Mr. Chandler's wishes on this subject were not gratified at that time nor during his life, but before his death he saw the demand that the Treasury should cease to be a bank of issue approved by the soundest financial sentiment of the country. His belief, that the paper money of the Union should be furnished by commercial institutions operating under properly regulated governmental supervision, that is, by the national banking system perfected and enlarged, has been long held by the ablest and clearest students of monetary problems in the United States; it is to-day constantly growing in popular strength, and the result it aims at will form part of any durable settlement of "the currency question."
In 1873 the vacillating and halting financial policy of the nation—which had tried and abandoned contraction, and while looking toward the resumption of specie payments had, in fact, retreated from it—bore fruit in speculative collapses, followed by a panic in business circles and widespread commercial disaster. Congress met amid the crumbling of unsound enterprise, and was called upon to meet a terrified demand for a renewed inflation of the already excessive volume of irredeemable paper. To cure the fever, men demanded more miasma. To repair the ruin, which all history proved to be the natural result of an oversupply of currency, it was proposed to still further increase that supply. Measures to this end were introduced at once, and pushed with great vehemence. They were sustained by a misled but powerful public sentiment, which was especially strong in the West and influenced the great mass of that section's representatives at Washington. Mr. Chandler never served his country better than he did in that hour. Unmoved by the clamor about him, and refusing to listen to the cries of even his own people when they demanded false leadership, he firmly resisted every measure of inflation and every suggestion that added embarrassments to the business of the future, or increased the difficulties of preserving the public faith. The pressure in favor of the inflation bill which President Grant vetoed was unusually strong. The Western Congressmen were almost a unit for its passage, but no solicitations, no force of numbers, prevented Mr. Chandler from opposing and denouncing it. His speech in opposition to this bill (on Jan. 20, 1874) commenced with one of his terse sentences, which went straight to the marrow of the situation, and furnished a motto for the cause he championed. It was, "We need one thing besides more money, and that is better money." This phrase furnished the text for many addresses and editorials, and stood upon the title-page of the weekly circular issued by the friends of a sound currency in Boston during the controversy which preceded the passage of the Resumption act of 1875. In the same speech Mr. Chandler said:
To insure prosperity we ought to have something permanent, something substantial. Then the business of the country will conform itself to the facts and regulate itself accordingly. This panic (of 1873) was exceptional, as indeed all panics are. A panic among men is precisely like a panic among animals. I once saw 2,000 horses stampede, and they were just as the same number of thousands of men would be in a panic. It is the feeling of animal fear, and one encourages the other, and so it goes on until it becomes a perfect insane rush for something, nobody knows what. Prior to this late panic, as is well known, many of our capitalists had over-invested in wild railroad schemes; they had undertaken to do impossible things; when the panic struck them it ought not to have had the least effect outside of Wall street and operators in railroad stocks. But the panic swept like a tornado all over the land, affected values everywhere, values of all kinds. Whoever had money in bank sought to draw it out and hide it away. The panic was universal, and yet this nation was never more prosperous than it was the day before the panic struck. And to-day there is as much money in the Union as there was then. Every dollar that was here then is here now. Besides, the enormous borrowers, the men who would pay any price for money—one-half per cent. a day, one per cent. a day, or any other given price—have failed and gone out of the market. And now the money is seeking the legitimate channels of commerce for interest and use.... The best time for the resumption of specie payment that has occurred since the suspension was in 1865, at the close of the war, when gold had fallen from over 200 to 122. In a few days values had shrunk, and the people of the nation were comparatively out of debt, and were ready then for a resumption of specie payments, but the government was not. The government owed more than $1,000,000,000, that was maturing daily in the shape of compound interest notes, seven-thirties and other obligations that must be funded or disposed of. Hence the government was not prepared for specie payments at that time, although the people were.... From that day to this we have been drifting and floating further and further away every hour from the true path—the resumption of specie payments. I have advocated from the first the earliest possible payment in coin. I believe there is no other standard of value that will stand the test, and I believe the time has arrived, or very nearly arrived, for coming to it. I have not the same timidity in fixing a date that some of my friends on this floor have. I believe that if we were to resolve to-day that we would resume the payment of our greenbacks in coin on the 1st day of January, 1875, and authorize the Secretary of the Treasury to borrow $100,000,000 in coin to be used in the redemption of the greenbacks, and sell no more gold until the 1st of January, 1875, on that day we would have $200,000,000 of coin in the Treasury for the redemption of the greenbacks. I am not particular as to date. I merely suggest the 1st of January, 1875. But I would accept an earlier date than that if it were deemed more advisable, but certainly I would not extend it more than six months thereafter....
It is no part of the business of this government to issue an irredeemable currency. We cannot afford to place ourselves beside the worn-out governments of Europe—we cannot afford to place ourselves on a par with Hayti and Mexico. We are too rich a people to do it; and it is a disgrace to us as a nation that we have allowed it to continue one single hour beyond the hour when it was in our power to remedy the wrong.
The proposition to increase our paper currency is a step in the wrong direction, and I, for one, am utterly opposed to taking even one step in the wrong direction when I know what the right direction is.
As part of the same general discussion, Mr. Chandler made a carefully prepared financial speech in the Senate on Feb. 18, 1874, in which he first graphically sketched the history of "wild-cat banking" in Michigan, and then said:
After the failure of these banks the cry was still, "More money; and we must have more money; the country is suffering for more money." The cry was responded to, and more money was furnished. The Treasury of the State of Michigan, already owing $5,000,000, undertook to furnish more money, and the State issued treasury notes ad libitum, and the "more money" men got more money until the value of the state treasury notes, which have been paid to the last dollar at par, ran down to thirty-seventy cents on the dollar; and almost every city in the State, including the city of Detroit, responded to the cry of "more money," and issued shin-plasters; and individuals, realizing that "more money" was needed, issued shin-plasters. So the State of Michigan was flooded with more money.
Well, sir, you can see at a glance that the State of Michigan needed more money. We had as a people been speculating almost to a man. It was not confined to the merchant, the banker, the man of wealth; but the mechanic, the farmer, the laborer, every man who could buy a piece of property of any sort, kind, or description, bought it, ran in debt, laid out a town, sold the lots, gave a mortgage, and then wanted "more money" to pay that mortgage.
When the collapse came it was absolute; there was no mistake about it; the collapse was perfect. Then the people of Michigan had enough of "more money;" and when our constitutional convention met, as it did a few years later, they put into the constitution a clause prohibiting the Legislature forever from chartering a bank or affording the means of furnishing "more money;" and the people acquiesced in it. They had enough of the "more money" cry; and for twenty-five years there was no more cry in the State of Michigan for irredeemable money.... The losses to which I have referred did not fall upon the moneyed men of the State of Michigan, the men who were in sound condition. They fell upon the laboring man, the farmer, and the mechanic. They fell upon the men who could least afford to submit to the loss. So it is now. Why, sir, our values are fixed by a foreign market, and in coin. There is not a bushel of corn or a bushel of wheat raised in Indiana, or Illinois, or Michigan, the value of which is not fixed by the foreign value in coin of that particular article. When you enhance the cost of production by an inferior currency you put that loss upon the producer, and the loss falls not upon the wealthy man, but upon the laborer and producer. Money will take care of itself all over the world. If it is not safe in this country, it will find a country where it is safe, and it will go to that country, no matter where that may be. Hence, capital requires no protection whatever from this body; money will take care of itself; but the poor man, the laboring man, the man who submits to all the losses from this depreciated currency, is the man who suffers all the pain and all the injury that are inflicted by this false legislation....
Now, sir, we come to the crash of 1873. On the 15th day of September, 1873, this nation was in a more prosperous condition than perhaps it had been for the last twenty-five years. Every branch of industry was prosperous, every interest of the people was prosperous; but in a day, at the drop of the ball at twelve o'clock on the 16th of September, the panic struck. What produced this tremendous panic and crash in this great and prosperous country? It was over-speculating in railroad securities. It was by men undertaking to do what it was utterly impossible for them to do, to wit, for individuals to float untold millions by their own credit; and when the people became alarmed for fear the crash would come, the crash came, and there was no salvation from it. But, sir, on that very self-same day the nation was more prosperous than it had been for the last twenty years in all its interests—business, banking and every other. The crash ought not to have extended one yard beyond Wall street and the few producers of railroad iron who were manufacturing for these defunct railroads. But, sir, the panic was so great that it spread until it became universal, and values sank until there seemed to be no bottom, and everybody was affected throughout the length and breadth of this broad land.
But, Mr. President, that panic was of short duration. Many failures took place, and particularly among stock and railroad operators; but the main business of the country still went on with a few notable exceptions. Some manufacturers stopped for the want of money; others stopped for the want of credit. The men that had been issuing their paper without intending to pay it, issuing millions of dollars of paper which they knew they could not meet at maturity, trusting in luck to meet their obligations—those men cannot borrow money; their lines are full everywhere; nobody will loan them money; but, sir, upon undoubted security money is to-day cheaper than it has been at any time for the last twenty years. These great borrowers, without the expectation of paying at maturity, are to-day all out of the market. No man will loan money to a person who does not pay at maturity. Every man that desires to borrow money for legitimate business can borrow it to-day cheaper than he could borrow it at any time in the last twenty years. Sir, you may legislate for this class who have over-speculated, you may legislate for the benefit of the men who have built factories, built steamboats, built mills, bought mills, bought mines, bought everything for sale, and given their paper knowing they could not meet it unless they could borrow the money over again; you may legislate them $100,000,000 or $1,000,000,000, and you will not help them in the slightest degree....
Now, Mr. President, I will ask the attention of the Senate while I show the effect upon the purchasing value of money of issuing your greenback circulation from the day it was first issued to the present time. In 1862 we commenced the issue of greenbacks. In January, 1862, the premium on gold was 2.5 per cent.; in February it was 3.5; in March, 1.8; in April, 1.5; in May, 1.3; in June, 6.5; in July, 15.5; in August, 14.5; in September, 18.5; in October, 28.5, in November, 31.1; in December, 32.3. It will be remembered that the then circulating medium (which was at that time state bank notes) amounted to about $200,000,000. This circulation was increased during the year 1862 by the addition of $147,000,000 in greenbacks, and that increase of circulation carried the value of gold from 102.5 on the 1st of January to 132.3 on the 31st day of December following.
In 1863 the necessities of the government compelled us to increase the greenback circulation to a yet larger extent. We issued during that year $263,500,000 additional, carrying up our greenback circulation to $411,200,000, in addition, of course, to our bank circulation, whatever it may have been. During the month of January of that year the premium on gold was 45.1 per cent.; during February, 60.5; March, 54.5; April, 51.5; May, 48.9; June, 44.5; July, 30.6; August, 25.8; September, 34.2; October, 47.7; November, 48; December, 51.1. In other words, the average rate of premium upon gold during that whole year was 45.2 per cent. I hold in my hand a paper showing the cash value of this emission for 1863. The emission of greenbacks at that time was $411,200,000. The average premium on gold was 45.2 per cent. The actual cash purchasing value of that $411,000,000, during the year 1863, was $283,195,000, and that was the whole purchasing value of that money during that year.
Then we come to the next year, 1864. That year, we increased our circulating medium by the addition of $237,900,000, making the whole amount $649,100,000. In 1864 the price of gold was, in January, 155.5; February, 158.6; March, 162.6; April, 172.7; May, 176.3; June, 219.7; July, 258.1, or less than 40 cents on the dollar in coin for your greenbacks after you had carried the amount up to $649,000,000. In August the price was 254.1; in September, 222.5; in October, 207.2; in November, 233.5; in December, 227.5. There is not a man here who does not remember, nor is there a farmer or mechanic throughout the length and breadth of the land who does not remember, that he then paid 60 cents for cotton goods that he had been in the habit of buying for 12½ cents, and that he paid for everything else in the same ratio. The merchant took care that he met with no loss; but the laboring man, the farmer, the man of muscle, was the man who submitted to this great loss, while the merchant and while every man with money took care of himself.
During that year the average price of gold was 203.3 per cent., or your money was a fraction less than 48½ cents on the dollar during the whole year. You had out that year $649,100,000, and the value of gold was 203.3, and the purchasing value of your $649,100,000 was $319,281,000, and that was the whole of it.
In 1865 you again increased the volume of your circulating medium by the amount of $49,800,000; making the whole amount of your circulation $698,900,000. During the month of January, 1865, the price of gold was 216.2; during February, 205.5; in March, 173.8; in April, 148.5; and after that it stood at 135.6, 140.1, 142.1, 143.5, 143.9, 145.5, 147, 146.2. The average of the year 1865 was 157.3; and what was the purchasing value of your greenbacks that year? Every man here will remark that that year we were disposing of our bonds at the rate of hundreds of millions of dollars a month; money was passing through the Treasury almost without limit. We had $1,000,000,000 that must be negotiated, and negotiated at once—seven-thirties and compound-interest notes and other floating liabilities that must be funded; and during that year the war had closed, and while we were negotiating at this enormous rate, the price of gold fell to 153.3, and during that year the purchasing value of our circulation attained a higher rate than during any other year. That year, although our circulation of greenbacks was $698,900,000, and the premium on gold 57.3, the actual purchasing value of that $698,900,000 was $444,310,000.
In 1866 we retired $90,000,000, leaving $608,900,000, and the average premium on gold that year was 40.9 per cent. The purchasing value of the $608,900,000, with the premium on gold at 40.9, was $432,150,000.
The next year, 1867, we retired $72,300,000, and premium on gold fell to 38.2. So we went on reducing until we got down to $400,000,000, and then we struck 14.9, 11.7, 12.4 and 14.7 as the premium on gold. There the matter has stood, and I have here from year to year, the purchasing value for each year....
Mr. President, what we want is purchasing value, because the intrinsic value is measured by the purchasing value. There is not a bushel of wheat that goes from your State or from mine the purchasing value of which is not fixed by the gold value on the other side of the Atlantic. We are shipping millions and tens of millions and hundreds of millions of our agricultural products every year, and the value of these products is fixed in gold on the other side of the Atlantic; and yet by this increase of circulation we enhance the value of everything that the producer raises, but when the product comes to the market its value must be fixed by its price in gold across the Atlantic....
Mr. President, I know of no way to substitute the Treasury of the United States for the banking experience of the last ten centuries. We have the experience of the past, we have the experience of our own nation, we have the experience of the world. Now, do we propose to throw aside this experience, and to launch our boat upon a wild and uncertain sea, an ocean of expansion and no payments?
Sir, there are very few persons within the range of my acquaintance who desire expansion of an irredeemable currency. Certainly the people of Michigan have had abundance of experience of that kind. But wherever you go you will find two classes of men who are making a great noise about "more money." One is the speculator, the impecunious speculator, who has, perhaps, bought real estate and given a mortgage, and thinks that his only chance is to reduce the value of your currency until it falls so low that the people would rather take his land than hold your money; and the other is the man who has issued his paper without intending to pay when it matures, and who can borrow no more money upon any terms until he pays what he already owes.
On the 14th of January, 1875, the act for the resumption of specie payments became a law. Mr. Chandler was a member of the Senate when this bill passed. He had but one objection to it; the time fixed for resumption was unnecessarily remote. Neither present exigency nor needed preparation required the delay, and he believed it to be opposed alike to economy, patriotism, and public honor. But it was the best that could be secured; insistence upon an earlier date would have divided the friends of resumption, prevented the passage of any bill at that time, and postponed the day of specie payments. For these reasons Mr. Chandler favored the measure, and a few weeks later, when he retired from the Senate, it was with the consciousness that he had only voted for an irredeemable and inconvertible currency to meet the imperious exigencies of civil war, that he had opposed its undue expansion, that he had sustained every measure of contraction calculated to lessen the difficulties of the return to a sound basis, and that he finally had crowned his Senatorial career by support of a measure which insured the return of the government to the constitutional standard of values.