We are told by the Comptroller of the Currency that $45,000,000 is a large allowance of currency at this moment for the South and West; indeed, I believe he puts the limit at $40,000,000. Now suppose only $40,000,000 are taken up during the coming year,—that is, till the completion of the census; that would leave $5,000,000 still outstanding, which might be employed for the benefit of the South and West. That circumstance indicates to a certain extent the financial condition of those parts of the country. Do they need larger facilities, and, if so, to what extent? Can you determine in advance? I doubt it. But, Sir, in the face of this uncertainty, this bill steps in and declares positively that “a new apportionment shall be made as soon as practicable, based upon the census of 1870.” What will be the effect of such a new apportionment? Even according to the census of 1860, such new apportionment would transfer some sixty million dollars from banks that enjoy it to other parts of the country; it would take away from those banks what they want, and transfer it where it is not wanted. The language is imperative. But, Sir, it is not to be under the census of 1860, but under the census of 1870; and unless figures deceive, by that census the empire of the great West will be more than ever manifest. And if the transfer is made accordingly, it will take some ninety or one hundred million dollars from where it now is, and is needed, and carry it to other places where certainly it will not be needed in the same degree. What will be the effect of such a transfer?
Mark, Sir, the statute is mandatory and unconditional. There is no chance for discretion; it is to be done; the transfer is to be made. And now what must be the consequence? A derangement of business which it is difficult to imagine, a contraction of currency instantaneous and spasmodic to the amount of these large sums that I have indicated.
I do not shrink from contraction. I am ready to say to the people of Massachusetts, “If the Senate will adopt any policy of contraction that is healthy, well-considered, and with proper conditions, I would recommend its acceptance.” But a contraction like that proposed by this bill, which arbitrarily takes from North and East this vast amount, and transfers it to another part of the country, where it may not be needed, such a contraction I oppose as mischievous. I see no good in it. I see a disturbance of all the channels of business; and I see a contraction which must be itself infinitely detrimental to the financial interests of the Republic.
But then, Sir, have you considered whether you can do it? Is it practicable? I have shown that it is mischievous: is it practicable? Can you take this large amount of currency from one part of the country and transfer it to another? Have you ever reflected upon the history of the bank-note after it has commenced its travels, when it has once left the maternal bank? It goes you know not where. I have been informed by bank-officers, and by those most familiar with such things, that a bank-note, when once issued, very rarely returns home. I have been assured that it is hardly ever seen again. The banks, indeed, may go into liquidation, but their notes are still current. The maternal bank may be mouldering in the earth; but these its children are moving about, performing the work of circulation. Why? The credit of the nation is behind them; and everybody knows, when he takes one of them, that he is safe. Therefore, I ask, how can the proposed requirement be carried into execution? how can you bring back these runaways, when once in circulation on their perpetual travels?
There is but one way, and that is by the return to specie payments. Hold up before them coin, and they will all come running back to the original bank; but until then they will continue abroad. The proposed requirement seems to go on the idea that bank-notes, like cows, return from pasture at night; whereas we all know, that, until specie payments, they are more like the wild cattle of the prairies and the pampas; you cannot find them; they are everywhere. Surely I am not wrong, when I suggest that the proposed requirement is impracticable as well as mischievous; and at the proper time I shall move to strike it out.
The amendment which I have moved has been under discussion for several days. It has had the valuable support of the Senator from Michigan [Mr. Chandler], who brings to financial questions practical experience. It has been opposed by other Senators, and with considerable ardor by my excellent friend from Indiana [Mr. Morton].
On Thursday last, the Senator from Indiana, addressing himself to me, and inviting a reply, which I was then prevented from making, took issue with me directly upon the position I have assumed, that the withdrawal of legal-tender notes would materially assist the effort for specie payments; and he further declared that the two currencies of bank-notes and United States notes were kept together because one was redeemable with the other. I do not quote his precise words, but I give the substance.[220]
Under the policy we are now pursuing, it seems to me, that, with $356,000,000 of legal-tender notes in circulation, the Government will not for many years, if ever again, pay specie. With that amount of United States notes, under the actual policy, the bank currency will forever remain inconvertible. And the correctness of these positions I will endeavor briefly to demonstrate.
A convertible currency is nothing more nor less than the servant of coin. If there is no coin, it can neither be servant nor representative, though it may attempt to perform the functions of coin. Presenting itself under false pretences, it but partially succeeds in this attempt; and the discredit attaching to it compels it to pay more for any property than would be the price of such property in coin, or the acknowledged representative of coin,—just as doubtful people must submit to ten, fifteen, or twenty per cent. discount, when what is known as “gilt-edged” commercial paper is discounted at five, six, or seven per cent. Thus far we have had no coin in the Treasury appropriated to the stability of the United States notes,—and under our present policy, dictated by the restrictive laws that hedge the Secretary of the Treasury and confine his liberty of action, we never shall have, until the whole bonded debt of the country is extinguished,—while at the same time the banks are excused under the law from all attempts to fortify their notes with coin.