to all, and confine it to its legitimate operations-you remove all prejudice against it. Then banks would do here as they do in Europe: they would carry on the exchanges of the country; they would issue certificates and commercial paper; they would aid commerce without usurping or exercising any of that authority which can safely be conferred only upon the Government.

It is sometimes said that the experience of other countries has shown that banks of issue are necessary. That is not so. The Bank of England consists of two distinct departments-as distinct as two departments can be. The one does the business of banking proper, buys and sells notes, discounts bills, issues bills of exchange and certificates of deposit, receives deposits, and carries on all the operations of the bank; the other department, distinct and separate, controlled by law, issues notes of circulation; and those notes of circulation are based entirely upon Government securities and gold and silver. It is nothing more nor less than this: that one department of the Bank of England is an agency of the people of that great kingdom to issue the notes of the Government; and that is all they are. Every Bank of England note is the note of the Government, for it is based upon the credit of the Government and upon gold and silver coin. It is regulated, controlled, and altered by the Government. The bank is the agency of the Government. In most of the other countries of Europe at present, gold and silver are the basis of all transactions, and there is no difficulty of carrying on the largest operations. It is only when people are compelled to use unusual resources, when they are compelled to resort to their credit in a time of great national emergency, that paper money is resorted to in Europe or is justified in this country.

There is a still more potent reason, Mr. President, why this bill should be adopted. We should all of us look forward to the time when peace shall again bless us. Although this war must be continued to maintain the national honor, and I trust the flag will never be lowered while there is a rebel in any part of this country, yet we all hope for peace; we look forward to that good time when our friends and kindred shall again resume the ordinary occupations of life at home, and in peace. When that good time comes, if there are no notes outstanding except the notes of the United States, they would be converted into bonds, and we should have again the national currency of gold and silver coin. But, sir, if you allow your country during this war to be flooded with this paper money, when peace comes it will be like the peace with Great Britain in 1815: it will only bring to us a commercial war, in which all our interests will be involved; the people will be left with this immense paper issue upon their hands without remedy, and they will be compelled to lose the whole of it.

If there was no money in this country but United States bank bills, the process of funding would be going on day by day. Whenever there was too great an accumulation of these bills, they would be converted into bonds; the operation would go on quietly and silently. Sir, I say, by the authority of the Secretary of the Treasury, that it is his deliberate judgment, after watching this process with all his conceded ability, that but for the influence of this local bank paper he

would be able to carry on this war without the issue of more paper money; that the currency now outstanding, and that which by law he is authorized to issue, would be sufficient to carry it on. Such a currency would lead to the conversion of the notes into bonds, and by this process the people would absorb a national loan and enable him to carry on the Government without any sacrifice to them.

Mr. President, you can see that the effect of local paper money is to prevent this process. What are the United States notes? They are based upon the credit of the whole people; they are of general authority; they are receivable in payment of all public debts; they are made a legal tender in payment of private debts; they may be converted at any time into six per cent. bonds; they may be temporarily deposited on interest. They have all the privileges, all the securities which the faith of a great nation can give to them. They are eagerly sought for, everywhere taken. They are only driven out of circulation by the superabundance of an inferior issue. We know it is a principle in finance, that wherever there is an inferior currency, it will fill all the channels of circulation, and the superior will be hoarded. Why are gold and silver now hoarded? Because they are worth more than paper money. Why is United States paper money hoarded? Because it is worth more intrinsically than the local paper of the banks, which, after all, has only a local security and a local value; and now all the channels of commerce are filled by this currency, which the laws of the United States forbid the Secretary of the Treasury from taking in payment of public dues. If a patriotic citizen now desired to aid the Government with a loan of $5,000, he would have to sell at a discount or exchange the local currency which he has in his hands for United States paper, in order to enable him to loan that paper to the Government. I give it as my conviction, aided and supported by that of the Secretary of the Treasury, that but for this intermediate currency the gradual absorption of the national debt by the common people-the farmers, the men scattered all over our country-would go on rapidly and satisfactorily, sufficiently so, I think, to carry on the operations of the Government.

It may be supposed that the conflict between local bank paper and United States notes is imaginary, or of modern origin. Now, sir, to prove that I am not either original or peculiar in the views expressed, I wish to read from the writings of an eminent statesman, who certainly was not in favor of paper money. My idea upon this subject is exactly according to his, years ago; and when I read these extracts from Mr. Jefferson, you will perceive that he, who during his whole life was so mindful of the rights of the States and so jealous of paper money, in brief and terse language designated the only way in which our country could carry on war, and that is the very way I have indicated in my remarks. I will read two or three extracts from the writings of Mr. Jefferson. In his letter to Mr. Cooper, dated September 10, 1814, just at the close of the war, he says:

The banks have discontinued themselves. We are now without any medium, and necessity, as well as patriotism and confidence, will make us all eager to receive Treasury notes, if founded on specific taxes.

Congress may now borrow of the public, and without interest, all the money they may want, to the amount of a competent circulation, by merely issuing their own promissory notes of proper denominations for the larger purposes of circulation, but not for the small. Leave that door open for the entrance of metallic money. . . . Providence seems, indeed, by a special dispensation, to have put down for us, without a struggle, that very paper enemy which the interest of our citizens long since required ourselves to put down, at whatever risk.

The work is done. The moment is pregnant with futurity, and if not seized at once by Congress, I know not on what shoal our bark is next to be stranded. The State Legislatures should be immediately urged to relinquish the right of establishing banks of discount. Most of them will comply, on patriotic principles, under the convictions of the moment; and the non-complying may be crowded into concurrence by legitimate devices.

Remember, this was written at a time when this local bank paper had become almost worthless; when it was worth far less than any local bank paper now is.

Again, in a letter dated March 2, 1815, he says:

But the circumstances of the war draining away all our specie, all these banks have stopped payment, but with a promise to resume specie exchanges whenever circumstances shall produce a return of the metals.

Some of the most prudent and honest will possibly do this; but the mass of them never will or can. Yet, having no other medium, we take their paper, of necessity, for purposes of the instant, but never to lay by us.

The Government is now issuing Treasury notes for circulation, bottomed on solid funds, and bearing interest. The banking confederacy (and the merchants bound to them by debts) will endeavor to crush the credit of these notes; but the country is eager for them, as something they can trust to, and as soon as a convenient quantity of them can get into circulation, the bank notes die.

I will also read another extract to show that this matter filled the mind of Mr. Jefferson. He says:

Put down the banks, and if this country could not be carried through the longest war against her most powerful enemy, without ever knowing the want of a dollar, without dependance on the traitorous classes of her citizens, without bearing hard on the resources of the people, or loading the public with an indefinite burthen of debt, I know nothing of my countrymen. Not by any novel project, not by any charlatanerie, but by ordinary and well-experienced means; by the total prohibition of all private paper at all times, by reasonable taxes in war, aided by the necessary emissions of public paper of circulating size, this bottomed on special taxes, redeemable annually as this special tax comes in, and finally within a moderate period-even with the flood of private paper by which we were deluged, would the Treasury have ventured its credit in bills of circulating size, as of five or ten dollars, etc., they would have been greedily received by the people in preference to bank paper.

Mr. President, I have shown you that under circumstances very similar to ours, when the banks had suspended specie payments, when the disparity between gold and silver and paper money was getting marked, Mr. Jefferson, in his retirement at Monticello, in private correspondence with his friends, with great sagacity pointed out the very mode to which we must now resort if we would maintain a national currency. We have already our United States notes precisely of the character stated by him, based upon taxes, based upon the credit of the United States. We have thrown around them all the guards possible. We have done just as he says we ought to have done. All that remains for us is by wise measures to induce the withdrawal of the

local circulation of the banks of the country, not by an arbitrary edict striking them dead or deranging the currency of the country, but by a tax, reasonable and moderate in itself, to be increased if policy dictates; and by a tax to drive at once out of circulation all fractional currency. This policy will confine the banks to that ordinary business of banking known among all the commercial nations of the world. If this is done by moderate and wise legislation, as Mr. Jefferson truly says, we may maintain this war until our flag floats from Louisiana to Maine, in every portion of our beloved country.

NATIONAL CURRENCY.

IN THE SENATE, FEBRUARY 9, 1863.

THE bill to provide a national currency secured by a pledge of United States stocks, and for the circulation and redemption thereof, being before the Senate, the following amendment was offered as an additional section by Mr. Powell:

And be it further enacted, That each and every banking association organized under this act shall be, and is hereby, required to keep in its vaults in gold and silver coin, at all times, an amount equal to at least one fourth of the amount of the notes it is authorized to issue.

After explanation of the section by Mr. Powell, Mr. Sherman said:

MR. PRESIDENT: When this bill was drawn, I did not expect that my friend from Kentucky would vote for it; nor did I expect that he would vote for any bill which required the banks which might be organized under it to pay specie from this moment, because, as he knows, that would be futile. His amendment would require these banks to keep twenty-five per cent. of gold and silver in their vaults. The bill as reported provides that they shall keep twenty-five per cent. in lawful money of the United States in their vaults. If the courts shall decide, as the Senator says they will, that the paper money of the United States is worthless trash, illegal and unconstitutional, then the phrase "lawful money of the United States" will mean gold and silver; and the bill will suit him as it is now.

But, Mr. President, while we are in war specie payments are naturally suspended, as they always will be and always have been in every country involved in a great war. They were suspended in England during her wars with Napoleon. Would it not have been singular if some man had stood up in the British Parliament, when during a long war specie payments were suspended, and the Bank of England notes were made the basis of currency, and had denounced the Bank of England paper as worthless trash? It would have been considered a very remarkable thing; and yet that is done now. The United States money, to which the faith of the United States is pledged, to which the faith of every State in the Union is pledged, to which all the property of the United States is pledged, is here denounced, in the Senate

of the United States, as worthless trash. And yet without this "worthless trash" we must submit to be overrun by armed confederates who are seeking to subvert the Government, and every man knows it. Every man knows-none better than the Senator from Kentuckythat without the issue of paper money it would be impossible to carry on the operations of the Government, and there would be nothing to prevent Jefferson Davis from encamping within sight of New York city. It is by the use of just such money that armies are formed in the South.

Is it not very strange that the Senator should denounce this paper money, necessary to be used to carry on this war, as worthless trash, and discredit the Government of the United States? It is very singular. As a matter of course, the amendment cannot be offered with any hope that it will be adopted. If it were adopted, it would be a defeat of the bill. None of the banks of the United States now pay gold and silver, nor can they; it is impossible; and therefore the amendment was moved, I think, not with much expectation that it would prevail, but to enable the Senator to announce as his opinion that the money of the United States-the notes issued by this Government-is worthless trash, unconstitutional and unlawful, and that therefore all the banks which might be founded upon it would be unlawful.

Sir, the very moment this war is over, the very moment our credit is good, the very moment the bonds of the United States are worth above par, that moment all these banks will be specie-paying banks, and every one of them will then be required to keep the very amount of specie in their vaults that the Senator provides for-that is, twentyfive per cent. of the lawful money of the United States. My hope is that Congress will never authorize the issue of more than $400,000,000 of United States notes, and that these will be made the basis, during the war, of the currency of the country, and that by this bill the money of the people, through their banking associations organized all over the country, may be combined in support of the credit of the United States to make a safe and stable currency which will give us during time of war the best substitute possible for gold and silver. That, I believe, will be done. There are but two species of lawful money-one gold or silver coin, and the other the United States greenbacks, as they are called. During the war the greenbacks are necessary to carry on the Government, and necessary as lawful money. They are made so by the Government.

Mr. Collamer of Vermont gave his views in relation to the general character of the bill, and pointed out somewhat at length his objections to it. Mr. Sherman then said:

I shall detain the Senate but a few moments in replying to some of the observations of the honorable Senator from Vermont. There is no member of this body who is more attentively listened to, or whose opinions are entitled to more respect, than that honorable Senator. I always give to them the deference due to his position and his character, and I am always very sorry to find myself differing from him in opinion upon any point.

The Senator has commented upon the remark I made as to the opinions of the Cabinet. I simply said that the Secretary of the Treasury,