"The third plan of resumption has been favored very extensively in this country, which is the plan of a graduated scale for resumption in coin or bullion; what I call the English plan. That is, that we provide now for the redemption, at a fixed rate or scale or rates, of so much gold for a specific sum of United States notes. At present rates we would give about $90 of gold for $100 of greenbacks, and then provide for a graduated scale by which we would approach specie payments constantly, and reach it at a fixed day. This may be called a gradual redemption. This, also, is objectionable to many persons, from the idea that it compels us to enter the money markets of the world to discount our own paper. It is an ideal objection, but a very strong objection; an objection that has force with a great many people. We have undertaken to redeem these notes in coin, and it is at least a question of doubtful ethics whether we ought to enter into the markets of the world and buy our own notes at a discount. Although that plan has been adopted in England and successfully carried into execution, yet there is a strong objection to it in this country, and therefore that mode is abandoned.
"Either of these plans I could readily support; but they have met and will meet with such opposition that we cannot hope to carry them or ingraft them in this bill without defeating it. We have then fallen back on these gradual steps: First, to retire the fractional currency; second, to reduce United States notes as bank notes are increased; and then to rest our plan of redemption upon the declaration, made on the faith of the United States, that at the time fixed by the bill we will resume the payment of the United States notes in coin at par. That is the whole of this bill."
On the 7th of January, 1875, the bill was considered in the House of Representatives and, after a very brief conversational debate, passed by the vote of yeas 136, nays 98.
On the 14th day of January, 1875, the President sent a message to the Senate approving the bill but also containing recommendations of further legislation upon matters that had been carefully excluded from the bill. He added at the close of the message this paragraph:
"I have ventured upon this subject with great diffidence, because it is so unusual to approve a measure—as I most heartily do this, even if no further legislation is attainable at this time—and to announce the fact by message. But I do so, because I feel that it is a subject of such vital importance to the whole country, that it should receive the attention of, and be discussed by, Congress and the people, through the press and in every way, to the end that the best and most satisfactory course may be reached of executing what I deem most beneficial legislation on a most vital question to the interests and the prosperity of the nation."
Thus, after a memorable debate, extending through two sessions of Congress, a measure of vital importance became a law, and when executed completely accomplished the great object proposed by its authors. The narrative of the steps leading to resumption under this act will be more appropriate hereafter.
CHAPTER XXVI. RESUMPTION ACT RECEIVED WITH DISFAVOR. It Is Not Well Received by Those Who Wished Immediate Resumption of Specie Payments—Letter to "The Financier" in Reply to a Charge That It Was a "Political Trick," etc.—The Ohio Canvass of 1875— Finance Resolutions in the Democratic and Republican Platforms—R. B. Hayes and Myself Talk in Favor of Resumption—My Recommendation of Him for President—A Democrat Elected as Speaker of the House— The Senate Still Republican—My Speech in Support of Specie Payments Made March 6, 1876—What the Financial Policy of the Government Should Be.
The resumption act was generally received with disfavor by those who wished the immediate resumption of specie payments. It was the subject of much criticism in the financial journals, among others "The Financier," which described it as a political trick, an evasion of a public duty, and as totally inadequate for the purpose sought to be accomplished. I took occasion to reply to this article in the following letter:
"United States Senate Chamber,} "Washington, January 10, 1875.} "Dear Sir:—As I am a subscriber to 'The Financier,' you will probably allow me to express my surprise at the course you have pursued in respect to the finance bill recently passed by Congress. Claiming as you do to be a 'monetary and business' journal, you might be expected to treat fairly a measure affecting so greatly the interests you represent; but you have not done so. You have treated it as a political trick, an evasion, a disgrace to Congress. You complained that it was passed without debate and that its inception and passage were shameful. But as you say in your last number 'that it is well to examine it hopefully, to find what good may have been done, if any, although from a bad motive,' I take the liberty to correct errors even in your 'hopeful' view of the law, so that you may be more hopeful still. You assume that the Secretary of the Treasury is not authorized to issue five per cent. gold bonds to prepare for and to maintain resumption, because the amount of five per cent. bonds authorized in the act of 1870 is nearly exhausted. This is an error. The secretary can issue either four and a half or five per cent. gold bonds to an amount sufficient to execute the law. The act of 1870 is only referred to for the 'description' of the bonds to be issued, and the only limit to their amount is the sum necessary, and the only limit to their sale is that they must not be sold at less than par in coin.
"You say that one trick of the bill is 'that there is no provision for carrying on the withdrawal of legal tenders after their maximum reaches $300,000,000.' Now this 'trick' was advocated by you one year ago; it was voted for by every specie paying Member of Congress at the last session, and nearly every writer on the subject has contended that if the legal tenders were reduced to $300,000,000, and the treasury was supported by a reasonable reserve, specie payments could be resumed and maintained. Besides, no one believes that $100,000,000 of bank notes will be issued under this act, and this provision only relieves some people from an idle fear of an improbable event. You must have noticed that when banks retire their notes, as they have done and will do rapidly, this is a reduction of the currency, while every issue of notes to new or old banks involves a retirement of a ratable amount of United States notes. What you say about playing with a movable 'reserve' is equally wrong. Neither the fractional currency nor the 'eighty- two million' redeemed can be reissued, and I stated so when the bill was pending under debate, and no lawyer could put a different construction upon the bill. As to United States notes, a part of the $300,000,000 redeemed after resumption of specie payments, we did refuse to provide whether they could be reissued or not, and we acted wisely. When the question is hereafter determined by Congress, the controversy will be whether the notes when reissued shall have the legal tender quality, or be simple treasury notes receivable for public dues.