The theory, in my belief, is a departure from true principles of finance, national interest, national obligations to creditors, Congressional promises, party pledges (on the part of both political parties), and of personal views and promises made by me in every annual message sent to Congress and in each inaugural address.
In my annual message to Congress in December, 1869, the following passages appear:
Among the evils growing out of the rebellion, and not yet referred to, is that of an irredeemable currency. It is an evil which I hope will receive your most earnest attention. It is a duty, and one of the highest duties, of Government to secure to the citizen a medium of exchange of fixed, unvarying value. This implies a return to a specie basis, and no substitute for it can be devised. It should be commenced now and reached at the earliest practicable moment consistent with a fair regard to the interests of the debtor class. Immediate resumption, if practicable, would not be desirable. It would compel the debtor class to pay, beyond their contracts, the premium on gold at the date of their purchase, and would bring bankruptcy and ruin to thousands. Fluctuation, however, in the paper value of the measure of all values (gold) is detrimental to the interests of trade. It makes the man of business an involuntary gambler, for in all sales where future payment is to be made both parties speculate as to what will be the value of the currency to be paid and received. I earnestly recommend to you, then, such legislation as will insure a gradual return to specie payments and put an immediate stop to fluctuations in the value of currency.
I still adhere to the views then expressed.
As early as December 4, 1865, the House of Representatives passed a resolution, by a vote of 144 yeas to 6 nays, concurring "in the views of the Secretary of the Treasury in relation to the necessity of a contraction of the currency, with a view to as early a resumption of specie payments as the business interests of the country will permit," and pledging "cooperative action to this end as speedily as possible."
The first act passed by the Forty-first Congress, [approved] on the 18th day of March, 1869, was as follows:
AN ACT to strengthen the public credit.
Be it enacted, etc., That in order to remove any doubt as to the purpose of the Government to discharge all just obligations to the public creditors, and to settle conflicting questions and interpretations of the law by virtue of which such obligations have been contracted, it is hereby provided and declared that the faith of the United States is solemnly pledged to the payment in coin or its equivalent of all the obligations of the United States not bearing interest, known as United States notes, and all the interest-bearing obligations of the United States, except in cases where the law authorizing the issue of any such obligation has expressly provided that the same may be paid in lawful money or in other currency than gold and silver; but none of the said interest-bearing obligations not already due shall be redeemed or paid before maturity unless at such time United States notes shall be convertible into coin at the option of the holder, or unless at such time bonds of the United States bearing a lower rate of interest than the bonds to be redeemed can be sold at par in coin. And the United States also solemnly pledges its faith to make provision at the earliest practicable period for the redemption of the United States notes in coin.
This act still remains as a continuing pledge of the faith of the United States "to make provision at the earliest practicable period for the redemption of the United States notes in coin."
A declaration contained in the act of June 30, 1864, created an obligation that the total amount of United States notes issued or to be issued should never exceed $400,000,000. The amount in actual circulation was actually reduced to $356,000,000, at which point Congress passed the act of February 4, 1868, suspending the further reduction of the currency. The forty-four millions have ever been regarded as a reserve, to be used only in case of emergency, such as has occurred on several occasions, and must occur when from any cause revenues suddenly fall below expenditures; and such a reserve is necessary, because the fractional currency, amounting to fifty millions, is redeemable in legal tender on call.