The Life and Work of James A. Garfield, Twentieth President of the United States / Embracing an Account of the Scenes and Incidents of His Boyhood; the Struggles of His Youth; the Might of His Early Manhood; His Valor As a Soldier; His Career As a Statesman; His Election to the Presidency; and the Tragic Story of His Death.

by John Clark Ridpath

“No theory of currency that existed in 1860 can justify the volume now outstanding. Either our laws of trade, our laws of value, our laws of exchange, have been utterly reversed or the currency of to-day is in excess of the legitimate wants of trade. But I admit freely that no Congress is wise enough to determine how much currency the country needs. There never was a body of men wise enough to do that. The volume of currency needed, depends upon laws that are higher than Congress and higher than governments. One thing only legislation can do. It can determine the quality of the money of the country. The laws of trade alone can determine its quantity.

“In connection with this view we are met by the distinguished gentleman from Pennsylvania [Mr. Kelley] with two historical references on which he greatly relies in opposing resumption. The first is his reference to France. Follow France, says the honorable gentleman from Pennsylvania, follow France, and see how she poured out her volumes of paper money, and by it survived a great crisis and maintained her business prosperity. Oh, that the gentleman and those who vote with him would follow France! I gladly follow up his allusion to France. As a proof that we have not enough money, he notices the fact that France has always used more money than either the United States or England. I admit it. But does the gentleman not know that the traditions and habits of France are as unlike those of England and the United States as those of any two nations of the world can be in regard to the use of money? I say to the gentleman that in France, banking, as an instrument of trade, is almost unknown. There are no banks in France except the Bank of France itself. The government has been trying for twenty years to establish branches in all the eighty-nine departments, and thus far only fifty-six branches have been organized. Our national, State, and private banks number nearly ten thousand. The habits of the French people are not adapted to the use of banks as instruments of exchange. All the deposits in all the saving-banks of France are not equal to the deposits in the saving-banks of New York City alone. It is the frequent complaint of Americans who make purchases in Paris that the merchants will not accept drafts, even on the Bank of France.

“Victor Bonnet, a recent French writer, says: ‘The use of deposits, bank accounts, and checks, is still in its infancy in this country. They are very little used even in great cities, while in the rest of France they are completely unknown. It is, however, to be hoped that there will be more employed hereafter, and that here, as in England and the United States, payments will be more generally made through the medium of bankers and by transfers in account-current. If this should be the case, we shall economize both in the use of specie and of bank-notes; for it is to be observed that the use of bank-notes does not reach its fullest development except in countries where the keeping of bank accounts is universal, as is evident by comparing France in this respect with England.’

“M. Pinard, manager of the Comptoir d’Escompte, testified before the commission of inquiry, that the greatest efforts had been made by that institution to induce French merchants and shopkeepers to adopt English habits in respect to the use of checks and the keeping of bank accounts, but in vain; their prejudices were invincible. ‘It was no use reasoning with them; they would not do it, because they would not.’

“So long as the business of their country is thus done hand to hand by the use of cash, they need a much greater volume of money in proportion to their business than England or the United States.

“How is it in England? Statistics, which no man will gainsay, will show that ninety-five per cent. of all the great mercantile transactions of England is done by drafts, checks, and commercial bills and only five per cent. by the actual use of cash. The great business of commerce and trade is done by drafts and bills. Money is now only the small change of commerce. And how is it in this country? We have adopted the habits of England, and not of France, in this regard. In 1871, when I was Chairman of the Committee on Banking and Currency, I asked the Comptroller of the Currency to issue an order naming fifty-two banks which were to make an analysis of their receipts. I selected three groups: The first group were the city banks; not, however, the clearing-house banks, but the great city banks not in the clearing-house association. The second group consisted of banks in cities of the size of Toledo and Dayton, in the State of Ohio. In the third group, if I may coin a word, I selected the ‘countriest’ banks—the smallest that could be found at points away from railroads and telegraphs.

“The order was that all those banks should analyze all their receipts for six consecutive days, putting into one list all that can be called cash, either in coin, greenbacks, bank-notes, or coupons; and into the other list all drafts, checks, or commercial bills. What was the result? During those six days $157,000,000 were received over the counters of those fifty-two banks; and, of that amount, $19,370,000 was in cash—twelve per cent. only in cash; and eighty-eight per cent. of that vast amount, representing every grade of business, was in checks, drafts, and commercial bills. Does a country that transacts its business in that way need as much currency afloat among the people as a country like France, without banks, without savings institutions, and whose people keep their money in hoards.

“I remember in reading one of the novels of Dumas, when an officer of the French army sent home his agent to run his farm, he loaded him down with silver enough to conduct the business for a year; there was no thought of giving him credit in a bank; but of locking in the till, at the beginning of the year, enough coin to do the business of the year. So much for the difference between the habits of France and those of Anglo-Saxon countries. Let us now consider the conduct of France during and since the German war. In July, 1870, the year before the war began, the Bank of France had outstanding $251,000,000 of paper circulation, and held in its vaults $229,000,000 of coin. When the war broke out, they were compelled immediately to issue more paper, and to make it a legal tender. They took pattern by us in their necessity, and issued paper until, on the 19th of November, 1873, four years ago next Monday, they had $602,000,000 of paper issued by the Bank of France, while the coin in the bank was reduced to $146,000,000.

“But the moment their great war was over, they did what I recommended to the gentleman from Pennsylvania [Mr. Kelley], they commenced to reduce their paper circulation, and in one year reduced it almost $100,000,000, and increased the coin circulation $120,000,000. In the year 1876 they had pushed into circulation $200,000,000 of coin, and retired nearly all their small notes. They are at this moment within fifty days of resumption of specie payments. Under their law, fifty days from to-day, France will again come into the illustrious line of nations who believe in a sound currency. I commend to the eloquent gentleman from Pennsylvania [Mr. Kelley] the example of France....

“The overwhelming and fixed opinion of England is that the cash-resumption act of 1819 was a blessing and not a curse, and that the evils which England suffered from 1821 to 1826 did not arise from the resumption of cash payments. I appeal to every great writer of acknowledged character in England for the truth of this position. I ask the gentleman to read the eighth chapter of the second book of Miss Martineau’s History of the Peace, where the case is admirably stated. I appeal also to the opinion of Parliament itself, especially to the House of Commons, which is as sensitive an index of public opinion as England knows. When they were within about eighteen months of resumption of specie payment, a motion was made, like the motion of my colleague from Ohio [Mr. Ewing], that the resumption-act bill be repealed or modified, because it was producing distress. And a number of gentlemen in the House of Commons made speeches of the same spirit as those which we have heard here within the past week. The distress among the people, the crippling of business, the alarm of the mercantile classes, all were paraded in the House of Commons, and were answered by those knights of finance whose names have become illustrious in English history. And at the end of a long debate on that proposition, on the 11th of April, 1821, a vote was taken, and the proposition was rejected by a vote of 141 to 27. In other words, by a vote of 141 to 27 the House of Commons resolved that their act for the resumption of specie payments was not causing distress, and ought not to be repealed, and ought not to be modified, except to make it more effective. As a matter of fact, it was so modified as to allow resumption to take place much sooner than was provided in the act of 1819....