about seventy cents on the dollar, or sixty cents, which I think they reached. If they had undertaken such a movement as that in the face of this provision of law the greenbacks would have had the market value of four per cent. bonds, and those speculators would have been broken long before the Government gold was thrown on the market.

Mr. President, all there is of specie payments in this bill is contained in these simple words; and if the Senate is not willing to do thus much to give value to the security of the note-holder, the nagain the note will drift off, valuable only for the payment of taxes. Now, the United States Government refuses to take this note for any purpose except for taxes. You do not give it any value; you do not promise to pay it; you do not fix a time when you will pay it; you do not authorize it to be received for customs dues; you do not authorize it to be received in payment of bonds; you will not take it at all; you dishonor it; you stamp it with infamy by refusing it in almost every form possible. And now, when we propose to give to it the additional value of making it at least equal to a four per cent. bond, we are met by a phantom fear.

per

Mr. President, I would not regard it as a misfortune if fifty or one hundred million dollars of greenbacks should float into these four cent. bonds. We can never redeem them so cheaply again. The Senator is willing to sell four per cents, even five per cents, at par in gold. Why does he not give the holders of greenbacks now four per cent. bonds if they are willing to take them? If we were now back to specie payments, an object we all desire, but few seem really to wish to come to, the holder of a greenback could present it and demand his gold and silver coin. We are now offering to borrow the gold and silver coin at five per cent., giving our bonds for it. Why not, then, shorten the process by dealing at once with the holder of our legal tenders, and give him a bond payable at four per cent., and thus save the difference?

It is idle to talk about specie payments either now or in the future, when you refuse to give for the greenbacks an obligation of the Government bearing four per cent. interest in gold. Sir, this measure, as far as this point is concerned, is a weak one. The note-holder ought to have more privileges than are conferred by this bill; but the fear of contraction, of a disturbance of the business relations of the country, as an effect of a sudden return to specie payments, must be guarded against, as we have endeavored to do.

We have, then, given to the greenback some productive value, the least productive value that has ever been proposed in this country since its formation; that is, the right to be converted into a bond bearing four per cent. interest. If you are not willing to do that much to strengthen the market value of the greenback, then you proclaim that it is good for nothing except to pay a small portion of the taxes of the United States; not good to pay duties on imported goods; not good to pay interest on the public debt; not good for anything until in some distant future the United States may hoard enough gold in the Treasury to resume specie payments.

Mr. President, this question is simple, although very important in

its effects. The vote of the Senate on this question will have far more effect on the resumption of specie payments than any vote that has been taken at the present session. If we now again dissever the connection between the note and the bond, we allow the note to float on the market a mere toy for speculators, to be raised or lowered at their pleasure. But if we now tie it to our public credit, tie it to the market value of the bonds, we shall have anchored it to a sure foundation, where it may rest in the hands of the people, to be floated into the Treasury in payment of bonds until all that are left-and nearly all will be left-will be paid in gold and silver coin when we resume specie payments. To avoid the possible evils of withdrawing the currency, or any portion of it, from the circulation of the country, we have provided for free banking. Any association of individuals may present these greenbacks, or the bonds provided for by this act, to the Treasurer of the United States, and receive and issue circulating notes, and then and only then an equal amount of greenbacks is canceled under the operation of this act. This measure, simple as it is, I think will have a beneficial effect. But if this is stricken out, the effect of the bill as far as specie payments are concerned is destroyed.

After which the bill was further debated, amended, and passed.

The bill as passed by the Senate was disagreed to by the House, and a committee of conference appointed, whose report was not concurred in, and a second committee of conference agreed to, and their report was submitted by Mr. Sherman, who made the following brief explanation:

I desire the attention of the Senate while I make a brief statement in regard to this very important bill. The controversy between the two Houses as to the funding bill related principally to three matters: first, as to the description of the bonds; second, as to the mode of negotiation; and third, as to their operation upon national banks. The House of Representatives provided for a four per cent. thirty-year bond. The Senate provided for three classes of bonds, at five, four and a half, and four per cent. We have adjusted that matter by providing for three classes of bonds of the description provided for in the Senate bill, but have limited the amount of five per cent. bonds to $200,000,000, of four and a half per cent. to $300,000,000, and the residue, $1,000,000,000, must be four per cent. bonds running for thirty years.

The second question was as to the mode of negotiation. The House provided for no means of negotiation, no agencies and no facilities. The Senate had opposed the appointment of agents, and the advertising of the loan, etc., and limited the expenditure to one half of one per cent. We have agreed to a modification which places the one half of one per cent. at the disposal of the Secretary of the Treasury for the negotiation of the loan; so that in substance it is the proposition. of the Senate.

As to the national banks, we had a great deal of trouble. The original section in the funding bill, as it passed the Senate, required that all the national banks should substitute the new bonds for the old. There was, as I think, a very unreasonable and unnecessary clamor raised by the banks against that provision. I was sorry to see it. In

the House bill there was no provision made in regard to the national banks. But when we came into conference the House conferees themselves proposed that the new banks to be organized under the currency act which recently passed should be upon the new description of bonds; a provision which was manifestly just in itself and not unjust to the banks. That was a proposition made by the conferees of the House, and we agreed to it. When the bill went back to the House, it seems that some of the very gentlemen who were so much opposed to our section about the national banks attacked the report of the committee on the ground that it did not extend this provision in regard to the new banks to the old ones. The contest thus sprang up on the proposition proposed by the House conferees, and the bill was defeated, after debate, upon this proposition.

The second committee of conference, being composed of the same gentlemen, had but one of two courses to pursue either to restore the section proposed by the Senate originally, which we thought was the better way, or to omit all reference to national banks in the bill. In view of the action of the House we concluded that it was better to strike out the seventh section of the bill entirely, leaving the old and new banks upon the same footing, and leaving the national banks entirely at liberty to help or to mar the funding of the public debt.

I wish now to record my deliberate judgment that in this conclusion, to which we have been compelled to arrive by the action of the House, we are doing the national banks a great injury, which will impair their influence and power among the people, and that the opposition of the national banks to this provision, which would have required them to aid in the funding of the public debt, will tend more to weaken and destroy them than anything that has transpired since their organization. I do not see how we can go before the people of the United States and ask them to lend us gold at par for our bonds, when we refuse to require agencies of our own creation to take them; when we even refuse to require new banks not yet organized to take the new bonds, and when we refuse to require old banks, which have made on the average from fifteen to twenty per cent. annually upon the franchise derived from the United States, to aid us to this extent in funding the public debt.

But, sir, the vote of the House shows the power of the national banks. It is so great, at least in the House, that in order to secure a funding bill we have been compelled to abandon all provisions in regard to the national banks; but I give notice that in the future I for one shall be prepared at all times to require the national banks to take that class of bonds which we propose in this bill, and I have no doubt this will be the result. But for the present, in deference to the wishes of the House, we have withdrawn the section in regard to national banks. This bill became the Refunding Act of July 14, 1870.

RECEIPTS AND EXPENDITURES-REDUCTION OF

TAXATION.

IN THE SENATE, MAY 23, 1870.

THE Senate, as in Committee of the Whole, having under consideration the bill making appropriations for the legislative, executive, and judicial expenses of the Government for the year ending the 30th of June, 1871, Mr. Sherman said:

MR. PRESIDENT: This appropriation bill is the first of a series that will bring before us every branch of the expenditures of the National Government. It may be well before we enter into their details to take a general view of our expenditures, and of such measures of taxation as will be necessary to raise the vast sums about to be appropriated. Taxes and appropriations are inseparably associated. They are the pleasing and painful sides of financial legislation. If to appropriate money was the "end all and be all" of this and kindred bills, it would be the most gratifying employment in the world. We could indulge in the luxuries of art and the fancies of statesmanship; we could erect temples for custom-houses, and cover the ocean with our subsidized steamers; we could increase our salaries, and buy all the islands adjacent to our continent. But unhappily we can only appropriate what we first collect by taxation, and taxation is a painful process at best, in its nature unequal, and generally inflicting more injury to the individual than it confers benefit upon the people. Every appropriation bill is a tax bill, and every item added is a draft upon the earnings and labor of our citizens, to which is superadded the cost of collection. If the money is borrowed, then interest is added, and interest is as consuming to the resources of a nation as it is to an individual. It never rests or sleeps.

The estimates upon which these appropriation bills are founded are made annually by bureau clerks nearly one year before the commencement of the fiscal year for which they are made, and by law are submitted to us at the beginning of each session. A general résumé of these for the year may be found on pages 240 to 244 of the book of estimates, as follows:

Permanent appropriations, mainly collection of customs and postal service. Other indefinite permanent appropriations, as drawbacks, excess of duties, bounties, etc.

Interest of public debt..

$155,297,617 62 5,110,000 00

9,031,300 00 129,077,815 00

Total.

$298,516,732 62

A palpable error occurred in the postal estimates, but this I have corrected in the statement read. The great mass of these estimates is to carry into effect existing laws, and can only be reduced by a change of the law. All the appropriations for public works, and some of the appropriations for other heads of expenditure, amounting in the aggregate to more than fifty million dollars, depend upon, and may be increased or diminished in, the annual appropriation bills. The amount estimated by the Secretary of the Treasury in his annual report for the service of the next fiscal year is $291,000,000, made up as follows:

The difference between the two estimates is readily explained, and consists mainly of his reduction of estimates for public works; but the actual appropriation will depend upon the economy or liberality of Congress. I shall be gratified if the appropriations are kept within the estimates of the Secretary of the Treasury.

Now, in these estimates there are elements of uncertainty growing out of other causes than the action of Congress; and some of these demand an immediate legislative remedy. Under the law and the practice of the departments unexpended balances of appropriation for one year are carried over to the credit of that fund in the next year. Thus we may appropriate a specific sum for the pay of transportation in the army, enough in the judgment of Congress for that purpose; yet a much larger sum may be expended by adding to the new appropriation the balances of former appropriations. It is at this moment difficult to estimate what balance of unexpended appropriations will remain on the 1st of July next, and it was much more difficult to estimate such balance in October last. The actual balance of unexpended appropriations on the 1st of July last was $102,390,159.37, of which $41,548,477.30 were for the War Department, and $26,532,453.94 for the Interior Department, or more than one full year's appropriations for each of those departments. Indeed, their "balances" were nearly as large as the whole appropriations for the present fiscal year, thus giving the departments two years' supplies for one. I refer Senators for further information upon this subject to Executive Document No. 155, House of Representatives.

Here we have an element of uncertainty, which explains why the appropriations are not the limit of expenditures. The only way to correct this is by carrying all the balances of appropriations at the end of the fiscal year to the surplus fund; then the expenditures can never exceed the appropriations for that year. This reform has been adopted by the Senate in an amendment reported by the Committee on Finance to this bill, by confining these balances to expenditures included in the fiscal year for which they are appropriated. If unforeseen wants should arise, they can be provided for by deficiency bills; but with the present practice there is not sufficient check upon expenditure. I know of