between them. But this is a section familiar to the Senate, and it is not necessary for me to discuss it.

There is one provision, however, which I will take this opportunity to explain. It is asked, "Why reissue these notes for current expenses; will not this necessarily increase the public debt?" Not at all. The necessity of maintaining that provision grows out of the fact that we now have a deficiency of currency revenue. Our currency revenue is only about $100,000,000; our gold revenue is nearly $200,000,000. The result is, that now we are compelled to sell our gold in order to get currency to pay the current expenses of the Government. If we were not compelled to sell the gold received from customs, we could use in redeeming bonds all the surplus gold, amounting to $60,000,000, or more than that perhaps, as the interest on the public debt is $100,000,000, and the sinking fund requires $30,000,000. We might use our excess of gold directly for the payment of the six per cent. bonds of the United States at par, without discount, without commission, and without the intervention of agent or syndicate. All the surplus gold that comes into the Treasury might be used directly and surely, each month, in the payment of the six per cent. bonds of the United States, and to the extent that currency flows into the Treasury for the five per cent. bonds that currency might be used for the payment of the current expenses, instead of their being met by the sale of gold. To the extent that those notes are presented for redemption, to the full extent that anybody claims they will be presented for redemption, we can convert our six per cent. bonds into five per cent. bonds without costs, commissions, or exchange.

But this is only an incident to the general provision; and the reason why bonds instead of coin ought to be stipulated for is because we can not now say that we can actually promise beyond all doubt to pay coin at the time named. If Congress were willing to impose the requisite taxes we might maintain a system of actual coin redemption, although I think it would not be desirable to do it. I certainly would not vote for actual coin redemption at any fixed period. But instead of promising coin, we can promise to give what we have the power to give, our bond.

It is said that we lose interest; that if a man gives up a note not bearing interest and takes our note or bond bearing interest, we thereby lose interest. Ought we not to do so? Why should the United States or any bank or individual-have the power to force its note into circulation as money when it refuses to pay interest on it to those who desire interest on their money? There is no reason for it. This also fixes a time after the next presidential election, so that I hope that will not mingle in this contest-the 1st of January, 1877, when we shall have reached practical coin redemption.

Mr. President, these are the general features of the bill, and in my judgment, with due deference to the opinions of the Senate, it ought to be taken as a whole. It is manifest that here are two provisions, one providing for an increase of paper money, the other providing for increasing its value; one providing for more money, the other providing for better money. You can not have more money without making pro

vision to make that money better, except by violating the public faith. Therefore I submit to the Senate in all candor and sincerity that they ought to take this bill as a whole, and not tear it to pieces and compel those who are friendly to the system of free banking to vote against it, because there is not coupled with the provision for free banking such a system of redemption as will prevent the depreciation of the notes. I am asked whether the immediate effect of this bill on the country will be contraction or expansion.

I always avoid as far as I can the use of phrases which deceive and mislead. The use of "contraction," and "expansion," and "inflation," and all those words, does not convey distinctly any meaning which ought to guide us in the consideration of a practical measure of legislation. But, to come nearer to the point, I will say that each section of this bill may have a different tendency. The first section of the bill at once places in circulation all the reserves now held by the banks as a security for circulation. There is another section of the bill which, on the other hand, by withdrawing the reserves for deposits from the banks in New York and requiring them to be maintained in the vaults of the respective banks, would tend, in the first instance, to contract the currency; that is, it would transfer currency from a place where it is admitted to be superabundant to regions of the country where it is claimed to be insufficient. So I should have to go over, section by section, the whole bill. As a whole, undoubtedly the effect will be to increase the volume of paper money, and it can not be otherwise, because it has no effect to cancel a single dollar of the paper now outstanding except as twice as much more is issued. Therefore the immediate effect and the effect of the whole must necessarily be to expand the currency, but with such qualifications and provisions and with such pledges for the future as will prevent its depreciation.

It is said that the effect of the clause of this bill which provides for removing the reserve on deposits from New York to the West and South would be to produce contraction. Now, if there is any objection to this proposition that has twice received the vote of the Senate and once received the vote of the House of Representatives, if there is really objection to the transfer of this reserve from the city of New York, where it is used simply for stock-gambling, to the West and South, I hope some Senator will move to strike out that clause.

The section which repeals the reserve on circulation passed the House of Representatives. It was intended for the benefit of the banks, and to relieve them from all reserves on circulation, and as a substitute for that fifteen or twenty-five per cent. we require them to maintain five per cent. reserve in the Treasury of the United States; so that to this extent both the House bill and the Senate bill are an expansion or unlocking of the currency. But the Senator from Illinois says that the bill also contains another section which transfers the reserve on deposits from New York to the West and South. If the Senator is opposed to that transfer he can move to strike it out. If he thinks that works contraction, and he strikes at the bill in that direction, he can move to strike it out, and then I could give the reasons why we adopted that section.

Under the present law three fourths of three fifths of the reserve on deposits may be loaned by bankers in New York to whoever will borrow it on call; and that is just what is done. I have not gone into a close computation, but I will take the Senator's own estimate. Suppose the currency reserve on deposits is $50,000,000, as he states, and I think it is about $50,000,000, or $55,000,000. Three fifths of that amount may be put in New York, and three fourths of that three fifths may be lent in New York. How? It is lent out by the banks of New York only to brokers. It is not made the basis of commercial loans at all. Not a single dollar of the reserves of the country banks held there is lent for commercial purposes, or for investment in the West or South or anywhere else. It is lent for speculative stock operations; and business men of the highest character in New York who themselves are presidents of banks have advised against it. They say that while this reserve is piled up in New York, banks there will bid for it according to the rate of interest to induce its deposit with them. Being a deposit on call, liable to be called for at any moment, the New York banks lend it on call themselves. I think this provision of the bill can be defended without regard to whether it inflates or contracts. But if there is objection to having the reserve transferred from New York, let us relieve the banks entirely from the reserve. If Senators really think that from fifteen to twenty-five per cent. on deposits is too much of a reserve to be maintained by national banks to protect themselves against sudden demands, lower the reserve, and so make an expansion. I am perfectly willing to leave the banks, with or without reserve, to take their chances. They will surely fail if they do not maintain, in an ordinary state of affairs, from ten to twenty-five per cent. in reserve, whether the law provides for it or not. If the reserve required is too large, reduce it, and thus raise the question of inflation. But this provision, which the Senator from Illinois himself proposed to the Senate, is now ingeniously seized upon as an objection to this bill, because, forsooth, it will cause the transfer of the reserves from New York to the West and South. What benefit is it to the West and South to have their money, belonging to their own banks, sent to New York and lent to stock-brokers in that city? It may be of some service in the West after the banks are established to strengthen them at home, and if they ought not to have that amount of reserve now required by law, why not decrease it? Now to take two provisions together for the purpose of making an argument against this bill, especially when this particular clause has been passed by both Houses of Congress and was offered by the Senator from Illinois himself and assented to by members on both sides, seems to me to be late. If Senators desire to correct their opinion on that question, as they have the right to do; if they think the transfer ought not to be made, it is very easy for them to propose suitable amendments to the bill in that respect; but they do not propose them.

Now a word in regard to another point, and this is the chief point. The Senator from Indiana refers to the $44,000,000 reserve. There is nothing in this bill about a reserve at all. Yesterday the reserve was perhaps $3,000,000; to-day it may be $10,000,000. According to the

last statement the currency reserve is swollen to ten millions. Sometimes it must be ten millions. Whenever quarter-day comes for the payment of pensions, the Treasury must have on hand seven and a half millions to pay pensions. Sometimes this reserve must run up to ten or fifteen millions. The Secretary of the Treasury carefully studies when he must pay out money. There are times when he must have a large currency reserve. There are other periods of the year when he can run it down to three millions. I have known the currency reserve at one time to run down to two millions. In my judgment it is hardly ever safe to have a currency reserve in the Treasury of less than fifteen millions. It is better to have it. The Secretary of the Treasury would naturally have it, and on an average the reserve has been more than fifteen millions. On the 12th of September, just before the panic, the reserve was about twelve or fifteen millions; the precise amount I do now know, but it was over twelve millions certainly-fourteen millions my friend from New York suggests. To-day it is ten millions, and sometimes it goes down to three millions.

The very language of this section is the language of the House bill, the language proposed by the Senator from Iowa the other day, and there is not a word about the $44,000,000 reserve in it. This bill practically abolishes the idea of such a reserve; it fixes the maximum of United States notes at $382,000,000, and the Secretary of the Treasury will necessarily keep enough of that $382,000,000 to meet his current payments.

Now, in regard to the vital importance of the clause which the pending amendment touches, I say that without the reduction of the greenbacks as bank notes are issued, in some proportion, this bill is nothing at all but an inflation measure providing for a large increase of paper money, with no restraint except a provision that in January, 1877, thirty-two months hence, we shall redeem these notes, then largely increased, in bonds of the United States. Sir, I knew the division of sentiment here among Senators. I knew we were all grown-up men and disliked to change our opinions. I have gone to the extreme limit in this bill to meet the ideas of those who desire more paper money if only we could have better paper money. I am not sure but that I have gone too far; perhaps I have; but I am willing to go so far and other Senators are willing to join me. But now when we introduce a proposition here which provides for the continual daily increase of paper money without a single dollar of reduction-for not one dollar of notes can be canceled or redeemed until twice their amount is put in circulation--when we propose that as a compromise, with all the other provisions of the bill practically agreed to except one that does not take effect for two years (for all the other provisions of this bill have come to us from the House of Representatives, where they have been discussed and carried), we are met on this decisive vote which settles the fate of this bill, so far as I am concerned at least, with an intimation that unless you can issue $4,000,000 of paper money for the cancellation of $1,000,000 certain Senators will not vote for the bill. If that is so, the sooner it is ended the better, in my judgment. I will not prolong debate. I hope the Senate will act upon this amendment as

the vital issue involved in this bill. If a majority decide for it, then, as a matter of course, I will relieve myself of any further custody or care of the measure.

THE ISSUES OF THE HOUR.

DELIVERED AT COLUMBUS, SEPTEMBER 2, 1874.

FELLOW CITIZENS: The two great parties have now, by their State Conventions in Ohio, nominated their candidates and announced their principles. The people of Ohio have rejected the new Constitution, and have thus postponed for the time all questions of State policy. No Governor is to be elected. The officers to be chosen are purely ministerial or judicial, and no local question is to be decided. The people of Ohio are now called upon to choose between the only two existing national political parties, and at an election when their immediate Representatives in Congress are to be chosen. It is, therefore, a national election. The issues and results, whatever they are and may be, affect not only the people of Ohio, but the whole people of the United States.

And, fellow citizens, I am bound to say that at no period of our political history have the people of the whole country been more free from embarrassment in the selection of parties than at this moment. All the great, overriding, fundamental questions that have given rise to political parties are practically settled by the progress of events-by popular acquiescence and judicial decisions. The Federal and Republican parties of Adams and Jefferson grew partly out of the tendency of the Federalists to aristocratic forms and usages, and partly from difference of views as to the powers of the General Government. The strength of the Republican party of Jefferson lay in its adoption of simple republican forms. The ideas and habits which came to our ancestors from England tended to keep alive class distinctions between citizens. These distinctions were encouraged by the Federalists, but were swept away by the success of the Republican party. On the other hand, the powers of the General Government, as maintained by the Federalists, were established by successive decisions of the Supreme Court, and, though disputed from time to time, are now recognized by all parties and all classes. The supreme authority of the National Government over national questions, and the exclusive authority of State Governments over local questions, are now admitted by all, and the boundary between the two has been carefully defined.

The questions that gave rise to the formation of the Whig and Democratic parties of Clay and Jackson were economic questionsquestions about a national bank, the public lands, and tariffs. These again have been settled. No one now thinks of a national bank. The public lands are no longer regarded as a source of revenue, but, by common consent, are held for settlement under the homestead and preemption laws; while the tariff question is purely a matter of detail, in