What are the facts?
The loan act which authorized the 5.20 bonds became a law February
25, 1862. Jay Cooke & Co. were the loan agents? of the Government. By
the authority of the Secretary of the Treasury these agents advertised a
6 per cent, loan, interest and principal payable in coin. There is not a
loan bill on the statute books by which the kind of money in which coupon
or principal is payable is mentioned, and yet the hard-money policy of the
Government has been uniform.
The question wap not raised during the finance debate of 1862. The evi-
dence is overwhelming that these bonds were to be paid in coin. A sinking
fund of coin was set apart to be used each year to liquidate the very debt
that was being created. At that date nobody supposed the legal-tender cur-
rency would be issued beyond the $150,000,000 authorized, whereas the prin-
cipal of these bonds was $500,000,000. Every member of Congress knew it.
They were sold alongside of the coin-bearing bonds under the 10-40 act and
met as ready a sale. Can any man believe that the buyers understood that
they were getting paper bonds? I have examined the coritemporaneouii d-
16
bates and I say to you that at the crisis in which these securities were issued
no man, here or abroad, supposed they were to be paid otherwise than in coin.
No member of either House of Congress suggested such a thing. I have
*
heard the old wheel horse of the Administration of Lincoln summoned from
his grave to lend the weight of his influence to the schemes of the inflationists.
I am prepared to show that Mr. Stevens never gave a syllable of countenance
to paper-money payment until long after the contracts had been made. I
find in his speech on the loan bill in the House on February 6, 1862, three
direct admissions that in his view the bonds were redeemable after twenty
years in gold. In the same debate Mr. Hooper, a member of the Committee
on Ways and Means, of which Mr. Stevens was chairman, used this language
(Globe, second session Thirty-seventh Congress, page 691):
The proposed issue of Government notes guards against this effect of inflating the currency by (he
provision to convert them into Government bonds, the -principal and interest of which, as before stated
are payable i n specie.
This was after the committee had reported the bill almost unanimously.
Mr. Stevens rose immediately afterwards and suggested that the debate close
without intimating that Mr. Hooper was wrong. I am convinced, not as a
partisan, but as an honest investigator, that the Government and the public
understood this contract alike. In the debate of 1863 on the 10-40 loan act,
the intimation was for the first time made that the paper of the Government
could pay the 5-20 bonds.
At this point in the debate Mr. Thomas, of Massachusetts, moved the
express provision for payment in coin, which was carried after this remark
from Mr. Horton, an influential member of the Ways and Means Committee,
from Ohio.
I wish to state here that the Committee on Ways and fieans in framing this bill never
dreamed that these twenty. year bonds would be payable in anything other than gold until
the gentleman yesterday told it upon the floor of the House. I say to the gentleman and to
this House that I never heard an expression tliat these bonds were to be paid in anything
other than coin. The form her* proposed is the form always used by the Government, and
they have always been paid In coin up to this day. Globe, first session Fortieth Congreta,
page 800.
To learn the truth of these contracts an intelligent man has only to turn
to the reports of Secretary Fessenden and the official messages of the Presi-
dent and the concurrent and unanimous judgment of both Houses of Congress.
The agreement interpreted by the history of the times was to pay them in
money and not in depreciated promissory notes. And the only coined money
known at the mints or in the business of the people was gold. Without that
understanding not a bond would have been taken in any market. Bull 'Run
was not a very good advertisement for United States bonds. The existence
of the Government, not to speak of its solvency, was at stake when these
bonds were put upon the doubtful markets of Europe and America
UNIVERSITY OF CALIFORNIA LIBRARY
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