its own accounts; and it seems to me that nothing less than that should be granted.

The bill became a law February 8, 1861, and the session closed on the 3d of the following month. Of this loan, bearing six per cent. interest and having twenty years to run, the Secretary sold as soon as possible $18,415,000 at the rate of 89.10 per $100.

ISSUE OF UNITED STATES NOTES.

IN THE SENATE, FEBRUARY 13, 1862.

THE first session of the Thirty-seventh Congress convened July 3, 1861. Mr. Chase, Senator from Ohio, having been called to the Treasury by President Lincoln, Mr. Sherman succeeded him in the Senate. The first session closed August 6, 1861, and the second session convened December 2, 1861, Mr. Sherman serving upon the Finance Committee, of which Mr. Fessenden was chairman.

The Senate, as in Committee of the Whole, resumed the consideration of the bill to authorize the issue of the United States notes, and for the redemption and funding thereof, and for funding the floating debt of the United States. Mr. Sherman said:

MR. PRESIDENT: The general views of the Committee on Finance have been so ably stated by its chairman, that it will not be necessary for me to discuss the features of this bill, upon which we agree. As it came from the House it was evidently imperfect; but the amendments adopted, on the recommendation of the Committee on Finance, have so improved it as materially to change its character.

The motion of the Senator from Vermont now for the first time presents to the Senate the only question upon which the members of the Committee on Finance had any material difference of opinion, and that is, whether the notes provided for in this bill shall be made a legal tender in payment of public and private debts. Upon this point I will commence the argument where the Senator from Maine left it.

He says he is not satisfied that this provision is necessary, and until so satisfied he will not support it. He does not present the constitutional question, but doubts whether it is necessary to give these notes the sanction of a legal tender. I agree that this measure can only be justified on the ground of necessity. I do believe there is a pressing necessity that these demand notes should be made a legal tender if we want to avoid the evils of a depreciated, dishonored paper currency. I do believe we have the constitutional power to pass such a provision, and that the public safety now demands its exercise. Is there such a necessity?

In the first place, I will say, almost every recognized organ of financial opinion-if that is a correct expression-in this country agrees

that there is such a necessity in case we authorize the issue of demand You commence with the Secretary of the Treasury, who has given this subject the most ample consideration. He declares not only in his official communications here, but in his private intercourse with the members of the committee, that this clause is indispensably necessary to the security and negotiability of these demand notes. We all know from his antecedents, from his peculiar opinions, that he would be probably the last man among the leading politicians of our country to yield to the necessity of substituting paper money for coin. He has examined this question in all its length and breadth. He is in a position where he feels the necessity. He is a statesman of admitted ability, and distinguished in his high position. He informs us that without this clause the attempt to circulate as money the proposed amount of demand notes of the United States will prove a fatal experiment.

In addition to his opinion we have the concurring opinion of the Chamber of Commerce of the city of New York. With almost entire unanimity they have passed a resolution on the subject after full debate and consideration. That resolution has been read by your Secretary. You have also the opinion of the Committee on Public Safety of the city of New York, composed of distinguished gentlemen, nearly all of whom are good financiers, who agree fully in the same opinion. I may say the same in regard to the Chambers of Commerce of the city of Boston and the city of Philadelphia. They have said to us in the most solemn form that this measure was indispensably necessary to maintain the credit of the Government, and to keep these notes anywhere near par. In addition, we have the deliberate judgment and vote of the House of Representatives. After a full debate, in which the constitutionality, expediency, and necessity of this measure were discussed, in which all the objections that have been made here and many more were urged, the House of Representatives, by a large vote, declared that it was necessary to issue demand notes, and that this clause was indispensable to their negotiation and credit.

Now, Mr. President, I know very well that the Senate is not governed by authority; nor should it be. As a high political body, our opinions ought not to be affected entirely by the opinions of others. But allow me to repeat what is admitted by all, that very few members of this body are familiar with financial subjects; very few of us have been called upon to study such questions; and therefore it is that, when a question of this kind is before the Senate, the opinion of men who have devoted their lives to this subject ought to be fairly considered. Upon the question of the constitutionality of this measure the opinion of the Senator from Vermont and other Senators around me is worth much more than that of commercial men; but upon the question of the necessity of this measure, to give your demand notes negotiability, security, value, in the money market, their opinion is worth more than that of any individual Senator.

But I do not intend to rest here. I desire to show the necessity of it from reason. We have to raise and pay out of the Treasury of the United States before the 1st day of July next, according to the esti

mate of the Committee of Ways and Means, the sum of $343,235,000. Of this sum, $100,000,000 is now due and payable to your soldiers; to contractors; to the men who have furnished provisions and clothing for your Army; and to your officers, judges, and civil magistrates. Where will you get this money? A question of hard necessity presses you. We know very well that it cannot be obtained of the banks. They have, with a patriotic feeling not usually attributed to money corporations, which are supposed to have neither souls nor bodies, already exhausted their means. The aggregate capital of the banks of the three principal cities of the United States is but $105,000,000, and they have taken more than their capital in the bonds of the United States. It is, therefore, idle to look to them for relief. They can lend you no more money. You must look to other sources. The men who have thus loaned you money, and enabled you to carry on the war thus far, are the very men who now beg you for this measure of financial aid. They ask this currency to enable them to assist you further in carrying on the Government. Among others, the cashier of the Bank of Commerce, the largest bank corporation in the United States, and one that has done much to sustain the Government, appeared before the Committee on Finance, and stated explicitly that the Bank of Commerce, as well as other banks of New York, could not further aid the Government unless your proposed currency was stamped by and invested with the legal form and authority of lawful money, which they could pay to others as well as receive themselves.

Another thing must be considered. We cannot get the needed sum by taxation for six months at least. We are to pay out over three hundred millions before next July with but small revenue. The Committee of Ways and Means of the House of Representatives have already been two months in framing a tax bill, and it is not yet done. It has to go through the ordeal of the House of Representatives; it has to come here, and pass through all the forms of legislation. If it should assume the form of law by the 1st day of June next, it will be as much as we can expect, so that it is useless to look to taxation for any portion of this money.

I ask you, then, Mr. President, where will you get it? You must borrow it. The most direct way would be to put your bonds, based upon the credit of the United States, in the money markets of the world, and sell them for what they will bring. This has been done by the most powerful Government in Europe. In the struggle of Great Britain with Napoleon that power sold £420,000,000 of securities for £260,000,000. She contracted a debt of £173 for every £100 received by her. It was only by such sacrifices that she was able to cope with and eventually overcome her adversary. But even such enormous sacrifices would not have produced the money needed had she not adopted a national currency of paper money-practically, if not legally, made a legal tender and had not used this currency as a medium of exchange with which she facilitated the payment of taxes and the negotiation of loans. You are compelled by your necessities to pursue the same course. It is not claimed by any one that these demand notes will satisfy your wants. You here provide only for $100,000,000, and have

yet large sums to provide for. After these notes are exhausted we must sell the bonds of the United States.

But suppose you put the bonds now on the market, what will they bring? It is said to us by the leading financiers of this country, whose opinions are entitled to respect, whose patriotism cannot be questioned, that these bonds, if now forced upon the market in large quantities, would be depreciated to something like sixty cents on the dollar; and why? Not because financiers do not consider them good, not because any one doubts that they will be paid eventually, but because there is no money with which to buy them. By the laws of the United States, the Secretary of the Treasury can receive nothing in payment for bonds but gold and silver coin. Where will the purchaser of your bonds get the gold and silver coin? It is now driven out of circulation. There is no such thing as gold and silver coin circulating in the country to any large amount. It is stowed away. The very moment the banks suspended in the city of New York, that moment gold and silver ceased to be the circulating medium of this country. There is not now in active circulation nearly enough gold to pay your existing debt. It is therefore clear you cannot sell your bonds for gold and silver under existing circumstances. If any man, however patriotic, desired to purchase them, he could not pay you in the only coin that you dare take, because he cannot get it. He must go to a broker first and buy the gold before he can find a medium of exchange with which he can legally pay for them.

It may be said, and I know the Senator from Rhode Island said, that there is an easy remedy for this difficulty. He would repeal the Sub-Treasury law, and receive the paper money of the banks. In other words, he would at once install as the national currency, as the standard of values, the inflated currency of all the local banks in the United States: banks over which we have no control, which we cannot regulate or govern in the slightest degree. We should have, then, the circulation of these banks substituted for gold; and what would be the effect? Suppose such paper money issued by banks in every State, by banks that would have every inducement to inflate, because they do not pretend to pay specie, were received for bonds, and paid out to our soldiers, how long would it be before we should have all the evils of an inflated currency, of an irredeemable currency of the worst character, and in the most dangerous form?

It is easy to criticise this bill. I dislike to vote for it. I prefer gold to paper money. But there is no other resort. We must have money or a fractured Government. If Senators can show me how they can raise money except in the way proposed, I will join them in denouncing paper money. I listened with great attention to the remarks made by the Senator from Vermont; but when he got through, I should have been glad to have him inform me, if we cannot issue these demand notes, what we shall do. Shall we surrender the Government? shall we refuse to pay our soldiers? shall we refuse to pay our contractors? No, Mr. President, we have agreed to pay our debts in money. The chairman of the Committee on Finance gave us a very handsome lecture, a very able discourse upon the importance of preserving the pub

lic faith; and he desired to impress upon us--and did impress upon me -the necessity of not affecting the obligation of contracts. We must not in any emergency, under any stress of circumstances, affect the obligation of contracts between private individuals. Did that Senator overlook the first contract, the contract between the Government and the soldier, the Government and the man who feeds and clothes your armies? We must pay the soldier in money; we must pay the contractor in money. There is a contract, an obligation between the contractor and the soldier and the Government that must be observed. The obligation of good faith rests upon us to pay every dollar that is due from us to our own creditors, as well as not to impair the obligation of contracts between others. How can we do it? I have shown that we cannot do it in gold; I have shown that we ought not to do it in the inflated paper money of the country. How else can we do it? There is no other way, except to issue to our creditor the note of the United States, in such form, with such sanctions, as will enable him to use it as money. If we can believe the testimony of others and the light of reason, the only way we can do this is by stamping it with the same national sanction as that with which we stamp our gold and silver coin.

Having thus stated the necessity of this measure, I must consider our constitutional power to pass it. The Senator from Vermont, whose opinion is certainly entitled to the highest consideration, and who supports it with an able argument, contends that this measure is unconstitutional. I confess, if I did not feel its necessity, I would shield myself behind his conviction and vote against it. But, sir, the more I reflect upon the subject the more I am convinced that Congress can authorize the issue of paper money, stamped as a national currency, as a medium of exchange. Such a currency is a necessary and proper means to enable the national Government to exercise its expressly delegated power to borrow money, to regulate commerce, to support armies and navies. It may be a power subject to abuse; it may be a dangerous power, only to be resorted to in extreme cases; but when I am convinced its exercise is necessary and proper to enable Congress to execute its high powers, I cannot shrink from assuming my share of the responsibility.

The Senator from Vermont has read extracts from the debates in the National Convention and from Story's "Commentaries," tending to show that Congress cannot authorize the issue of bills of credit. But I submit to him that this question has been settled by the practice of the Government. We issued such bills during the war of 1812, during the war with Mexico, and at the recent session of Congress. We receive them now for our services; we pay them to our soldiers and our creditors. These notes are payable to bearer; they pass from hand to hand as currency; they bear no interest. If the argument of that Senator is true, then all these notes are unauthorized. The Senator admits that when we owe a debt and cannot pay it, we can issue a note. But where does he find the power to issue a note in the Constitution? Where does he find the power to prescribe the terms of the note, to make it transferable, receivable for public dues? He draws all these