These opinions and apprehensions were developed in the debate which led to the passage of the Act of April 12, 1866. The subject was first introduced by Mr. Alley of Massachusetts. On the 18th of December (1865) he offered a resolution concurring in the views of the Secretary of the Treasury, in relation to the necessity for a contraction of the currency, with a view to as early a resumption of specie payment as the business interests of the country would permit. Under a suspension of the rules, without debate, 144 voted for the resolution, 6 against it, and 32 were not recorded. Two months later, on the 21st of February, 1866, Mr. Morrill, from the Committee on Ways and Means, reported a bill which, as he explained, would expand the authority provided by the Act of March 3, 1865, for funding interest-bearing obligations, so as to include non-interest-bearing obligations. The measure authorized the Secretary to exchange the bonds prescribed by the Act for notes or certificates, and power was given to negotiate them and make them payable either in the United States or elsewhere, but if beyond the sea at not over five per cent interest.
—Mr. Thaddeus Stevens declared that the bill put over sixteen hundred millions of Government paper under the absolute and uncontrolled discretion of the Secretary of the Treasury. "This is a tremendous bill," said he. "It proposes to confer more power upon Mr. McCulloch than was ever before conferred upon any one man in a government claiming to have a constitution."
—Mr. Hooper of Massachusetts magnified the financial achievements of the Government, urged the policy embodied in the bill, and insisted on the importance of restoring the currency to a sound condition at the earliest practicable moment. He controverted the suggestion which had been made to increase United-States notes to $1,000,000,000, on the ground that the value of that dollar would be constantly fluctuating. A minority of the commissioners appointed by the preceding Congress to inquire into the state of trade and commerce had presented a specious argument in favor of debasing the coinage, but Mr. Hooper dismissed the proposition summarily and argued strongly for a contraction of legal-tender notes.
—Mr. Hulburd of New York maintained that taxation could not be increased to meet the existing and maturing obligations of the Government. He held that under the Acts of June, 1864, and March, 1865, the Secretary had power to sell at home or abroad six per cent coin bonds in any amount to meet short obligations of the Government. "Under the proposed measure," he said, "authority is specifically asked to withdraw the fractional currency and legal-tender notes, in whole or in part, and to substitute bonds for them. The like power was never asked for Neckar or for Pitt. As a principle the proposition is dangerous." He protested vigorously against making any part of the public debt payable in foreign countries.
—Mr. John Wentworth of Illinois argued in favor of contraction, maintaining that the purpose of the pending bill was to make the Secretary of the Treasury master of the situation. "If we expect him to compete successfully with the most desperate body of men in the world we must confer upon him the necessary powers. The real question is, Shall our Government pay its pensions and all its employees and creditors in depreciated paper, when by borrowing a little money at six per cent it can bring its paper to par?" He charged that an immense lobby against the bill had thronged the hall, and was surprised to find importers among them. "But the importers have found," said he, "that a bloated currency bloats the fashions." He earnestly indorsed Mr. McCulloch as a cautious man, who would not be precipitate, no matter what power might be conferred upon him: "If we adopt his policy we shall wake up some morning and find the paper of our country at par."
—Mr. Pike of Maine doubted the necessity of enforced contraction; but if contraction was necessary, he was for taxing the circulation of national banks out of existence, and afterwards retiring greenbacks. "Once upon a specie basis," said he, "let the business of the country regulate itself." He proposed also to allow the States to tax the bonds of the United States.
—Mr. Price of Iowa asked: "Would any prudent and sensible business man who had given his note payable at his own option, without interest, be likely to give for it another note for the same amount payable at a certain time, with interest at six per cent semi-annually, in gold coin?"
—Mr. Scofield of Pennsylvania asked if the legal-tender notes were not, upon their face, payable on demand.
—Mr. Allison of Iowa insisted that "the Secretary of the Treasury does not propose to return to specie payments immediately, but he expresses the opinion that the reduction of greenbacks by the sum of one hundred million dollars will secure that result."
—Mr. Boutwell of Massachusetts was content to try the experiment of converting the interest-bearing obligations into long bonds, but was unwilling to go farther.