CONGRESS. (TiiE BILL AUTHORIZING ISSUE OF BONDS.) 



191 



Treasury should have the means of laying hold 

 upon some form of obligation that he can i-sue for 

 the purpose of obtaining funds to inert that tem- 

 porary condition. That is the intention of th. 

 ond section. 



Further, it is intended that obligations that are 

 issued for the purpose of meeting temporary de- 

 ficiencies of revenue shall run for only a short 

 period : hence we limit the amount to $50,000,000. 

 It i- expected that such obligations will be paid by 

 surplus revenue within a brief period, for the sec- 

 tion provides that these certificates of indebtedness 

 must be paid within three years. It is precisely 

 the same thing that is done, for example, by Great 

 Britain under certain conditions. She authorizes 

 the issue, of exchequer bills, which are almost ex- 

 actly the same as what are here denominated cer- 

 tificates of indebtedness. Those bills are issued, 

 under the British system, not for permanent loans, 

 but to meet any temporary deficiency of revenue 

 that may occur, and are paid in a comparatively 

 short time from surplus revenues which Parlia- 

 ment is expected to provide." 



Mr. Cox. of Tennessee, asked why the certificates 

 of indebtedness were to be redeemed in " lawful 

 money " and the bonds in " coin " '( 



Mr. Dingley answered : 



" Because we require a coin fund for redemption 

 purposes ; the law so provides. But current obli- 

 gations of the Treasury we can pay in any kind of 

 lawful money that may exist at the time. 



" There has been no bond issued by this Govern- 

 ment up to this hour but that provides that it shall 

 be paid, both principal and interest, in coin, and 

 we are simply meeting the conditions of pre-exist- 

 ing legislation. Vie have heretofore contracted 

 these obligations, and we propose to meet them as 

 an honorable people. But as to temporary defi- 

 ciencies of revenue, where there has been no such 

 previous obligation, they can always be paid in law- 

 ful money. How is the gentleman paid his salary 

 as a member of this House f In lawful money, 

 whatever that may be. But whenever you under- 

 take to make a loan, and especially to borrow coin, 

 you can not expect to obtain it unless you are ready 

 to pay in the same kind of money that you bor- 

 row. \Ve have always borrowed gold, and hence 

 coin as used in our bonds means the same kind of 

 coin that we have borrowed. It is because we have 

 preserved good faith with our creditors that we have 

 been able, up to within two years, to borrow on so 

 favorable terms.'' 



Mr. Lacey. of Iowa, asked if the gentleman 

 thought the bill guarded sufficiently against the 

 legal-tender notes, after they are redeemed accord- 

 ing to the provisions of the first section, being paid 

 out to meet current expenses. 



Mr. Dingley said : 



" of course, if the Secretary of the Treasury de- 

 sires to so use them and finds that there is a necessity, 

 there is no absolute provision otherwise in this bill. 

 But the suggestion here, and it is a suggestion 

 which is exceedingly important, is that the Secre- 

 tary of the Treasury shall adopt the policy of sepa- 

 rating the two funds and shall use the greenbacks 

 or any other forms of currency precisely as they 

 were used from 1879 up to 1893". At one time dur- 

 ing President Cleveland's first administration there 

 was in the Treasury of the United States S180.000,- 

 000 of greenbacks. They were the result in large 

 part of deposits of United States legal-tender notes 

 by banks retiring their circulation or going into 

 liquidation. Those were gradually drawn out. but 

 it took several years, and it was not until the act of 

 July 12, 1890. was passed that those funds were 

 turned into the Treasury. The same policy that 

 prevailed from 1879 to 1893, provided we can have 



revenue sufficient to meet expenditures, will be re- 

 peated by the operations of the bill which is now 

 before the House. 



" The only question really for us now is whether, 

 in the interest of the people of this country, we 

 shall not authorize the issue of a lower-rate bond, 

 and thus have the lower-rate bond sold in prefer- 

 ence to the higher-rate bond, with the provision 

 that when sold it shall be first offered to the people 

 of this country, and the further provision that the 

 proceeds shall be separated from ordinary cash in 

 the Treasury and maintained as a reserve." That is 

 all there is in this bill." 



Mr. Marsh, of Illinois, asked : 



" You have told us that it would be a great sav- 

 ing of interest to the people if we could negotiate a 

 3-per-cent. bond instead of a 4-per-cent. bond. Now, 

 that argument is significant if true, but I ask the 

 gentleman from Maine if it is not true that when a 

 3-per-cent. bond can be sold at par, a 5- or a 4-per- 

 cent, bond will sell at a rate of premium that will 

 be less than 3 per cent. ? In other words, when a 

 bond runs for ten years, is it not worth more than 

 one that runs for five ( " 



Mr. Dingley : " Undoubtedly. What I say is 

 this, that when you offer a bond to the people of 

 the country to the plain people, who do not stop 

 to make calculations as to premiums you will find 

 that a large proportion of them would prefer to 

 purchase a 3-per-cent. bond at par rather than a 4- 

 per-cent. bond on which they will have to pay a 

 premium. People do not like to pay a premium on 

 their investments. But when they can get a 3-per- 

 cent, bond at its face, the plain people of this coun- 

 try will take that in preference to paying what 

 would be less than the equivalent for a 4- and 5-per- 

 cent, bond at a premium. That is the practical 

 working of it." 



Mr. Turner, of Georgia, in speaking in opposition 

 to the bill, said : 



" I now venture to suggest to my friends on the 

 other side that either they have not been entirely 

 candid or they themselves do not understand this 

 measure. It is said that out of abundant caution a 

 proviso was added to the first section to prevent the 

 retirement of the legal-tender notes. Gentlemen 

 who are the friends of all these notes may find 

 themselves unwittingly entrapped. There is in the 

 first section of the bill a provision to this effect : 



" ' And the Treasury shall use the proceeds 

 thereof ' that is, of these bond sales ' for the re- 

 demption of United States legal-tender notes, and 

 for no other purpose.' 



"And to that is added this morning a proviso, 

 which I will now read : 



"'Provided, That nothing in this act shall be 

 construed to repeal or modify the act approved 

 May 31, 1878, entitled "An Act to forbid the 

 further retirement of United States legal-tender 

 notes." ' 



Now. in the first place. Mr. Speaker, what is to 

 become of the United States legal-tender notes into 

 which this gold reserve may glide by the process of 

 redemption i 



" My friend from Maine in the outset of his re- 

 marks, which I failed to hear distinctly, seemed to 

 hold that by the operation of this bill the Treasury 

 will have to open two accounts and segregate the 

 proceeds of this redemption into a separate fund 

 and a separate account. I deny it. There is noth- 

 ing, absolutely nothing, in this bill which would 

 have this effect. It would in no way change the 

 Treasury policy in this respect. The proceeds of 

 these bonds, when they reach the Treasury in the 

 form of gold or coin and are converted info legal- 

 tender notes by redemption, will take their place 

 side by side with such legal-tender notes as are 



