Speaking of the purpose for which they were issued, he said: Congress believed that four hundred millions would suffice for these purposes, and therefore limited the issues to that sum.

He also recommended the increase of the limit for temporary deposits, then fixed by act of July 11, 1862, at $100,000,000, to $150,000,000, and stated that $10,000,000 of the $50,000,000 reserve had been used in its redemption (p. 16). It was after these recommendations that the act of June 30, 1864, was passed (13 Stat., p. 218), which reënacted this recognized limit of $400,000,000 of United States notes "issued or to be issued," and increased the limit of temporary deposits to $150,000,000. This act provides the same reserve, not exceeding $50,000,000, to be temporarily used for the redemption of such temporary loan.

After this act, in his annual report in December, 1864, Secretary Fessenden again twice (pp. 3 and 18) recognizes that, even prior to its passage, the limit of intended circulation was $400,000,000 of United States notes.

Secretary McCulloch, in his annual report in December, 1865 (p. 11), says "that the circulating medium of the country is altogether excessive," and proceeds to combat objections urged to a reduction of the currency. After making various recommendations, all tending to diminish the volume of circulating notes, he adds (p. 14):

It is the opinion of the Secretary, as has been already stated, that the process of contraction can not be injuriously rapid, and that it will not be necessary to retire more than one hundred, or at most two hundred millions of United States notes, in addition to the compound notes, before the desired result will be attained. But neither the amount of reduction nor the time that will be required to bring up the currency to the specie standard can now be estimated with any degree of accuracy. The first thing to be done is to establish the policy of contraction.

The first act in response to this recommendation was the following resolution, introduced into the House of Representatives 15th March, 1866, and passed by the very decided vote of 144 yeas, 6 nays:

Resolved, That this House cordially concurs in the views of the Secretary of the Treasury in relation to the necessity of a contraction of the currency, with a view to as early a resumption of specie payments as the business interests of the country will permit; and we hereby pledge coöperative action to this end as speedily as practicable.

Afterward, the bill was introduced in the House of Representatives, and finally passed, and was approved April 12, 1866. It was discussed at length, and during the whole debate its purpose was avowed to be contraction of the currency and resumption of specie payments as a consequence. Objections to the great power conferred upon the Secretary of the Treasury, under which he could call in and retire the whole of the legal-tender notes, resulted in a recommittal of the bill to the Committee of Ways and Means; and, in reporting it back, the chairman stated that the recommittal was considered an instruction to place a limit upon the power of contraction. Hence the proviso which limits the contraction to $10,000,000 in the first six months, and $4,000,000 per month afterward.

If the power to reissue had been a power coexisting with that of

retiring, it is evident that the act of February 4, 1868, was unnecessary; for the evil to be arrested by that act could as well have been arrested by the reissue of the notes. That act was passed when it was alleged that contraction was too rapid, and was not intended to relieve the stringency by authorizing a reissue, but, on the contrary, only suspended the power exercised after the passage of the act of 1866.

From this review of the several acts relating to United States notes, we may fairly conclude that the intent and legal effect of these acts, when fairly construed, was to reduce the maximum of legal-tender notes to $356,000,000. No one appears to have asserted that the Secretary had power to increase that sum. The care with which a maximum was always prescribed indicates the intention of Congress to preserve one. The only contingency for an excess was to "temporarily " meet "temporary loan," and by the act of April, 1866, the temporary loan was funded. When the policy of contraction was entered upon, the words used-"retired and canceled "-as clearly expressed a permanent payment and contraction as any words could do. If possible, the words were made stronger by forbidding an increase of the public debt; the issue of a new bond was to be accompanied by the permanent payment and cancellation of an equal amount of the old debt. The general understanding of the business community was that the maximum of United States notes was $356,000,000, subject only to the limited power to use a part or all of the $50,000,000 reissue for payment of "temporary loan," and that only to be used temporarily. To overthrow this construction, and establish the authority of the Secretary of the Treasury to issue $44,000,000 at his discretion, would require some clear and unequivocal expression of the legislative will, and ought not to be inferred.

66

It is claimed that, under a clause of section three of the act of March 3, 1863, the Secretary of the Treasury was granted the power to issue new United States notes in place of those canceled and destroyed," and that he therefore might at his discretion issue the $44,000,000 "retired and canceled " under the act of April 12, 1866. The clause of the act of March 3, 1863, is as follows:

And in lieu of any of said notes, or any other United States notes returned to the Treasury and canceled or destroyed, there may be issued equal amounts of United States notes such as are authorized by this act.

Does this authority conferred in 1863 authorize the reissue of notes "retired and canceled" under the act of April 12, 1866? Your Committee think not. Such a construction overlooks the object and legal effect of the acts of June 30, 1864, April 12, 1866, and February 4, 1868, already cited. The act of 1863 provides for an issue and reissue of United States notes for Treasury notes. Treasury notes bearing interest were issued and United States notes received in payment. When the Treasury notes became due they were paid in United States notes. Under that act United States notes, to the amount of $150,000,000, were issued, reissued, canceled, or destroyed, or mutilated notes were replaced by new ones. They were exchanged at par for Treasury notes. This process often led to the cancellation and destruction of United States notes, and the law provided for the issue of new notes in their

place. This cancellation and destruction of notes, authorized by the act of March 3, 1863, is a very different process from retiring and canceling notes under a law which provides explicitly for a reduction of the currency at the rate of four millions a month. The words of the two acts are different. All the provisions are different. The res gesta are different. One provides for an exchange of securities; the other provides for "retiring and canceling" a specified sum each month.

Again, this clause in the act of 1863 must be construed in connection with the limit of circulation authorized by law.

The limit, it is clear, had been fixed at $400,000,000 by the act of 1864, and we find in the act of March 3, 1865, a proviso that it should not be construed to authorize the issue of legal-tender notes in any form. That limit being kept in mind, the purpose of the act of 1866 was to reduce that outstanding amount.

As originally introduced, the power of reduction extended to the whole legal-tender circulation then issued. Had it passed in that form, as it was urged upon the House, if the right to reissue existed, it would have presented the anomaly of Congress announcing the policy of contraction as necessary and salutary, and leaving the power in the Secretary's hands to defeat that policy as fast as it operated, by reissuing the notes whenever received in exchange for interest-bearing bonds. That power is totally at war with the avowed purpose of the act, and it can not stand with it to the extent of $44,000,000 any more consistently than it could if it had been applicable to the whole $400,000,000.

It is stated that since the passage of the act of February 4, 1868, large sums of United States notes have been held by the Treasury Department as a surplus fund, in excess of the $356,000,000 in circulation, for the purpose of meeting any sudden demand upon the Treasury. This was necessarily so, as large quantities came in daily for redemption as mutilated, defaced, or endangered by successful counterfeiting. But no issue in excess of $356,000,000 was made except in two instances.

In one of these one million and a half was issued after the Chicago fire, to replace that amount burned and destroyed in the office of the depositary at Chicago during the fire. This is scarcely an exception, for the new notes were issued only in advance of the formal proof and allowance for the destroyed notes, but not in advance of the certainty of their destruction.

The other case is stated by the Secretary of the Treasury in his letter of December 13, 1872, to the House of Representatives, as follows:

In reply thereto, I have to say that the amount of United States notes in circulation was increased in October last, upon the order of Assistant Secretary Richardson, then Acting Secretary, in the absence of the Secretary of the Treasury, in the sum of about $5,000,000 over the amount outstanding when the act of February 4, 1868, became a law.

The object of the issue was the relief of the business of the country, then suffering from the large demand for currency employed in moving the crops from the South and West. The condition of affairs then existing in the country seems to me to have warranted the issue upon grounds of public policy.

The circumstances under which this issue of five millions was made were such as would clearly have justified its exercise, if, as was honestly

and confidently claimed by the officer who made the issue, he had the legal authority to make it. It was his plain duty to exercise every power he possessed to protect the public in the emergency stated, and your Committee are unanimously of the opinion that the Assistant Secretary acted according to what he conceived to be his legal power and public duty; but, believing that, under the law, he could not issue legal-tender notes in excess of $356,000,000, we must regard the precedent as a bad one. No sooner was this power claimed than it was at once contested. It is scarcely possible that, if such a power existed, it would not have been exercised before, in times of greater stringency. His action may be an argument why some power ought to be granted to issue United States notes to meet an emergency; it was based not so much upon a construction of law as "upon grounds of public policy," which should control the action of legislative and not executive authorities.

We are referred to two decisions of the Supreme Court, Banks vs. Supervisors (7 Wallace, 26) and Vezie vs. Fenns (8 Wallace, 537), as sustaining the power of the Secretary of the Treasury to issue United States notes in excess of $356,000,000. A careful examination of these cases shows that they have no bearing on the question before us. The Chief Justice says:

That under the act of March 3, 1863, another issue was authorized, making the whole amount authorized $450,000,000, and contemplating a permanent circulation, until resumption of payment in coin, of $400,000,000.

The Chief Justice was not called upon by the case before him to pass upon the subsequent acts, and did not do so. In point of fact, there never was in circulation $450,000,000 of United States notes; and it is safe to say that no one expected to resume specie payments in coin with so large a sum as $400,000,000 United States notes outstanding.

A power over the currency so wide-reaching as the power to issue $44,000,000 of new legal-tender notes is one that ought not to rest upon implication. It should not rest upon a doubtful construction of words in a law passed three years before, and used in regard to loans negotiated under widely different circumstances. Congress might well grant a power during war that it would not confer in peace. The full exercise of such a power would undoubtedly affect the nominal value of all property in the United States to the extent of at least 10 per cent., and the real value or burden as between debtor and creditor of at least 10 per cent. on all contracts to be performed. Such a power, if given, would be by clear and unambiguous language, and should not be inferred by subtile reasoning, or depend upon the pressure of interested parties or changing views of public policy.

In all questions of construction as to the extent of power conferred by law in matters which affect the public credit or public securities, a reasonable doubt as to a grant of power should be held to exclude it. After a careful review of the subject, your Committee are of the opinion that the Secretary of the Treasury has not the power to issue United States notes in excess of $356,000,000, outstanding when the act of February 4, 1868, took effect; but he may replace with new

notes all mutilated or defaced notes, and, within the limit of $356,000,000, may exchange or replace new notes for old ones.

And your Committee report the following resolution :

Resolved, That, in the opinion of the Senate, the Secretary of the Treasury has not the power, under existing law, to issue United States notes for any portion of the forty-four millions of the United States notes retired and canceled under the act approved April 12, 1866.

THE CURRENCY-SPECIE PAYMENTS.

IN THE SENATE OF THE UNITED STATES, JANUARY 16, 1873.

MR. PRESIDENT: The Committee on Finance, to whom was referred the bill (S. No. 1113) supplemental to 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 to secure an elastic currency, to appreciate national obligations, and to reach specie payments without commercial embarrassments, have agreed, I may say unanimously, on a substitute which they offer as an amendment to the bill introduced by the Senator from Connecticut [Mr. Buckingham]. The substitute of the Committee proposes free banking after the 1st of July next and specie payments or qualified specie payments after the 1st of January next, and is the result of the most careful consideration given to this whole class of subjects, embracing all the topics connected with our currency and the resumption of specie payments. In order that the general views of the Committee, as far as they can be given by one member, may go out with this proposition, I have condensed as far as I could in the fewest words the general reasons which control the action of the Committee.

The restoration of our currency to a specie standard is an object of primary importance. The present condition of our currency governs and controls all other questions of political economy, and until we make it the equivalent of money-of gold coin, the recognized standard of money among all civilized nations-we can not rest upon a solid basis for any kind of business or for public or private credit. Every man now buys and sells upon a fluctuating standard of measurement. Every man who borrows feels that he may be compelled to pay in a different money from what he receives. Every producer feels that in addition to the uncertainty of supply and demand he must also speculate upon the uncertainty of the kind and value of the money with which he is to be paid. The merchant must not only guard against dangers by fire and water, but against "corners" or artificial stringency of money. The people at large, while boasting of their restored credit, of vast payments on their public debt, yet must feel that that debt, held by them in the form of United States notes, is less valuable than gold, which it promises to pay; it is less valuable than any other form of public debt, and by its own depreciation forces the depreciation of the notes of