so endeared to the people of this land that they would spend billions upon billions of money and rivers and rivers of the best blood to preserve it, I ask you where the man is who will stand up here and curse it and say it is not responsible for the circulation of the country." "Sir, I maintain for that legal-tender, today, that it is as good as gold. The honor of this nation is pledged for its redemption in gold. We will never repudiate a dollar or a dime of it. Sir, it has upon it the impress of the best faith of this nation. It is the money sealed and sanctified with the best blood of the Republic. . . . . It is a noble currency, a grand trophy of the war, and held dear in the heart of every American citizen." h) The belief in an arbitrary shifting of values by every variation in the volume of notes led to another view less extensively held, no doubt, but yet of serious effect, and that was that Congress and the Administration were in the corrupt control of the financial interests against the producing or borrowing interests. As the farmer brooded over his misfortunes and was stung with the feeling of injustice in addition to the realization of loss; as the conviction became more and more impressed that he had not only been betrayed by his representatives, but deliberately robbed of the result of his labor and the patrimony of his children, he was ready to believe the demagogue who could explain it all and point out the remedy. This psychological stress was made the more tense and socially effective by that concentration of dissatisfaction in agricultural and rural environment which characterized the West and South. The "Inflation Bill of 1873" is one of the most entertaining debates in the Annals of Congress. Objectively speaking, it comprises seventeen hundred columns of the Congressional Record and occupied almost the entire attention of both Houses during the long session of the Congress beginning December 1. In this voluminous compendium we have gathered together what is probably the most interesting body of economic theory, from the point of view of the curio-hunter, that American public records afford. The advocates of inflation were in the majority-the vote in the House was 140 to 102; in the Senate, 29 to 24-and the bill to increase the circulation of greenbacks to $400,000,000 failed to become law only by the veto of President Grant. The quotations above are taken almost entirely from this discussion, as illustrating the views of the most representative body of men available. It may be observed that the inflationist advocates were not confined to either of the great parties nor to any section. As a direct party issue greenbackism proved to be a weaker movement than did the non-partisan measure of 1873-74. The temporary relief of more prosperous times and the strength of the old party ties resulted in practical abandonment after a single decade of struggle. The element of the discontented and aggrieved found a more promising field for their powers of agitation in another movement which was already taking form; for while the silver movement offered the essential benefits which greenbackism sought, it held out certain important tactical advantages. 107. THE FRONTIER FARMER AND GREENBACKISM1 BY CLYDE O. RUGGLES It was ultimately in the agricultural west that greenbackism found its strongest support. The conclusions of a study of the greenback movement in two typical states, Iowa and Wisconsin, may be summarized as follows: The prosperous decade of 1860 to 1870 encouraged many to engage in farming and to go into debt; that the falling prices of the decade 1870 to 1880 made it impossible for many to pay these debts, especially since the subsidy policy of the Homestead Law had enticed a class with but very slender means to enter agriculture; that the counties which sustained a slightly higher percentage of mortgage to farm value gave more votes to the Greenback party; that the land subsidy policy also brought about a greater production of the principal grains than could be disposed of at a profit; that the Greenback party was organized and attained its greatest strength in both States during the years of greatest agricultural depression and lost its hold on the voter with the return of better times; that the party was strongest in that State which was more dependent upon agriculture, and in the section of both States that were more frontier in character; and, finally, that in the "Greenback counties" there was but little stress upon manufacturing, diversified farming, and the dairy, and a marked concentration upon grain farming. Adapted from "The Economic Basis of the Greenback Movement in Iowa and Wisconsin," Proceedings of Mississippi Valley Historical Association (Omaha), VI (1913), 765. 108. OBJECTIONS TO RESUMPTION OF SPECIE PAYMENTS1 BY BENJAMIN BUTLER If resumption of specie payments could be accomplished it would cause the greatest depreciation of values in every species of property except debts held against the Government and individuals. Every bond and note would be appreciated, say 30 per cent. All other property would be depreciated the same amount as compared with the present rate of valuation. Such an unsettling of values the world has never seen nor any nation endured. It would be equivalent to confiscation by legislative act of one-third of the value of all the property in the country, excepting only that held by the creditor class. But could resumption in fact be accomplished? The sole alleviation yet suggested is that such confiscation might be extended over a considerable period of time, say two years and a half, so that we might meanwhile be preparing ourselves for it; in other words, the Government ought to deprive the large majority of the middle and laboring classes of its people of 12 per cent annually of their values until one-third of them are absorbed for the benefit of the small minority, who are owners of capital loaned at interest. I will not insult the intelligence of the House by any argument upon the feasibility or practicability of these schemes. The better way to test them is to call attention to one or two of the methods by which it is proposed to accomplish so gigantic an undertaking. One says, "The way to resume specie payments is to resume." Suppose the physician should say to the sick man, "The way not to be sick is to be well," might not the patient ask his doctor, How am I to get well? So, a few years ago, one may remember that the way proposed for the Union armies to get to Richmond was "On to Richmond"; and I trust I may not be considered malicious in calling to mind that our armies found some difficulties in carrying out that suggestion, which resulted in such disaster that it was to be hoped those who blindly advocated it would never again dogmatize upon any subject the difficulties of which they neither appreciated nor understood. Another proposition, coming from a source we much respect in some other of the branches of political science, is that we pass a law that specie payments shall be resumed on the 1st day of July next, Adapted from speech in Congress, January 12, 1869, Congressional Globe, 40th Congr., 3d sess., pp. 304-5. but we are not told how the law is to be executed if passed. It was jocosely said many years ago that while an act of Parliament was omnipotent yet it could not make one's uncle his aunt. I fancy there would be an equally insuperable difficulty in compelling by act of Congress the payment at par of $700,000,000 of debts due on demand when there are but $100,000,000 capable of being used for that purpose. Another learned, able, and intelligent gentleman, for whom all entertain the highest regard, in a speech of great power, supports a bill embodying a plan for the relief of our financial difficulties which would be perfect were it not impossible. Stripped of the halo thrown around it by his logic and learning, it proposes that the Government and banks shall return to specie payments by hoarding gold enough with which to do it. Granted: but where is the gold to be got? By borrowing simply. For although the Government may hoard the gold it receives for its duties on imports, yet that gold is in fact obtained by its merchants by borrowing it with Government notes at 35 per cent discount. Whatever deficit of gold to carry out this scheme cannot be obtained by this process is to be borrowed on the Government notes for thirty years, sold at such rate of discount as foreign bankers may choose to impose. Now, specie payments, if they can be maintained, it will be admitted, will make all our public debt with its high rates of interest equal to par, if not at a premium in gold. The fault in the plan seems to be that we are not told how many greenbacks we must sell at 35 per cent less than their face, and how many bonds we must negotiate at a like rate of discount on thirty years, to place ourselves in condition to pay both greenbacks and the bonds, which we thus sell at par. Differential calculus might work out the problem, but plain arithmetic is entirely inadequate to the task. Besides, as upon the best authorities there are only about fifteen hundred millions of specie currency in circulation in all the nations where our bonds have been or will be taken as an investment, or, indeed, in the civilized world, if we should succeed in locking up $350,000,000 of that, or 20 per cent of the whole currency of the world, should we not make what in technical phrase is known as a "corner" on the rest of mankind, in comparison with which the late performance in that line of the Erie Railroad and New York bankers would sink into merited insignificance? Time will not permit me further examination of this and cognate plans for the resumption of specie payments. If a return to specie values is the only remedy for our financial evils, then there is but one plan, in my judgment, by which it can be accomplished: we must wait and grow to it. By the industry and economy of our people; by the development of our resources; by the enterprise of our business; by the extension of our commerce; by the production of the precious metals; by reducing importations, the only method by which we can keep specie at home; by retrenchment of the expenses of government, both State and national; by the relinquishment of all hazardous and doubtful enterprises, we must accumulate sufficient surplus wealth to bring back the $600,000,000 of our national bonds held abroad, to which may be added an equal like amount of State and railroad bonds also held there, and thus stop the annual drain of more than seventy millions of bullion now sent abroad year by year to meet interest alone. When this is done we may with wisdom return to specie values and specie payments without serious financial disaster and commercial ruin. But this time will come only when gold and silver from the plenitude of its production will have depreciated to our values, not we appreciate them to the present value of gold and silver. 109. THE RESUMPTION OF SPECIE PAYMENTS1 As Secretary of the Treasury, Mr. Sherman fixed upon 40 per cent as "the smallest reserve at which resumption could be prudently commenced and successfully maintained." In pursuance of this policy he had accumulated by December 31, 1878, $114,193,000 in gold, which was a trifle over 40 per cent of the United States notes then outstanding. Of this gold reserve $95,500,000 had been obtained through the sale of bonds, part of the coin being procured in Europe. The accomplishment and maintenance of specie payments, however, was not a simple task. The danger to the Treasury's redemption fund lay, as everyone understood, in possible gold exports. As it happened, there was no gold movement in progress at the time of specie resumption; but foreign exchange was only a trifle below the normal gold-exporting point, and no spring season for eighteen years had passed without gold shipments. In the first half of 1877, nearly twenty millions of gold had been exported from New York, chiefly obtained from the city banks. On January 1, 1879, these New York banks held in specie only $19,781,400, but they held twice as much I Adapted from Forty Years of American Finance, pp. 45-57. (G. P. Putnam's Sons, 1898.) |