Democratic Sentinel, Volume 2, Number 28, Rensselaer, Jasper County, 23 August 1878 — THE FINANCIAL ISSUE. [ARTICLE]

THE FINANCIAL ISSUE.

Speech of Hon. Franklin Landers, at Lafayette, Ind. The whole question of money is by the constitution given to Congress. That body has the power to make money and regulate its value. Nothing is said in the constitution as to what shall be a legal tender, or what material shall be used in making this money, or how they shall regulate its value. These things are left to the sound discretion of Congress, and that body has wisely authorized the coinage of gold and silver into dollars and eagles, and has said what value each shall have in the payment of debts. Gold and silver having been adopted as a medium of exchange by all the commercial nations of the earth, it was the part of wisdom in our Congress to adopt tkem as that medium also. This wisdom is clearly shown in settling the balances between Governments, and at the same time it is shown that they cannot be relied upon to perform the offices of exchange between private individuals, because they flow to and from Governments according to the degree of prosperity or adversity. A government may be flooded with coin or it may be almost entirely drained ; therefore the wisdom of all commercial governments has led them to adopt a domestic or home money. This is done by the Government issuing paper money, or authorizing the hanks to do so. There is little or no profit to the Government in coining gold or silver, because of the cost of the bullion; but paper money is made of an article of but little value, hence, the Government or bank issuing it makes a great profit out cf it. because they never part with a dollar of it unless they receive one hundred cents in return. Therefore, when these facts are considered, yon will readily understand why there is a contest as to who shall issue the paper money. We demand, in the language of Jefferson, “ that the bauks should surrender their currency, and the issue of paper money he restored to the Government, to whom it belongs.” But it is said that ruin and distress would follow the closing of the national banks. We don’t propose to wind up the banks. When the National Bank act went into effect a high tax was placed upon State hanks, which compelled them to abandon the circulation of their notes, and yet the business of the country was not disturbed, because other paper money took its place, and the banks were changed from State to national banks. In the same way the national banks could be changed from banks of issue to bauks of discount and deposit only. Doubtless some of the hankers would try to retain their present privilege of loaning their indebtedness for interest, and they might desire to embarrass the business of the country, but this point can he guarded by the issue in advance of Government notes. The business community would derive great benefit from a Government currency, because the Government would get 100 cents for every dollar issued by it, whether paper or coin, because tho paper would cost the holder just as much as coin. As it is now, coin costs tho hank 100 cents on the dollar, whereas the paper money issued by them costs them just 1 cent on each dollar. The Government money would cost too much to he kept lyiDg idle, aud the banks would loan it at tho best rate they could get.

I have said that paper money, whenever we insist upon an issue of Government notes, based on the credit of the whole people, the ghost of the Continental money and Confederate scrip is at ouce brought promiuentlv before the people to convince them that such notes will always depreciate. Mr. Groesheck, of Cincinnati, in liis paper upon the subject of silver, which he read before tho Bankers’ Convention in New York some time since, digressed from his subject of silver and brought these ghosts before that body. He referred to the depreciation of Continental money and the Confederate scrip. He said that all money like our United States notes would depreciate in time of war. 1 regret, because of the high standing of Mr. Groesheck, that he should attempt to compare our United States notes to Continental and Confederate notes. The Continental notes were not based upon taxes; the Continental Government had no power to levy taxes except by consent of the States; and, if she had had he power, they had almost notbiug to tax. The Confederate notes were not issued by a Government at all, but by States in rebellion trying to establish a Government, and when their cause failod their money would of course be worthless. Will Mr. Groesheck, or any other advocate of bank currency redeemable in coin, he candid or honest enough to inform the.country what became of the redeemable money of the South, every dollar of which was lost to the holders, and ivhat would have Y 3en the fate of the North had ij not been for the issue of legaltender notes by the Government ? The banks had been under suspension of specie payments for more than twelve months, and no man of business can come to any other conclusion than this, that the people would have lost every dollar of their money had not the Greenback act of February, 1862, enabled them to redeem their notes with them. We ask for the issue of notes by a Government of more than 100 years’ standing, with credit second to none, and with a revenue of nearly $300,000,000 per year. I can bear with a man of but little information bringing forward those ghosts, but, when one like Groesheck so far forgets himself as to do so, he demands some attention. I defy any opposers of the issue of such notes as we ask for by the Government to point to a single instance wfiere the issue was made by responsible Governments that they,ever did depreciate. Such notes wero issued by the States of Pennsylvania, ‘.Virginia and North Carolina, when they were colonies of Great Britain. They never depreciated below coin, although they remained in circulation for nearly forty years, and added much to the wealth of those colonies. The first notes issued by the Government after the war began were called demand notes, but, when it was seen that the Government had no coin to pay them with, Congress made them a full legal tender, and they never depreciated below the value of coin, and over $50,000 of them are outstanding to-day. When coin was worth 285 in greenbacks, which were a limited legal tender, the demand note, that was a full legal tender, was worth the same premium in greenbacks. Need I say more ? Can any one doubt tfie ability of our Government to make her own notes par with coin to the extent that the legitimate trade of the country needs to perform exchanges? Bedeematle in coin on business principles led to the wildest inflation and the most ruinous contraction, and I want to call your attention to the ebb and flow of currency under specie basis from 1811 until the issuing of Government notes: Bank currency in 1811 $28,000,003

Bank currency in 1816 $68,000,C00 Bank currency in 1820 45,000,000 Contraction from 1816 to 1820 * $23,000,000 Bank currency in 1837 $141,000,000 Bank currency in 1813 68,090^000 Contraction from 1837 to 1843 83,000,000 Bank currency in 1854 $204,000,000 Bank cun ency m 1858 155,000,000 Contraction from 1854 to 1858 49,000,000 Bank currency in 1860 $207,000,000 Bank currency in 1862 184,000,000 Contraction from 1860 to 1862 23,Q00,C00 Bank currency in 1863 $202,000,000 ’ You will observe that the ebb and flow of the currency at tbe times I have named was, under the policy of paper money, redeemable in coin. This was all done, as I have said, on business principles, to make money and protect credit, and is directly chargeable to the policy of redeemable money, but the expansion and contraction I am about to refer to was one of designing legislation in the interests of the few and at the expense of the many. It was dono to build up a moneyed aristocracy, as I have already said. Amount of money, currency and circulating medium, Oct. 31, 1865: United States notes, legal tenders and greenbacks $ 428,160,569 Seven-thirty treasury notes 830,U00 000 Compound-interest notes 173 Ci2’l4l Demand notes 32,536j900 fractional currency 26,057,469 Total $1,489,767,080 CUBBENCY. National-banknotes $185,000,000 State-banknotes 65,000,000 Certificates of indebtedness 85,000,000 Total $335,000,000 Total circulation of money and currency Oct. 31, 1865 $1,824,767,080 Contraction from 1865 to ] 873 $1,058,078 385 United States notes and bank currency in circulation Dec. 1, 1873: United States notes—greenbacks $337,001 685 Fractionai currency 48,009 000 Certificates of indebtedness C7B 000 National-bank notes 360, 000] 000 Total.. $755,679^685 From tbe expansion find contraction which I

have shown took place under specie basis from 1811 to the commencement of the war, who can argue that a currency upon such a basis is a stable one ? In every case history informs us that bankruptcy and ruin to the business men and laboring community was the result. There are many here to-night who recollect the panic and bankruptcy that followed the contraction from 1837 to 1843. The amount of the contraction of the circulating medium was proportionately as great as the contraction smee 1865. I cannot think there is a man in Indiana who will study the history of the expansion aud contraction cf papar money redeemable in coin but who will come to the conclusion which I have, that it is ruinous to the laboring and producing classes who produce all the wealth, aud that it should be abandoned as not suited to the wants of the people. If you notice, a contraction of $23,000,000 from 1811 to 1816, a contraction of $83,000,000 from 1837 to 1843, caused the crash and financial panic of those periods. A contraction of $49,000;000 from 1854 to 1857 caused the panic of the latter year. A contraction of $23,000,000 from 1860 to 1862 produced the money panic and the suspension of specie payments in December, 1861. The volume of State-bank paper in 1863 was $202,000,000, which the hanks were unable to redeem until the issue of greenbacks. A contraction of from $23,000,000 to $83,000,000 was sufficient to produce such wide-spread financial ruin. But in 1873 it took hundreds of millions to produce a like result, from the obvious reason that from 1861 to 1863 the business was done principally on credit, forced on us by bank currency redeemable in coin. Whereas, in 1866 there was an abundance of currency to do business, and no necessity to make debts, all commodities could be sold for cash. Therefore it required an enormous contraction to force the credit system on the country. As contraction was carried on credit was substituted until it came to the bursting point in 1873.

In order to alarm the people and prevent them from demanding their rights in a body, as they would do in any business matter disconnected from politics, iu having their money made a full legal tender, aud receivable by the Government iu payment of all dues, they tell them that if that iH done the Secretary of the Treasury will have to buy coin to pay interest on the public debt. This I deny. When the treasury notes are receivable, for tariff dues, speculation in com will cease at once, as it lias been gradually falling off since the remonetization of silver. All dollars being equai in perfuming exchanges nothing can be performed with any dollar other than exchanges, or to loan to tome person fur that purpose. The paper dollar being so much superior to the coin dollar in convenience, all active exchanges will he performed by it. The coin wi'l find its way into the treasury and bank vaults, and the Treasurer of the United States will have more gold then than he has now. This cry of tho gold ring to secure legislation ni its own favor should alarm no one. As it is now, the member of our Government firm who ha 3 tariff dues to pay offers to pay the debt due to the firm iu its own paper. The firm refuses to accept its own note on the ground that it has contracted to pay a particular debt in) a particular kind of money, therefore, in order that the firm may be relieved of the necessity and expense of procuring that particular kind of money, they say to their partner, “Wo cannot receive our own note in discharge of your obligation to us; we are compelled to ask you to sell our note and bring us tho kind of mouey wo have promised to pay upon this special debt.” There is not a fair-minded business man in Indiana who would call that an honorable transaction.

1 have given the subject of the expansion and contraction of the currency much attention, and, though I have been denounced as an inflationist, it has been the study of my life how to avoid this result. Inflation—or expansion, if you please—robs the creditor if the inflation takes place after the debt is made, just as contraction robs the debtor for the benefit of. the creditor if done after tho debt is made. Honest payment is the payment of a debt in money of the samo value as that in which the debt was created. I have tiied to convince you that this honest payment of a creditor and justice to a debtor cannot be maiutained upon a specie basis. We want a fixed amount of paper money, made and kept in circulation in order that justice may be done to both debtor and creditor, that business may be done with more certainty. You ask me liow much money the Government ought to put out. I have no hesitation iu giving you my opinion. She ought to put out every dollar of paper money that she can keep at par with coin, and I believe she could keep S2O per capita, which would give us from $800,000,000 to $1,000,000,000 at par with coin if she would give it all the credit she can by making it a full legal tender, and giving it all the paying qualities she gives to coin. If an amount was fixed by Government and it was found to he too great to he kept at par with coin, I would adopt the policy suggested by Mr. Jefferson in 1812. I would open Government loans, and take the Government legaltender note as I would coin for bonds. A government that does not keep in circulation the largest quantity of paper money possible to be kept at par with coin, so as to give the largest price possible for lands and labor and commodities in coin or paper as its equevalent, so as to give the largest price for labor and commodities and the lowest interest, does not look after the true interest of those that produce the wealth. If commodities are soldfor paper, or labor done fox paper or cain either, the paper and coin being equal in value ; if they had sold for one-quarter or one-half more than they would bring w ith an unstinted amount of money in circulation, the gold thus received for it—if preferred by the seller (both being equal)—is worth just as much if sent abroad as though the man had worked two dayq to get the same amount, or sold twice the amount of commodity to get it. To say that any civilized commercial Government has her values based upon coin is false. They all have paper money, and most of thorn have that paper money a legal tender as fully as coin. France, England and Russia have made their paper money a legal tender. The paper money of France and Russia is not redeemable. The paper of England is : but, being a legal tender, the same as coin, every dollar that is in circulation gives value to commodities and labor, just as gold would do. That is just what we mean in our platform when we demand that the Government alone shall issue money, paper as well as coin, all male a legal tender. We mean to reduce the value of coin by having paper perforin precisely the same office.

Address of Dr. Gilbert De LaMafyr at Martinsville, Ind. The excitement of war had quickened the pulse of the masses, aud they entered upon production with a unanimity and force that amazed the world. It was a question of immense significance. Here armies of hundreds of thousands of men would be merged into civil life. That unprecedented feat was accomplished as quickly and noiselessly as the morning dew was absorbed. The opportunity for production, and the sanguine hope of gaining homes and a competency, attracted to peaceful pursuits the disbanded heroes. The whole land became alive with motion. The hum of cheerful industry filled the air. The green wave of corn and wheat rolled westward over the prairie. As by magic, cottages, villages and cities decked a rapidly-advancing border. Railroads preceded the lines of settlement, carrying every advantage of old communities. In short, we entered upon a career of production which, if continued until now, would have paid the national and municipal debts aud made the masses of the people comfortable and happy. France, at the close of a war waged since we emerged from strife, was oppressed with a debt which, in view of her undeveloped resources, was greater for her than ours was for us ; but has paid her debt aud has not impoverished her people. This demonstrates the practicability of keeping a people producing in such circumstances, and the amazing possibilities of production when a whole people are kept at it. The task resting on our statesmanship, since the war, has been to inspire and wisely direct the productive energies of our people. There was no other way to retrieve the waste of war, sustain the nation’s honor, dealer than life, but by paying its debts, and still not impoverish themselves. Are not these statements sound? Can they be flippantly treated as the vaporings of a blatherskite? Will any man question their wisdom? No one doubts that on the management of the finances all depended. One has said that money is a tool with which we pay debts and effect exchanges. Another calls it an instrument to effect the distribution of exchanges. Still another, that it is a necessity of association. All these answers are correct. It is clear that the more debts there are to be paid and exchanges to be effected and associations to be cherished, the larger must be the volume of money. In other

words (leaving out the matter of debt), the higher the civilization the greater the production and exchanges, and the more active social life the larger the volume of money needed. Add the burden of an immense debt to a people like ours, who after a civil war are engaged in immense production, the exchange of which must be made over a very wide extent of country, and are cherishing the most active association, and you have tho conditions demanding the largest amount of money in circulation. I think all will agree with me thus far. There is nothing “idiotic” or insane in this view. It follows that a proper regulation of the amount of current money was the task before our statesmanship. This statement will not be branded as idiotic. That the constitution commits this important task to the General Government is not questioned. All admit that the great work before the administration was to so regulate the currency as to secure the largest possible production from farm, mine, forest, factory and commerce. lam sure that thus far we all stand together. One party has been mainly in power and responsible. Its policy has been definite and relentlessly executed. That policy must be judged by its results. All efforwa at evasion are unworthy and in vain. This is a practical world, and plans and policies are inexorably judged by their outcome. 1 shall not charge dishonesty on the party which has so signally failed. I shall not call the framers and guides of its policy idiots, because they have brought the people into their present state of distress. They have strictly followed the precedents of the world’s financiering. At the close of the

war tho channels of trade wero filled with a currency called forth by war exigencies. All the notes issued by the Government were used as currency except those hearing coin interest. Some classes of them were more commonly used than others, but were all more or less utilized. I believe this is a fair statement about tfie extent of currency. I know that tho final payment to the army was largely made in interestbearing notes, and they were thus thrust into wide circulation as currency. Because of the fancied uncertainty of tho success of the Government in the war, its credit fell to about 33 per cent, in its issue of obligations. But when it triumphed there could not have remained a shadow of doubt on the mind of any intellectual person that its obligations were worth their face. Yet the absorbing effort of the Republican party has been to strong‘hen ostensibly the credit ®f the Government, which was at par above any per&dventure. Of course, those who held its obligations, and a large number who manipulated them —men wanting to have them appreciated in relation to all other values —joined in the demand to have them thus appreciated. For instance : A Mr. McCune received $40,000 iu gold from an English firm for a patent right. He immediately exchanged it for $103,000 in greenbacks and exchanged the greenbacks for 5-20 bonds. Within a short time Congress voluntarily made those bonds payable in coin, though the contract was to pay them in currency. That act appreciated the bonds to a level with gold. That was a very nice transaction for Mr. McCune, but a very poor bargain for a debt-ridden people. This one illustration exhibits the immense interest of the creditor class in strengthening the credit of tho nation. The goal aimed at was a speedy race to a gold basis. The voluntary promise to pay bonds iu coin at their maturity, which wore paid for in currency depreciated by the hazards of war, and were payable in tho same currency hy the contract; the pledge of resumption at a given timo, which was very near, and the demonetization of silver, are specimens of the legislation under the fixed p ■licy of the party in power. To be able to pay gold for the currency afloatat call so soon, that currency must be greatly contracted and immense contraction followed. As a result of a withdrawal of currency from the channels of trade, evidences of individual indebtedness took tho place of cash iu all offices of exchange, and distribution of values. That necessitated the drain of interest. The national-hank system w 7 as inaugurated for the purpose of changing the greenbacks, which were non-interest-bearing notes, into interest-bearing bonds. To make that exchange rapid the unprecedented offer was made to permit any corporation complying with certain conditions to deposit SIOO with the Government, on which the depositor drew 6 per cent, interest, and then received S9O in currency to loan to the people at any rate of interest allowed by the State Government. All this legislation tended directly and inevitably to swell the interest on the money used iu production, and to depreciate other values.

It is not extravagant to assert that since the close of the war money has appreciated from 33 per cent, to 100, arid property and income from business and labor has depreciated from 100 to 33 per cent. The producing and business classes (except money brokers) have been forced to pay an average of 10 per cent, annual interest for use of money. 1 need not say that business and production must speedily and inevitably break down under such a load. The prostrated condition of our country is no marvel notwithstanding our vast resources, and the fact that for the fourteen years of our descent to financial wreck God ha 3 showered His munificence in unprecedented profusion of dew, of rain and of sunshine, so as to give us abundant crops. There is no wonder that poverty and distress rests upon a very large majority of our people. Let us glance at the true state of things. Let us look at facts; facts are stubborn things that sneers cannot obliterate. Except in agriculture, production is paralyzed ; nearly all whose capital was invested in productive enterprise or in business (other than money brokerage) are utterly bankrupt. The temples of industry are mostly closed and wasting in idleness. The number of free-holders has been lessened to a fearful extent. The homes of veteran soldiers, and very many other laboring men, which, by saving and toil, had been partly paid for, have been confiscated. Very many farms have been taken from families that have toiled for a generation to clear and improve them, and many more are sure to go. This confiscation of farms had become so general and so certain that a New York paper, in its issue of April 25, 1877, says, “ There seems to be but one remedy, and that is a slow one and not immediately effective. To reach it both farmers and capitalists need to be educated to it, but it seems to be inevitable. It is a change of ownership of the soil, and the creation of a class of rand-owners on the one hand, and of tenant farmers on the other—something similar in both case? to what has: long existed, and now exists, in the older countries of Europe, and similar also to a system that is common in ' eur own State of California. Those farmers who are land-poor must sell and become tenants in place of owners of the soil. The hoarded idle capital must be invested in these lands, and turned over to the poor farmers, who will at once be set upon their feet—not to go and loaf about towns and villages spending their money while it may last, but to buy with this money stock, fertilizers, implements, machines, and go to work to cultivate the soil profitably. Instead of their money being sunk in dead and unproductive acres it will be invested in cows, sheep, swine of improved breeds, in guano and fertilizers by which the crops will be doubled or trebled. It will thus becoihe active and productive, and capable of doubling itself within the year. The farmer will be relieved from the burden of a bad investment on which he now makes no interest. His money will be placed where it will do the most good. He will at once be lifted from poverty to financial ease, and, in place of an unsalable farm, he will have to show for his money some property that will realize all that it is worth at public sale at twenty-four hours’ notice. Very much more than this is implied in this change that is so obvious to the practical man that it need not be particularized.” Our present mission is to inspire with hope of relief in a legitimate way which will injure none and bless all. Our ultimate purpose is to wipe out debate by paying what has been contracted, and prevent the occurrence of such a state of indebtedness by securing for each a just return for his labor, and making impossible the interest drain which is the main cause of our indebtedness. To this end we seek an equilibrium between the volume of money and the demand for it and stability in that equilibrium. We agree with the hardest money advocates, that in all the fluctuations of currency it is the laborer and business man that suffer, while the money princes reap their fabulous harvest. It is the fluctuation of currency which has resulted in the fearful concentration of wealth which now oppresses the civilized world. The coin basis has been the universal plan, and under it financial crises occur in the United States about once in ten years, and in Europe oftener. It is high time to try some more stable plan. Against any change the entire money power is strenuously and avowedly arrayed, and no wonder, for it has turned into their coffers through shaving interest—usury—the entire product of the world’s toil except that the toilers necessarily consume. In every country, and in every instance, the expansion of currency has stimulated activity in production and given prosperity. The process of con-

tracting, ostensibly to bring the currency down to a peculiar relation to one or two of the methods which have never, can never, be more than a small per cent, of the circulating medium, has invariably paralyzed production and producers, and enriched money manipulators. We propose to try the plan of having the Government charged by our constitution with the responsibility of providing a circulating medium, furnish a currency in the form of notes, based upon the gold, silver, lead, iron, coal, sand, keel, all the material resources of the nation, and also upon the enterprise, industry, intelligence and integrity of our people, making it stable as the Government itself, which is as stable as the principles of eternal truth on which it is based. We propose to have its volume sufficient to make all exchanges to be effected with ready cash, stopping the drain of usury which now saps the life of all prosperity. The possibility of supplying such a currency was demonstrated by the supply of the greenbacks and other notes which constituted the medium of exchange during the war and immediately after. The law making these notes legal tender gave them value, though no time was set to redeem the greenbacks with coin. In the greenback we had the principle in all its essential features, with an important exception : they were not made a legal tender for rational duties. Bucli currency, wisely regulated, would answer all the purposes for which money js needed iu the nation. The Govern-

ment could also legalize the coinage of gold and silver and baser metals, as now, for all exchange with foreign countries, as the balance of trade in our favor, and, with ample and cheap currency, over-stimulated productions would greatly increase that balance, and notes which are legal tenders here would bo of value in all countries which buy of us. If I were going to travel among some African tribes, I should change my gold into a species of small shells, a ton of which would be worth intrinsically what lime these would make, deducting expense of making, because they would buy what I should need of their tribes. We ask tlie hard-money defenders the impracticability of (his plan, instead of crying rag-baby and such stuff, used only when argument is wanting. We know that the greenbacks were worth more than rags. Tnev paid debts, exchanged for anything we needed, and admirably answered every demand of currency amoDg us. It could not bo impossible for the wisdom of Congress to derive safe methods for putting such a currency into the hands of the people, and to regulate its volume to their needs, without causing them to pay intermediate parties, as they have the national banks, two interests, either of which is more than thev can make out of it. No sane man will contend that any ordinary business cau afford to pay 6 per cent, interest on money loaned in its exchanges, yet under the hard-money policy the people pay in taxes C per cent., which goes to the banks, and then on an average 10 per cent, more on bank issues. It is true that banks help pay taxes, and so does all capital save that invested in national bonds.