On the return of the bill to the House of Representatives debate began on February 21st.—Mr. Phillips of Kansas advocated the double standard with the ratio of metal properly determined, and he thought this was done in the dollar of 412½ grains.—General Butler of Massachusetts was in favor of insisting on the House bill for free coinage, and was seconded by Mr. Atkins of Tennessee.—Mr. Bland was willing to accept the Senate amendments and then pass a supplementary measure for free coinage on an appropriation bill. He added: "If we cannot do that I am in favor of issuing paper money enough to stuff down the bondholders until they are sick."—Mr. Dwight of New York sought to limit the legal-tender quality of the silver dollar to $50, and for larger sums to make it receivable at its value in gold.—A motion by Mr. Hewitt of New York to lay the bill on the table was lost by ayes 71, noes 205. The several amendments of the Senate were then adopted; that limiting coinage by 203 ayes, to 72 noes, and that for an International Monetary Conference by ayes 196, noes 71.(2) The concurrence of the House in these amendments passed the bill.
President Hayes returned the bill the House of Representatives with his objections, on the 28th of February. He based his veto on the proposition that "the silver dollar authorized is worth eight to ten per cent less than it purports to be worth, and is made a legal tender for debts contracted when the law did not recognize such coin as lawful money. The effect would be to put an end to the receipt of revenue in gold, and thus compel the payment of silver for both the principal and interest of the public debt." This he thought would be regarded as a grave breach of public faith: "It is my firm conviction that if the country is to be benefitted by a silver coinage, it can only be done by the issue of silver dollars of full value which will defraud no man. A currency worth less than it purports to be worth, will in the end defraud not only creditors, but all who are engaged in legitimate business, and none more surely than those who are dependent on their daily labor for their daily bread."
The House voted at once on the veto—passing the bill against the objections of the President, by ayes 196, to noes 73. The vote was taken in the Senate on the same day, without debate, and the bill was passed over the veto by ayes 46, noes 19. The senators not voting were paired. Had every senator been present and voted the result would have been ayes 53, noes 23. New England, New York and New Jersey supplied the principal part of the negative vote. Mr. Bayard, Mr. Pinkney Whyte, Mr. Butler of South Carolina, and Mr. Lamar were the senators from the South who voted in the negative. Pennsylvania, the South and the West sustained the bill. The Pacific coast was divided,—Mr. Booth supporting the bill and Mr. Sargent opposing it. The only vote for the bill in either House from New England was that of General Butler. The proportion and general location of the votes in the House were about the same as in the Senate.
The opinions of senators and representatives were of three distinct types. The majority believed, as the vote showed, in the policy of coining silver dollars of full legal-tender, regardless of their intrinsic equality of value with gold dollars,—thus creating two metallic currencies differing in value for all purposes of commercial interchange with the world, and keeping them at an equality of value at home by the force of law. The great mass of the Democratic party and a considerable number of Republicans joined in this view.
A small minority of both parties disbelieved in the use of silver as money, except for subsidiary coins, with its legal-tender value limited to small sums,—fifty dollars being the highest proposed, the majority apparently favoring ten dollars.
A majority of Republicans and a minority of Democrats asserted the necessity of maintaining silver coin at full legal-tender, but upon the basis of equality in intrinsic value with the gold dollar. This class feared the effect of an exclusively gold standard, while the supply of gold, compared with the commercial demands of the world, is relatively and rapidly growing less. They had seen the ratio of gold-supply far beyond that of silver for a series of years following 1850, and then for a series of years the ratio of silver-supply in excess of the supply of gold. The theory advanced by this class rested upon the proposition that the dollar of commerce could not with safety be exclusively based either upon the scarcer or upon the more plentiful metal. An adjustment is required providing for the employment of both metals—maintaining between them such fair equalization as would not violently disturb the value of real property or of annual products, and most important of all would secure a steadiness to the wages of labor and a sound currency in which to recompense it. The supply of both metals for two periods of sixteen years each (1850-1865 both included and 1866-1881 both included) in the United States and in the world at large may suggest some useful lessons.(3)
From the Silver Bill the public interest turned to the approaching day of Specie Resumption, January 1, 1879. To the last month there had been many doubters, but when the day came it was found that the Treasury was fully prepared and the gold coin which had borne a premium for the seventeen years of specie suspension was not now demanded even by those who had been hoarding legal-tender notes for that express purpose.
The result has proved that legislators and financiers were wisest who had the largest faith in the resources of the nation. The legislation proved to be adequate to the end in view, and resumption was achieved with the least practicable disturbance of trade and the least practicable depression to industry. The process of funding the debt was of great assistance, as was the constant reduction of the principal, which all the while drew our bonds from Europe and thus reduced the amount due for foreign interest. The monthly charge for interest had been in 1865 as high as $12,581,474.—a part payable in paper. During the fiscal year ending with June, 1879, it was only $6,981,148. It is obvious that from this source alone the Treasury was greatly strengthened.
Generous credit was accorded to Secretary Sherman for the great achievement. It seldom happens that the promoter of a policy in Congress had the opportunity to carry it out in an Executive Department. But Mr. Sherman was the principal advocate of the Resumption Bill in the Senate, and during the two critical years preceding the day for coin payment he was at the head of the Treasury Department. He established a financial reputation not second to that of any man in our history.
During the period of the Crimean war (1854-6), the mercantile marine of the United States gained so rapidly that it approached equality with that of England, in tonnage. But even before the calamities of our civil war, a change was foreshadowed favorable to England, hostile to the United States. It was the change from sail to steam. The utilization of iron as a ship-building material, the cheapening of fuel, the superior speed, all betokened a radical change in transportation on the principal ocean routes of the world. From the close of 1856 to the outbreak of the rebellion the average loss to the Navigation interests of the United States was two per cent annually. This ratio of loss was immensely accelerated by the course of events during the civil war, involving the utter destruction of many American vessels or their change of flag. The natural result was that in the spring of 1865 we stood in the carrying trade relatively and absolutely far behind our position in 1855.