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OUR MONEY WARS
THE EXAMPLE AND WARNING OF
AMERICAN FINANCE
BY
SAMUEL LEAVITT
AUTHOR OF " PEACEMAKER GRANGE," ETC.
BOSTON
ARENA PUBLISHING COMPANY
Copley Square
1694
Copyright, 1894,
by
SAMUEL LEAVITT.
All rights reserved.
Anna Press
~v8
CONTENTS.
CHAPTER I.
09
«J l6oO TO I70O.
PAGE
The first American Money 1
•The first Bank-notes 4
The British Debt 4
- ^ First American Paper Money 4
CHAPTER II.
17OO TO I776.
More Paper Money 6
Truth about John Low 6
Speculations in France in 1720 , 12
Speculations in England in 1720 13
' Paper in the Colonies . . .» 1 t,
The Money of the Poor. . . 19
Continental Money 19
CHAPTER III.
I776 TO I786.
Continental Money (continued) 24
Jefferson to Epps, 1S13 24
The first Savings Banks 26
/^Shay's Rebellion in 1785 27
The Bank of North America 28
CHAPTER IV.
1786 to 1796. f
The United States Begin 29
The first United States Bank 31
The United States Mint ^
Money of Account 34
The Value of Foreign Coins 35
The Foreign Loans 36
38S249
iv CONTENTS.
CHAPTER V.
1796 to 1806.
^^ PAGE
The Bank of Venice 37
Foreign Coins 38
Small Coins 38
CHAPTER VI.
1806 TO l8l6.
Foreign Coins 39
•v Wild-cat Banks 39
^ Fluctuations of Gold in England 39
State Banks 40
V Interest-bearing Treasury Notes 4 r
The Act of June 30, 1812 41
The Act of February 25, 1813 42
•Jefferson Disgusted 42
Suspension of the Banks 42
The Act of March 4, 1S14 43
An Original Greenbacker 43
Legal Tender to Government 43
How Banks are Created 44
A Fight against Treasury Notes 44
An Old Story 47
Madison on Treasury Notes 47
~aper Money Broke the Power of the first Napoleon 47
\
>>
K
CHAPTER VII.
18 1 6 to 1826.
C urrency Theories 49
Foreign Coins 49
Testing Treasury Notes 50
al-tender Discussions 51
The Acts of May 15, 1820, and March 3, 1821 51
Peel's Resumption 51
A Parallel 56
CHAPTER VIII.
1826 TO 1836.
The Steady Currency of France 57
Gen. Jackson takes Hold 57
Jackson's Veto Message, July 10, 1832 59
Jackson's Message, December 3, 1833 60
The Act of April 1 1, 1833 60
,/^The Act of June 25, 1834 60
>The Change of Ratio between Gold and Silver 60
Banking in the Northwest 64
Speculation in England in 1834, '5 and '6 65
CONTENTS. V
CHAPTER IX.
1836 TO 1846.
PAGE
The Banks in Luck again 67
Wisdom of Sarsaparilla Townsend 67
The Act of January 18, 1837 68
Panic of 1S37 68
^^Thomas Benton on Currency 69
-^^>One Mill Interest per Annum 72
A Thinker cries " Eureka ! " 73
The Act of May 21, 1838 73
.^Albert Gallatin 73
Henry C. Carey's " Credit System " ' 74
The Philadelphia Bank of the United States — Nick Biddle's 75
The Act of July 4, 1S40 75
President Harrison Died 76
. The Act of August 13, 1841 77
^^-> Relief Notes 77
j>Indiana Treasury Notes 78
President Tyler's Financial Instinct 78
The President of the Bank of England 79
The United States Could not Borrow 80
The Act of June 30, 1842 80
The Act of August 31, 1842 81
The Act of March 3, 1843 8l
^ - ^Sumner of Yale Explains Things 81
The Act of March 3, 1845 82
CHAPTER X.
1846 TO 1856.
The Act of May 22, 1846 83
The Act of July 22, 1846 83
The Independent Treasury Act 83
Money for the Mexican War 84
^^•Speculations and Panic of 1847 84
France Helped the Whole World 85
The Act of March 3, 1849 86
Wild Cats in New England 86
S** Gold down, Silver up 86
Bank Notes in Australia 87
Production of Gold and Silver — 1852 to 1876 88
y>"The first Limited Legal-tender Act 88
The Clearing-house Established 89
CHAPTER XL
1856 TO l86l.
ryThe Panic of 1857 90
The Act Demonetizing Foreign Coins 90
"tephen Colwell's Description of the Panic 91
S*
vj/ CONTENTS.
I PAGE
Warwick Martin on Panics 92
Treasury Notes Again : 94
The Fall of Gold 94
The War Panic 96
The Patient Pack-mule — the Treasury Note 96
CHAPTEE XII.
l86l TO 1866.
War
The Act of February 8, 1S61 — the First Treasury Note of the War.
The Act of March 2, 1861
The Yale Hen is " On "
Immense Issues of Money
Seven-thirties and Demand Notes
New York Banks Suspend
Legal-tenders now first Repudiated by the Government
The Act of February 1 2, 1862
7-Thaddeus Stevens' Death Cry
The Exceptions on the Greenback
The Fatal Act of February 25, 1862
^Heath's Great National Bear
The Origin and History of the 5-20 Bonds
Loan Certificates
^^TJemand Notes Made Full Legal-tender
^ The Hazzard Circular
Postage Made Legal-tender
Large and small Greenbacks
Who Bought the 5-2OS
National Banks Authorized
Interior Banks and Redemption Banks
The Ten-forties, fractional Currency, etc
The Act of March 3, 1863
Tricks that Were Not Vain
The Act of July 1 1, 1863, Increasesthe Ten Days' Loans
Sarsaparilla Townsend's Wisdom again
Government Selling Gold
National Banks Fixed for Gambling
Gold Futures Stopped and Unstopped
Chase Frightened Out
The Total Currency Issue — Eessfinden
Six Per Cent. Bonds
Playing Ink-fish
Carey on McCulloch
Seven-thirties
State Banks Taxed to Death
The Freedmaq'g Bank ,
McCulloch's Treachery
Retiring Legal-tenders ,
The total Debt — Birkey
00
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01
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2 3
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CONTENTS. vii
Two Billions of Currency 132
McCulloch's Mad Policy 133
Judge Wm. D. Kelley Pleads Ignorance 134
CHAPTER XIII.
lS66 TO 1873.
Contraction.
The Contraction Act of April 12, 1866 136
The Financial Difficulties of England in 1866 136
Cash Payments 138
Three Per Cent. Certificates 138
" Addition, Division and Silence " 138
Vanderbilt Waters New York Central 139
Sherman's Entering Wedge 139
A Short Stop 140
' Check to Rothschild 140.
A " Howling Success " 141
The Act of July 25, 1868 141
Rothschilds Win, Seymour Beaten •. . . 142
There's Millions in it 143
Checking the Banks 144
The Credit Strengthening Act 144
Black Friday, 1869 146
National Banks Allowed to Surrender their Circulation 147
The Great Refunding Act 148
The Supreme Court and the Legal-tenders 149
Repeal of the Income Tax 1 50
More Wealth in Ten Years than in 250 Previous 151
The Three- sixty-five Bonds 151
Carpet-bag Debts 151
French Paper Money 152
The Credit Mobilier and Tweed Rings 154
Earnings in Production and in Banking 154
Preparing for the Panic of 1S73 154
Apotheosis of Jay Gould 155
Germany Kicks 157
A Warning Silver Prophet 1 57
"ngland's Five Billions of Credit Money 158
CHAPTER XIV.
1873 T Q. 1880.
Seven Years of Famine in a Land of Plenty.
The Demonetization of Silver 159
"Ernest Seyd 160
fcThe Great Panic of 1873 ! ^9
The Bank Inflation 172
The Legal-tender Contraction — Field 172
viii CONTENTS.
PAGE
""^ Pompous David A. Wells 173
The Broken Banks and Trust Companies 175
A Wise English Opinion 176
— JLittle Chit on Banks 177
" Must Trade it out over the Counter " 178
Pulling Down the American Flag 178
Victorious Grant Conquered 179
'The Public Robbers Let Go 1S0
National Bank-note Redemption 181
The Value of Convertible Currency — Winder 182
Bank C urrency for 60 Years 184
The Three Per Cents 184
Horrors of Resirrffption 185
Who Use Savings Banks 186
- > Whatrthe Hungry Democrats Did in 1S74 187
A National Debt a National Blessing — Henry Carey Baird 188
The President of New York Metropolitan Bank Speaks out 188
>Drevv versus Wells 189
Gold, Flour and Beef 189
Five Million Dollars a Day Lost 190
The Resumption Act of 1S75 Scorched 190
Dead Wendell Phillips Speaketh 191
Debtor and Creditor Nations —Winder , 194
Solon Chase and "Them Steers " 197
Gold-Bug Tricks 199
Ben Butler and Butler Duncan 200
Pandemonium in California 200
Greenbackers Organized December 1, 1875 2or
Frantic Diabolism of New York Tribune 201
Congress and Contraction , 201
Gladstone versus Gold Basis 203
Trade Dollars Repudiated in 1876 203
Postal Currency Gone 203
Grant does Unintended Good 205
Foolish Californians 206
Democrats Repudiate Resumption 206
The Bond Age — $1 50,000,000,000 206
Coin and Bullion in Europe 207
" Money Market " Easiest in the Hardest Times 207
The Silver Commission and Hard Times 208
" A Mad, Mad World, my Masters " 210
The Buell Circular 212
Stupid Astonishment of the Gold-Bugs 212
What " Gentleman George " Pendleton said 213
" The Leading Papers " 214
No more Trade Dollars in 1S77 216
Our Per-Capita Currency 216
Debts in the United States 217
The English See our Amazing P'olly 218
" A Year of National Shame " — 1878 219
The Partial " Uprising of a Great People " *_ 219
Bonds not Payable in Gold 220
CONTEXTS.
The Bland Bill Passed over Hayes' Veto 221
The Chicago Inter-Ocean Told the Truth Then 222
Ernest Seyd on Silver Demonetization 223
Fourteen Dollars Per Capita 224
A Million and a Half Greenback Vote and 20 Congressmen in 1S78. 224
The Greenback Remonetized by Sherman, who was Scared 225
Chicago Tribune on the Fraud of 1873 226
The " Leading Paper " Caught Napping 226
Failures in Business 228
" One Soweth — Another Reapeth " 229
A Resolute Start 229
A Devouring Demon in Philadelphia 230
England a Thousand Millions Out 231
California Cleansed 232
Gold Big-Bug Papers 232
The Interest Equals the Public Debt 233
What Gold the Banks Had 234
Bonds Sold after January 1, 1876 234
Gold Rushes from Europe 235
Paper Money in the United States for 21 Vears — Heath 236
CHAPTER XV
18S0 TO 1885.
The Triumph of the Plutocrats.
Who Held the Bonds 237
Currency of Fifteen Nations 238
Greenbacks and National Bank Notes Compared 239
The Bonded I )ebts of all Nations 239
To Pay the Bonds at Once 240
Pretty Good Picking 240
Compound Interest 241
Gould Becomes Respectable 241
Another Straw (in 1890) 242
The Tonnage of the Lake Ports 242
A Bright Idea — Whose ? 243
The Ohio Idea 244
The Carlisle Refunding Bill — 1SS1 245
The Bankers' Rebellion 246
Gould Must be Sustained 247
Senator Jones Saw a Great Light 248
Silver Certificates Preferred to Gold 249
Keene on Gould 249
The St. Louis Republican 249
An Elastic Currency 250
Gold Sticking in the West 251
Wm. H. Vanderbilt Sells his Friends 251
Eighty-six National Banks Organized in 1881 252
Stocks Go up Two Billion Dollars 252
Severe on Secretary Folger. 253
Jesuitical Nonsense . . ". 253
CONTENTS.
The Gold Drainage from Europe to America . . . v 254
F. 13. Thurber and his Anti-Monopolists 254
Interest Coming Down 254
Knox Knocked Out 255
Bank Charter Bill Passed — 1882 256
Bank Profits 259
Trade Dollars in Siam ' 259
The Water and Gas Gone out of Stocks — 1883 259
The " Seney Crowd's " High Kicking 260
Vanderbilt Gets Palaces and Respectability 264
Thurber on the Lard Failures 265
The Trade Dollar Nuisance 266
" These be your Gods, O Israel ! " 266
A Wall Street Panic— 18S4 267
The Greenback Victory in the Supreme Court 267
Many Marvelous Facts 267
Keene Bucks against " The Wizard " 269
Commodore Garrison Fails 270
" The Blasted Silver Did it " 271
The Bey of Tunis Has Coupon Bonds 272
Back to State Banking 272
False Statement about France 272
Banks Retiring Circulation 273
The Coming Deluge of Silver 273
Godkin's Ghoulish Glee 274
Wm. II. Vanderbilt still Making Hay 274
The Clearing-house and the Treasury 274
" Union of the Puritan and the Black-leg " 275
Gould's Greatness 276
Not Useful Citizens 277
CHAPTER XVI.
1885 TO 1893.
The Beginning of the End.
Belmont — Hewitt — Tildenism 279
Secretary Manning's Panic — 1SS5 2S0
" Great Heads " Rattled 2S1
A Curious Proposition 282
A 'Coon Treed 283
The Ways of the Robber Nation 2S3
Lord Chancelors' Gold Pensions 284
What the Soldiers Lost 285
A Deluge of Trusts and Syndicates 285
" Who Make Lies their Refuge " 286
The Old, Old Story— 1887 286
Blaine Right this Time 288
I Iigh Treason ._. 290
A Poor Creature 290
In a Nutshell 291
All Products Save Gold Fall ^ per cent, between 1873 an< ^ 1887,. . 291
CONTENTS. xi
PAGE
Fair Gambles ." 291
Abundant Silver Helps Producers — Jones 292
Government Loans on Land and Goods 294
Ratio of Silver and Gold 295
The New York Sun Inconsistent 295 ,
Trust Company Profits 296
Silver Bugaboos 298
The Silver Bill of July 14, 1890 300
Pensions Furnish Currency 302
Senator Jones on Intrinsic Value 302
Beecher's Deacon White ' 303
Panic of November, 1S90 304
Review of 1891 306
Do you Think, O Fools ? 307
After the St. Louis Convention 310
Inductive Method with Silver 313
So Stupid 314
Gold Imports, 1878-1892 316
The Panic of May, 1S93 317
India and America 317
OUR MONEY WARS.
CHAPTER I.
1600 to 1700.
The First American Money. — Indian money or wampum
was used, in New England almost universally, as late as
1635. For a long- time, the intercourse between the Indians
and the colonists was more important, in an economic
sense, than has commonly been supposed. The native
was a producer, not only for himself, but, through his sur-
plus, for the white settler. In his furs he furnished the
chief staple of exchange with Europe. But he did more
than this, he supplied corn and other food products to the
colonists, he labored for the planters on the latters' farms —
unsteadily, it is true, but such help as he was willing to
give was indispensable. It is also to be noted that at the
first, contact with the colonists benefited the Indian from
an industrial point of view. A Sachem would sell a tract
of land for a certain number of hoes, and, according to
Governor Bradford, these iron implements, substituted for
the wooden spade, or clam shell of the squaws, pro-
duced more corn on an acre, and yielded a surplus for
sale. Thus the Narragansetts were enabled to sell from
500 to 1,000 bushels at a time.
But for the trade which soon opened up, a medium of
exchange was needed ; and the relative importance of the
parties to the commercial transactions, is indicated by the
fact that it was the money not of the colonists, but of
the Indians, which became the common currency. The
aborigines of New England had a true money in wampum.
2 OUR MONEY WARS.
This name was given to the white beads made from
the stems or inner whorls of a sea-shell found on all the
south coast of New England. When strung they were
called wampum-peage, meaning strings of white beads.
Color was the basis of nomenclature, as well as of differ-
ence in value. The black beads, which were called Sacki
and were made from the dark part of the common quahog,
or round clam shell, were generally worth twice as much
as the white.
What at first especially contributed to recommend wam-
pum as a currency to the colonists, was the fact that it
was exchangeable, or, so to speak, redeemable in furs,
and above all, in the highly-prized skins of the beaver.
Wampum was the magnet which drew the beaver out of
interior forests, and sent it to Europe, thus starting the
revolving commerce between the New and the Old World.
In calculating wampum, the unit of measure was theo-
retically a string of beads a fathom long, but in practice
the length varied. After 1643 a fathom was always
worth sixty pence; but as the colonists received beads
sometimes at four, and sometimes six a penny, the num-
ber of beads in a fathom would vary from 240 to 360. We
refer, of course, to white beads ; the black beads were rated
by colonial statutes at twice the value. The strong hold
^upon colonial life secured by wampum, is shown by a long
course of colonial legislation respecting it. In 1641 Mas-
sachusetts made the shell beads a legal tender at six a penny
up to ^10, a large sum in the transactions of that date. Two
years later the legal tender limit was reduced to 40 shillings.
At that time wampum was a universal currency, exchange-
able for merchandise, for labor and for taxes. In 1641,
when the trade in wampum was farmed out in Massachusetts,
the lessees stipulated to redeem from Harvard College all the
accumulations of peage or string beads, in its treasury, under
£2$. By 1645 the inventories of deceased colonists com-
monly contained items of peage, and frequently there was
no other money. Judgments of the courts were made pay-
able in strings of beads. It is interesting to learn that in
1648 a process analogous to coinage was applied to wam-
pum in Massachusetts. At President Dunster's suggestion
it was enacted that the beads should be strung in eight
different parcels; id., 3d., izd., in white beads; 2d., 6d.,
OUR MONEY WARS. 3
2S. 6d., and 10s. in b.lack. Taken together, these parcels
formed a complete assortment of change or small coin.
About the date last mentioned, however, the circulation
of wampum began to decline. In 1649, a Massachusetts
statute prohibiting the receipt of beads for taxes — a statute
which before had been inoperative, was re-enacted and en-
forced. There were several causes for the decline ; for
instance, labor had become better organized, and coin was
more abundant among the colonists ; but the main cause
was the falling off in the supply of beavers. The colonists
would have received the beads as readily in 1660 as 1640,
if the same facility-of redemption in beaver had existed ; for
the continued use of wampum as an accessory currency
shows that it was convenient and desirable. In the remote
districts of New England, wampum still circulated in the be-
ginning of the eighteenth century. Madam Knight found
wampum classed as currency on the southern shore of Con-
necticut in 1704. In 1693 the shell beads were recognized
in the definite rates of the Brooklyn ferry.
In 1652 a mint was set up in Boston to coin silver into
what was called " Pine Tree " money. Considerable silver
was then coming from the West India trade — our rulers in
England only busying themselves in stealing from us any
good money we could get hold of. Singularly enough, we
depended for coin, then, largely upon another class of pirates
— the Buccaneers of the Spanish Main — who spent most of
their plunder on our shores, where were the nearest civilized
ports. This was a great blessing — " a blessed providence "
— to our Puritan ancestors, and the gold-bug economists of
that time.
Yet barter prevailed generally, on account of the scarcity
of money. An act of 1654 provides that all contracts in
kind shall be so satisfied.
In 1655, a constable brought cattle to the treasurer for
taxes, which were so poor that the latter would not receive
them.
In 1657, another constable prayed for relief because,
having taken boards for taxes, the treasurer would not
allow him as much as he allowed for them.
In 1658, it was ordered that no man should pay taxes in
" lank " cattle.
" In fact the barter continued general," says Prof. Wm. G,
4 OUR MONEY WARS.
Sumner of Yale College, in his " History of American
Currency." And yet this same learned pundit, who is one of
those who never let conditions or facts bother them when " a
theory is confronting them," says, in the first page of his
first chapter : " Every community will have so much of the
precious metals as it needs for its exchanges." This sub-
lime British Bullion-Report dogma he calmly maintains
throughout his book.
The First Bank-notes. — It will not seem surprising that
money was scarce, at this period, when we consider that it
was about 1660 when the first regular bank-note was printed
by Palmstruck of Sweden. He met the usual fate of great
inventors, and reformers. He became so unpopular, that he
got into difficulties ; and was finally obliged to leave his
country. But soon afterward, the Government of Sweden
decided that, after all, the bank-note was not such a very
bad thing. So they took possession of the bank which
Palmstruck had abandoned ; and that bank, to-day, is the
great central bank of Sweden.
The British Debt. — Foreign facts that have a special
bearing upon American finance will be presented here in
chronological order. For instance, we are informed by
Hume, the historian, that the British public debt had reached
only the small sum of ,£1,054,925 on March 20, 16S9. But
the rulers found making public debts " a great scheme";
and by 1697 the French war had raised the debt to .£50,-
000,000. The French war, before our Revolution, raised
it to ^"140,000,000; our Revolution to ^"240,000,000, and
the Napoleonic war to ^"800,000,000, in 1815, where it has
stuck ever since.
First American Paper Monev. — In 1690 the first issue
of paper money was made by Massachusetts. This was the
year before the establishment of the Bank of England. An
expedition had been sent out against the French in Canada ;
and returning without the hoped-for plunder, and in a state
of misery, the soldiers were clamorous for their pay. So
,£7,000 were issued, in notes from 5 shillings to £$. The
form of these notes or bills was as follows : " This in-
dentured bill, of ten shillings, due from the Massachusetts
colony to the possessor shall be in value equal to money ;
and shall be accordingly accepted by the treasurer and
receivers subordinate to him, in all public payments, for any
OUR MONEY WARS. 5
stock at any time in the Treasury." They circulated at par
with coin for 20 years until _ redeem ecL _
The " Century Magazine," in 1 891, is printing a lot of false
statements about money to tickle its monopoly readers. Here
is what the "Twentieth Century," said about one of its
screeds. — In " Topics of the Time " we are treated to a re-
view of the " Century's " own tirades against " cheap
mo'ney." The land bank of 1696 failed. The land bank of
Rhode Island failed. John Law's bank failed. The notes
of the Argentine republic failed. Argae, all cheap money
schemes must fail. The series is liable to several criticisms.
Imprimis, it does not embody half the cheap money experi-
ments which have been made. The " Century " is aware of
this, and though it says it has not noticed numerous criti-
cisms because they were answered in subsequent papers,
threatens a fresh series to fill up the voids. The statement,
quoted this month from the Buenos Ayres " Standard," that
John Law lived to see his error, is false. But, passing over
these minor points — the land bank of 1696 failed — that is, it
never came into working existence, not as the "Century"
man says, because the capitalists, those gods of the bour-
geois idolatry, would not buy the stock of an institution
avowedly intended to break them down, but because the rate
at which it could lend was arbitrarily fixed at 3 y 2 per cent.,
while the current rate was 6 per cent., an arrangement which
could only have been intended to defeat the scheme (Macau-
lay " History of England," vol. iv., pp. 553, 560, Boston edi-
tion, 1856). John Law's bank did not fail until the Missis-
sippi scheme was added to it. That there ever was a
Mississippi scheme was due to the plethora of capital seek-
ing investment, which in turn was due to Law's success.
OUR MONEY WARS.
CHAPTER II.
1700 to 1776.
More Paper Money. — In 1703, South Carolina began to
issue paper money. In that year, also, Massachusetts made
a second issue of ,£15,000 ; which was made & legal tender
for private debts.
In 1 7 16, another issue to the amount of ;£i 50,000 was au-
thorized to be distributed among the different counties of
the province ; and to be put into the hands of five trustees
in each county, to be appointed by the Legislature ; to be let
out 071 real estate security in the county, in specific sums, for
the space of ten years, at five per cent, per annum. Another
act for ,£50,000 in bills was passed in 1720, which resulted
in clearing Massachusetts of debt in 1773; though the cur-
rency was usually much below par in coin.
In 1709, Connecticut began to issue bills. We must here
diverge to get some facts from Europe.
The Truth about John Law. — In answer to questions, I
printed in the Chicago Express, in August, 1891, the following :
" The History of John Law. Law, a Scotchman, Was King
of French Finance for Many Years. Made Mistakes, but
Was ' a Financier Without a Parallel.' "
We are asked about John Law, the noted financier, and
reply: He was born in Scotland in 1671. His father was
a goldsmith and banker. The son was a brilliant scholar
with a great head for finance. After some years spent in
THE EXAMPLE AND WARNING OF
AMERICAN FINANCE
BY
SAMUEL LEAVITT
AUTHOR OF " PEACEMAKER GRANGE," ETC.
BOSTON
ARENA PUBLISHING COMPANY
Copley Square
1694
Copyright, 1894,
by
SAMUEL LEAVITT.
All rights reserved.
Anna Press
~v8
CONTENTS.
CHAPTER I.
09
«J l6oO TO I70O.
PAGE
The first American Money 1
•The first Bank-notes 4
The British Debt 4
- ^ First American Paper Money 4
CHAPTER II.
17OO TO I776.
More Paper Money 6
Truth about John Low 6
Speculations in France in 1720 , 12
Speculations in England in 1720 13
' Paper in the Colonies . . .» 1 t,
The Money of the Poor. . . 19
Continental Money 19
CHAPTER III.
I776 TO I786.
Continental Money (continued) 24
Jefferson to Epps, 1S13 24
The first Savings Banks 26
/^Shay's Rebellion in 1785 27
The Bank of North America 28
CHAPTER IV.
1786 to 1796. f
The United States Begin 29
The first United States Bank 31
The United States Mint ^
Money of Account 34
The Value of Foreign Coins 35
The Foreign Loans 36
38S249
iv CONTENTS.
CHAPTER V.
1796 to 1806.
^^ PAGE
The Bank of Venice 37
Foreign Coins 38
Small Coins 38
CHAPTER VI.
1806 TO l8l6.
Foreign Coins 39
•v Wild-cat Banks 39
^ Fluctuations of Gold in England 39
State Banks 40
V Interest-bearing Treasury Notes 4 r
The Act of June 30, 1812 41
The Act of February 25, 1813 42
•Jefferson Disgusted 42
Suspension of the Banks 42
The Act of March 4, 1S14 43
An Original Greenbacker 43
Legal Tender to Government 43
How Banks are Created 44
A Fight against Treasury Notes 44
An Old Story 47
Madison on Treasury Notes 47
~aper Money Broke the Power of the first Napoleon 47
\
>>
K
CHAPTER VII.
18 1 6 to 1826.
C urrency Theories 49
Foreign Coins 49
Testing Treasury Notes 50
al-tender Discussions 51
The Acts of May 15, 1820, and March 3, 1821 51
Peel's Resumption 51
A Parallel 56
CHAPTER VIII.
1826 TO 1836.
The Steady Currency of France 57
Gen. Jackson takes Hold 57
Jackson's Veto Message, July 10, 1832 59
Jackson's Message, December 3, 1833 60
The Act of April 1 1, 1833 60
,/^The Act of June 25, 1834 60
>The Change of Ratio between Gold and Silver 60
Banking in the Northwest 64
Speculation in England in 1834, '5 and '6 65
CONTENTS. V
CHAPTER IX.
1836 TO 1846.
PAGE
The Banks in Luck again 67
Wisdom of Sarsaparilla Townsend 67
The Act of January 18, 1837 68
Panic of 1S37 68
^^Thomas Benton on Currency 69
-^^>One Mill Interest per Annum 72
A Thinker cries " Eureka ! " 73
The Act of May 21, 1838 73
.^Albert Gallatin 73
Henry C. Carey's " Credit System " ' 74
The Philadelphia Bank of the United States — Nick Biddle's 75
The Act of July 4, 1S40 75
President Harrison Died 76
. The Act of August 13, 1841 77
^^-> Relief Notes 77
j>Indiana Treasury Notes 78
President Tyler's Financial Instinct 78
The President of the Bank of England 79
The United States Could not Borrow 80
The Act of June 30, 1842 80
The Act of August 31, 1842 81
The Act of March 3, 1843 8l
^ - ^Sumner of Yale Explains Things 81
The Act of March 3, 1845 82
CHAPTER X.
1846 TO 1856.
The Act of May 22, 1846 83
The Act of July 22, 1846 83
The Independent Treasury Act 83
Money for the Mexican War 84
^^•Speculations and Panic of 1847 84
France Helped the Whole World 85
The Act of March 3, 1849 86
Wild Cats in New England 86
S** Gold down, Silver up 86
Bank Notes in Australia 87
Production of Gold and Silver — 1852 to 1876 88
y>"The first Limited Legal-tender Act 88
The Clearing-house Established 89
CHAPTER XL
1856 TO l86l.
ryThe Panic of 1857 90
The Act Demonetizing Foreign Coins 90
"tephen Colwell's Description of the Panic 91
S*
vj/ CONTENTS.
I PAGE
Warwick Martin on Panics 92
Treasury Notes Again : 94
The Fall of Gold 94
The War Panic 96
The Patient Pack-mule — the Treasury Note 96
CHAPTEE XII.
l86l TO 1866.
War
The Act of February 8, 1S61 — the First Treasury Note of the War.
The Act of March 2, 1861
The Yale Hen is " On "
Immense Issues of Money
Seven-thirties and Demand Notes
New York Banks Suspend
Legal-tenders now first Repudiated by the Government
The Act of February 1 2, 1862
7-Thaddeus Stevens' Death Cry
The Exceptions on the Greenback
The Fatal Act of February 25, 1862
^Heath's Great National Bear
The Origin and History of the 5-20 Bonds
Loan Certificates
^^TJemand Notes Made Full Legal-tender
^ The Hazzard Circular
Postage Made Legal-tender
Large and small Greenbacks
Who Bought the 5-2OS
National Banks Authorized
Interior Banks and Redemption Banks
The Ten-forties, fractional Currency, etc
The Act of March 3, 1863
Tricks that Were Not Vain
The Act of July 1 1, 1863, Increasesthe Ten Days' Loans
Sarsaparilla Townsend's Wisdom again
Government Selling Gold
National Banks Fixed for Gambling
Gold Futures Stopped and Unstopped
Chase Frightened Out
The Total Currency Issue — Eessfinden
Six Per Cent. Bonds
Playing Ink-fish
Carey on McCulloch
Seven-thirties
State Banks Taxed to Death
The Freedmaq'g Bank ,
McCulloch's Treachery
Retiring Legal-tenders ,
The total Debt — Birkey
00
00
00
01
01
02
02
03
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00
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24
2 5
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-5
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29
29
29
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â– sr
CONTENTS. vii
Two Billions of Currency 132
McCulloch's Mad Policy 133
Judge Wm. D. Kelley Pleads Ignorance 134
CHAPTER XIII.
lS66 TO 1873.
Contraction.
The Contraction Act of April 12, 1866 136
The Financial Difficulties of England in 1866 136
Cash Payments 138
Three Per Cent. Certificates 138
" Addition, Division and Silence " 138
Vanderbilt Waters New York Central 139
Sherman's Entering Wedge 139
A Short Stop 140
' Check to Rothschild 140.
A " Howling Success " 141
The Act of July 25, 1868 141
Rothschilds Win, Seymour Beaten •. . . 142
There's Millions in it 143
Checking the Banks 144
The Credit Strengthening Act 144
Black Friday, 1869 146
National Banks Allowed to Surrender their Circulation 147
The Great Refunding Act 148
The Supreme Court and the Legal-tenders 149
Repeal of the Income Tax 1 50
More Wealth in Ten Years than in 250 Previous 151
The Three- sixty-five Bonds 151
Carpet-bag Debts 151
French Paper Money 152
The Credit Mobilier and Tweed Rings 154
Earnings in Production and in Banking 154
Preparing for the Panic of 1S73 154
Apotheosis of Jay Gould 155
Germany Kicks 157
A Warning Silver Prophet 1 57
"ngland's Five Billions of Credit Money 158
CHAPTER XIV.
1873 T Q. 1880.
Seven Years of Famine in a Land of Plenty.
The Demonetization of Silver 159
"Ernest Seyd 160
fcThe Great Panic of 1873 ! ^9
The Bank Inflation 172
The Legal-tender Contraction — Field 172
viii CONTENTS.
PAGE
""^ Pompous David A. Wells 173
The Broken Banks and Trust Companies 175
A Wise English Opinion 176
— JLittle Chit on Banks 177
" Must Trade it out over the Counter " 178
Pulling Down the American Flag 178
Victorious Grant Conquered 179
'The Public Robbers Let Go 1S0
National Bank-note Redemption 181
The Value of Convertible Currency — Winder 182
Bank C urrency for 60 Years 184
The Three Per Cents 184
Horrors of Resirrffption 185
Who Use Savings Banks 186
- > Whatrthe Hungry Democrats Did in 1S74 187
A National Debt a National Blessing — Henry Carey Baird 188
The President of New York Metropolitan Bank Speaks out 188
>Drevv versus Wells 189
Gold, Flour and Beef 189
Five Million Dollars a Day Lost 190
The Resumption Act of 1S75 Scorched 190
Dead Wendell Phillips Speaketh 191
Debtor and Creditor Nations —Winder , 194
Solon Chase and "Them Steers " 197
Gold-Bug Tricks 199
Ben Butler and Butler Duncan 200
Pandemonium in California 200
Greenbackers Organized December 1, 1875 2or
Frantic Diabolism of New York Tribune 201
Congress and Contraction , 201
Gladstone versus Gold Basis 203
Trade Dollars Repudiated in 1876 203
Postal Currency Gone 203
Grant does Unintended Good 205
Foolish Californians 206
Democrats Repudiate Resumption 206
The Bond Age — $1 50,000,000,000 206
Coin and Bullion in Europe 207
" Money Market " Easiest in the Hardest Times 207
The Silver Commission and Hard Times 208
" A Mad, Mad World, my Masters " 210
The Buell Circular 212
Stupid Astonishment of the Gold-Bugs 212
What " Gentleman George " Pendleton said 213
" The Leading Papers " 214
No more Trade Dollars in 1S77 216
Our Per-Capita Currency 216
Debts in the United States 217
The English See our Amazing P'olly 218
" A Year of National Shame " — 1878 219
The Partial " Uprising of a Great People " *_ 219
Bonds not Payable in Gold 220
CONTEXTS.
The Bland Bill Passed over Hayes' Veto 221
The Chicago Inter-Ocean Told the Truth Then 222
Ernest Seyd on Silver Demonetization 223
Fourteen Dollars Per Capita 224
A Million and a Half Greenback Vote and 20 Congressmen in 1S78. 224
The Greenback Remonetized by Sherman, who was Scared 225
Chicago Tribune on the Fraud of 1873 226
The " Leading Paper " Caught Napping 226
Failures in Business 228
" One Soweth — Another Reapeth " 229
A Resolute Start 229
A Devouring Demon in Philadelphia 230
England a Thousand Millions Out 231
California Cleansed 232
Gold Big-Bug Papers 232
The Interest Equals the Public Debt 233
What Gold the Banks Had 234
Bonds Sold after January 1, 1876 234
Gold Rushes from Europe 235
Paper Money in the United States for 21 Vears — Heath 236
CHAPTER XV
18S0 TO 1885.
The Triumph of the Plutocrats.
Who Held the Bonds 237
Currency of Fifteen Nations 238
Greenbacks and National Bank Notes Compared 239
The Bonded I )ebts of all Nations 239
To Pay the Bonds at Once 240
Pretty Good Picking 240
Compound Interest 241
Gould Becomes Respectable 241
Another Straw (in 1890) 242
The Tonnage of the Lake Ports 242
A Bright Idea — Whose ? 243
The Ohio Idea 244
The Carlisle Refunding Bill — 1SS1 245
The Bankers' Rebellion 246
Gould Must be Sustained 247
Senator Jones Saw a Great Light 248
Silver Certificates Preferred to Gold 249
Keene on Gould 249
The St. Louis Republican 249
An Elastic Currency 250
Gold Sticking in the West 251
Wm. H. Vanderbilt Sells his Friends 251
Eighty-six National Banks Organized in 1881 252
Stocks Go up Two Billion Dollars 252
Severe on Secretary Folger. 253
Jesuitical Nonsense . . ". 253
CONTENTS.
The Gold Drainage from Europe to America . . . v 254
F. 13. Thurber and his Anti-Monopolists 254
Interest Coming Down 254
Knox Knocked Out 255
Bank Charter Bill Passed — 1882 256
Bank Profits 259
Trade Dollars in Siam ' 259
The Water and Gas Gone out of Stocks — 1883 259
The " Seney Crowd's " High Kicking 260
Vanderbilt Gets Palaces and Respectability 264
Thurber on the Lard Failures 265
The Trade Dollar Nuisance 266
" These be your Gods, O Israel ! " 266
A Wall Street Panic— 18S4 267
The Greenback Victory in the Supreme Court 267
Many Marvelous Facts 267
Keene Bucks against " The Wizard " 269
Commodore Garrison Fails 270
" The Blasted Silver Did it " 271
The Bey of Tunis Has Coupon Bonds 272
Back to State Banking 272
False Statement about France 272
Banks Retiring Circulation 273
The Coming Deluge of Silver 273
Godkin's Ghoulish Glee 274
Wm. II. Vanderbilt still Making Hay 274
The Clearing-house and the Treasury 274
" Union of the Puritan and the Black-leg " 275
Gould's Greatness 276
Not Useful Citizens 277
CHAPTER XVI.
1885 TO 1893.
The Beginning of the End.
Belmont — Hewitt — Tildenism 279
Secretary Manning's Panic — 1SS5 2S0
" Great Heads " Rattled 2S1
A Curious Proposition 282
A 'Coon Treed 283
The Ways of the Robber Nation 2S3
Lord Chancelors' Gold Pensions 284
What the Soldiers Lost 285
A Deluge of Trusts and Syndicates 285
" Who Make Lies their Refuge " 286
The Old, Old Story— 1887 286
Blaine Right this Time 288
I Iigh Treason ._. 290
A Poor Creature 290
In a Nutshell 291
All Products Save Gold Fall ^ per cent, between 1873 an< ^ 1887,. . 291
CONTENTS. xi
PAGE
Fair Gambles ." 291
Abundant Silver Helps Producers — Jones 292
Government Loans on Land and Goods 294
Ratio of Silver and Gold 295
The New York Sun Inconsistent 295 ,
Trust Company Profits 296
Silver Bugaboos 298
The Silver Bill of July 14, 1890 300
Pensions Furnish Currency 302
Senator Jones on Intrinsic Value 302
Beecher's Deacon White ' 303
Panic of November, 1S90 304
Review of 1891 306
Do you Think, O Fools ? 307
After the St. Louis Convention 310
Inductive Method with Silver 313
So Stupid 314
Gold Imports, 1878-1892 316
The Panic of May, 1S93 317
India and America 317
OUR MONEY WARS.
CHAPTER I.
1600 to 1700.
The First American Money. — Indian money or wampum
was used, in New England almost universally, as late as
1635. For a long- time, the intercourse between the Indians
and the colonists was more important, in an economic
sense, than has commonly been supposed. The native
was a producer, not only for himself, but, through his sur-
plus, for the white settler. In his furs he furnished the
chief staple of exchange with Europe. But he did more
than this, he supplied corn and other food products to the
colonists, he labored for the planters on the latters' farms —
unsteadily, it is true, but such help as he was willing to
give was indispensable. It is also to be noted that at the
first, contact with the colonists benefited the Indian from
an industrial point of view. A Sachem would sell a tract
of land for a certain number of hoes, and, according to
Governor Bradford, these iron implements, substituted for
the wooden spade, or clam shell of the squaws, pro-
duced more corn on an acre, and yielded a surplus for
sale. Thus the Narragansetts were enabled to sell from
500 to 1,000 bushels at a time.
But for the trade which soon opened up, a medium of
exchange was needed ; and the relative importance of the
parties to the commercial transactions, is indicated by the
fact that it was the money not of the colonists, but of
the Indians, which became the common currency. The
aborigines of New England had a true money in wampum.
2 OUR MONEY WARS.
This name was given to the white beads made from
the stems or inner whorls of a sea-shell found on all the
south coast of New England. When strung they were
called wampum-peage, meaning strings of white beads.
Color was the basis of nomenclature, as well as of differ-
ence in value. The black beads, which were called Sacki
and were made from the dark part of the common quahog,
or round clam shell, were generally worth twice as much
as the white.
What at first especially contributed to recommend wam-
pum as a currency to the colonists, was the fact that it
was exchangeable, or, so to speak, redeemable in furs,
and above all, in the highly-prized skins of the beaver.
Wampum was the magnet which drew the beaver out of
interior forests, and sent it to Europe, thus starting the
revolving commerce between the New and the Old World.
In calculating wampum, the unit of measure was theo-
retically a string of beads a fathom long, but in practice
the length varied. After 1643 a fathom was always
worth sixty pence; but as the colonists received beads
sometimes at four, and sometimes six a penny, the num-
ber of beads in a fathom would vary from 240 to 360. We
refer, of course, to white beads ; the black beads were rated
by colonial statutes at twice the value. The strong hold
^upon colonial life secured by wampum, is shown by a long
course of colonial legislation respecting it. In 1641 Mas-
sachusetts made the shell beads a legal tender at six a penny
up to ^10, a large sum in the transactions of that date. Two
years later the legal tender limit was reduced to 40 shillings.
At that time wampum was a universal currency, exchange-
able for merchandise, for labor and for taxes. In 1641,
when the trade in wampum was farmed out in Massachusetts,
the lessees stipulated to redeem from Harvard College all the
accumulations of peage or string beads, in its treasury, under
£2$. By 1645 the inventories of deceased colonists com-
monly contained items of peage, and frequently there was
no other money. Judgments of the courts were made pay-
able in strings of beads. It is interesting to learn that in
1648 a process analogous to coinage was applied to wam-
pum in Massachusetts. At President Dunster's suggestion
it was enacted that the beads should be strung in eight
different parcels; id., 3d., izd., in white beads; 2d., 6d.,
OUR MONEY WARS. 3
2S. 6d., and 10s. in b.lack. Taken together, these parcels
formed a complete assortment of change or small coin.
About the date last mentioned, however, the circulation
of wampum began to decline. In 1649, a Massachusetts
statute prohibiting the receipt of beads for taxes — a statute
which before had been inoperative, was re-enacted and en-
forced. There were several causes for the decline ; for
instance, labor had become better organized, and coin was
more abundant among the colonists ; but the main cause
was the falling off in the supply of beavers. The colonists
would have received the beads as readily in 1660 as 1640,
if the same facility-of redemption in beaver had existed ; for
the continued use of wampum as an accessory currency
shows that it was convenient and desirable. In the remote
districts of New England, wampum still circulated in the be-
ginning of the eighteenth century. Madam Knight found
wampum classed as currency on the southern shore of Con-
necticut in 1704. In 1693 the shell beads were recognized
in the definite rates of the Brooklyn ferry.
In 1652 a mint was set up in Boston to coin silver into
what was called " Pine Tree " money. Considerable silver
was then coming from the West India trade — our rulers in
England only busying themselves in stealing from us any
good money we could get hold of. Singularly enough, we
depended for coin, then, largely upon another class of pirates
— the Buccaneers of the Spanish Main — who spent most of
their plunder on our shores, where were the nearest civilized
ports. This was a great blessing — " a blessed providence "
— to our Puritan ancestors, and the gold-bug economists of
that time.
Yet barter prevailed generally, on account of the scarcity
of money. An act of 1654 provides that all contracts in
kind shall be so satisfied.
In 1655, a constable brought cattle to the treasurer for
taxes, which were so poor that the latter would not receive
them.
In 1657, another constable prayed for relief because,
having taken boards for taxes, the treasurer would not
allow him as much as he allowed for them.
In 1658, it was ordered that no man should pay taxes in
" lank " cattle.
" In fact the barter continued general," says Prof. Wm. G,
4 OUR MONEY WARS.
Sumner of Yale College, in his " History of American
Currency." And yet this same learned pundit, who is one of
those who never let conditions or facts bother them when " a
theory is confronting them," says, in the first page of his
first chapter : " Every community will have so much of the
precious metals as it needs for its exchanges." This sub-
lime British Bullion-Report dogma he calmly maintains
throughout his book.
The First Bank-notes. — It will not seem surprising that
money was scarce, at this period, when we consider that it
was about 1660 when the first regular bank-note was printed
by Palmstruck of Sweden. He met the usual fate of great
inventors, and reformers. He became so unpopular, that he
got into difficulties ; and was finally obliged to leave his
country. But soon afterward, the Government of Sweden
decided that, after all, the bank-note was not such a very
bad thing. So they took possession of the bank which
Palmstruck had abandoned ; and that bank, to-day, is the
great central bank of Sweden.
The British Debt. — Foreign facts that have a special
bearing upon American finance will be presented here in
chronological order. For instance, we are informed by
Hume, the historian, that the British public debt had reached
only the small sum of ,£1,054,925 on March 20, 16S9. But
the rulers found making public debts " a great scheme";
and by 1697 the French war had raised the debt to .£50,-
000,000. The French war, before our Revolution, raised
it to ^"140,000,000; our Revolution to ^"240,000,000, and
the Napoleonic war to ^"800,000,000, in 1815, where it has
stuck ever since.
First American Paper Monev. — In 1690 the first issue
of paper money was made by Massachusetts. This was the
year before the establishment of the Bank of England. An
expedition had been sent out against the French in Canada ;
and returning without the hoped-for plunder, and in a state
of misery, the soldiers were clamorous for their pay. So
,£7,000 were issued, in notes from 5 shillings to £$. The
form of these notes or bills was as follows : " This in-
dentured bill, of ten shillings, due from the Massachusetts
colony to the possessor shall be in value equal to money ;
and shall be accordingly accepted by the treasurer and
receivers subordinate to him, in all public payments, for any
OUR MONEY WARS. 5
stock at any time in the Treasury." They circulated at par
with coin for 20 years until _ redeem ecL _
The " Century Magazine," in 1 891, is printing a lot of false
statements about money to tickle its monopoly readers. Here
is what the "Twentieth Century," said about one of its
screeds. — In " Topics of the Time " we are treated to a re-
view of the " Century's " own tirades against " cheap
mo'ney." The land bank of 1696 failed. The land bank of
Rhode Island failed. John Law's bank failed. The notes
of the Argentine republic failed. Argae, all cheap money
schemes must fail. The series is liable to several criticisms.
Imprimis, it does not embody half the cheap money experi-
ments which have been made. The " Century " is aware of
this, and though it says it has not noticed numerous criti-
cisms because they were answered in subsequent papers,
threatens a fresh series to fill up the voids. The statement,
quoted this month from the Buenos Ayres " Standard," that
John Law lived to see his error, is false. But, passing over
these minor points — the land bank of 1696 failed — that is, it
never came into working existence, not as the "Century"
man says, because the capitalists, those gods of the bour-
geois idolatry, would not buy the stock of an institution
avowedly intended to break them down, but because the rate
at which it could lend was arbitrarily fixed at 3 y 2 per cent.,
while the current rate was 6 per cent., an arrangement which
could only have been intended to defeat the scheme (Macau-
lay " History of England," vol. iv., pp. 553, 560, Boston edi-
tion, 1856). John Law's bank did not fail until the Missis-
sippi scheme was added to it. That there ever was a
Mississippi scheme was due to the plethora of capital seek-
ing investment, which in turn was due to Law's success.
OUR MONEY WARS.
CHAPTER II.
1700 to 1776.
More Paper Money. — In 1703, South Carolina began to
issue paper money. In that year, also, Massachusetts made
a second issue of ,£15,000 ; which was made & legal tender
for private debts.
In 1 7 16, another issue to the amount of ;£i 50,000 was au-
thorized to be distributed among the different counties of
the province ; and to be put into the hands of five trustees
in each county, to be appointed by the Legislature ; to be let
out 071 real estate security in the county, in specific sums, for
the space of ten years, at five per cent, per annum. Another
act for ,£50,000 in bills was passed in 1720, which resulted
in clearing Massachusetts of debt in 1773; though the cur-
rency was usually much below par in coin.
In 1709, Connecticut began to issue bills. We must here
diverge to get some facts from Europe.
The Truth about John Law. — In answer to questions, I
printed in the Chicago Express, in August, 1891, the following :
" The History of John Law. Law, a Scotchman, Was King
of French Finance for Many Years. Made Mistakes, but
Was ' a Financier Without a Parallel.' "
We are asked about John Law, the noted financier, and
reply: He was born in Scotland in 1671. His father was
a goldsmith and banker. The son was a brilliant scholar
with a great head for finance. After some years spent in
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