that may be. Hence, capital requires no protection whatever from this body; money will take care of itself; but the poor man, the laboring man, the man who submits to all the losses from this depreciated currency, is the man who suffers all the pain and all the injury that are inflicted by this false legislation....

Now, sir, we come to the crash of 1873. On the 15th day of September, 1873, this nation was in a more prosperous condition than perhaps it had been for the last twenty-five years. Every branch of industry was prosperous, every interest of the people was prosperous; but in a day, at the drop of the ball at twelve o'clock on the 16th of September, the panic struck. What produced this tremendous panic and crash in this great and prosperous country? It was over-speculating in railroad securities. It was by men undertaking to do what it was utterly impossible for them to do, to wit, for individuals to float untold millions by their own credit; and when the people became alarmed for fear the crash would come, the crash came, and there was no salvation from it. But, sir, on that very self-same day the nation was more prosperous than it had been for the last twenty years in all its interests--business, banking and every other. The crash ought not to have extended one yard beyond Wall street and the few producers of railroad iron who were manufacturing for these defunct railroads. But, sir, the panic was so great that it spread until it became universal, and values sank until there seemed to be no bottom, and everybody was affected throughout the length and breadth of this broad land.

But, Mr. President, that panic was of short duration. Many failures took place, and particularly among stock and railroad operators; but the main business of the country still went on with a few notable exceptions. Some manufacturers stopped for the want of money; others stopped for the want of credit. The men that had been issuing their paper without intending to pay it, issuing millions of dollars of paper which they knew they could not meet at maturity, trusting in luck to meet their obligations--those men cannot borrow money; their lines are full everywhere; nobody will loan them money; but, sir, upon undoubted security money is to-day cheaper than it has been at any time for the last twenty years. These great borrowers, without the expectation of paying at maturity, are to-day all out of the market. No man will loan money to a person who does not pay at maturity. Every man that desires to borrow money for legitimate business can borrow it to-day cheaper than he could borrow it at any time in the last twenty years. Sir, you may legislate for this class who have over-speculated, you may legislate for the benefit of the men who have built factories, built steamboats, built mills, bought mills, bought mines, bought everything for sale, and given their paper knowing they could not meet it unless they could borrow the money over again; you may legislate them $100,000,000 or $1,000,000,000, and you will not help them in the slightest degree....

Now, Mr. President, I will ask the attention of the Senate while I show the effect upon the purchasing value of money of issuing your greenback circulation from the day it was first issued to the present time. In 1862 we commenced the issue of greenbacks. In January, 1862, the premium on gold was 2.5 per cent.; in February it was 3.5; in March, 1.8; in April, 1.5; in May, 1.3; in June, 6.5; in July, 15.5; in August, 14.5; in September, 18.5; in October, 28.5, in November, 31.1; in December, 32.3. It will be remembered that the then circulating medium (which was at that time state bank notes) amounted to about $200,000,000. This circulation was increased during the year 1862 by the addition of $147,000,000 in greenbacks, and that increase of circulation carried the value of gold from 102.5 on the 1st of January to 132.3 on the 31st day of December following.

In 1863 the necessities of the government compelled us to increase the greenback circulation to a yet larger extent. We issued during that year $263,500,000 additional, carrying up our greenback circulation to $411,200,000, in addition, of course, to our bank circulation, whatever it may have been. During the month of January of that year the premium on gold was 45.1 per cent.; during February, 60.5; March, 54.5; April, 51.5; May, 48.9; June, 44.5; July, 30.6; August, 25.8; September, 34.2; October, 47.7; November, 48; December, 51.1. In other words, the average rate of premium upon gold during that whole year was 45.2 per cent. I hold in my hand a paper showing the cash value of this emission for 1863. The emission of greenbacks at that time was $411,200,000. The average premium on gold was 45.2 per cent. The actual cash purchasing value of that $411,000,000, during the year 1863, was $283,195,000, and that was the whole purchasing value of that money during that year.

Then we come to the next year, 1864. That year, we increased our circulating medium by the addition of $237,900,000, making the whole amount $649,100,000. In 1864 the price of gold was, in January, 155.5; February, 158.6; March, 162.6; April, 172.7; May, 176.3; June, 219.7; July, 258.1, or less than 40 cents on the dollar in coin for your greenbacks after you had carried the amount up to $649,000,000. In August the price was 254.1; in September, 222.5; in October, 207.2; in November, 233.5; in December, 227.5. There is not a man here who does not remember, nor is there a farmer or mechanic throughout the length and breadth of the land who does not remember, that he then paid 60 cents for cotton goods that he had been in the habit of buying for 12½ cents, and that he paid for everything else in the same ratio. The merchant took care that he met with no loss; but the laboring man, the farmer, the man of muscle, was the man who submitted to this great loss, while the merchant and while every man with money took care of himself.

During that year the average price of gold was 203.3 per cent., or your money was a fraction less than 48½ cents on the dollar during the whole year. You had out that year $649,100,000, and the value of gold was 203.3, and the purchasing value of your $649,100,000 was $319,281,000, and that was the whole of it.

In 1865 you again increased the volume of your circulating medium by the amount of $49,800,000; making the whole amount of your circulation $698,900,000. During the month of January, 1865, the price of gold was 216.2; during February, 205.5; in March, 173.8; in April, 148.5; and after that it stood at 135.6, 140.1, 142.1, 143.5, 143.9, 145.5, 147, 146.2. The average of the year 1865 was 157.3; and what was the purchasing value of your greenbacks that year? Every man here will remark that that year we were disposing of our bonds at the rate of hundreds of millions of dollars a month; money was passing through the Treasury almost without limit. We had $1,000,000,000 that must be negotiated, and negotiated at once--seven-thirties and compound-interest notes and other floating liabilities that must be funded; and during that year the war had closed, and while we were negotiating at this enormous rate, the price of gold fell to 153.3, and during that year the purchasing value of our circulation attained a higher rate than during any other year. That year, although our circulation of greenbacks was $698,900,000, and the premium on gold 57.3, the actual purchasing value of that $698,900,000 was $444,310,000.

In 1866 we retired $90,000,000, leaving $608,900,000, and the average premium on gold that year was 40.9 per cent. The purchasing value of the $608,900,000, with the premium on gold at 40.9, was $432,150,000.

The next year, 1867, we retired $72,300,000, and premium on gold fell to 38.2. So we went on reducing until we got down to $400,000,000, and then we struck 14.9, 11.7, 12.4 and 14.7 as the premium on gold. There the matter has stood, and I have here from year to year, the purchasing value for each year....

Mr. President, what we want is purchasing value, because the intrinsic value is measured by the purchasing value. There is not a bushel of wheat that goes from your State or from mine the purchasing value of which is not fixed by the gold value on the other side of the Atlantic. We are shipping millions and tens of millions and hundreds of millions of our agricultural products every year, and the value of these products is fixed in gold on the other side of the Atlantic; and yet by this increase of circulation we enhance the value of everything that the producer raises, but when the product comes to the market its value must be fixed by its price in gold across the Atlantic....

Mr. President, I know of no way to substitute the Treasury of the United States for the banking experience of the last ten centuries. We have the experience of the past, we have the experience of our own nation, we have the experience of the world. Now, do we propose to throw aside this experience, and to launch our boat upon a wild and uncertain sea, an ocean of expansion and no payments?

Sir, there are very few persons within the range of my acquaintance who desire expansion of an irredeemable currency. Certainly the people of Michigan have had abundance of experience of that kind. But wherever you go you will find two classes of men who are making a great noise about "more money." One is the speculator, the impecunious speculator, who has, perhaps, bought real estate and given a mortgage, and thinks that his only chance is to reduce the value of your currency until it falls so low that the people would rather take his land than hold your money; and the other is the man who has issued his paper without intending to pay when it matures, and who can borrow no more money upon any terms until he pays what he already owes.

On the 14th of January, 1875, the act for the resumption of specie payments became a law. Mr. Chandler was a member of the Senate when this bill passed. He had but one objection to it; the time fixed for resumption was unnecessarily remote. Neither present exigency nor needed preparation required the delay, and he believed it to be opposed alike to economy, patriotism, and public honor. But it was the best that could be secured; insistence upon an earlier date would have divided the friends of resumption, prevented the passage of any bill at that time, and postponed the day of specie payments. For these reasons Mr. Chandler favored the measure, and a few weeks later, when he retired from the Senate, it was with the consciousness that he had only voted for an irredeemable and inconvertible currency to meet the imperious exigencies of civil war, that he had opposed its undue expansion, that he had sustained every measure of contraction calculated to lessen the difficulties of the return to a sound basis, and that he finally had crowned his Senatorial career by support of a measure which insured the return of the government to the constitutional standard of values.

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