176 



CONGRESS, UNITED STATES. 



Mr. Sherman, then a Senator and chairman of 

 the Committee on Finance, who reported this 

 bill, was asked what was the purpose of this 

 third section; whether it would give to the 

 Secretary of the Treasury power to cancel and 

 destroy the legal-tender notes, or were they to 

 be reissued ? I will send to the Clerk's desk to 

 be read some extracts from that debate." 



The Clerk read as follows : 



Mr. Schurz : " I think that the Senator from Ohio 

 has probably not understood my question. "What I 

 meant to ask was whether, whenever any greenbacks 

 were retired by the Secretary of the Treasury, or, as 

 the bill styles it, are redeemed in consideration of so 

 many thousands of dollars of bank notes having been 

 issued, the greenbacks so retired shall be canceled 

 and destroyed, never to be reissued again ? The 

 Senator will remember very well that we had a pro- 

 tracted struggle about a similar question once, and 

 that the framing of a law gave rise to much contro- 

 versy on that identical point. Now, what I am after 

 is to understand whether the provisions of this bill 

 will in their practical operation work in the direction 

 of specie payments or not, and for that it is a very 

 essential question whether the greenbacks so retired 

 shall be destroyed, never to be reissued again, or 

 whether they shall be held as a reserve, as the forty- 

 four millions were, certainly to be put into the mar- 

 ket again." 



Mr. Sherman : " The honorable Senator from Mis- 

 souri and I agreed perfectly some years ago when 

 the question about the $44,000,000 reserve came up. 

 I should rather put that question to him. At all 

 events I say to him frankly that we do not propose to 

 decide that question in this bill. I have no doubt 

 that when the time arrives when the question becomes 

 material, it will be met. Undoubtedly until the re- 

 duction of the United States notes to $300,000,000 

 they cannot be reissued. The progress must go on 

 pari passu until the amount of legal-tender notes is 

 reduced to $300,000,000. Before that time will prob- 

 ably arise in the course of human affairs, at least one 

 or two Congresses will have met and disappeared, 

 and we may leave to the future these questions that 

 tend to divide us and distract us, rather than under- 

 take to thrust them into this bill and thus divide us 

 and prevent us from doing something in the direction 

 at which we aim.". . . . 



Mr. Merrimon : " I will put the question, and the 

 honorable Senator can answer or not, at his pleasure. 

 It is whether, when the Secretary of the Treasury, 

 after the 1st day of January, 1879, shall redeem Trea- 

 sury notes in coin, he will have the right to reissue 

 such notes ? " 



Mr. Sherman: " That question I said distinctly 

 that I left to the future. I answered that a moment 

 ago, and stated that this bill did not propose to 

 answer that question, but would leave it to be deter- 

 mined by the future between this and the time when 

 the redemption is to take place." 



Mr. Phillips : "Mr. Speaker, it will be observ- 

 ed that in the bill as passed through the Sen- 

 ate the question as to the reissue was supposed 

 to be left open. In endeavoring to collect data 

 (and I only learned yesterday afternoon that I 

 would be expected to speak here to-day), I 

 went to the Treasury Department this morning 

 and saw Mr. Secretary Sherman, from whom I 

 learned that the amount of legal-tender notes 

 withdrawn on account of the issue of national- 

 bank notes is $27,509,108. This amount, as the 

 Secretary informed me, has been canceled and 

 destroyed. The question of its destruction was 

 not left to the future. It was not left to the 



Congresses which should meet, but as fast as 

 the circulation of the money of the people 

 could be withdrawn under the third section of 

 the resumption act, it was promptly destroyed 

 to prevent its reissue. 



"Now, as I have said, the theory of that 

 section was that it would increase by 20 per 

 cent, the currency of the country. If such 

 was the purpose, what has been the result? 

 There were outstanding at the date of the pas- 

 sage of the act $382,000,000 of legal-tender 

 notes, and of national-bank notes $349,894,- 

 182. Of the national-bank notes, there art 

 to-day outstanding $316,775,111. On last 

 Saturday, the 3d instant, there were outstand- 

 ing of greenbacks $354,490,992. There has 

 been, therefore, under this third section of the 

 resumption act, a decrease of national-bank 

 notes amounting to $35,086,339. The reduc- 

 tion in legal-tender notes, which, as I have 

 stated, have been canceled and destroyed, has 

 been $27,509,108. Thus there has been a re- 

 duction of $62,595,447 in the volume of the 

 currency under the operation of this section of 

 the resumption act. 



" This result was brought about by an adroit 

 process. "When a million of national-bank 

 notes were issued eight hundred thousand legal- 

 tender notes were canceled and destroyed. 

 When national banks surrendered their circula- 

 tion, say of a million, eight hundred thousand 

 legal-tender notes were not reissued. Indeed, 

 under this cunning machinery a national bank 

 could surrender its notes one day for a million 

 dollars and then next day apply for a fresh cir- 

 culation ; and every time they went through 

 this process caused the cancellation and de- 

 struction of eight hundred thousand legal-ten- 

 der notes. By this arrangement it was possible 

 for a syndicate of bankers to pump the legal- 

 tender system dry ; and thus we witness the 

 result that with a contraction of national-bank 

 notes amounting to upward of thirty-five mil- 

 lions there is also a contraction of legal tender 

 of twenty-seven millions and a half. 



" But that, Mr. Speaker, is not all. At the 

 date of the passage of that act there were out- 

 standing in fractional currency $45,300,173.- 

 73. This was a non-interest-bearing debt, as 

 the legal-tender notes were. Now I wish to 

 call attention to a fact I ascertained at the 

 office of the Director of the Mint that consider- 

 ably surprised me ; it was that silver subsidiary 

 coin has been issued in exchange for the fraction - 

 al currency to the extent of $23,156,162.82. 

 Then, as I learn from that officer by a state- 

 ment which I have here in my hand, there 

 have been coined up to the first of the present 

 month of these subsidiary coins, which are a 

 token coinage, $39,118,000. At the date of 

 the passage of the resumption act there was 

 upward of four millions of this subsidiary coin 

 in the Treasury of the United States, thus mak- 

 ing upward of $43,000,000 of silver coin then 

 on hand and since coined. This coin halves, 

 quarters, and dimes is of less value than our 



