public creditor, and even prevent for a time any considerable depreciation of the notes. In the mean time the notes would be a legal tender among our citizens, would pay debts and fulfill contracts, and would, the moment that exceptional causes passed by, be at par in coin. With authority in the Secretary of the Treasury to redeem United States notes either with coin or with the five per cent. bonds now offered for sale, and with like authority to redeem bank bills protested for nonpayment in specie with the bonds of the bank deposited with the Treasurer at par, we would have specie payments except when bonds of the character named were worth less than par in specie.

With the advancing credit of the United States we may safely affirm that such bonds will always be at par in gold, except at such times as it would be ruinous to maintain specie payments. And, with such provision for the redemption of United States and bank notes, no large reserve of gold, either in the Treasury or in the bank, would be required. Such a provision would guard against the sacrifices which banks and people alike must suffer when compelled to redeem their notes to pay their debts in coin, made exceptionally scarce by panic or war. It would reconcile many persons to a specie standard who dread that an artificial or temporary scarcity of specie might require them to fulfill their contracts with money impossible to be obtained. Banks who now fear that under a panic their bonds and securities might be sacrificed for specie would feel that their securities deposited with the Treasurer would at least pay their bills. It would be in harmony with the banking system and all our early loan laws during the war, which provided for a voluntary conversion of notes into bonds. I do not claim that this is the only expedient against a panic and for temporary suspension, but I do claim it would secure us against the wide-spread bankruptcy that in times past resulted from the compulsory suspension of specie payments in the United States.

Having thus shown the obligation and necessity of specie payments, and how the anticipated evils of resumption may be avoided, it remains to examine the means best adapted to bring it about. Among the innumerable schemes proposed there are several that are practicable.

1. To authorize legal-tender notes to be receivable in payment for bonds of the United States.

2. To authorize them to be receivable in payment of duties.

3. To authorize them to be converted into demand notes bearing interest, or into compound-interest notes.

4. To provide for direct resumption of specie payments on a day in the future to be fixed by law.

5. To provide a graduated scale of rates at which the notes will be redeemed in coin, advancing to par in coin at a prescribed day.

The examination of these plans would lead me more into detail than I propose to go at this time. Each of them would immediately advance our notes toward a specie standard. The second only is subject to the objection that it would violate the public faith, now pledged to maintain the customs revenue in coin as a special fund for the payment of interest on the public debt. A careful consideration of the whole subject leads me to the conviction that the simplest and most

expedient measure is to declare by law that on and after the 1st day of January next the United States will redeem its notes either with coin or, at the option of the Secretary of the Treasury, with its bonds of convenient denominations bearing five per cent. interest in coin. This will be a recognition by the United States of its solemn pledge, made March 18, 1868, that it will at the earliest practicable period redeem its notes in coin. It will provide also for the possible but not probable contingency that more notes will be presented than can conveniently be paid in coin. In that event the United States will redeem its notes in bonds now worth par in gold in the money market of the world. The objections that may be made and its effect upon the national banks have already been anticipated in what I have said. The plan is founded upon the plain equity that if we can not literally perform our promise by payment in coin, we will at least give to the public creditor who holds the notes of the United States a bond bearing a commercial value equal to gold. If, then, these notes are in excess of the wants of the people for a currency, they will be presented for redemption, and ought to be redeemed; if not, their value will be appreciated to the gold standard, and this is specie payment. The necessary modifications of the banking act can properly be postponed until a future time, when the practical effect of a specie standard upon United States notes will test the ability of the banks to maintain their notes at par with those of the United States. Whether they should be relieved from maintaining so large a reserve, whether there should be one center of redemption, are questions of practical legislation for the future. The moment the notes are redeemable in coin the banking system ceases to be limited as to the number and distribution of banks, and will stand like all other business pursuits, open to all who will give the requisite security for their notes and will obey the general law.

In submitting these remarks at this time I feel like apologizing for passing by arguments worthy of consideration; but my only purpose now was to present with the substitute reported by the Committee of Finance the leading reasons in favor of it. My hope is, and it is a reasonable one, that neither Senators nor the public will confine their arguments to critical objections, but will suggest some plan better suited to the objects we have in view. I, for one, while honestly supporting this plan, will readily adopt any better one that will make the now broken promise of the United States to pay one dollar equal to the best gold dollar of the mint.

Mr. President, I move that the amendments be printed, and that the bill take its place on the calendar; and on some convenient day, when the Senate is ready to consider a question like this, I shall move to take up the bill.

COINAGE LAWS.

IN THE SENATE, JANUARY 17, 1873.

THE Senate resumed the consideration of the bill revising and amending the laws relative to the mints, assay offices, and coinage of the United States. On the amendment offered by the Finance Committee to strike out the following words: "And any gold coin of the United States, if reduced in weight by abrasion not more than one half of one per cent. on the double eagle and eagle, and one per cent. on the other coins, below the 'standard weight prescribed by law, shall be received at their nominal value by the United States Treasury and its offices, under such regulations as the Secretary of the Treasury may prescribe for the protection of the Government against fraudulent abrasion or other practices; and any gold coins in the Treasury of the United States reduced in weight below this limit of abrasion shall be recoined," Mr. Sherman said:

I CAN only say I have here a number of documents, not only from the Director of the Mint in Philadelphia, but from Prof. Barnard and the Comptroller of the Currency, calling our attention to this very important feature of the bill; and the Committee on Finance, after a patient examination of the whole matter, decided that it was clearly inexpedient and wrong to leave in this provision for the recoinage of all the present gold coins of the United States.

It is true, we have provided for recoining the coin in the Treasury of the United States; but we go no further than that. No nation in the world has gone further than that. I do not wish to delay the Senate by reading these documents, but I suggest to the Senator whether he had not better let this proposition go to a committee of conference rather than undertake to discuss it here, because if we are compelled to discuss it here I shall be obliged to have these letters read, which entirely convinced the Committee on Finance that the United States dare not assume the loss of abrasion beyond the legal standard.

There is a legal standard within which the United States make the coin good; but when coin depreciates below the standard of abrasion, then neither the United States nor any other nation in the world undertakes to make the coins good except for their intrinsic value. The ways in which these coins might be abraded by fraud were shown to us, and it will be utterly impossible for any regulation of the Secretary to prevent great loss to the Government if we attempt to maintain these coins when they fall below the limit of abrasion and redeem them at the nominal instead of the real value.

The law now provides for recoining abraded coin in the Treasury of the United States. There is no necessity, therefore, for putting it in here again. Indeed, when this clause was inserted in the House the law providing for that recoinage had not been passed. It was passed in an appropriation bill on my own motion, I think, at the last session of Congress. The Mint was authorized to recoin the abraided coins in the Treasury of the United States, some of which were taken at their reduced value.

All nations retain the nominal value of abraded coin to a certain standard, but when it falls below that, the loss falls on the individual who holds it. That has been the custom of all countries. The coin that is held by the Treasury of the United States is received at its nominal value if it is within the limits of abrasion fixed by the law; but if it falls below the limits the loss falls on the holder of the coin, and much of that which is now being recoined was taken at the abraded value, that is, reduced value; and when we issue it again, we shall issue it in coin up to the standard. The question as to whether we shall recoin our own coin and the question whether we shall recoin the coin in the hands of citizens are very different things.

Within a certain degree, one thousandth per cent., a small degree, the Government maintains the coins at their nominal value even if abraded, but when they are abraded below that, the loss falls on the holder, and every man who receives a coin must look to it that it has not been abraded beyond the legal limit. If it is so abraded, he can refuse to take it, or if he takes it at all, he should take it for what it is intrinsically worth. The recoinage of the gold coin now in circulation, although not very large, would involve an amount of one or two million dollars. As a matter of course, as soon as our attention was called to this fact we struck out this clause. I do not wish to go any further into the details of the matter. I think the action of the Committee on Finance was clearly right, and it would be very wrong indeed to undertake in this ambiguous way to make good all the coin now outstanding.

On the question of a coinage charge for gold, Mr. Sherman said:

I must confess my regret that this disputed question should be raised at this stage of the bill, just as it was about on its passage. The Senate of the United States deliberately, after full discussion, decided to retain the charge for coinage of one fifth of one per cent. It is now one half of one per cent., but we reduced it to one fifth of one per cent. The Senate, by a very decided vote, after a full debate, settled that question. The bill went to the House of Representatives, and there there was another effort made by the members from the Pacific coast to repeal the coinage charge, and there, after full debate, it was settled by an overwhelming majority to retain the charge of one fifth of one per cent.

If this question about the coinage charge is to be opened and pressed, it will compel those of us who are in favor of retaining the coinage charge to enter into an elaborate debate. I did so when it was here before, and many other Senators participated in that discussion. The question has been settled, and this bill has now gone to its last stage. This bill passed the Senate a few years ago, and was fully discussed, and the charge of one fifth of one per cent. was retained. This point is beyond our consideration practically. We ought not to undertake, at this period of the session, to review that decision.

The people of California are very largely interested in the revision of the Mint laws. Indeed I have received more letters from that State about this coinage bill, desiring it to pass, than from any other portion

of the country. I can see the great importance of it to them, and I believe it to be one of great importance to the whole people of the United States. Therefore I do not wish to enter into a discussion in regard to this coinage charge that may probably weary the Senate and delay the passage of the bill. I promised that the bill would not take more than an hour, and when I made that promise I supposed these amendments which have been acted upon would be acted upon sub silentio, and that other questions which had been settled would not be revived.

I therefore prefer not to say anything on the question except that the coinage charge has not been and ought not to be repealed entirely. We have reduced it now to the lowest rate of any nation in the world except only Great Britain.

The bill became the coinage act of 1873.

THE CURRENCY AND SPECIE PAYMENTS.

IN THE SENATE, JANUARY 16, 1874.

THE bill to provide for free banking, to secure an elastic currency, to appreciate national obligations, and to reach specie payments without commercial embarrassment, being before the Senate, Mr. Sherman said:

MR. PRESIDENT: It was my purpose not to address the Senate until I had the benefit of the opinions of all Senators who wished to express their opinions; and then I proposed, in closing the debate, to state the general reasons that influenced the Committee on Finance to report this resolution. But as the Senator from Illinois [Mr. Logan] tells me he is not very well to-day, and other Senators are not prepared, I prefer, rather than cause delay, to state as best I can those reasons now.

And, sir, at the outset of my remarks I wish to state some general propositions established by experience, and the concurring opinions of all writers on political economy. They may not be disputed, but they are constantly overlooked. They ought to be ever present in this discussion as axioms, the truth of which has been so often proved that proof is no longer requisite.

The most obvious of these axioms, and one which lies at the foundation of the argument I wish to make to-day, is that a specie standard is the best and the only true standard of all values, recognized as such by all civilized nations of our generation, and established as such by the experience of all commercial nations that have existed from the earliest period of recorded time. While the United States, and all other nations, have for a time, under the pressure of war or other calamity, been driven to establish other standards of value, yet they have all been impelled to return to the true standard; and even while other standards of value have been legalized for the time, specie has measured their value as it now measures the value of our legal-tender notes.