Close Window


Speech on Payment of the Public Debt in Legal Tender Notes

Date: 1867 

As a result of the Civil War and overall mismanagement of federal funds, the national debt grew from $80 million in 1860 to more than $3 billion in 1866. In the summer of 1867, western Democrats, led by Representative George H. Pendleton (D-OH), formulated a plan to pay back government-issued war bonds, with paper money ("greenbacks") instead of gold. The Legal Tender Act, which released $150 million of paper money at the beginning of the Civil War, established a national currency unbacked by gold. The Ohio Plan, as Pendleton's proposal was called, met with eager support in the West, but eastern Democrats, many of whom were tied to financial institutions and other lenders, rejected the idea. Pendleton, once a contender for the Democratic presidential nomination, failed to secure the nomination without eastern support. In this speech, given on November 2, 1867, Pendleton describes the Ohio Plan before an audience in Milwaukee. He declares that, in his interpretation of the Legal Tender Act, the government is entitled to use paper money to pay back the principle of the bonds, and only pay the interest in gold. He felt this arrangement would help alleviate the national debt, since gold would primarily be used for foreign transactions, and paper money for domestic ones.


Speech on Payment of the Public Debt in Legal Tender Notes (1867)

George H. Pendleton

From: Milwaukee News.

November 2, 1867


… The revenues of the Federal Government in 1866 amounted to $561,572,266.00. You can hardly realize what that vast sum is. When you undertake to count it imagination almost stands abashed. It would have sufficed for the whole expense of the Administration under General Jackson for more than twenty years. The year 1866 was a year of profound peace. The army had been disbanded, the navy had been reduced, the military expeditions had not only accomplished their purpose, but they had been brought to an end. And yet in that year the Government of the United States realized from its revenue $100,000,000 more than the Kingdom of Great Britain, and $190,000,000 more than the Empire of France under Napoleon. If that amount had been assessed upon the people of the United States, it would have amounted, for every man, woman and child in the country, to more than $11.46 in gold. And yet, in this same year the taxation of Great Britain, assessed in the same way, would have amounted to $10.92. The taxation of France would have amounted to $7.97, and the taxation of Austria to only $5.27.

If that amount had been assessed upon all the taxable property, real and personal, in the United States, it would have amounted to $3.93 upon every one hundred dollars, and if the taxation of Great Britain, in the same year, had been assessed in the same way, it would have amounted only to nine-tenths of one per cent. The taxable property of Great Britain real and personal of every kind and description, amounts to $36,238,800,000. The taxable property of France amounts to $40,000,000,000, while the taxable property of the United States, of the same character, amounts to less than $15,000,000,000. If the taxable property of Great Britain were subjected to the same rate of taxation as prevails here, the revenue would be more than $1,424,000,000.

The population of Great Britain, including her colonies, amounts to 255,000,000 of people. The population of the United States amounts to less than 38,000,000 of people.

The public debt of Great Britain amounts to $4,000,000,000, while the public debt of the United States amounts to $3,000,000,000. I may not state the public debt at the exact amount. The Chairman of the Committee on Finance in the Senate has stated it at $3,000,000,000. The Chairman of the Committee of Ways and Means in the House has stated it at $4,000,000,000. I take the smaller sum. If the public debt of the United States were assessed upon every man, woman and child in the country—I mean the liquidated debt which consists of somewhat more than $2,200,000,000—it would he equivalent to $74 a head, while the public debt of France, if assessed in like manner, would amount to $53, that of Austria to $45, and that of Prussia to less than $12 a head.

The interest which the United States pay for money is six per cent in gold, and, in addition, they grant an exemption from taxation, which amounts probably to two per cent more; while, as you all know, the interest of Great Britain is three per cent, and that of France still less.

It has been stated lately, very tersely and very truly, that when the United States borrows a thousand dollars it borrows at a rate which will pay the lender in twenty years $2,700, while the Government of Great Britain, going to the same market, borrows the same amount of money, on terms which will in twenty years pay to the lender $1,700. The Government of the United States, with its territory unexampled in richness, with its population unexampled in activity and energy, pays a greater rate of interest than any nation in Europe, even including effete and worn-out Turkey. The public debt of the United States, which I have told you was $3,000,000,000, has been incurred, all except $80,000,000, within five years. The public debt of Great Britain, amounting to) $4,000,000,000, has accumulated during two hundred years.

Part of this public debt has grown out of the legitimate expenses of the war. Part of it is owing to the depreciation of the currency which arose from the issue of legal-tender notes. Of the parts of the debt thus incurred, I have nothing at present to say.

The greater part of it has grown out of the fraud and corruption and maladministration of the party which is now in power. I sat in Congress in 1862 and heard a Republican member from Massachusetts, Chairman of the Committee of Investigation, charged with looking into the expenditures of the Government, say that the stealings on horse contracts permitted by the War Department in the first year of Mr. Lincoln's administration, were more than equal to the annual expenditure of James Buchanan's administration. I heard another member of Congress charged with a similar duty, declare that the Secretary of the Navy had employed a relative of his to purchase ships for the navy at a commission, which in three months was equal to $95,000.

I have seen it stated everywhere in the public prints, and I have never heard it denied, that the late Secretary of War paid to a Republican friend of his $600,000 for two ships which had been condemned by a board of naval officers, and one of which was dismantled immediately, in order that it might be converted into a quarantine hospital.

In 1865, after the surrender of the Confederate troops, after the war had been brought to a close, we had an Indian War in the West. I do not know whether you ever heard of it here in Wisconsin, and yet it cost you $35,000,000. A Republican member of Congress—and I quote from Republican authority, my friends—a Republican member of Congress had occasion to investigate that subject, and his report is published in the Congressional Globe. He details some of the circumstances of this war. He tells us how the money was expended. He tells us that the death of each Indian cost the people of the United States $2,000,000. He tells us of an expedition of a certain valiant colonel from his own State, I believe, who was burning with military ardor. He enlisted a thousand men. He obtained from the Government of the United States a thousand horses. He obtained excellent and abundant arms. He loaded his ample train with commissary stores, which cost the Government $6,000,000. He went upon his expedition; he returned; he made his report. He reported that he had lost all his horses, that he had lost all his wagons; that he had eaten up all his provisions, and that he had killed one Indian.

A rider who was employed by the Overland Express Company, whose soul was also fired with martial ardor, when he came into the settlements, reported that this colonel lied—under a mistake, I suppose—for he himself had killed that one Indian. The war between this express rider and the valiant Colonel waxed warm, until some hunters in the neighborhood came to hear of it, and brought the contest to an untimely end by declaring that they knew the Indian to be still alive.

The Special Commissioner of Internal Revenue, who made his report to the Secretary of the Treasury in December last, declared that in the year 1866, the people of the United States had consumed 40,000,000 gallons of distilled spirits. I have not a doubt that we had consumed 100,000,000 gallons of distilled spirits. But I state it as the commissioner's report states it. You know the tax on these distilled spirits was $2 a gallon, and that the amount of revenue ought, therefore, to have been $80,000,000. But he tells you in fact that the sum which the Government received from that source was only $29,000,000, although the people had paid the whole amount. He tells you that in 1866, when the tax upon distilled spirits was $2 a gallon, the Government received a trifle less in the aggregate than in 1864, when the tax was only 20 or 60 cents a gallon.

He tells you that in one section of the country—a very small section—the loss which the Government sustained by the collection of revenue upon tobacco alone, was more than $8,000,000. And yet we know that the Treasury Department employs more than 20,000 men for the purpose of administering the revenue laws.

Military governments and the freedmen's bureau have been established all over the South. They cost the people of the country, by appropriations and in other ways, $200,000,000. And what have they done? They have subverted civil governments in ten States in the Union. They hold the life, and liberty, and property of the people of those States in the mailed hand of military power. They have subverted the social system; they have subverted the labor system; they have destroyed the supply of labor; they have turned eight hundred thousand blacks from the pursuit of agriculture and industry to the pursuit of politics, they have turned gardens into deserts, they have, by unjust and arbitrary acts, and by still worse threats, disturbed the repose of the people of that country until every incentive to honest industry is taken away; they have utterly destroyed the ability of that people to pay their legitimate share of the taxation of the country. The taxation paid by the city of Cincinnati, under the internal revenue law, to-day is equal to that paid by any eight of the ten States of the South.

The Republicans have done more. They have treated the Constitution of the United States with derision and contempt. They have destroyed all reverence for it. They have violated or amended it as the whim of the moment suggested. Thaddeus Stevens to-day says, and says boastingly, that the action of the Congress of the United States, with reference to the people of the South, is outside of the Constitution, and when Mr. Sherman, of Ohio, feebly attempts—and it is a feeble attempt—to justify that action by any provision of the Constitution, Mr. Stevens at once retorts upon him, and retorts with justice, that the attempt is the worst copperheadism he ever saw; that any attempt to reconcile the action of Congress with the provisions of the Constitution of the United States proves it to be "legislation without authority and reconstruction by usurpation."

And going further, they have utterly destroyed the Union—they have ejected ten States from it. What the ordinances of secession could not do—what the arms of the Confederates could not accomplish, Congress, by its unjust and unconstitutional action, has effectually done. The blood of the soldier has been spilled in vain. The agony of the people has been all for naught; the fruits of victory in battle have turned to ashes on our lips. The war was for the preservation of the Union, for the maintenance of the Federal authority, and the maintenance, at the same time, of the rights, powers and equality of all the States. That object was accomplished when Johnston surrendered to Sherman; that object was accomplished when the last act of the war was over, and yet, since then, a new and more dangerous enemy has arisen up at home in the very heart of our Government, which has, in fact, destroyed the Union and subverted the Constitution.

And all this ruin is wrought; all this accumulation of folly and corruption, and fraud and wrong, is heaped up in order that the Republican party may consolidate the Government; may substitute for its checks and balances the unbridled will of an irresponsible majority; may organize it so that it shall feel the least impulse of popular passion, and shall instantly obey it. They seek to do this that they may override the Constitution; that they may invade the rights of the States; that they may regulate suffrage in the South; that they may enfranchise the negroes there and secure them as Republican voters, and thus perpetuate the power of the Republican party.

And that is what they claim the right to do when they answer their question, "Are we a nation?"

Their ultimate object is not that which lies upon the surface. On the surface you can see their designs. They see that power is passing away from them in the North. They see that State after State is being lost to the influence which they exerted over it. They intend to make up for the losses in the North by gaining negro States in the South. They think that thus they will be able to perpetuate high tariffs, hundred per cent. dividends, untaxed bonds, the harvest of capital, and the heydey of New England Puritanism. They tried the white race; they were not successful. They turned to the black race. They see that labor in the large cities is discontented. The laborers are many, but the work is scarce. They see that the agricultural interest of the great Northwest groans under the oppressive burdens laid upon it for the benefit of Eastern capital. They see that the people in this part of the country are beginning to believe the sumptuary laws are the dictates of fanaticism. They soothe the discontent of all these interests by appeals to their philanthropy, and prepare for events which are to come by securing suffrage to the negro and the negro to themselves.

Their ultimate object is not the enjoyment of the honors or emoluments of office; not the gratification of a vulgar greed for gain or a vain love of power. They have the true spirit of radical reformers. They have at once the cautious, wary prudence of worldly wisdom, and the fierce zeal of fanatical proselytism. They have the persistence of the martyr and the intolerance of the bigot. New England Puritanism supplies the spirit, and seeks power in order that through the forms of a government thus perverted, it may enforce the theories of its philosophy. It pushes the functions of government into the domain of morals, and setting up an arbitrary standard of right in all things which pertain to drought or habit, it seeks to coerce complete conformity. It invades the liberty of the individual that it may establish the moral excellence of the community. Its full development may be seen in Massachusetts. Sunday laws and liquor laws express it. Not satisfied with maintaining the peace and suppressing riots, it compels the citizens to a breach of the law or to a hypocritical sanctimoniousness. Not satisfied with repressing public drunkenness, it imposes penalties on moderate and harmless indulgence. It is the same spirit which, in olden times, forbade the bating of bears, not so much because it gave pain to the bear, as because is gave pleasure to the spectators. What kind of government, men of Wisconsin would that be which would subject your interests, your tastes, your customs, your religion, your local law, to the convictions of the Radicals of New England. They believe devoutly that the earth belongs to the saints of the Lord, and that they are the saints. They have the most perfect faith in their own convictions. Their zeal is not tempered by moderation. If it were clothed with the power of "the nation" it would prohibit your gardens, destroy your breweries, break up your vineyards, and compel you to spend your Sundays at home. And this they call, in glowing terms, the fulfillment of the great duty of "the nation" of securing entire equality, before the law, to all its citizens. Its spirit is manifested in the bill of Mr. Sumner, to enforce negro suffrage on the States. Connecticut, last spring, declared that negroes should not vote. Ohio, within a month, has made the same declaration by fifty thousand majority. Mr. Sumner proposes, by act of Congress—by the power of the nation—to enforce negro suffrage on both States.

This insatiable desire to govern you and us, and all the country, and make it conform, in all things, to their whims or convictions, is the motive of this cry, which rises with such ominous uniformity, and is so elaborately answered, "Are we a nation?"

The financial system is to be made to bear an important part in this process of consolidation. A national debt, in the language of those who maintain the kingly governments of Europe, is a blessing. I say it is a national curse. It is the natural ally of a despotic and consolidated government. It is the natural enemy of change, and progress, and liberty. It loves despotism. It lives by the coercion of the many who labor, to pay of their earnings to the few who do not labor. Labor soon becomes restive and discontented, and power becomes necessary to enforce prompt and regular payments; and thus the public creditors clamor for power in the government, and are ready to aid in its execution; and thus a public debt attaches the creditors to the government and chains the tax-payers to the creditors. Do we not hear, my friends, that the public debt ought not to be paid too soon; that its payment ought to be postponed as long as possible; that the bonds outstanding should be renewed as they fall due; that, as future generations will derive benefit from the deeds for which the debt was created, they should bear the burden of the debt? Gentlemen, I do not believe any such doctrine, I do not believe it is possible for the people of the United States, under the government which we have, to collect a revenue of $561,000,000 for any great length of time, and yet preserve the honesty, purity, and integrity which are essential to that form of government.

The public debt of the United States, as I stated to you before, amounts to $3,000,000,000. $2,200,000,000 or more are in a liquidated form, and bear interest. $800,000,000 are in greenbacks and unliquidated claims, and bear no interest. This is an enormous amount, and yet, gentlemen, I believe, and the Democratic party believes, that it should be paid, every dollar of it, principal and interest, at the time it comes due, exactly in accordance with the terms of the contract under which the loans were made.

Part of that debt is payable in gold and part of it in legal-tender notes. The faith of the country requires that the one should be paid in gold, and the interest of the country requires that the other should be paid in legal-tender notes. Prior to the year 1862, the laws of the United States provided that gold and silver coin should be legal tender in payment of every debt. Every debt which was contracted before that time, whether it was upon a contract, or a bond, or a note, was payable in coin, whether it was so expressed upon the face of the contract or not.

In February, 1862, the Congress of the United States passed the legal-tender act. It provided that one hundred and fifty millions of dollars should be issued in paper, under the stamp of the United States, and that these paper dollars should be received as "lawful money"—I quote the language of the act—as "lawful money, and as a legal tender in the discharge of all debts, public and private, except only duties upon imports and interest upon the public debt." Mark the language of the act, "lawful money." That is the first legal-tender act. It provided for the emission of a hundred and fifty millions of dollars in paper money.

Every contract after that time for the payment of money, whether by ordinary contract, or note, or bond, by whomsoever made, was made with full knowledge of the law, and was payable in these legal-tender notes, and not in coin, unless the maker chose so to discharge it.

The Government of the United States has paid in coin every bond that was issued before the passage of that law, and which has matured since its passage; and the Government since that time, by an act of Congress, has provided for the issuing of other bonds, which, notwithstanding the legal-tender act, are to bear upon their faces an express promise that the principal shall be paid in gold. These are the ten-forties. They are payable in gold, principal and interest. I maintain, my fellow-citizens, that every bond, except the ten-forty bonds, and those issued before the legal-tender act, is payable in the greenbacks of the country.

The legal-tender act controls this. The law itself under which these bonds were issued provides that the principal shall be paid in lawful money, and the interest shall be paid in coin. And not only that, but the face of the bond shows that the principal may be paid in lawful money, while the coupons declare that the interest shall be paid in gold.

Some gentleman will say to me, perhaps, that the legal-tender act shall not be permitted to override the uniform policy of the country up to that time. Let him beware how he objects to the legal-tender act, for it is only by virtue of it that the interest on the first issue of five-twenty bonds is payable in gold. The very act which authorizes the issue of these legal-tender notes provided for the first issue of the five-twenty bonds. That alone of all the acts authorizing the issue of five-twenty bonds did not provide that either the principal or interest should be paid in gold. I say to those who have bonds of that issue, that the payment of their interest in gold depends on that single provision of the legal-tender act, which says that this paper money shall not be received in payment of interest upon the public debt.

Some gentleman will say to me, as has been said before, that the law which provided for the issue of these same legal-tender notes provided that the coin to be derived from the payment of duties upon imports should be set aside and appropriated to the payment of the interest of the public debt, and to the purchase or payment, year by year, in every year, after the first day of July, 1862, of one per cent upon the public debt. It is claimed that this provision of the law implies a contract to pay the principal of the public debt in coin. Now, gentlemen, the same language which applies to the payment of the public debt applies also to its purchase. If those words constitute a promise to pay the public debt in coin at par, they also constitute a direction to purchase the public debt prior to the time it becomes due also in coin, at par, and that construction would be simply absurd, as you know that at that very time the Government of the United States was selling the five-twenty bonds at par in greenbacks.

It is said—I saw it in a newspaper published in Wisconsin to-day—that the Secretary of the Treasury, while these bonds were being issued, thought, and announced his opinion, that they would be paid in gold. What he may have thought is of no consequence. What he said was promptly met by Mr. Stevens, Chairman of the Committee on Ways and Means, who said, on the floor of the House, that these bonds were not payable in gold, and the opinion of the Secretary of the Treasury was wrong, and would bind nobody.

It is said that the newspapers declared that these bonds would be paid in gold. When the ten-forties were issued, only a few months later, the newspapers declared, under authority of Jay Cooke, that they were the only bonds whose principal was payable in gold. The one declaration may offset the other.

It is said those who purchased these bonds believed they were to be paid in gold. I can not aver, my friends, that they did not believe it, but I do aver that they had no reason to believe it. The law was open to their inspection, and was plain. They knew well that the Government of the United States paid every other debt that it owed, except only the interest upon the bonds, in legal-tender notes. They knew that they themselves discharged every debt that they owed in legal-tender notes. They knew that they themselves, when they bought these bonds, paid for them in legal-tender notes, and they had no reason to believe that an exception would be made in their case alone.

It is said that if these bonds are payable in legal-tender at all, they must be paid out of the identical hundred and fifty millions issued under the act of 1862. The objection is too puerile for notice. It is said these bonds are not payable in legal tender, because the act of 1864 declared that the amount of legal-tender notes should never exceed four hundred millions, and this sum is not equal to the amount of the bonds. Indeed! Then by like reasoning they are not payable in coin, for all the coin in the country is not equal to one-fourth of the five-twenties.

Now, gentlemen, I have thought it worth while to dwell thus in detail upon the legal and moral obligations of the Government to pay these bonds in gold, because it has been thought, in some quarters, a sufficient answer to every argument to cry out "repudiation! repudiation!" There is not a particle of repudiation in the proposition. Neither the law, nor the contract, nor the face of the bond, nor good morals, require that they should be paid in gold. Repudiation! That is a charge which comes with an excellent grace from men who, in Ohio, and Indiana, and New York, and Pennsylvania, and perhaps here in Wisconsin, paid in legal-tender notes the interest upon the State debt, which was contracted to be paid in gold. Repudiation! The charge is made by men who paid in depreciated paper the United States notes of 1861, which were bought for gold at par, and by the contract were to be paid in gold. Repudiation!! the charge in made by the men who voted for the law which authorized every man who had agreed to pay a hundred dollars in gold to discharge the debt by paying a hundred dollars in paper. Repudiation! they are the repudiators, who, after they have compelled the people to take these legal-tender notes in payment of every public and private debt, in payment of every State, and county and township, and city and railroad bond-now turn around and depreciate these notes, and say they are not "lawful money," as they were declared by act of Congress to be, and not fit to be given to a public creditor.

Do not misunderstand me here. I did not vote for that legal-tender act. I was in Congress at the time. I opposed it. I voted against it. I believed the policy was bad. We had coin currency, and I believed we should maintain it. I thought the war might have been carried on, as the wars of Napoleon against the world were carried on for years, upon a coin basis, and without inflation, and without the issue of notes. I endeavored to the utmost of my feeble ability to enforce that policy upon Congress. I was overruled, and a contrary policy was adopted. It became incorporated into the business of the country, and I am now in favor, in good faith, of carrying it out to the end, until every advantage shall be realized, and until we can with safety and case reverse this policy, as I believe we ought, and return to specie payments in the country.

If these bonds may be lawfully and honorably paid in legal-tender notes, is it not good policy to do so? If a neighbor of yours, being largely indebted, should seek to convert debts which bear no interest into debts which do bear interest—if having contracted a debt for necessaries when the price was very high, he should seek to pay it off when the price of everything he had to sell was very low—and especially if having the control of the market he should of set purpose depress the price at that time—what would you say of him?

If he, being a guardian of an orphan, were acting thus with the property and indebtedness of his ward, would you not say that the Orphan's Court should remove him on the charge of either corruption or incompetency? Is not that exactly what these men in office are doing with the interests of the people?

If the Secretary of the Navy, having made a contract in 1862 for the building of a ship for $100,000, had in 1864 paid the contractor that sum in gold, would you not say it was public robbery? Would you not believe that the Secretary had either corruptly agreed to receive half the premium on gold, or that he was utterly imbecile? But is not that exactly what these gentlemen propose to do in reference to the payment of these bonds?

To expand the currency when the people are incurring a debt, and to contract the currency when they come to pay it, is public robbery, whether such be the motive or not.

And now I say not only that these bonds are payable in legal-tender, but that they ought to be paid as soon as it is possible to do so. I do not know that it is possible to pay them as fast as they mature, even in currency; but I do know that every possible effort ought to be made to do it.

But at this point I am met with the statement that this policy will cause the issue of an immense amount of paper, and thus so far inflate the currency as to destroy its value, and bring disaster upon the country. Now, gentlemen, let me examine this objection. Mr. McCulloch in his last monthly report stated that the public debt which bears interest is comprised in three kinds; that three hundred millions of this debt could not be redeemed before 1874; that three hundred millions more could not be redeemed before 1881; and that the rest of the debt, amounting to nearly seventeen hundred millions of dollars, is made up of five-twenties and bonds which bear interest in currency.

Seventeen hundred millions of five-twenties and bonds which bear interest in currency, may be redeemed within the next five years. I can not state to you the exact time nor the exact proportions in which these bonds may be redeemed. I mean these five-twenties. Their very name implies that when five years shall elapse after their issue the Government may pay them; but it need not pay them until twenty years shall have elapsed.

I maintain that these five-twenty bonds should be paid as fast as it is possible to do so without inflating the currency beyond a safe and just point. And it is my business now to show you how rapidly that can be done. The unliquidated debt of the United States consists of greenbacks and claims which have not been adjusted, and amounts to eight hundred millions of dollars. It pays no interest.

The policy of the Republican party is to convert, in whole or part, these eight hundred millions of dollars of unliquidated debt into bonds, which pay six per cent interest in gold. Now, what will be the effect? It converts a debt which bears no interest into a debt which bears interest in gold; it will add to the expense of the Government $48,000,000 in gold—for that is the interest on $800,000,000. It will increase the number of those who do not pay taxes, and increase the burdens of those who do pay taxes. It will add to the untaxed property of the country. It will convert active into inactive capital. If any portion is converted, the same proportionate result will follow.

Now, I maintain that this system ought not to go on, that this debt ought not to be converted, that this capital ought not to be locked up, and that this large number of people ought not to be exempted from taxation, and that this additional burden of $48,000,000 should not be imposed. The Republicans say they can—I know they ought to be able to—pay this amount from the current revenues.

If you look at the report made to-day, in the evening papers by telegraph, you will see the National banks have three hundred and thirty-eight millions of dollars of the bonds of the United States deposited in the Treasury as security for their circulation. You know how these National banks are established. A man buys the bonds of the Government of the United States, and deposits them in Washington and receives the interest on them year by year at six per cent in gold. He receives ninety per cent of bank paper; he brings them home here to your own city, establishes a bank, issues these notes, and derives the interest of six, or ten, or twenty per cent, as the case may be, when you borrow them.

Three hundred and thirty-eight millions of these bonds are, by the report of the Secretary of the Treasury, deposited to-day as security in the vaults of the Treasury. Three hundred millions of bank paper are issued on the faith of these bonds. Now, gentlemen, I maintain that this circulation ought to be called in; that three hundred millions of these bonds ought to be redeemed with legal tender, which will take the place of that bank circulation.

What would be the effect of this? The seventeen hundred millions of interest-bearing bonds would be reduced to fourteen hundred millions; and eighteen millions of dollars in gold would be saved to the Government from the interest which is paid to the bankers for the bonds which they have deposited.

Now, then, suppose you take these eighteen millions of interest which is saved and add it to the forty-eight millions of dollars which these gentlemen say they can pay from the current revenue, and you have sixty-six millions of dollars in gold, year by year, and if you convert that sum into greenbacks, at 140, you have ninety two millions of dollars a year, and if this is appropriated as a sinking fund, you can pay off the whole debt in less than thirteen years, without adding one dollar to your taxation, or one dollar to the circulating medium.

Bear in mind that I am trying to convince you that these bonds can be paid in greenbacks without inflating the currency. Bear in mind this can be accomplished in twelve or fourteen years without the addition of one dollar to your taxation, or one dollar to your circulating medium. And now bear in mind, also, that I have not touched the revenues of the Government, which, in 1866, amounted to five hundred and sixty millions of dollars; nor have I attacked the expenditures of that year of Radical administration.

But now set the radical reformer to work. Let him cut off every extravagance—lop off every unnecessary expenditure. Let him reduce the current expenses of the Government to $150,000,000 a year—I mean expenses independent of the interest on the public debt—though it ought to be reduced to $100,000,000; that would be twenty-five millions more than Mr. Buchanan expended; that would be as much in one year as Andrew Jackson expended in any of the four years of his administration. But let the expenditure be reduced to $150,000,000, and what do you have? $150,000,000 for current expenses, $130,000,000 for interest upon the public debt, and $92,000,000 for a sinking fund, as I have described, constituting an aggregate of $372,000,000, and if you take that from the revenue of 1866, which amounted to $560,000,000, you have a balance of $188,000,000, which you may add to your sinking fund, and thus bring it up to $280,000,000 annually. And with that you can, in five years, pay every cent of the principal and interest upon your public debt, without the addition of a dollar to the circulating medium of the country.

As the debt is diminished, the interest will be diminished also, and the sinking fund proportionately increased.

When five years shall have passed, you can reduce $150,000,000 of your taxation, and yet be able to pay the $300,000,000 which falls due in 1874. Then you can reduce your taxation $200,000,000 more; and by recalling your greenbacks, as the great burden of taxation is reduced, you will be able to pay the debt maturing in 1881, and at the same time to return to the constitutional currency of the country.

And yet, you see that I have not proposed to increase the taxes or add one farthing to the currency.

But the country can well bear more currency. Look at the money market today—interest from ten to twenty-four per cent. Look at the condition of ten Southern States—houses, fences, barns, agricultural implements destroyed; horses, cattle, hogs, all gone; farms lying waste, bread scarce, laborers idle; the ground so rich that it needs but the touch of capital to make it yield abundant harvests. Do they not need more currency? If New England needs three-fifths of the $300,000,000 of bank circulation, do not the Southern States need at least as much?

I do not know that these figures are exactly correct. I have taken them from the Secretary of the Treasury and the Commissioner of Revenue. They are sufficiently correct. I use them for illustration only. Other modes of executing this general plan might be devised—perhaps better ones. I designed only to show that it was feasible and safe. Experience and wisdom will, when the time shall come, determine the best. I urge the adoption of this general idea, because I think I see danger ahead. The Republican party refuses to adopt it. They insist upon paying the bonds in gold. This adds forty per cent to your debt. They insist upon curtailing the currency. This makes it impossible to keep up your revenues, and postpones the payment of the debt. In the mean time you are paying a larger interest than any government in Europe. At the end of fifteen years you will have paid, by way of interest, an amount equal to your whole debt, and yet the principal remains wholly undiminished. In the mean time the bonds are wholly exempt from State and local taxation.

The public debt amounts to one-fifth of all the property, real and personal, of every man, and woman, and child, in the country; and yet one-fifth of all the capital in the country—that capital so well able to bear taxation—which labors from the first day of January till the last day of December; in summer and winter, through heat and cold, through storm and sunshine, by night and by day, which knows no weariness, seeks no repose, is not subject to the disease and pains and accidents which afflict the muscles and bones of men—whose owner, though he toils not, nor yet spins, is clothed like Solomon in all his glory—one-fifty of all this capital is exempt from taxation. Labor will become restive—discontent will enter the hearts which control its brawny arms. This state of things can not last—it ought not to last. I beg of the bondholders to be prompt and wise—wise to discern their true interests, prompt to act upon them; for I tell you gentlemen—I do not say it by way of threat—I say it by way of solemn and timely warning—it is no threat to say, when the sun rises in the east, that it will ascend to the zenith and set in the west, and leave us in darkness; it is no threat to say, when we see the gathering clouds, that there will be a storm—that as sure as there are passions in the human heart, this capital of the bondholders will be made to bear the same burden as other property, and those burdens will be speedily lightened, or other and worse consequences will follow, involving, perhaps, the violation of national honor and of plighted faith.

My friends, the first step in the right direction is to lay bare every fraud, to expose and correct all corruptions, to cut off every unnecessary expenditure, to dismiss every superfluous office-holder, to abandon every unconstitutional scheme, to abolish all military governments, to return to the teachings of our Constitution, and to the enjoyment of the liberties which it specifically assures to us, to give repose to the hearts of the people, in order that labor may be stimulated by the hopes of a rich reward for its industry. The rest of the journey to happiness, and safety, and peace, will be comparatively easy. The first step will cost you labor. It can only be accomplished by putting out of power the Republican party, and putting in its place the Democratic party.

I speak in no low partisan sense. The Republican party can not administer our Constitution. They hate it. They believe they can make a better Constitution. Their belief, their teachings, their tendencies, their wishes are all for its destruction. I do not impugn the honesty of their motives. I attack the foundation of their philosophy. "By their fruits ye shall know them."

I know full well the difficulty of this work, yet I do not despair. The signs around us are all propitious.

Connecticut heralded the coming morn; the sun arose from the horizon in Maine; its radiant rays were thrown back in golden glory from California, and lighted the lofty peaks of Montana. Higher it rose in the heavens, and Ohio and Pennsylvania were warmed into a new life. Soon New York and New Jersey will be enveloped in its rays. Will you, Wisconsin and Minnesota, reflect, from earth to sky, the full luster of its mid day splendor?

I believe you will; and the whole land, bathed in the warm light of delicious day, will throw off the noxious vapors of the night which has just passed.

Do your duty, men of Wisconsin. Do it as your brethren of other States have done theirs, and we will obtain possession of the powers of the Government. We will banish fraud and corruption and extravagance; we will regain our liberties; we will restore our Constitution; we will reinvigorate our Union; we will hold out to the people of the South the hand of friendly and fraternal affection; we will bid them be at peace with us, and in repose at home. We will banish from our councils and our hearts the spirit of hatred and vengeance, and we will invoke the spirit of charity and forgiveness and love which dwells in the bosom of God himself; and then this whole people, attesting the beneficence of a Government thus administered, will, with tears of joy and voices choked with emotion, thank God that "tho' sorrow endureth for a night, joy cometh in the morning."


Text Citation (Chicago Manual of Style format):

"Speech on Payment of the Public Debt in Legal Tender Notes."American History Online. Facts On File, Inc.
ItemID=WE52&iPin=E14200&SingleRecord=True (accessed April 24, 2014).

Primary Source Citation (Chicago Manual of Style format):

Pendleton, George H. "Speech on Payment of the Public Debt in Legal Tender Notes." American History Online. Facts On File, Inc.
ItemID=WE52&iPin=E14200&SingleRecord=True (accessed April 24, 2014).

Other Citation Formats:

Modern Language Association (MLA) Format
American Psychological Association (APA) Format

Additional Citation Information


Return to Top

Record URL: