The report states:
"Your committee are therefore of opinion that no legal tender notes, beyond the amount now limited by law, should be issued under any pressure of financial or political necessity until they are convertible into gold and silver. Our duty is to elevate the 'greenback,' the standard of national credit, to the standard of gold, the money of the world. Until then we are not on a substantial foundation. Let us make the dollar of our promise in the pocket of a laboring man equal to the dollar of our mint. The rapidity of the process is a question of public policy. It may be by gradually diminishing the volume of currency, or be left at its present amount until increased business or improved credit bring it up to the specie standard."
The refunding bill was taken up by the Senate on the 27th of February, 1868, and was fully discussed by me. After stating its general objects I said:
"It is with this view, and actuated by this principle, that the committee on finance have endeavored to make this a bill of relief, reducing, if possible, consistent with the public faith, the interest of the public debt, and giving increased value to United States notes. We have endeavored in this bill to accomplish three results: First, to reduce the rate of interest with the voluntary consent of the holders of our securities; second, to make a distinct provision for the payment of the public debt; and third, to give increased value to United States notes, and to provide for a gradual resumption of specie payments. All these are objects admitted to be of the highest importance. The only question is, whether the measure proposed tends to accomplish them."
I then quoted the example of the United States and Great Britain in reducing the rate of interest on public securities. I do not approve all I said in that speech. It has been frequently quoted as being inconsistent with my opinions and action at a later period. It is more important to be right than to be consistent. I then proposed to use the doubt expressed by many people as to the right of the government to redeem the 5-20 bonds in the legal tender money in circulation when the bonds were sold, as an inducement to the holders of bonds to convert them into securities bearing a less rate of interest but specifically payable in coin. Upon this policy I changed my opinion. I became convinced that it was neither right nor expedient to pay these bonds in money less valuable than coin, that the government ought not to take advantage of its neglect to resume specie payments after the war was over, by refusing the payment of the bonds with coin. I acted on this conviction when years afterwards the resumption act was adopted, and the beneficial results from this action fully justified my change of opinion.
The debate on this bill was participated in by nearly every Senator, and was conceded to be the most comprehensive and instructive debate on financial questions for many years.
The bill, as it then stood, authorized the Secretary of the Treasury to issue registered or coupon bonds of the United States, in such form and of such denominations as he might prescribe, payable, principal and interest, in coin, and bearing interest at the rate of five per cent. per annum, payable semi-annually, such bonds to be payable forty years from date and to be redeemable in coin after ten years.
It authorized the exchange of the bonds commonly known as the 5-20 bonds for the bonds authorized by that bill. It also authorized the holders of United States notes to the amount of $1,000, or any multiple of that sum, to convert them into the five per cent. bonds provided for by the bill. This bill passed the Senate on the 14th of July, 1868. It passed the House of Representatives soon after, with amendments that were disagreed to by the Senate. The bill and amendments were referred to a conference committee which reported a modified bill which passed both Houses and was sent to President Johnson, but at so late a period of the session that it was not approved by him and thus failed to become a law.
The committee on finance at the next and closing session of that Congress deemed it useless to report another funding bill, and on the 16th of December, 1868, I reported, by direction of that committee, the following resolution:
"Resolved by the Senate, That neither public policy nor the good faith of the nation will allow the redemption of the 5-20 bonds until the United States shall perform its primary duty of paying its notes in coin or making them equivalent thereto; and measures shall be adopted by Congress to secure the resumption of specie payments at as early a period as practicable."