LEGAL TENDER OF SILVER COIN.

IN THE SENATE, JUNE 8, 1876.

THE bill to amend the laws relating to legal tender of silver coin being under consideration, Mr. Sherman said:

MR. PRESIDENT: I wish very briefly to call the attention of the Senate from all the various topics that have been discussed since this bill was introduced, to the consideration of a small measure, intended to meet a temporary necessity, and which has given rise to a very extraordinary debate.

This bill proposes to restore the old silver dollar, and with that dollar, and the subsidiary coins of the United States, to redeem the United States notes and fractional currency. The dollar to be restored is the same that had existed from 1792 to 1873; and the subsidiary coins to be issued are the same in form and value as have been issued since 1853. I have, in my remarks made on the 11th of April last, already given the history of these silver coins and stated the relation of silver and gold to each other, not only in the United States, but in the countries with which we have the most extensive commercial intercourse. The Senator from Nevada [Mr. Jones] has also, in more detail, and with greater fullness of illustration and authority, presented the important questions of the double standard, with the reasons why, in the United States especially, silver and gold must both be standards of value. I will not therefore repeat those arguments, but confine myself to the two main propositions contained in this bill, and then show, if I can, that it is not wise public policy to adopt the full silver standard proposed by the Senators from Nevada and Missouri, nor to go further than is proposed by the Committee on Finance.

The two main questions are:

First. Shall silver coin be exchanged for United States notes as well as for fractional currency? And,

Second. Is it wise to recoin the old silver dollar with a view to exchange it for United States notes ?

The bill as reported embodies both propositions. It is purely a voluntary process. No one need surrender his notes for coin unless he wishes to do so. We do not take advantage of a public creditor, to force upon him silver coin, for we have given him the assurance of positive law that we will, on the 1st day of January, 1879, pay all notes or demands against the United States in coin. We cannot, or rather public sentiment will not allow us to, pay in gold coin sooner than this. By this bill we authorize the Secretary of the Treasury, to the extent of the sinking fund, to pay silver coin to the holder of our notes, in exchange for them if he demands it. In spite of all that has been said about the depreciation of silver, and of our coin being worth less than United States notes, we know there is an eager demand for silver coin. The long lines of people awaiting their turn at the doors of your custom-houses show an anxious desire to surrender your promises for bright, shining coin. The instinct of the people, more

wise than the calculations of the broker, assures them that hard money, real money, the result and the representative of labor, is more desirable than a promise to pay money, and especially a promise that may be broken, changed, evaded, or postponed.

By the law as it stands, only one kind of paper money-fractional currency-is redeemable in silver coin. United States notes, although based upon the same promise-and of the same or more intrinsic value than fractional currency because they are a legal tender for all sumsare not redeemable in silver coin. Therefore fractional currency is this day more valuable than United States notes. The first effect of the issue of silver coin is to advance the value of fractional currency. In like manner will this bill, if it passes, advance the value of United States notes. It will be resumption of specie payments in silver. It will tie our promises to pay to the solid basis of a metal which has always been a standard of value, is now, and ever will be; and which can vary only in a comparatively slight degree from the more precious metal, which is now and ever will be the highest standard of value.

Now, sir, it is admitted that we are able to pay a portion of our indebtedness. Indeed, a specific fund, termed the sinking fund, together with the accumulation of interest thereon, has, by a law of the highest sanction, been set aside, to pay, annually, one per cent. of our entire debt; and this annual sum is to be taken from our customs duties. What class of our debt ought to be annually paid is purely a question of public policy and interest. We have heretofore applied the sinking fund to the reduction of our bonded debt; but this debt is now so valuable that it is worth eighteen per cent. more than United States notes and five per cent. more than gold. It is therefore manifestly our interest to apply this fund to the payment of United States notes, and this we can now do, not only with the assent but upon the demands of the holders of these notes. Why upon this demand? I answer, upon what ground of honor or interest can we refuse to pay notes now due, while we are using large sums to pay bonds not due? They pay a large premium for our bonds, which are worth more than gold, while we refuse to pay our notes now due, and which are daily quoted at a depreciation of twelve to fourteen per cent. Whatever other reasons are given for this anomaly, we can not pretend that we are not able to pay these notes, while we are paying out thirty millions a year in gold to buy bonds not yet due.

Nor can we refuse to pay silver coin for our notes on the ground that silver is depreciated as compared with gold. That is a question for every holder of our notes to determine for himself. When he demands silver, it is idle, yes, dishonorable, to say: "O, we will not pay you silver, because it is not worth as much as our notes. Wait until 1879 and we will then pay you gold." Every market-woman in the land knows that the reason for your refusal is false. She may well say she will not trust in your promise to pay gold three years hence if you will not pay silver now when you can. All objections to this bill, based upon the pretension that payment in silver is unjust to the note-holder, are the merest sham, unless you are now prepared to pay him in gold. He is the best judge of what he will take in payment,

and he wants and demands the silver now. And this is a sufficient answer to all arguments about the note-holder. When you redeem the note you can do with it what you please. You may burn it, or replace it, or reissue it, or whatever else you have the power to do with it. But the man who holds it now has your promise to pay; and if you refuse to pay him gold it is for him to say whether or no he will take silver. Will you give him the option? If this question were to be decided by considerations of public honor or public faith, no one could doubt what the decision would be. But I propose now to discuss it upon the basis of interest, upon the narrowest basis of commercial traffic; and by this sordid view, as well as by the more exalted one of public honor and public faith, it is manifest that it is for the interest of the United States now to redeem with silver coin such portion of the notes of the United States as the holders thereof may choose to exchange for them.

And, first, it is the cheapest mode in which we can pay our notes. One dollar of the subsidiary silver coin of the United States contains 385-8 grains of standard silver, worth to-day about eighty-four cents in gold, or ninety-five cents in United States notes. It needs no logic to show that the Government' makes money by the exchange of this dollar for a United States note. And yet no injury is done to the holder, for the exclusive power of the United States to coin money has imparted to the silver in the coined dollar additional value, which makes the holder eager to accept it for his promise-dollar. The market value of the silver in the dollar provided for in this bill is now not only equal to that of the United States note, but it is of intrinsic valve; and, even though the note may rise in value, the silver dollar will keep pace with it. The Government pays its debt, and yet replaces its note with a real dollar, which takes the place in circulation of the paper dollar, and does not have to be paid when resumption comes.

Not only is payment in silver coin the cheapest mode of redeeming our notes, but it strengthens us for full resumption in gold. It not only lessens the amount of notes to be maintained at par with gold, but it scatters among the people a large amount of silver coin, which, without reserve or aid from the Government, will, from its intrinsic value, maintain itself at par with gold. And this quality of silver coin does not depend upon its being a legal tender, but upon its intrinsic value, and its indispensable use among all classes of people for change, and for the payment of labor and the purchase of family supplies. As I showed the other day, not less than $2.50 per inhabitant, of silver coin of less intrinsic value than ours, is maintained at par with gold by Great Britain, France, and Germany. The United States, before the war, maintained at par with gold more than fifty millions of the very silver coin this bill provides for. No one inquired how much this coin cost the United States, but they knew it passed everywhere, and was as good anywhere as gold coin. So now, with our increased population and business, it is manifest that seventy-five millions or more of this coin can be maintained at par with gold after we shall have reached the full gold standard; and this amount is about as much as can be issued under this bill. The obvious effect of substituting silver for

paper money will be to appreciate the purchasing power of the remaining mass of paper money. Who does not see that the reduction of the aggregate of paper money to three hundred millions strengthens us for the duty of maintaining it at par with gold?

Sir, silver resumption is better now than gold resumption; for silver money will now circulate with paper money, while gold will not. Silver money, in intrinsic value, is so near paper money that it will freely circulate, while gold would at once be hoarded. Even if silver money were of the same intrinsic value as gold, it ought to be put freely into circulation before gold. It must always be the specie of the people, which gold is not. Silver resumption must precede gold resumption. We now but avail ourselves of the present depreciation of silver bullion to prepare the way for gold resumption. It appears almost as a providential dispensation to enable us to follow the path of safety and honor. If we do not avail ourselves of this opportunity, we shall be blind to every instinct of a statesman and a patriot.

Again, sir, there is a popular instinct which we may call the "instinct of hoarding," which impels the provident classes of every nation and tribe of men to hoard the precious metals as the safest form of wealth, either to gratify avarice or to prepare for immediate or approaching wants. This instinct is as well gratified by hoarding silver as gold. For this reason, and for this reason mainly, a larger amount of silver coin will be hoarded than of fractional currency. The currency is perishable; it is subject to loss by fire and water. But silver coin can neither be burned by fire nor perish by water, and the common instinct of humanity will cause it to be held, while the fractional currency will be paid out. The silver is the people's resource, and will be paid out and circulated when the necessity for it arises. For these reasons we must provide for a much larger amount of this coin than experience has proved to be sufficient for fractional

currency.

Again, sir, this bill will relieve us from the possibility of a dearth of change, by authorizing the exchange of silver coin for United States It is manifest that, by limiting this exchange to fractional currency, we have given an artificial value to such currency. The hoarding of this currency for the purpose of obtaining silver coin may create a serious want of small change. It is this anticipated scarcity that the House of Representatives has attempted to guard against by a bill now pending in that body. This difficulty is at once obviated in the present bill, by placing both notes and currency on an equal footing with silver coin, and thus lifting all gradually to the gold standard. The object of the law now in force is to put silver coin in circulation as a substitute for fractional currency. If, however, the coin can be exchanged directly for the fractional currency only, one or the other species of change will be demonetized or held for a premium during the process; but if silver coin can be had at will for either greenbacks or fractional currency, the purpose of the law can easily be effected. Things that are equal to the same thing are equal to each other. The difficulty of a direct exchange of commodities first caused the use of money. While we have paper money we can only circulate that of the lowest market

value. Even a temporary demand for fractional currency causes it to be hoarded. Brokers all over the country are offering a premium for fractional currency, in order to obtain silver coin. Even in this city, where fractional currency was most abundant, it is advertised for at a premium. Besides, we must provide more silver money than we now have fractional currency, for the reasons already stated, and we must therefore exchange it for United States notes as well as for such currency.

And, sir, the substitution of silver coin for United States notes meets and allays the fear of "contraction" that has been the direful cause of our long delay in approaching the specie standard. Reason about it as you will, you can not persuade the people long to endure the process of contraction, even to secure the acknowledged good of a specie standard. How often do we hear people say they desire specie payments, but not through contraction! They wish to get well, but do not like the medicine offered. They are in favor of the Maine liquor law, but are opposed to its execution. They want to get well by natural processes. Well, now, the silver opportunity offers; silver can be substituted for paper without contraction. Both will circulate together, because their market value is near each other; and we have the silver bullion and the sinking fund, amply sufficient to sustain the process of exchange. By providing a market for silver we advance a domestic product, and by reducing the amount of paper money we approach and prepare for full resumption. The silver will circulate equally with the paper. To the extent that it is hoarded or exported there may be some contraction; but it will not be hoarded or exported largely when issued in sufficient quantities to meet the demand for it, and this bill provides for either hoarding or exporting, by authorizing the issue of silver coin in exchange for silver bullion. If, then, there is a demand for silver coin greater than can be met by the surplus fund at our disposal, it can be had for the silver bullion of private persons, which can be promptly

converted into coin.

The bill reported by the Committee on Finance thus provides for an immediate resumption of specie payments in silver coin, and thus completes the first and most difficult step of the problem. It neither disturbs nor deranges business, nor stirs up the phantom of contraction. It is in exact accordance with existing law, and leaves the silver coin, as now, a subsidiary coin, a legal tender only in limited amounts.

The next question presented by this bill is, shall we restore to our silver coinage the old silver dollar? And here I am met by the objections of the Senator from Vermont; but his objections are rather to the amendments proposed by the Senator from Missouri than to the report of the Committee. The Committee propose the silver dollar, not as a legal tender for gold contracts, but only as a tender for currency contracts not exceeding twenty dollars in any one payment. I would prefer to leave the silver dollar to stand upon its intrinsic value as a legal tender, the same as the smaller coin. But there is no injustice in enlarging the limit to twenty dollars, and, but for the reasons I will state hereafter, there is no injustice in making it a legal tender for all currency contracts. The silver dollar has that intrinsic value which, in