As often as I return to this subject I am impressed by the damage the country has already suffered through menacing propositions affecting the national credit. I cannot doubt that in this way the national burdens have been sensibly increased. By counter-propositions in the name of Congress we have attempted to counteract these injurious influences. We have met words with words. But this is not enough.
There is another remark which I wish to make, although I do little more than repeat what I said on another occasion.[223] It is that a national debt, when once funded, does not seem to affect largely the condition of the currency. The value of the former is maintained or depressed by circumstances independent of the currency. But, on the other hand, the condition of the currency bears directly upon all efforts for increased loans; and this is of practical importance on the present occasion. The rules of business are the same for the nation as for an individual; nor can a nation, when it becomes a borrower, hope to escape the scrutiny which is applied to an individual under similar circumstances. Applying this scrutiny to our case, it appears that on our existing bonded debt we have thus far performed all existing obligations,—not without discussion, I regret to add, that has left in some quarters a lingering doubt with regard to the future, and not without an opposition still alive, if not formidable. But the case is worse with regard to that other branch of the national debt known as legal-tenders, where we daily fail to perform existing obligations, so that these notes are nothing more than so much failed paper. With regard to this branch of the national debt there is an open confession of insolvency, and each day renews the confession. Now, by the immutable laws of credit, which all legislative enactments are impotent to counteract or expunge, the nation must suffer when it enters the market as a borrower. Failing to pay these obligations already due, it must pay more for what it borrows. Nor can we hope for more than partial success, until this dishonor is removed.
With these preliminary remarks, which are rather hints than arguments, I come directly to the measure before the Senate; and here I begin with the first section.
I wish the Senate would note the difference between this section in my bill and in the substitute of the Committee. I proposed to authorize the issue of $500,000,000 of Ten-Forty five per cents., and prescribe the use to which the proceeds of such bonds should be applied. The Committee propose $400,000,000 of Ten-Twenty five per cents., and leave the application of the proceeds the subject of discretion. Between the two propositions there are several differences: first, in the amount; secondly, in the length of the bond; and, thirdly, in the application of the proceeds.
Here I beg to observe that the original sum of $500,000,000 was not inserted by accident, or because it was a round and euphonious sum. Nothing of the kind. It was the result of a careful examination of the national debt in its details, especially in the light of the national credit. It was adopted because it was the very sum required by the nature of the case. At least so it seemed to me. A brief explanation will show if I was not right.
The year 1862, which marks the date of our legal-tenders, marks also the date of a new system in regard to our loans. Senators are hardly aware of this change. Previously our standard for sixes was an immutable loan for twenty years. By the new system this immutability was continued as to the right of demand by the bondholder, but the right of payment was reserved to the nation at any time after five years. This change, as we now see, gave positive advantages to the nation. Its disadvantages to the bondholder were so apparent that it encountered resistance, which was overcome only after undaunted perseverance and final appeal to the people. Now, by recurring to the schedule of the national debt, you will find that the first loan within the sphere of this discretionary system is the Five-Twenties of 1862, which, on the 1st of February last, after deducting the purchased bonds, were $500,000,000. This, therefore, is the first loan falling within our discretion, the first loan we are privileged to pay before maturity, and the first loan presenting itself for payment. In these incidents the loan of 1862 has precedence,—it stands first.
But there is a reason, which to my mind is of peculiar force, why this first loan should be paid in coin at the earliest possible day. It seems to me that I do not deceive myself, when I consider it conclusive on this question. The loan of 1862 is the specific loan which has been made the objective point of all the movements under the banner of Repudiation. It is the loan to which this idea first attached itself. It is the loan first menaced. Therefore, to my mind, it is the loan which should be first provided for. I know no way, short of universal specie payments, by which the national credit can be so effectually advanced.
Why in the amendment of the Committee the amount of the proposed issue is placed at $400,000,000 I am at a loss to conceive. Here is no equivalent of any one loan, nor of two or more loans. It is an accidental sum, and might have been more or less for the same reason that it is what it is. The term Ten-Twenties seems also accidental, as it is unquestionably new. Of course it is assumed that the amount proposed of Ten-Twenties at five per cent. will absorb an equal amount of Five-Twenties at six per cent., irrespective of any particular loan; but I am at a loss to see on what grounds the holders of the sixes can be induced to make the exchange. Will the substitute bonds be considered of equal value? I affirm not. But assuming that they are acceptable, how shall they be acceptably distributed? Shall the first comer be first served? If all were at the same starting-point, the palm might be justly bestowed upon the most swift. In the latitude allowed, stretching over all the Five-Twenties, there would be opportunity for favoritism; and with this opportunity there would be temptation and suspicion.