The patience with which mankind submits to the demands of tyrants has been the wonder of each succeeding age, and heroes are made of those who break one yoke only to bow with servility to a greater. The Roman soldier, returning from wars in which his valor had won wealth and empire for his rulers, was easily content to become first a tenant, and then a serf, upon the very lands he had tilled as owner before his voluntary exile as his country’s defender, kissing the hand that oppressed, so long as it dispensed, as charity, a portion of his tithes and rentals in sports and food. And now, after ages of wonder and criticism, the soldiers of our nineteenth-century civilization outvie their Roman prototypes in submitting to exactions and injustice of which Nero was incapable either of imagining or executing, bowing subserviently to the more ingenious tyrant of an advanced civilization, if but his hand drop farthings of pensions in return for talents of extortion. It may not be that the soldiers and citizens of America shall become so thoroughly debauched and degraded, nor that the consequences of their revolt shall be a burning capitol and a terrified monopolist; but if these evils are to be averted, it will be only because fearless hands tear the mask from our modern Neros, and tireless arms hold up to popular view the naked picture of national disgrace.

Twenty-eight years ago the first step had been taken towards the final overthrow of the objective form of human slavery. There were, even in those days, cranks who were dreaming of new harmonies in the songs of liberty; and when tyranny opposed force to the righteous demands of constitutional government, ploughshares rusted in the neglected fields, workshops looked to alien lands for 162 toilers, while patriots answered the bugle-call, and a nation was freed from an eating cancer. But what was the return for such sacrifices? Surely, if ever were soldiers entitled to fair and full reward, it was those who responded to the repeated call of Lincoln for aid in suppressing the most gigantic rebellion of history—not in the form of driblets of charity, doled with cunning arts to secure their submission to extortions, not offered as a bribe to unblushing perjury and denied to honest suffering, but simple and exact justice, involving a full performance of national obligation in return for the stipulated discharge of the duty of citizenship. The simple statement of facts of history will serve to expose the methods of those who pose as par excellence the soldiers’ friends and the defenders of national faith.

The soldiers who enlisted in the war of the rebellion were promised by the government, in addition to varying bounties, a stipulated sum of money per month. It requires no argument to prove that the faith of the government was as much pledged to the citizen who risked his life, as to him who merely risked a portion of his wealth in a secured loan to the government. But the record shows that the pay of the former was reduced by nearly sixty per cent, while the returns of the latter were doubled, trebled, and quadrupled; that in many cases government obligations were closed by the erection of a cheap cast-iron tablet over a dead hero, while the descendants of bondholders were guarded in an undisturbed enjoyment of the fruits of their ancestors’ greed. For, after the armies were in the field, the same legislative enactment that reduced the value of the soldier’s pay increased that of the creditor’s bond, by providing that the money of the soldier should be rapidly depreciated in value, while the interest upon bonds should be payable in coin; and then, after the war was over, another and more valuable bond was prepared, that should relieve the favored creditor of all fear of losing his hold upon the treasury by the payment of his debt. That the purpose of the lawmakers was deliberate, was exposed in a speech by Senator Sherman, who was Chairman of the Finance Committee of the Senate while the soldiers in the trenches were being robbed in the interest of the creditors at home. In reviewing the financial policy of his party during the war, Mr. Sherman said, in a speech in the Senate, July 14th, 1868 [Footnote: Congressional Record, page 4044]:

“It was, then, our policy during the war, to depreciate the value of United States notes, so that they would come into the Treasury more freely 163 for our bonds. Why, sir, we did a very natural thing for us to do, we increased the amount to $300,000,000, then to $450,000,000, and we took away the important privilege of converting them into bonds on the ground that, while this privilege remained, the people would not subscribe for the bonds, and the notes would not be converted; that the right a man might exercise at any time, he would not exercise at all.”

No page of our national history contains a more damning record of injustice than this. Mr. Sherman recognizes and admits that the notes, as issued and paid to the soldiers and producers of the country, were fundable at the holder’s option in a government interest-bearing bond. He confesses to the foreknowledge that in nullifying this right the value of the notes would be decreased and to that extent the soldiers’ pay be diminished. No organ of public opinion raised the cry of breaking the plighted faith of the nation. The soldier had no organ then; but years after the wrong had been perpetrated, there appeared in Spaulding’s “History of the Currency” the naÏve statement, “It never seemed quite right to take away this important privilege while the notes were outstanding with this endorsement upon them.” By a law, passed against the protests of the wisest and most patriotic members of the popular branch of Congress, it had been provided that these government notes, so soon to be further depreciated in value, should be a full legal tender to the nation’s defenders, but only rags in the hands of the fortunate holder of interest-bearing obligations of the government, upon which they were based, and into which they were fundable at the option of the holder. In one of his reports while Secretary of the Treasury, Hon. Hugh McCulloch showed that fully thirty per cent of the cost of supplies furnished the government was due to the depreciation of the currency, the initial step in such depreciation being the placing of the words “Except duties on imports and interest on the public debt” in the law and upon the back of the notes. But, having provided that one class of the government creditors should be secured against the evil effects of a depreciated currency, those friends of the soldiers and defenders of the nation’s honor proceeded to a systematic course of depreciation of the currency, while the soldiers were too busy fighting, and the citizens too earnest in their support of the government, to criticize its acts. During the war the sentiment was carefully inculcated, that opposition to the Republican party or its acts was disloyalty to the government, copperheadism, treason; and protests against any of its legislation were answered with an epithet. It so happened that very 164 little contemporary criticism was indulged in, from a wholesome fear of social or business ostracism, or the frowning portals of Fort Lafayette.

But from the very commencement of the war there had been felt at Washington a strong controlling influence emanating from the money centres. The issue of the demand notes of the government during the first year had furnished a portion of the revenues required, and had served to recall the teachings of the earlier statesmen and the demonstrations of history—that paper money bottomed on taxes would prove a great blessing to the people, and a just exercise of governmental functions. This was only too evident to those controlling financial operations at the great money centres. The nation was alive to the necessities of the government; the people answered the calls for troops with such promptness as to block the channels of transportation, often drilling in camp, without arms, awaiting production from the constantly running armories. Those camps represented the people. From them all eyes were bound to the source of supply of the munitions of war; in them all hearts burned for the time for action, even though that meant danger and death. There were other camps from which gray-eyed greed looked with far different motives. The issue of their own promissory notes, based upon a possibility of substituting confidence for coin, had proven in the past of vast profit to the note-issuers of the great money centres. The exercise of that power by the government would inevitably destroy one great source of their profits, and transfer it to the people. Sixty millions of the people’s own notes, circulating among them as money, withstanding the effect of the suspension of specie payments by both the banks and the national Treasury, was a forceful object-lesson to all classes. To the people, it brought a strong ray of hope to brighten the darkness of the war cloud. To some among the metropolitan bankers who in after years prated so loudly of their patriotism and financial sagacity, it brought to view only the danger of curtailed profits. The government Treasury was empty; troops in the field were unpaid and uncomplaining; merchants furnishing supplies, seriously embarrassed for the lack of money in the channels of trade. The sixty millions of demand notes were absorbed by the nation’s commerce like a summer storm on parched soil. Under such circumstances, at the urgent request of the Secretary of the Treasury, the Ways and Means Committee of the House of Representatives framed a bill authorizing the issue of one hundred and fifty millions of bonds, and the 165 same amount of Treasury notes, the latter to be a full legal tender, and fundable in an interest-bearing bond at the option of the holder. The contest between the popular branch of the government and the Senate, upon this measure, forms one of the most interesting and instructive lessons of the financial legislation of the nation. In the Senate, a bitter and determined opposition to the legal-tender clause was developed. The associated banks of New York had adopted a resolution that the Treasury notes of the government should only be received by the different banks from their customers as “a special deposit to be paid in kind;” and it was one of the lessons of the war, that notices containing the announcement above quoted remained posted in the New York banks until a high premium on those very notes, over the dishonored greenbacks, caused a shrewd depositor to demand of the bank his deposits in kind. The demand was settled by a delivery of greenbacks, which were a full legal tender for the purpose, and the notices suddenly disappeared. The compromise effected between the two Houses resulted in the issue of the emasculated greenback, and it also led the way to the establishment of the National Banking system, and the issue of the promissory notes of the banks to be used as money.

Much of the force of all criticism of the system so devised has been weakened by the fact that the attack has been aimed at the banks themselves, and not against one special feature of the system. In explanation, though not in excuse for this, should be stated the fact that every issue of the annual finance report of the government contained the special pleadings of the comptrollers of the currency, concealing some facts, misstating others, and creating thereby the impression that they were endeavoring to win the favor of the banking institutions. Added to this were the efforts of those controlling the national bank in the great money centres to secure a permanency of the note-issuing feature of their system, after a very general public sentiment against it had been aroused, and even after its evil effects had been felt by smaller banks located among, and supported more directly by, the producing classes. But now, when the discussion is removed from the arena of politics, when the volume of the bank-note system is rapidly disappearing, and when many of the best and strongest banks are seeking to be relieved from the burden of note-issuance, it is opportune to discuss calmly and without prejudice the wisdom of the original acts and their effects upon the country.

It has been claimed that by the organization of the national banks 166 the government was enabled to dispose of its bonds and aided in carrying on the war. Do the facts warrant the claim? All national bank notes have been redeemable solely in Treasury notes. They do not possess the legal-tender qualification equal to the Treasury note, and cannot therefore be considered any better than the currency in which they are alone redeemable, and in comparison with which they have less uses. These are truths that were just as palpable twenty-five years ago as to-day. It follows that the issue of the bank notes did not furnish any better form of currency than that which came directly from the government to the people. Every dollar of such notes issued contributed just as much towards an inflation of the currency as the issue of an equal amount of Treasury notes. With these facts in mind, a review of the organization of the banks and their issue of notes will reveal the effect of such acts.

In 1864 the notes of the government had been depreciated to such an extent that coin was quoted at a premium ranging from 80 per cent to 150 per cent. The record of a single bank organized and issuing notes under such circumstances is illustrative of the whole system.

Take a bank with one hundred thousand dollars to invest in government bonds as a basis for its issuance of currency. The bonds were bought with the depreciated Treasury notes. Deposited with the Comptroller of the Currency at Washington, the bank received ninety thousand dollars of notes to issue as money. It also received six thousand dollars in coin as one year’s advance interest upon its deposited bonds, under the law of March 17, 1884. This coin, not being available for use as money, was sold or converted into Treasury notes at a ratio of from two to two and a half for one. The bank, therefore, had received, as a working cash capital, a sum in excess of the money invested in its bonds. The transaction stands as follows:

From this it will appear that the bank has the use, as currency, of more than the amount of its bonds, while the government is to pay, in addition, six per cent per annum on the full amount of bonds so long as the relations thus created continue. Surely no argument is needed to prove that, if the government had issued the $90,000 in 167 the form of Treasury notes, and had paid out the interest money for its current obligations, there would have been no greater inflation of the currency, a more uniform currency would have been maintained, and a saving effected of the entire amount of interest paid on bonds held for security of national bank notes, which at this date would amount to a sum nearly representing the total bonded debt of the country.

But there remains a still more serious charge to be made against this system. Defended as a war measure by which the banks were to aid the government in conquering the rebellion, the fact remains that at the date of Lee’s surrender only about $100,000,000 of bonds had been accepted by the banks, even though they received a bonus for the act. But, after the war had closed, and the government was with one hand contracting the volume of its own circulating notes by funding them into interest-bearing bonds, the banks were allowed to inflate the currency by the further issue of over $200,000,000 of their notes. Time may produce a sophist cunning enough to devise an adequate defence or apology for such legislation. His work will only be saved from public indignation and rebuke when a continued series of outrages shall have dulled the national intelligence and destroyed the national honor.

But there came a time when the policy of the government was radically changed. The soldiers had conquered a peace,—or thought they had,—and, as they marched in review before their commander-in-chief, had been paid off in crisp notes of the government—legal tender to the soldier, but not to the bondholder; the time for government to pay the soldiers had ceased; the national banks had been allowed to show their patriotism and their willingness to aid the government overthrow a rebellion already conquered, by the issuance of their notes to add to an inflated and depreciated currency; the soldiers had returned to the arts of peace, and had taken their places as producers of the nation’s wealth and taxpayers to the national Treasury. Then Mr. Sherman, with his brother patriots and statesmen, discovered that the country (meaning, of course, the bondholders) was suffering under the evils of a depreciated currency. Their tender consciences had never suffered a twinge while the soldiers were receiving from the government a currency depreciated in value as the result of its own acts. But when the soldier became the taxpayer, and from his toil was to be obliged to pay the bondholder, then the patriotic hearts of Mr. Sherman and his co-conspirators in the dominant political party 168 trembled at the thought of a soldier being allowed to discharge his obligations in the same kind of money he had received for his services. As a recipient of the government dole, paper money, purposely depreciated, was quite sufficient. From the citizen by the product of whose toil a bonded interest-bearing debt was to be paid, “honest money” was to be demanded. It required no argument to convince the government creditor that this was a step in his interest, and public clamor was hushed with the catchwords of “honest money” and “national honor,” while driblets of pensions were allowed to trickle from rivers of revenue. The Nero of Rome had been excelled by his Christian successor, and the dumb submission of ancient slaves became manly independence in contrast with modern stupidity.

By the passage of the so-called “Credit-strengthening Act,” in March, 1869, it was provided that all bonds of the government, except in cases where the law authorizing the issue of any such obligation has expressly provided that the same may be paid in lawful money, or other currency than gold and silver, should be payable in coin. This act was denounced by both Morton and Stevens, as a fraud upon the people, in that it made a new contract for the benefit of the bondholder. The injustice of the act could have been determined upon the plainest principles of equity: if the bonds were payable in coin, there was no need for its passage; if they were not so payable, there could be no excuse for it. If there existed a doubt sufficiently strong to require such an act, it was clearly an injustice to ignore the rights of the many in the interests of the few. But the men who had not scrupled to send rag-money to the soldiers in the trenches, and coin to the plotters in the rear, had no consciences to be troubled. They had dared to pay to the soldiers the money of the nation, and then rob them of two-thirds of it under color of law, and now needed only to search for methods, not for excuses. Political exigencies must be guarded against. The public must be hoodwinked, the soldier element placated with pension doles.

The first essential was to stifle public discussion. Some fool-friends of the money power had introduced and pressed the bill early in 1868. There were still a few Representatives in Congress who had not bowed the knee to Baal, and they raised a vigorous protest against the iniquitous proposal. Discussion then might be fatal to both the scheme and the party, and Simon Cameron supplemented an already inodorous career by warning the Senate that 169 this bill would seriously injure the Republican party, and that it should be laid aside until the excitement of a political campaign had subsided, and it could be discussed with the calmness with which we should view all great financial questions.

Here was the art of the demagogue, blinding the eyes of the people with sophistry and false pretences in order to secure by indirection that which could not be obtained by fair discussion. A Presidential election was approaching. An honest Chief Executive had rebelled against the attempt to nullify the results of the war by converting the Southern States into conquered territories, in order that party supremacy should be secured, even at the expense of national unity and harmony. Any discussion of a proposition to burden the victorious soldier with greater debt, in the interest of a class of stay-at-homes, would have caused vigorous protests from the men whose aid was necessary for party success. Thaddeus Stevens had announced that if he thought “that the Republican party would vote to pay, in coin, bonds that were payable in greenbacks, thus making a new contract for the benefit of the bondholders, he would vote for Frank Blair, even if a worse man than Horatio Seymour was at the head of the ticket.” Oliver P. Morton, the war-Governor of Indiana, had been equally vigorous in his language; and practical politicians foresaw that even Pennsylvania and Indiana might be lost to the Republican party with these men arrayed against it. Therefore the cunning proposal to postpone this discussion “until after the excitement of a Presidential election was over, and we could discuss this with the calmness with which we should view all great financial questions.” The hint was taken, the contest of 1868 was fought under a seeming acquiescence in the views of Stevens and Morton; the dear people were hoodwinked with catch-phrases coined to deceive, and a new lease of power was secured by false pretence. But when the excitement of the election had passed, and there was no longer any danger of “injuring the Republican party,” all discussion was stifled; and the first act signed by the newly elected President was that which had been laid aside for that season of “calmness with which we should view all great financial questions.”

The next step in the conspiracy was a logical sequence to all that had preceded. Having secured coin payment of interest and principal of all bonds, it was now in order to still further increase the value of the one and to perpetuate the payment of the other. To this end, silver was demonetized by a trick in the revision of the 170 Statutes, reducing the volume of coin one-half, and decreasing the probability of rapid bond payments. Then the volume of the paper currency was contracted by a systematic course of substituting interest-bearing bonds for non-interest-bearing currency, and the first chapter of financial blunders and crimes of the Wall Street servants ended in a panic, revealing, in its first wild terror, the disgraceful connection of high public officials with the worst elements of stock-jobbery.

It is possible that a direct proposition in 1865, to double the amount of the public debt as a free gift to the creditor-class, might have caused such a clamor as would have forever driven from power its authors, and have silenced the claims of modern Republicans that they were the sole friends of the soldier, and defenders of national honor. But the financial legislation of the Republican party has done more and worse than this. Its every act has been in the interest of a favored class, and a direct and flagrant robbery of the producing masses. It has won the support of corporate monopoly by blind submission to its demands, and, with brazen audacity, sought and obtained the co-operation of the survivors of the army by doling out pensions and promises. And yet, with a record that would have crimsoned the cheek of a Nero or Caligula, its leaders are posing as critics of honest statesmen, and the only friends and defenders of the soldier and laborer. The leaders of its earlier and better days have been ostracised and silenced in party councils, while audacious demagogues have used its places of trust as a means of casting anchors to windward for personal profit. Its party conventions are controlled by notorious lobbyists and railroad attorneys, and the agricultural population appealed to for support. Truly the world is governed more by prejudice than by reason, and American politics of the present day offer but slight rewards to manliness or patriotism.

Clinton Furbish.