"It may be asked if we provide for the issue of circulating notes to banks, why not provide for the retirement of an equal amount of United States notes. The answer is that under the provisions of the banking act, by the law as it now stands, a bank cannot be organized and maintained in existence unless the reserve which is in that bank, or required for that bank in the ordinary course of business, either on its deposits or circulation, is at least equal to twenty per cent. of the amount of its circulating notes, so that it was believed, according to the judgment of the best business men of the country, and I may say with the comptroller of the currency, that the retirement of eighty per cent. of the amount of bank notes is fully equivalent to keeping the amount of circulating medium in actual circulation on the same footing, so that this provision of the bill neither provides for a contraction nor expansion of the currency, but leaves the amount to be regulated by the business wants of the community, so that when notes are issued to a bank eighty per cent. of the amount in United States notes is redeemed, and this process continued until United States notes are reduced to three hundred millions."
Mr. Schurz asked:
"Will the Senator permit me to ask him a question in reference to this section? When the eighty per cent. of greenbacks are retired will they be destroyed and never used again?"
I replied:
"I will speak of that in a moment in connection with other sections. Now, Mr. president, that is all there is in regard to banking in this bill and also in regard to the retirement of the United States notes until the time for the resumption of specie payments comes, when this bill provides for actual redemption in coin of all notes presented. It has always been a question in the minds of many people as to whether it is wise to fix a day for specie payments. That matter was discussed at the last session of Congress by many Senators, and the general opinion seemed to be that if we would provide the means by which specie payments would be resumed it might not be necessary to fix the day; but, on the other hand, it is important to have our laws in regard to the currency fix a probable time, or a certain time, when everybody may know that his contracts will be measured by the coin standard. We also know, by the example of other nations which have found themselves in the condition in which we are now placed, and by some of the states when specie payments were suspended, that they have adopted a specific day for the resumption of specie payments. In England, by the bank act of 1819, they provided for the resumption of specie payments in 1823, making four years. In our own states—in New York, in Ohio, in nearly all the states—when there has been a temporary suspension of specie payments a time has been fixed when the banks were compelled to resume, and this bill simply follows the example that has been set by the states, by England, and by other nations, when they have been involved in a like condition.
"This bill also provides ample means to prepare for and to maintain resumption. I may say the whole credit and money of the United States is placed by this bill under the direction of the proper executive officers, not only to prepare for but to maintain resumption, and no man can doubt that if this bill stands the law of the land from this time until the 1st day of January, 1879, specie payments will be resumed, and that our United States notes will be converted at the will of the holder into gold and silver coin.
"These are all the provisions contained in this bill. They are simple and easily understood, and every Senator can pass his judgment upon them readily.
"Now I desire to approach a class of questions that are not embraced in this bill. Many such, and I could name fifty, are not included in this bill, and I may say this: That if there should be a successful effort, by the Senate of the United States, to ingraft any of this multitude of doubtful or contested questions upon the face of this bill it would inevitably tend to its defeat. I am free to say that if I were called upon to frame a bill to accomplish the purpose declared in the title of this bill, I would have provided some means of gradual redemption between this and the time fixed for final specie payments. All these means are open to objection.
"There have been three different plans proposed to prepare for specie payments, and only three. They are all grouped in three classes. One is what is called the contraction plan. The simplest and most direct way to specie payments is, undoubtedly, the gradual withdrawal of United States notes or the contraction of the currency. Now, we know very well the feeling with which that idea is regarded, not only in this Senate, but all through the country. It is believed to operate as a disturbing element in all the business relations of life; to add to the burden of the debtor by making scare that article in which he is bound to pay his debts; and there has been an honest, sincere opposition to this theory of contraction. Therefore, although it may be the simplest and the best way to reach specie payments, it is entirely omitted from this bill.
"The second plan, that I have favored myself often, and would favor now, if I had my own way, and had no opinion to consult but my own, is the plan of converting United States notes into a bond that would gradually appreciate our notes to par in gold. That has always been a favorite idea of mine. There is nothing of that kind in this bill, except those provisions which authorize the Secretary of the Treasury to issue bonds to retire the greenbacks as bank notes are issued; and it also authorizes the Secretary of the Treasury to issue bonds to provide for and to maintain resumption. I therefore have been compelled to surrender my ideas on this bill in order to accomplish a good object without using these means that have been held objectionable by many Senators.