banks of New York, Boston and Philadelphia took the sum of $100,000,000 of seven and three-tenths three years Treasury notes at par, and $50,000,000 twenty years six per cent. bonds at a discount of ten and two thirds per cent. from their face-say net $44,661,230.97, being a loss of $5,338,769.03 on this transaction. This is a higher rate of interest than our Government, with all its immense power and resources, ought to pay; but the loan has been made, and I only refer to it now for the purpose of showing what has been done under these two acts of Congress.

Under the army bill, five hundred thousand volunteers have been called into the service, and are now in the field. Under both of these bills a debt has been created against the Government. The associated banks of . New York, Boston and Philadelphia are creditors of the Government to the extent of $150,000,000. The five hundred thousand volunteer army are also creditors of the Government to a large amount. We owe them both, and both are creditors under laws passed by us at the extra session. Are not both classes of these creditors on the same footing? Are the bankers entitled to any preference over the volunteer army? Is the banker's money any more sacred than the services of the soldier in battle, on guard, or in the tented field? I cannot see that the banker or the holder of Treasury notes is entitled to any preference over the soldier, under these two laws of Congress, and yet, if you concur in these hardmoney amendments of the Senate, you will compel the soldier to take legal tender Treasury notes in payment for his thirteen dollars per month which you agreed to pay him, while you pay the banker his high rate of interest, semi-annually, in gold and silver coin. Is this right? Will this be meting out just and equal laws to the loyal citizens of this Government? What will your army say to an arrangement of this kind? Sir, I can consent to no such discrimination, no such amendment, no such injustice. It is to be hoped that this will be a short war. It is very desirable that it should be pressed on with the utmost vigor, and be brought to a speedy and successful termination. God grant that this may be the issue. I have no expectation, however, that the authority of the United States Government will be respected and enforced in all the Southern States for many years. I think the rebels are desperate and determined, and will never submit to the Constitution and laws until compelled to do so by armed force. They may be beaten and compelled to fall back, but until Union governments are successfully established in all the Southern States the laws of the United States will not be respected, and can only be enforced by the army and navy in actual occupation of the rebellious States. This will require a large and expensive army for many years, the total expenses of which cannot now be estimated. It will require Federal troops in every rebellious State to collect your direct taxes and internal duties; and until you can peaceably collect taxes in all the rebellious States the rebellion is not ended.

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In every aspect in which you view this hard-money provision, its practical workings will be disastrous. It would be all very well if the amount was small and applied to carrying on the Government on a peace footing, when you know what amount will be required; but in carrying on the Government at this time, when the magnitude of the expenditures are so overwhelming, all theories applicable to peace must give way to the inexorable necessities that are forced upon us in the prosecution of this war. Look at your long line of offensive operations, extending from Kansas to

this capital, and thence to Fortress Monroe, Hatteras, Beaufort, Key West, Pensacola, and Ship Island-a distance of more than four thousand miles. This very long line of military operations cannot be maintained except at an enormous expense for transportation, supplies, and material of war. One million six hundred thousand dollars does not cover the daily expenditures. Peace theories of finance must give way to what is practicable to be done in the present exigency. The Government is at this moment in the situation of a merchant who has overtraded, who owes more than he has the present means of paying. He may be compelled to stop payment in specie, when he has ample assets to cover all his liabilities. A mere

suspension of specie payments does not imply bankruptcy or insolvency.

Our country and Government at all hazards must be preserved. To accomplish this, our plan of finance must be simple and practical. As has been shown, we have various descriptions of property in abundance. We have not the money to meet the sudden demands that are thrown upon us. Is it not better to pledge our honor, our lands, houses, personal estate, incomes, and wealth of all kinds to create this money, on the faith of the nation, than to run the risk of utter ruin to all interests for the sake of holding on to theories which may be excellent in time of peace, but which are wholly impracticable in the prosecution of this war.

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It is very clear that in the prosecution of this war to maintain this Union, the ways and means of carrying it on can only be limited by the actual expenditures.

We must, while the war lasts, incur all the debt necessary to crush out the rebellion, and maintain the authority of the United States Government over all the thirty-four States. We cannot, therefore, now limit the amount of the debt to be incurred, nor can it be accurately estimated. Notes and bonds must be issued in some form for all the debt incurred, excepting what we may realize annually from taxes, excises, and duties on imports. In issuing these notes and bonds I think it will be much better for the Government, and for the people, to have one uniform system. It would be better for all concerned to have a fixed policy, not to be changed, so that all business men may conform to it at once. That policy should, in my judgement, be the issue of legal tender demand Treasury notes not bearing interest, to be paid out for what is necessary to support the army and navy, and fundable at any time in twenty years bonds, bearing interest at six per cent., payable semi-annually. This is as high a rate of interest as the Government ought to pay, especially as our people are to be heavily burdened by taxation to pay, ultimately, the interest and principle in gold and silver of all this debt. Let our policy be distinctly fixed and settled, and we shall hear no further importunities for higher rates of interest, or for any preference of one class of creditors over any other class equally meritorious.

I regret that my sense of duty compels me to differ so widely from the Senate. I have great respect for that body, and would gladly yield to their views, if I did not regard it so fatal to the public interest. So soon as our funded debt reaches $700,000,000, which will be in a very few months, I believe it will be impossible to procure the coin to pay the interest semi-annually without the most serious consequences to our credit. The amount of discount on our bonds to procure specie would be very large. In every view, the Senate amendment seems to me unnecessary, injurious, partial and unjust. I trust the House will non-concur in the amendments."

At the time the above remarks were made by Mr. Spaulding, the duties on imports were, as the bill then stood, payable in legal tender notes, but this was afterwards changed in the Committee of Conference, making those duties payable in coin, so that the interest might be paid in coin, without being obliged to force the bonds on the market to obtain coin for that purpose. This was probably the best compromise that could be made, as will more fully appear in finally adjusting the disagreeing votes between the Senate and House.

SPEECH OF MR. POMEROY.

Mr. POMEROY, of New York, spoke one hour in favor of paying the interest in coin on bonds and Treasury notes.

He said:

"The action already had upon the bill has, so far as the sense of Congress is concerned, settled, if not the constitutionality and expediency of issuing, to a limited amount, Treasury notes, made a legal tender in payment of debts, at least the existence of a necessity, under which such constitutional power will be assumed and its exercise declared expedient. I do not propose, therefore, to enter at all upon the discussion of those questions, nor would it be pertinent to the only amendment I propose to discuss, to wit: that providing for payment of interest on the national debt in coin. They were fully discussed when the bill was first before the committee, to the neglect, as I then thought and now think, of the point presented by the pending amendment, upon which alone I desire to submit a few remarks.

The question is not now whether $150,000,000 of Treasury notes shall be issued and made a legal tender in payment of public and private indebtedness. That proposition has been decided in the affirmative; but if my faith in the necessity and expediency of such issue was stronger even than that of the able and distinguished Representative, [Mr. Spaulding,] who has originated this measure, and carried it triumphantly over the Administration and through Congress, still, deeming this amendment, as proposed by the Senate and now under consideration, vital to the success of the scheme, and the only regulation by which financial explosion under it can be prevented, I could not, as an original proposition, and cannot now, without such amendment, support this bill. My opinion may be unfounded and erroneous. I hope it is, if this amendment is to fail. I have no pride of opinion upon this matter, but I have convictions, clear, decided and conscientious, which I cannot trample upon without violating my own sense of self-respect and of public duty. The opposition which this amendment meets from the framers of the bill sufficiently demonstrates to us and to the country that it is not merely formal in its character, but is of primary importance and entitled to the highest consideration. I shall be very brief, and will endeavor to be plain in my views respecting it.

It is conceded by the friends of the IIouse bill, that the policy of issuing Treasury notes under it with the characteristics of money is to be temporary, and that it is a divergence from the correct principles of political economy, to be justified only by necessity, and yet the primary and principal fault I find with it is, that instead of being a temporary measure, it really, by its failure to make adequate provision to raise money by loan,

inaugurates and necessitates the perpetuation of a reliance upon a forced paper currency alone to meet the demands of the war, the amount of the issue of which, if sufficient for that purpose, must depreciate it to a mere nominal value, and result in ultimate repudiation. It may be expedient as a remedy for an existing political disorder, but it is death if relied upon for per

manent existence.

The credit of the Government has been recently brought to the test of practical experiment in a much more favorable time than the present, when the banks were plethoric with gold beyond all former experience and promptly meeting all engagements in coin, when suspension had not been thought of, and the patriotism of the people was fully aroused in the enlistment of those armies that are to-day more than meeting our proudest anticipations; and yet, under those most favorable auspices, the rate of interest, as established, was seven and three-tenths per cent. for three year coupon bonds, and seven per cent. for those running twenty years, each payable semi-annually in coin, and with the added advantage to the banks, who were the purchasers, of holding the proceeds on deposit without interest until drawn out in the usual course of expenditure; and $50,000,000 of the long bonds, authorized at the extra session, have not been, and could not be, sold even at the rate above named.

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The science of Government is one purely experimental. A code of laws designed for men as they ought to be, would be a terrible code applied to men as they are. We experience no difficuly in recognizing in legislation the natural laws of matter, and we should have no more in recognizing the natural laws of mind, association, trade, commerce and business.

If we are to borrow money, we must recognize these laws; and I may well call them higher laws, for while legislation cannot change them, they are continually changing legislation. One of these is that the precious metals are the representative of value. The gold dollar of our currency is the unit of value. Conversion into this representative is the only criterion of value. Those who invest money or loan will make it a condition precedent that the interest shall be in money, and not in promises to pay money. Legislation has not changed, and cannot change, paper currency into coin or its equivalent, except through convertibility. Without this requisite it is a mere naked promise. We cannot make Treasury notes money until we can change by act of Congress a promise into a performance, and Almighty power alone can do that. We propose to compel the Government and citizens to receive this paper as money in payment for debt; but we do not propose to attempt to compel anybody to take it by way of loan, nor to compel anybody to loan it, not even to Government. Then people must be induced to loan it; and how can you expect them to do it at rates less favorable than you have already established in more prosperous times, to wit: a rate of seven and three-tenths per cent., payable in coin.

Now, this paper is or is not equal to gold. My colleague may take whichever horn of the dilemma he pleases. If it is not, it is folly to suppose that people are voluntarily going to place themselves in a position where, for a term of years, they compel themselves to receive it as interest, and assume all the risk of depreciation. If it is equal, then there can be no unjust discrimination in paying interest in gold. I prefer to look at the question just as it is, and admit the fact that it is not and cannot be made equal, because it lacks the essential quality of convertibility. To the extent to which it is not equal, we work a hardship in forcing it into circulation; but we have already decided that a necessity exists which

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compels us to accept this hardship rather than to inflict upon the people or submit the Government to a greater. And we believe farther, that the evils thus produced will, in the aggregate, if not in each individual case, be more than compensated by the relief they will afford from financial stringency, and as a medium of exchanges, especially with the Government itself.

While, however, we exercise the power to compel the people to receive it as gold in payment of debts, we, unfortunately, have not the power to compel them to loan it back to us on time, and receive more of the same kind as interest. There is just the practical point where our new political physiology fails. As 'Artemus Ward' would say, 'its forte is not in borrowing, but in paying,' and we have got to make it work both ways. It is all nonsense to say that while we pay out Treasury notes from necessity in some cases, we will forbear to borrow money, without which our credit must go down entirely, because it will necessitate the payment of interest in coin, and thus conflict with our theory; that because we pay ourselves and our soldiers and everybody else with whom we are under contract, in paper, we will stop paying even them rather than to continue the ability to do so by borrowing money and stipulating in advance to pay the interest in a different commodity. The inconsistency consists in not considering that we must first get the principal before we put on airs about the manner in which we will pay the interest, in which transaction the lender as well as the borrower is usually consulted. The Committee of Ways and Means are talking about paying, whereas the problem is how to borrow.

Nor does the agreement to pay interest in coin tend in the least to depreciate the value of the notes. The very necessity for this agreement arises from the fact of the pre-existing differences in value between coin and paper. It does not create the inequality. It recognizes an existing fact, and applying legislation practically to that fact, enhances the value of the paper, by allowing its conversion into a permanent loan, the principal and interest of which are to be paid in money; and instead of depreciating the paper, checks depreciation by reason of this very convertibility, and presents the only possible mode, that I can conceive of, by which serious depreciation can be prevented and the funding process kept in operation. In fact, this very difference between the intrinsic values of notes and coin, thus recognized and embodied in our legislation, tends to produce the very object desired—the funding of the public debt. If capital will seek Treasury notes at par, for the purpose of investment in bonds, with the interest payable in notes, how much more readily will it seek these same notes, at a slight depreciation, for the purpose of such investment, with the interest to be paid in gold; and the very demand for this purpose, while it prevents serious depreciation, is induced by the very depreciation inherent in the character of the paper which it continually checks. It produces a self-adjusting funding access, based upon things as they exist in the commercial world, by which the disparity between the value of the two currencies ceases to be an element of discord, and becomes, during the temporary period in which the funding process is going on, an element of good. In this manner, and through the happy instrumentality which may in this way be exerted by these notes, imperceptibly, and through the ordinary channels of financial operations, the whole process of funding the public debt will be accomplished.

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