FALLS IN GENERAL PRICES, 1866-'67. 285 said, the people were individually out of debt.' '' 1 But with the great contraction in the volume of money and the increased demand for money, the prices of commodities in general fell in the United States from an average of 216.8 in January and July, 1865, to an average of 172.2 in January and July, 1867.2 The injuries occurred which always follow falls in general prices. The terrible effects of the measure of exchange value increasing 25 per cent in TWO YEARS were everywhere manifest, and the people rose up and demanded that Congress put an end to the contraction of the circulating medium. This pressure and the fact that a national campaign was at hand resulted in the law of February 4, 1868, stopping the contraction. John Sherman in the Senate said that "contraction should go no further while industry is in a measure paralyzed, and that Congress ought to resume control of the currency which should not be delegated to any single officer."4 Hon. W. D. Kelley told the citizens of Philadelphia: "Hugh McCulloch 'hamstrung' the whole nation. All affirm that his management of the finances, while it enriched him and made him a great London banker, has cost the American people more than the war did." Berkey says: "McCulloch not only entered into the designs of the money power, but became its most subservient tool, and retired with the reputation of being the first Secretary of the Treasury who had ever prostituted his high office for the purpose of enriching himself and his associates." 5 McCulloch's record in May, 1865, very shortly after his accession to the post of Secretary, was this: He agreed with Henry C. Carey, one of. America's most noted economists and a student of the effect of Falling, and Stable Prices, that "in view of the great changes now to be met— millions of men, North and South, returning from the field and needing to seek employment, at a time when the Government must not only 50. 1Gordon Clark's Shylock, pages 49, The contraction in the currency was considered by Senator Sherman, January 9, 1868. He said: "$140,000,000 have been withdrawn out of $737,000,000 in less than two years. There is no example that I know of, of such rapid contraction." (Congressional Record, January 9, 1868; also John Sherman's Recollections," page 434.) 2 Senate Report of Wholesale prices. In the Senate, January 9, 1868, John Sherman, in advocating a bill to stop the contraction of the currency, said: cease to be a purchaser, but must, on the contrary, become a seller of commodities it had already purchased-it was most desirable that all our measures should tend in the direction of stimulating production and making demand for labor." Carey further says: "If I had my will, gold should be at 2.00 for the next seven years; as the premium afforded a protection that even false invoices would not enable the foreigner to avoid." To this Secretary McCulloch replied: "That is too much; but I would gladly see it at 1.75. But Three months later," says Mr. Carey, "he was instructing his representatives abroad to give assurance that we should resume specie payments before the first 7-30s became due." "Two months yet later came the destructive Fort Wayne decree [that he would contract the currency]; and from that hour did the Secretary persist in the absurd and injurious course of policy therein announced. But a few months later be presented himself as an opponent of the doctrines of Mr. Clay, of which he had been before the advocate. What is the value to be attached to his present opinions may be judged from this exhibit, now for the first time put on paper, although fully authorized by him on the day succeeding the conversation above described. He is, I believe, the only one of our finance ministers who has ever retired with the reputation of a large fortune accumulated during his term of office." 1 As we have just stated, the effect of falling prices was such that "the people rose up, demanding that Congress put an end to the contraction of the circulating medium," and that "This pressure and the fact that a political campaign was at hand resulted in the law of February 4, 1868, stopping the contraction." In the national campaign which followed, The Campaign of 1868. The Republican platform was drawn to suit the moneyed interests. A great effort was made to control the Democratic party. The Convention was held in New York City and the New York banker, August Belmont, agent of the Rothschilds, was made Chairman of the Democratic National Committee. The platform declared, however, that all obligations against the government payable in lawful money of the United States should be paid according to the contract and not paid in coin; quick payment of the national debt, and one currency for the people and the bond-holder, i. e., the repeal of the Exception Clause in the Legal Tender Act. "Of course our Boss Rothschild would not stand any such nonsense as that; and so Belmont, who owned a large interest in the New York 1 Statement of Henry C. Carey, Published in Our Money Wars. Leavitt, p. 130. World, was ordered to order Manton Marble [the editor] to play Benedict Arnold with his always-for-sale World, just before election-just on the eve of the great battle; and this leading Democratic paper came out October 15, 1868, in a double column editorial, denouncing Seymour as unavailable and unfit for the Presidency of the United States; and advised his withdrawal.” Through this, and the popularity of General Grant, together with the conditions existing as to the late war and President Johnson, the Democratic party was defeated. "It is an interesting fact that Marble, who not long before had been a reporter on the Evening Post and who had run the World at a loss for various masters, now suddenly acquired a fine brown-stone mansion on Fifth Avenue and all that that implies. Residing at present in Paris, he occasionally instructs the American public, by Orphic oracles, concerning 'the money question;' to which nobody who at all understands it pays any attention."1 Before the national campaign of 1868, Sherman, Morton, of Indiana, and other leading Republican Senators had opposed coin payment of After this time they were changed, for, as we shall see, they the bonds. voted for it. The so-called "Credit Strengthening Act" became a law 14 days after the Republican nominee was sworn into office. It is as follows: The law says: Be it enacted, etc.: That, in order to remove any doubt as to the purpose of the Government to discharge all its obligations to the public creditors, and to settle conflicting questions and interpretations of the law, by virtue of which such obligations have been contracted, it is hereby provided and declared that the faith of the United States is solemnly pledged to the payment in coin, or its equivalent, of all the obligations of the United States not bearing interest known as United States notes [i. e., the paper money issued by the United States and given legal tender qualities except in the payment of interest due by the United States,] and of all the interest-bearing obligations, EXCEPT in cases where the law authorizing the issue of any such obligations has expressly provided that the same may be paid in lawful money, or in anv other currency than gold and silver; but none of the said interest-bearing obligations not already due shall be redeemed or paid before maturity, unless at such times as United States notes shall be convertible into coin. "And the United States also solemnly pledges its faith to make provision for the redemption of the United States notes in coin." 1Our Money Wars, Leavitt, p. 142. It is proof positive that Europe did not consider the six per cent 5-20s bonds as being "coin" bonds, that on November 30, 1867, they were? sold in London at 70 5-8 cents; while New Brunswick and Cape of Good Hope six per cent coin bonds sold at 105; Russian five per cents at 85 and Brazilian five per cents at 75.1 At the time this act was passed, changing the payment of the bonds from greenbacks-then of much higher exchange value than the money paid for the bonds-to coin, there was outstanding $1,500,000,000 of 5-20 bonds; all to become due within the next twelve years. To avoid the risk of a repeal of the so-called credit strengthening act, the moneyed interests secured the enactment of a law, substituting new bonds payable in coin. cent. Payment in Coin Further Assured. This law of July 14, 1870, authorized the issue and sale of $1,500,000,000 of United States coin bonds to refund the 5-20s. The coin bonds put out in place of these 6 per cents, drew interest at 5, 4% and 4 per While this reduced the interest charges and so was a benefit to the people, it gave the great creditors of Europe a "coin" bond; and, furthermore, one billion of the bonds were, contrary to established usage, made to run 30 years with no option on the part of the Government to call them earlier. These bonds were many of them purchased afterward by the Government at 25 per cent premium. Here's another one. Interest on Bonds Paid in Advance. By joint resolution of March 17, 1864, enacted at a time when the exigencies of war required unusual provisions, the Secretary of the Treasury was "authorized to anticipate the payment of interest on the public debt by any period not exceeding one year, from time to time, either with or without a rebate of interest upon the coupons, as to him may seem expedient." After the war closed this resolution was continued in force and from 1864 to 1869 the Secretary of the Treasury paid the interest on the bonds one year in advance of its becoming due AND WITHOUT REBATE. This fact appears in "an official letter now in my possession, signed by H. F. French, acting Secretary of the Treasury, and dated April, 1880." This was stated by General J. B. Weaver in a speech delivered in Congress, May 10, 1880, after he had recited the facts above set forth. (Reprinted in Heath's Labor and Finance Revolution, p. 243.) 1Our Money Wars, Leavitt, p. 145. |