The bill passed the Senate, in substantially the form reported from the committee on finance, by the large vote of 33 to 10, and was, perhaps, the most carefully prepared of any of the financial measures of the government.
In opening the debate, I called the attention of the Senate to the great advantage the government had derived from making its bonds redeemable at brief periods, like the 5-20 bonds, the 10-40 bonds, and the treasury notes. I also called attention to the fact that the same principle of maintaining the right to redeem had been ingrafted in the bill then before the Senate, that the duration of the bonds was divided into three periods of ten, fifteen, and twenty years, during which time, by the gradual application of the surplus revenue, the whole debt might be paid. This was the bill sent by the Senate to the House of Representatives, and if it had been adopted by the House, there would have been no trouble about the application of the surplus revenue, but by common consent it would have been used in the speedy extinction of the public debt.
The bill was sent to the House of Representatives on the 11th of March, and there seems to have slept for nearly three months without any action on the part of the House.
On the 6th of June the committee on ways and means reported House bill 2167, covering the same subject-matters as were contained in the Senate bill. The consideration of this bill was commenced, by sections, on the 30th of June. The material part of the first section of this bill is as follows:
"That the Secretary of the Treasury is hereby authorized to issue, in a sum or sums not exceeding in the aggregate $1,000,000,000, coupon or registered bonds of the United States, in such form as he may prescribe, and of denomination of $50, or some multiple of that sum, redeemable in coin of the present standard value at the pleasure of the United States after thirty years from the date of their issue, and bearing interest payable semi-annually in such coin at the rate of four per cent. per annum."
Thus it will be perceived that instead of the three series of bonds provided by the Senate, the House proposed to authorize the issue of $1,000,000,000, redeemable in coin after thirty years from the date of their issue, with interest at four per cent. This difference in the description of the bonds was the chief difference between the propositions of the House and the Senate. To emphasize this difference I quote what was said by the chairman of the House committee, Mr. Schenck, in reporting the bill:
"It is a proposition to refund a portion of the public debt of the country at a very much lower rate of interest. It is a proposition that $1,000,000,000 of that debt shall take the form of bonds, upon which the United States will agree to pay only four per cent. per annum. But, in order to make those bonds acceptable to capitalists at home and abroad, further provision is made that the bonds themselves shall have a longer time to run, not merely for thirty years, but that they shall only be redeemable after thirty years; thus giving them, without the objections, the advantages which in a great degree attach to a perpetual loan."
This bill, with a very limited debate, passed the House on the 1st of July, and then immediately was offered as a substitute for the Senate bill, and was adopted.
Those two rival propositions, differing mainly upon the question of the character of the bonds to be issued, were sent to a committee of conference, composed on the part of the Senate of Messrs. Sherman, Sumner and Davis. The chief controversy in the conference was as to the description of funding bonds to be provided for. After many meetings it was finally agreed that the bonds authorized should be $200,000,000 five per cent. bonds, $300,000,000 four and a half per cent. bonds, of the character described in the Senate bill, and $1,000,000,000 of four per cent. bonds, as described in the House bill. In other words, it was a compromise which, like many other compromises, was in its results an injury of great magnitude, but it was an honest difference of opinion between the Senate and the House, in which, tested by the march of time, the Senate was right and the House was wrong. But it was perfectly manifest that without this concession by the Senate to the House, the bill could not have passed, and even with this concession, the first report of the committee of conference was disagreed to by the House, because of certain provisions requiring the national banks to substitute the new bonds as the basis of banking circulation.
This disagreement by the House compelled a second committee of conference, in which the contested banking section was stricken out, and the bill agreed to as it now stands on the statute books.