advantage in legal privileges over any other State. If its industry is superior, if its climate is better, if its soil is richer, those are the gifts of God; but no State has a right to enjoy a privilege by law which is not conferred upon another, and no State and no individual in a State has a right to enjoy any privilege conferred by law that is not fairly and equally shared by every other citizen and every other State. It is because the New England States in this distribution of banking currency have an advantage, that it is right, it is just, and it is proper to make a partial redistribution. I do not wish to disturb the business relations of those States. I think it would be wrong to do it, and I have frequently publicly and privately begged Senators not to make this withdrawal more than is absolutely necessary to secure some reasonable banking facilities in the South. I should dislike very much indeed to see the amount of withdrawal so large as to impair or derange the business of New England, because I know that our country is so interlinked and bound together that everything that affects the interests of that section will affect the interests of the South. I would only propose this as a temporary measure to meet a temporary exigency until we can have the resumption of specie payments and can provide a free banking system.

But pending the present anomalous state of affairs we are bound at least to render reasonable facilities to the South by some kind of bank circulation. If it is proposed to go back to specie payments, they can not be reached in a day or a month or a year. I am as willing to adopt measures to that end as any Senator; and resumption of specie payments will settle all these questions; but meanwhile it is only fair and right that this accidental advantage in the distribution of the banking capital should be removed to a reasonable extent.

I ought to say that this act does not affect my constituents in the least. Although the State of Ohio has somewhat less than its fair proportion of banking circulation, I do not know of any application, certainly none that I would heed, from that State for more circulation. This bill will not either take from or add to its circulation. I therefore feel that in pressing this act of partial justice, even though it may be an inconvenience to our friends in the New England States, we are doing what is right and proper, and that we should not in doing it

the question of the increase of the banking circulation in any way whatever. With my present convictions, I never will vote for the increase of the circulation of the national banks until we get back to specie payments, and then, in my judgment, the amount now outstanding is amply sufficient for all the purposes of this country. Before the war the whole bank circulation was only $168,000,000; now it is $300,000,000; and certainly I would vote for no proposition to increase in any form the paper money, either greenbacks or national-bank notes, until we get back to the standard of gold and silver coin.

A proposition to increase the national-bank notes and decrease the greenbacks, attached to this bill, will not meet the sanction of Congress, and will defeat the entire bill. The only effect of that proposition, should it become a law, would be to add to our national burdens the interest on $50,000,000 of new bonds, merely to secure a more just

distribution of banking circulation; while if the bill as it stands is passed, the effect will be to give to the South and a few of the new States of the West in the next year an opportunity to get a little banking circulation, and to give to banks in the old States an opportunity to move themselves bodily to the South, and this will relieve a political and sectional complaint that is founded in substantial justice.

One or two observations have been made to which I wish briefly to reply. One is that this is a case of extreme hardship and violation of faith. In my judgment, according to the law the apportionment to these States of the large amount they have is in violation of law, and is a case of great hardship. What is the case? Allot to Massachusetts, Connecticut, and Rhode Island twice their proper proportion of this banking circulation, give that to them on account of their manufacturing business, and they still have $59,573,837 more than their share under existing laws. We propose to take $20,000,000 of that, and distribute it among those States that have not any. That is the whole proposition.

But it is said that they have the pledge of the public faith, that they acted in accordance with law, upon our invitation, and got this proportion of circulation, and now it is not fair for us to withdraw it. If that argument were true in point of fact it would have some weight in equity, not in law, because the law expressly provides that the act itself may be repealed, changed, or modified at the pleasure of Congress. If in pursuance of our policy persons had entered into this banking business and got more than their proportion of circulation, it would not be exactly fair to withdraw it. But, sir, this is in violation of law, and it is only necessary for me to recite certain well-known facts to show it.

By the original banking act, passed February 25, 1863, an apportionment of circulation was provided by which one half was to be divided according to population and the other half according to resources. Massachusetts, Connecticut, and Rhode Island-for those are the only three States affected-got their full proportion under that law, every dollar of it; and the State of New York also got its proportion. It was found that the limit of $300,000,000 prevented some of the State banks from coming into the system, and in June, 1864, an act was passed to allow State banks, without regard to the limitation, to come into the system. Under the operation of that law, from June, 1864, to March, 1865, certain banks in the States of Massachusetts, Connecticut, Rhode Island, and New York came in, thus exceeding the proportion allotted to them by the law; but they had not very far exceeded the proportion up to March, 1865. They had in no case gone over thirty dollars an inhabitant, because the banks were slow.

I am asked how did it happen that the law was violated and there was so much of an excess. I will explain in a moment. On the 3d of March, 1865, Congress passed a law which, after making certain other provisions, reads as follows:

And that $150,000,000 of the entire amount of circulating notes authorized to be issued shall be apportioned to associations in the States, in the District of Columbia, and in the Territories, according to representative population, and the remainder

shall be apportioned by the Secretary of the Treasury among associations formed in the several States, in the District of Columbia, and in the Territories, having due regard to the existing banking capital, resources, and business of such States, District, and Territories.

This section restored the old provision of apportionment and repealed the act of June, 1864, which authorized existing banks to go beyond the limit of $300,000,000. It has never been changed, modified, or altered, except as I shall hereafter show.

Unfortunately, after this section had passed, as I supposed, into a law, although it was not finally approved until the 3d of March, 1865, an amendment was attached to an internal revenue bill which became law on the same day (March 3, 1865), in words as follows:

That any existing bank organized under the laws of any State, having a paid-up capital of not less than $75,000, which shall apply before the 1st day of July next for authority to become a national bank, under the act entitled "An act to provide a national currency secured by a pledge of United States bonds, and to provide for the circulation and redemption thereof," approved June 3, 1864, and shall comply with all the requirements of said act, shall, if such bank be found by the Comptroller of the Currency to be in good standing and credit, receive such authority in preference to new associations applying for the same.

Now, one construction of this amendment would seem to be that if, in the State of Rhode Island, any portion of their share under existing law remained to be distributed, it should be given to an old bank rather than to a new bank. The amendment did not change the rule of apportionment. It said nothing about it except who was to get the allotment, and that the old banks should have the preference therein; and in the State of New York the thing actually existed; the old banks and the new banks were coming in, and this provision was intended to give the old banks the preference. But the Comptroller of the Currency, as I think in violation of law, construed the amendment as a repeal of the section first mentioned, and disregarding that section entirely allowed the old banks to come in.

Let me say that up to the close of the war there was no very great inequality of circulation. Up to that time the banks of Massachusetts had not come into this system to the extent that they afterward did; but availing themselves of this privilege after the war was over, when everybody saw that it was a great advantage to have national banking circulation, when the difficulties had passed away, adopting the construction of the Comptroller of the Currency, they rushed in and got this enormous aggregate of circulation. So that, upon what I conceive to be an erroneous construction of the law, they now claim to hold an unfair advantage of the rest of the people of the United States.

In the application of a general rule like this for withdrawing circulation, I have no doubt there will be some inconvenience, perhaps some injustice. I certainly do not desire to injure any banks or any citizen of those States. But now, when we are compelled to do what is right, is it not just that we should give some circulation to the States that have none, even if we have to withdraw that which is held, I think without law, in other States?

Mr. President, the question after all comes down to this-for I do

not think we ought to bring into this debate the subject of funding the debt-shall there be a redistribution of banking circulation?

We were very careful in touching this question not to do anything that was harsh or injurious. It would be only even-handed justice to withdraw from these States in excess under a general rule the whole $60,000,000. I have not proposed and do not intend to propose such a thing, because a general interference with the business of the people of those States to the extent of enforcing a fair and equal rule would work injury to them and work injury to the whole country; but, in my judgment, the transfer of a reasonable amount of this circulation, while it may give local advantages to the Southern States, would not materially injure the business of these older States. At any rate, it is just and fair, and, as I said yesterday, if my own State were in excess I should still feel disposed to vote for the withdrawal.

All that there is in this bill, and all that is proposed by this bill, is to secure a partial redistribution of the banking circulation until we can adopt some permanent financial measure looking to free banking and specie payments. It is temporary in its character; and I must confess that the great objection I have to this measure is that it is temporary in its character. I would not press this bill now to secure this partial justice to the Southern States but for the fact that the bill reported from the Committee on Finance, or some bill of that kind looking toward specie payments and free banking, would not be adopted during the present session of Congress. The redistribution of $20,000,000 of circulation will give temporary relief, will probably be all that can be absorbed in those States for the next year or so, and, in my judgment, will not do any considerable injury to the people of the States whose currency will be decreased.

I hope, without any further prolonged debate-and I beg pardon for occupying so much time now in replying to the observations that have been made this morning-that we may have a vote on this bill and get it out of the road.

THE CURRENCY.

IN THE SENATE, JANUARY 24, 1870.

THE regular order being the bill to provide a national currency of coin notes and to equalize the distribution of circulating notes, Mr. Sherman said:

MR. PRESIDENT: I do not propose in opening the debate on this bill to make any elaborate financial speech. What I desire to say will be addressed solely to the Senate, and bear entirely upon the points presented by this bill. The bill proposes to deal with two questions: first the equalization of the national currency, and second the establishment of banks to issue coin notes; and these two propositions are the only subjects on which I shall say anything. I shall speak as briefly as possible, and present the questions involved as clearly as I can, so as to

confine the debate, if possible, to these two questions. There are a great multitude of financial questions now agitating the public mind that are somewhat connected with these two. The enlargement of the discussion by introducing them would, I think, rather obscure the argument than make it plain.

The first two sections of this bill provide for a partial equalization of the bank circulation of the United States. The present circulation is distributed with such gross inequality as to be revolting to the sense of justice. Three States whose people are among the most enterprising and active of our countrymen, containing a population of 1,865,833, or one fifteenth of the population of the United States, have an aggregate circulation amounting to $96,890,498. These States are Massachusetts, Rhode Island, and Connecticut. With a population of less than two millions, they have one third of the whole national circulation, so that one fifteenth of the population absorbs and monopolizes one third of the national circulation. The Southern States, with a population of about eleven millions, have scarcely any circulation, perhaps a few millions. I have here the tables in detail, but I can not give the aggregate. It is probably not one fourth as much as the State of Massachusetts alone. The Western States, all of them rapidly growing communities, with cities and towns and business springing up with amazing rapidity, some of them formed into States within a few years, have practically no circulation. The Pacific coast is practically excluded from our banking system, simply because there coin alone is used in circulation and our currency is sold at a discount.

Thus the present system, which ought to be a national one equally and fairly diffused through the United States, is confined in its beneficial effects to the Eastern and mainly to the New England States. This gross and palpable injustice has grown out of a violation of law by the Comptroller of the Currency and the Secretary of the Treasury. This fact I stated at the last session, and I wish now to call the attention of the Senate distinctly to the law under which this grossly unequal distribution was made. The first national bank act contained a provision for the distribution of the banking circulation. The act of February 25, 1863, contained this clause :

That the entire amount of circulating notes to be issued under this act shall not exceed $300,000,000, $150,000,000 of which sum shall be apportioned to associations in the States, in the District of Columbia, and in the Territories, according to representative population; and the remainder shall be apportioned by the Secretary of the Treasury among associations formed in the several States, in the District of Columbia, and in the Territories, having due regard to the existing banking capital, resources, and business of such States, District, and Territories.

Under this act each State would have been entitled to a little more than five dollars for each inhabitant, according to the census of 1860, out of the first $150,000,000, and then the other $150,000,000 should have been distributed according to business, capital, and resources. The Eastern States, being much wealthier than the Southern and Western, as a matter of course would have received much the larger portion of the last $150,000,000; but under the other provisions of this act each State would have at least five dollars for each inhabitant. The revised