Recollections of Forty Years in the House, Senate and Cabinet Part 43

In the Senate the opposition to bank bills was headed by Thomas H.

Benton, who openly advocated so changing the coinage ratio that gold would circulate to the exclusion of the notes, and perhaps incidentally of silver also. The matter of providing for silver, however, received little attention. The ratio was changed to sixteen to one, John Quincy Adams and Daniel Webster joining with Calhoun and Benton in bringing it about. It was well understood at the time that the operation of this act would banish silver.

The object of the change was distinctly stated, especially by Mr.

Benton, who said:

"To enable the friends of gold to go to work at the right place to effect the recovery of that precious metal, which their fathers once possessed; which the subjects of European kings now possess; which the citizens of the young republics to the south all possess; which even the free negroes of San Domingo possess; but of which the yeomanry of America have been deprived for more than twenty years, and will be deprived forever, unless they discover the cause of the evil and apply the remedy to its root."

By the act of 1834, superadded to by the act of 1837, the ratio of sixteen to one instead of fifteen to one was adopted. The result was that gold coins were largely introduced and circulated; but as sixteen ounces of silver were worth more than one ounce of gold, the silver coins disappeared, except the depreciated silver coin of other countries, then a legal tender. To correct this evil, Congress, on the 21st of February, 1853, provided for the purchase of silver bullion by the government, to be coined by it and not for the owners of the bullion. That was the first time the government had ever undertaken to buy bullion for coinage purposes. It provided for the purchase of silver bullion and the coinage of subsidiary silver coins at the ratio of less than fifteen to one. No mention was made of the dollar in the act of 1853. It had fallen into disuse and when coined was exported, being more valuable as bullion than as coin.

As the value of the minor coins was less that gold at the coinage ratio, they were limited as a legal tender to five dollars in any one payment. They were, in fact, a subsidiary coin made on government account, and, from their convenience and necessity, were maintained in circulation. They were similar to the coins now in use, revived and re-enacted by the resumption act of 1875.

It was not the intention of the framers of this law to demonetize silver, because they were openly avowed bimetallists, but it limited coinage to silver bought by the government at market price. They saw, in this expedient, a way in which silver could be more generally utilized than in any other. Mr. R. M. T. Hunter, an avowed bimetallist, in a report to the United States Senate, said:

"The mischief would be great indeed if all the world were to adopt but one of the precious metals as the standard of value. To adopt gold alone would diminish the specie currency more than one-half; and the reduction the other way, should silver be taken as the only standard, would be large enough to prove highly disastrous to the human race."

He evidently did not consider the purchase of silver bullion at its coinage value by the government, instead of the free coinage of silver, as monometallism.

After the pa.s.sage of the act of 1853, gold in great quant.i.ties, the produce of the mines of California, was freely coined at the ratio of sixteen to one, and was in general circulation. If, then, the purchase of silver, instead of the free coinage of silver, is the demonetization of silver, it was demonetized practically in 1834, and certainly in 1853, when the purchase of silver and its use as money increased enormously. In 1852 the coinage of silver was less than $1,000,000. In the next year the coinage of silver rose to over $9,000,000, and reached the aggregate of nearly $50,000,000 before the beginning of the Civil War. Then, as now, the purchase of silver bullion led to a greater coinage than free coinage.

This was the condition of our coinage until the war, like all other great wars in history, drove all coins into h.o.a.rding or exportation, and paper promises, great and small, from five cents to a thousand dollars, supplanted both silver and gold.

When, therefore, it became necessary to prepare for the coinage of gold and silver to meet the requirements of the act of 1869, "to strengthen the public credit," it was deemed by the treasury department advisable to revise and codify the coinage laws of the United States. Mr. Boutwell, then Secretary of the Treasury, with the a.s.sistance of John Jay Knox, deputy comptroller, afterwards comptroller, of the currency, and the officers of the mints of the United States, prepared a complete code of the coinage laws. It was submitted to experts, not only to those in the treasury but also to all persons familiar with the subject. The bill was ent.i.tled, "An act revising and amending the laws relative to the mint, a.s.say offices, and coinage of the United States."

The law, tested by experience, is conceded to be an excellent measure. A single provision of the bill has been the subject of charges and imputations that the silver dollar was, in a fraudulent and surrept.i.tious way, "demonetized" by this act. There is not the slightest foundation for this imputation. The bill was sent to me as chairman of the committee on finance, and submitted to the Senate with this letter:

"Treasury Department, April 25, 1870.

"Sir:--I have the honor to transmit herewith a bill revising the laws relative to the mint, a.s.say offices, and coinage of the United States, and accompanying report. The bill has been prepared under the supervision of John Jay Knox, deputy comptroller of the currency, and its pa.s.sage is recommended in the form presented. It includes, in a condensed form, all the important legislation upon the coinage, not now obsolete, since the first mint was established, in 1792; and the report gives a concise statement of the various amendments proposed to existing laws and the necessity for the change recommended.

There has been no revision of the laws pertaining to the mint and coinage since 1837, and it is believed that the pa.s.sage of the inclosed bill will conduce greatly to the efficiency and economy of this important branch of the government service.

"I am, very respectfully, your obedient servant, "Geo. S. Boutwell, Secretary of the Treasury.

"Hon. John Sherman, "Chairman Finance Committee, United States Senate."

Section 15 of the original bill omitted the silver dollar. It was as follows:

"Sec. 15. _And be it further enacted_, That of the silver coin, the weight of the half dollar, or piece of 50 cents, shall be 192 grains; and that of the quarter dollar and dime shall be, respectively, one-half and one-fifth of the weight of said half dollar. That the silver coin issued in conformity with the above section shall be a legal tender in any one payment of debts for all sums less than one dollar."

Section 18 prohibited all coins except those named, as follows:

"Sec. 18. _And be it further enacted_, That no coins, either gold, silver, or minor coinage, shall hereafter be issued from the mint other than those of the denominations, standards, and weights herein set forth."

Special attention was called to the dropping out of the silver dollar, both by Secretary Boutwell and Mr. Knox, and the opinion of experts was invited and given on this special matter and communicated to Congress. These sections, in the three years that the bill was pending in Congress, were changed either in the House or Senate in only one or two unimportant particulars.

Accompanying the report of Mr. Knox were the statements of Robert Patterson, of Philadelphia, confessedly one of the ablest scientists and metallists in the United States, in favor of dropping from our coinage the silver dollar. Dr. Linderman, the director of the mint, made the same recommendation. In the report accompanying the introduction of the bill, under date of April 25, 1870, Comptroller Knox gives the history of the silver dollar and the reasons for its discontinuance as follows:

"The dollar unit, as money of account, was established by the act of Congress April 2, 1792, and the same act provides for the coinage of a silver dollar, 'of the value of a Spanish milled or pillar dollar, as the same is now current.' The silver dollar was first coined in 1794, weighing 416 grains, of which 371 grains were pure silver, the fineness being 892.4. The act of January 18, 1837, reduces the standard weight to 412 grains, but increases the fineness to 900, the quant.i.ty of pure silver remaining 371 grains as before, and at these rates it is still coined in limited amounts."

He then says:

"The coinage of the silver dollar piece, the history of which is here given, is discontinued in the proposed bill. It is, by existing law, the dollar unit, and a.s.suming the value of gold to be fifteen and one-half times that of silver, being about the mean ratio for the past six years, is worth in gold a premium of about three per cent. (its value being 103.12) and intrinsically more than seven per cent. premium in our other silver coin, its value thus being 107.42. The present laws consequently authorize both a gold dollar unit and a silver dollar unit, differing from each other in intrinsic value. The present gold dollar piece is made the dollar unit in the proposed bill, and the silver dollar piece is discontinued.

If, however, such a coin is authorized, it should be issued only as a commercial dollar, not as a standard unit of account, and of the exact value of the Mexican dollar, which is the favorite for circulation in China and j.a.pan and other oriental countries.

"Note.--a.s.suming the value of gold to be fifteen and one-half times that of silver, the French 5-franc piece is worth about 96 cents (96.4784); the standard Mexican dollar 104.90, our silver dollar piece 103.12, and two of our half-dollar pieces 96 cents."

The finance committee carefully examined the bill. We were not in any hurry about it. It was sent to us in April, 1870, and was printed and sent, by order of the Senate, to everyone who desired to read it or look over it.

That committee was composed of Messrs. Sherman, Williams, Cattell, Morrill, Warner, Fenton and Bayard.

The bill was reported unanimously to the Senate December 19, 1870, after lying in the committee room for eight months.

The dollar was dropped from the coins in the bill framed in the treasury department. It was then an unknown coin. Although I was quite active in business which brought under my eye different forms of money, I do not remember at that time ever to have seen a silver dollar. Probably if it had been mentioned to the committee and discussed it would have been thought, as a matter of course, scarcely worthy of inquiry. If it was known at all, it was known as a coin for the foreign market.

No one proposed to reissue it. The Pacific coast had six intelligent, able, and competent Senators on the floor of the Senate. They would have carefully looked out for the interest of silver, if the bill affected them injuriously. The authority given in the bill as it finally pa.s.sed for coining the so-called trade dollar, met all the demands of the silver producing states. But the silver dollar at that time was worth more than the gold dollar. California and Nevada were on the gold standard.

The bill was printed over and over again, finally reported, and brought before the Senate. It was debated there for three days.

Every Senator from the Pacific coast spoke upon the measure.

Representing the committee, I presented the questions as they occurred from time to time, until finally we differed quite seriously upon the question of a charge for the coinage of gold. The only yea and nay vote in the Senate on the pa.s.sage of that bill, after two days debate, occurred on the 10th of January, 1871. Those who voted in favor of the bill were Messrs. Bayard, Boreman, Brownlow, Ca.s.serly, Cole, Conkling, Corbett, Davis, Gilbert, Hamlin, Harlan, Jewett, Johnston, Kellogg, McCreary, Morton, Nye, Patterson, Pomeroy, Pool, Ramsey, Rice, Saulsbury, Spencer, Stewart, Stockton, Sumner, Thurman, Tipton, Trumbull, Vickers, Warner, Willey, Williams, Wilson and Yates--36.

Every one of the six members of the Pacific coast voted for the bill after full debate.

Against this bill were Messrs. Abbott, Ames, Anthony, Buckingham, Carpenter, Chandler, Fenton, Hamiliton, of Texas, Harris, Howell, Morrill, of Vermont, Pratt, Scott and Sherman--14.

So on the only yea and nay vote which was ever taken upon the bill I voted against it. It was not on account of demonetizing the silver dollar. I did not do it because of that, but I did it because gold was then only coined for the benefit of private depositors; we were not using gold except for limited purposes.

Gold was the standard in California, and we thought the people of that state ought to continue to pay the old and reasonable rate for coinage of one-fifth of one cent to the dollar. No action was taken on the bill in the House of Representatives, and it failed to pa.s.s during that Congress. At the beginning of the next Congress the bill was introduced by Wm. D. Kelley, and reported by him favorably to the House of Representatives. It gave rise to considerable debate, especially the section defining the silver coins. No one proposed to restore the old silver dollar, but the House inserted a coin precisely the equivalent of five francs, or two half dollars of our subsidiary coin, and this franc dollar, as it was called, was made, like other subsidiary coins, a legal tender only for five dollars. On the 9th of April, 1872, Mr. Hooper, having charge of the bill, called especial attention to the dropping of the old dollar and the subst.i.tution of the French dollar. He said, on April 9, 1872:

"Section 16 re-enacts the provisions of existing laws defining the silver coins and their weights, respectively, except in relation to the silver dollar, which is reduced in weight from 412 to 384 grains; thus making it a subsidiary coin in harmony with the silver coins of less denomination, to secure its concurrent circulation with them. The silver dollar of 412 grains, by reason of its bullion and intrinsic value being greater than its nominal value, long since ceased to be a coin of circulation, and is melted by manufacturers of silverware. It does not circulate now in commercial transactions with any country, and the convenience of those manufacturers, in this respect, can better be met by supplying small stamped bars of the same standard, avoiding the useless expense of coining the dollar for that purpose. The coinage of the half dime is discontinued for the reason that its place is supplied by the copper nickel five-cent piece, of which a large issue has been made, and which, by the provisions of the act authorizing its issue, is redeemable in United States currency."

When the bill was sent to the Senate it, in compliance with the memorial of the legislature of the State of California, inserted in place of the French dollar, of 384 grains of standard silver, a dollar containing 420 grains of standard silver, called the "trade dollar." This was urged upon the ground that, as the Mexican dollar contained 416 grains, or 3 grains more than the old silver dollar, it had an advantage in trade with China and j.a.pan over our dollar, and that a coin containing a few grains more than the Mexican dollar would give our people the benefit of this use for silver. This dollar was, in conference, agreed to by the House, but was a legal tender for only five dollars. On final action on that bill, the conferees on the part of the Senate were Messrs. Sherman, Scott and Bayard. The amendment of the Senate adopting the trade dollar was agreed to by the House, and the bill pa.s.sed in both Houses without a division.

There never was a bill proposed in the Congress of the United States which was so publicly and openly presented and agitated. I know of no bill in my experience which was printed, as this was, thirteen times, in order to invite attention to it. I know no bill which was freer than any immoral or wrong influence than this act of 1873.

During the pendency of this bill, the Senators and Representatives from the Pacific coast were in favor of the single standard of gold alone. This was repeatedly shown during the debates, but now they complain that the silver dollar was demonetized, and that, though present, taking the most active interest in the consideration of the bill, they did not observe that the silver dollar was dropped from the coinage. The public records are conclusive against this pretense. Mr. Stewart, Senator from Nevada, and all the Senators from the Pacific coast, who took an active part in the debate on the bill, must have known of the dropping of the silver dollar from the coinage. It appears from the "Congressional Record" that, on the 11th of February, 1874, Mr. Stewart said:

"I want the standard gold, and no paper money not redeemable in gold; no paper money the value of which is not ascertained; no paper money that will organize a gold board to speculate in it."

Again, only a few days after this, on the 20th of February, when he was speaking in favor of the resolution, instructing the committee on finance to report a bill providing for the convertibility of treasury notes into gold coin of five per cent. bonds, he said:

"By this process we shall come to a specie basis, and when the laboring man receives a dollar it will have the purchasing power of a dollar, and he will not be called upon to do what is impossible for him or the producing cla.s.ses to do, figure upon the exchanges, figure upon the fluctuations, figure upon the gambling in New York; but he will know what his money is worth. Gold is the universal standard of the world. Everybody knows what a dollar in gold is worth."

To review the history of the act of 1873: It was framed in the treasury department after a thorough examination by experts, transmitted to both Houses of Congress, thoroughly examined and debated during four consecutive sessions, with information called for by the House of Representatives, printed thirteen times by order and broadly circulated, and many amendments were proposed, but no material changes were made in the coinage clause from the beginning to the end of the controversy. It added the French dollar for a time, but that was superseded by the trade dollar, and neither was made a legal tender but for five dollars. It pa.s.sed the Senate on the 10th of January, 1871--36 yeas and 14 nays--every Senator from the Pacific coast voting for it.

It was introduced in the House of Representatives by Mr. Kelley, at the next session. It was debated, scrutinized, and pa.s.sed unanimously, dropping the silver dollar, as directly stated by Mr.

Hooper. It was reported, debated, amended, and pa.s.sed by the Senate unanimously. In every stage of the bill, and every print, the dollar of 412 grains was prohibited, and the single gold standard recognized, proclaimed, and understood. It was not until silver was a cheaper dollar that anyone demanded it, and then it was to take advantage of a creditor.

It has always been within the power of Congress to correct this error, if error was made; but Congress has refused over and over again to do it. When the controversy arose, in 1878, on the Bland bill, and the House of Representatives proposed the free coinage of silver, the Senate rejected it after a deliberate contest, and subst.i.tuted in place of it what is called the Bland-Allison act, which required the purchase, by the government, of silver bullion at its market value, and its coinage to a limited amount. Every effort has been made, from that time to this, to have the Congress of the United States pa.s.s a free coinage act.

If this is done, it will be to secure a cheaper dollar of less purchasing power, with the view to enable debtors to pay debts, contracted on the basis of gold coin, with silver coins, worth, with free coinage, less than one-half of gold coins.

In reviewing, at this distance of time, the legislation of 1873, in respect to the coinage of silver, I am of the opinion that it was fortunate that the United States then dropped the coinage of the old silver dollar. No one then contemplated the enormous yield of silver from the mines, and the resulting fall in the market value of silver, but, acting upon the experience of the past, that a parity between silver and gold could not be maintained at any fixed value, Congress adopted gold as the standard of value, and coined silver as a subsidiary coin, to be received and maintained at a parity with gold, but only a legal tender for small sums.

This was the principle adopted in the act of 1853, when silver was more valuable than gold at the legal ratio. Silver was not then coined into dollars, because it was then worth more as bullion than as coin. It was needed for change, and, under the law of 1853, it was furnished in abundance. Similar laws are now in force in all countries where gold is the sole standard. Under these laws, a larger amount of silver is employed as subsidiary coins than when the coinage of silver was free.