Mr. Merchant: From what transpired there was undoubtedly an overwhelming opinion that there was a necessity, and therefore the issue of United States Notes was justified. No one will deny this power, if placed upon that ground, that the issuance of the Notes was essential to the preservation of the life of the Nation. But certainly that reason no longer exists, and therefore we should now act as we would then have acted, if we had not believed that it was a national necessity.
The measure for the first issue of $150,000,000 of United States Notes was passed and signed by the President February 25, 1862. The second issue of $150,000,000 came very soon, on July 11, 1862. The third issue of $150,000,000 followed on March 3, 1863, making a total issue in about a year of $450,000,000. If the result of the war had been doubtful and long continued, God only knows what the results would have been, as these United States Notes came very near reaching the zero point, as it was. The astounding fact, as the result of having practiced the law of making something out of nothing, followed in 1868 when one of the great political parties in the hot pursuit of political success declared in its platform that it was in favor of paying off the national debt with the I.O.U.'s of the Government or United States Notes. Of course, this action would have been the natural and necessary prelude to national repudiation.
Mr. Farmer: What I want to know is how much those greenbacks actually depreciated.
Mr. Banker: I have a sheet here furnished by the Government showing precisely what they were worth from February, 1862, to January 1, 1879, when we resumed specie payment, and began their current redemption in gold coin. It shows that they were worth 97 cents on the dollar in February, 1862, when the President signed the bill; in one year, or February 15, 1863, they were worth 60 cents on the dollar; and in a little more than a year afterwards, in July, 1864, they were worth only 35 cents on the dollar. That is, if you had bought a horse for $100 in January, 1862, and given a note due in July, 1864, you could have paid for the horse with $35.
You will perceive that every creditor was defrauded going down hill until you struck the bottom on that July day in 1864, when it took $2.85 of United States Notes to buy $1.00 of gold coin, and you defrauded every debtor climbing up that long hill from that July day in 1864, when the United States Notes were worth 35 cents, until January 1, 1879, when they became worth 100 cents. It took us just two years to go down the hill, and fifteen years to reach the top of the same hill, only to find the crater of a sleeping financial volcano beneath our feet; for if war clouds should now encompass us, or we should take one single step in the wrong direction, our National Credit would again be shattered, and must fall into utter ruin.
Mr. Farmer: Well, it then came out just as those men said it would, didn't it?
Mr. Banker: Certainly, and I want to call your attention to another thing, and that is that the additional cost of the war, because of issuing United States Notes, was greatly increased precisely as they predicted it would be.
Mr. Farmer: Oh, yes, we must find out about that. You remember we investigated the cost of the greenbacks since the war, and that Mr. Banker then demonstrated to our entire satisfaction that the United States Government would have been better off by $339,984,222, if at the close of the war we had issued bonds, bearing 4 per cent, and taken up these United States Notes and paid them off. Now, it would be mighty interesting to know just how much the war cost because we issued these United States Notes, and went off the Gold Standard.
Mr. Lawyer: I have something here right on that point. Let me read it: In his work on Public Debts, Prof. H.C. Adams computes the extra cost of the war to the tax payers in consequence of the depreciated currency at $850,000,000. And Mr. Wesley Hill, in the "Journal of Political Economy," March, 1897, computes the net cost of the war, due to this cause at $528,000,000. Now to be fair and take the average of these two estimates or $689,000,000, and add the cost of meeting greenback redemption since the war, or $339,984,222, we have $1,028,984,222, or about one-third of the cost of the war which, as I told you a while ago, was three billion two hundred million dollars, proving everything that was said by those who were opposed to issuing the greenbacks.
Mr. Manufacturer: I beg your pardon, sir, except one thing, Mr. Lawyer. According to the decisions of the Supreme Court, up-to-date, and that is, that they are constitutional. You remember, of course, that the question of the constitutionality of the Legal Tender quality of the United States Notes has been before the United States Supreme Court three different times.