Before describing this discussion, attention should be called to the fact that the panic of 1893 was immediately brought on by the bankers because Secretary Carlisle undertook to perform about the only good deed he has ventured upon as Secretary, i. e., to pay the Sherman treasury notes according to the letter of the act of July 14, 1890, in silver, just as France would have done. Now mark how Hendrix “opened his mouth and put his foot in it,” and how, finally, Hepburn tripped him.
Mr. Hendrix described at some length the process by which the gold was withdrawn by speculators for shipment abroad, and then proceeded to contrast this with the situation in France, where the Bank of France refused to pay, except where actually necessary, more than five per cent. of gold on its demand obligations. These aggressions on our gold reserve must be stopped, and if the pending bill would stop them, afford relief, take the government out of the banking business, as it has been taken out of the silver business, he would vote for it.
“Does the action of the Bank of France, in refusing to pay more than five per cent. in gold,” asked Mr. Hepburn, “impair the credit of that bank?”
“No.”
“Then would the credit of the United States be impaired if the United States should exercise its discretion and redeem the Sherman notes in silver?”
“Yes, I believe it would at this time,” replied Mr. Hendrix.
“Why?”
“Because of the general distrust of the government’s ability to pay in gold. One hundred and fifty-nine million dollars of Sherman gold promises [?] to pay cannot be met without gold.”
“But the notes are redeemable in coin, not in gold,” was Mr. Hepburn’s parting shot.
Mr. Hepburn declared that Mr. Hendrix had pointed out unwittingly the remedy for the present evil when he told the House that the great banking houses of Europe exercised their discretion about depleting their gold vaults. “Why will not the Secretary of the Treasury exercise the same discretion?” he asked, amid a round of applause. “The exercise of this discretion did not impair the credit of European banks. Who dared to say that the credit of this country, with 65,000,000 people behind it, and an unlimited taxing power, would be impaired because it refused to kneel at the demands of the Shylocks?”