The foregoing tables do not include bonds issued in aid of Pacific railroads.

The first three items in the above table of debt bearing coin interest represent obligations which were negotiated prior to the suspension of specie payments, January 1, 1862, and were therefore sold for gold. A portion of these bonds were sold at a discount, the aggregate amount of such discount being $7,358,544.19. All the remainder of the obligations stated in the above tables were sold at not less than par in United States notes.

Soon after the close of the war the revenues began to exhibit a surplus over expenditures. The surplus was applied from time to time to the redemption of short-term obligations, which consisted of debt bearing interest in lawful money (United States notes). Such portion of these obligations as could not be redeemed for lack of funds was converted into 5-20 bonds, as authorized by the act of March 3, 1865. These transactions were completed by May 1, 1869. The Government then began using the surplus revenues in the purchase of its unmatured bonds at the market price in currency. The average price paid in May, 1869, was 115.84, which was equivalent to 82.72 in gold, or a discount of 17.28. These purchases were continued until September, 1873. The total amount purchased was $323,253,800; the net cost in currency was $362,981,483.79 and the net cost in gold was $307,702,207.64. The average price in currency was 112.27 and the average price in gold was 95.19.

CREDIT-STRENGTHENING ACT.

During the war the necessities of the Government compelled the borrowing of money in many different ways. Some of the obligations issued for money so borrowed were admittedly payable in lawful money but other obligations, such as the 5-20 bonds, while bearing interest payable, under the laws authorizing them, in coin, contained no specific statement as to the kind of money in which the principal should be paid at maturity. In this respect these bonds did not differ from all the other bonds issued since 1791, since none of them contained any provision as to the kind of money in which they should be paid; but, before the war, gold and silver coins were the only recognized legal-tender money, while after the war the existence of the legaltender United States notes gave rise to discussion as to the power of the Government to liquidate all its debts in paper money. Το settle the conflicting questions arising from this discussion, Congress passed the act entitled "An act to strengthen the public credit," which was approved March 18, 1869. The text of the act was as follows:

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That in order to remove any doubt as to the purpose of the Government to discharge all just obligations to the public creditors, and to settle conflicting questions and interpretations of the laws 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, and of all the interest-bearing obligations of the United States, 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. But none of said interest-bearing obligations not already due shall be redeemed or paid before maturity unless at such time United States notes shall be convertible into coin at the option of the holder, or unless at such time bonds of the United States bearing a lower rate of interest than the bonds to be redeemed can be sold at par in coin. And the United States also solemnly pledges its faith to make provision at the earliest practicable period for the redemption of the United States notes in coin. Approved, March 18, 1869.

By this act the United States solemnly pledged its faith to the payment of all its obligations in coin, except those which were specifically payable in some other currency; but in order to prevent improper speculation in the public debt it was provided that the Government should not redeem any of its obligations in coin before their maturity, unless at the same time it should be able to redeem United States notes in coin, or until the public credit should have become so good that the Government could sell bonds bearing lower rates of interest at par in coin.

Refunding. The refunding act of July 14, 1870, authorized the sale, at not less than par in coin, of 5 per cent ten-year bonds, 41⁄2 per cent fifteen-year bonds, and 4 per cent thirty-year bonds, the proceeds to be applied to the redemption of the war debt. The refunding operations under this act began in 1871 and continued until the summer of 1879. At first the sales were confined to the 5 per cent bonds. In 1876, when the credit of the United States had sufficiently improved, the 42 per cent bonds were offered for sale; and in 1877 they were withdrawn and the per cents of 1907

were substituted. All these classes of bonds were sold at not less than par for gold or its equivalent, and the proceeds were used in redeeming, in gold, an equal amount of the bonds representing the war debt.

The classes of bonds sold for refunding and the bonds redeemed, with the proceeds, are shown in the following tables:

.

A considerable amount of 5 per cent bonds (about sixty-five millions) was exchanged at the beginning of the refunding operations, bond for bond, for 6 per cents. These exchanges are included in the above tables.

The annual saving of interest to the Government by the refunding operations was $19,900,846.50.

The greater part of the war debt was sold for currency. Bonds amounting to $1,395,345,950 were redeemed in gold, and the gold with which they were redeemed was obtained from the purchasers of other bonds bearing lower rates of interest.

The refunding operations included all the bonds which up to 1879 had become redeemable. Meanwhile resumption of specie payments had brought all the business of the country to the coin basis. As the remaining war debt matured it was either continued at a lower rate of interest or redeemed in gold. The continued bonds were also redeemed from time to time, as the surplus revenues permitted, until no bonds remained outstanding except those authorized by the refunding acts. These last-mentioned bonds and all the bonds now outstanding are payable in "coin."

The foregoing statement does not include the bonds, payable in lawful money, which were issued in aid of Pacific railroads.

RESUMPTION.

The resumption act was approved January 14, 1875; it directed the Secretary of the Treasury to prepare and provide for the redemption of United States notes in coin, on and after January 1, 1879, and it authorized him to use the surplus revenues for that purpose, from time to time, and to sell and dispose of, at not less than par in coin, either of the descriptions of bonds described in the refunding acts above mentioned. In pursuance of this authority $95,500,000 of the 4% and 4 per cent bonds were sold for redemption purposes, and the proceeds ($96,000,000 in gold) were placed in the Treasury as a fund for such redemption. In time this fund became known as the “gold reserve,” and in the bank act, approved July 12, 1882, in a section providing for the issue of gold certificates, the sum of $100,000,000 was prescribed by Congress as the limit to which the gold reserve might be reduced without affecting the issue of gold certificates.

The presentation of United States notes for redemption prior to 1893 was not great enough to reduce the reserve fund below $100,000,000. During the operation of the Wilson bill the revenues of the Government from customs fell off rapidly, the deficiencies for the four years of the Cleveland Administration amounting to $155,864,183. The excess of expenditures over revenues thus existing was supplied from cash in the Treasury ($162,807,577); so that in April, 1893, the minimum of the gold reserve was reached, and the fund became so low that in February, 1894, an issue of bonds became necessary, ostensibly to enable the Government to restore the gold reserve and redeem the obligations of the United States. Accordingly, popular subscriptions were invited for an issue of $50,000,000 of ten-year 5 per cent bonds, which were dated February 1, 1894, and realized to the Government $58,633,295.71 in gold. In November, 1894, another issue of $50,000,000 of the same class of bonds was necessary, the sum realized being $58,538,500. In February, 1895, the Government was again obliged to replenish the gold reserve, which it did by the purchase, under contract, of 3,500,000 ounces of gold coin, which were paid for with United States 4 per cent thirty-year bonds, amounting to $62,315,400. Another sale of $100,000,000 of 4 per cent thirty-year bonds was made through popular subscriptions, invited in January, 1896. The total amount of bonds thus issued since 1893 to protect the gold reserve was $262,315,400, and the total proceeds thereof, in gold coin, was $293,454,286.74.

The amount of United States bonds outstanding April 30, 1898, was as follows:

42 per cent bonds continued at 2 per cent. 4 per cent bonds of 1907...

$25,364,500

559,644,950

5 per cent bonds of 1904... 4 per cent bonds of 1925.

Total

.$100,000,000 162,315,400

... 847,324,850

All these bonds were sold at not less than par for gold coin, or its equivalent; they are all redeemable in coin of the standard value of July 14, 1870, which was the date of the first of the refunding acts. The standard weights and fineness for coins at that date were the same as at present, the gold unit being a dollar of the standard weight of 25.8 grains and the silver unit being the silver dollar of the standard weight of 412 grains. The interest on all these bonds is payable quarterly in coin of the same standard.

The Government has never issued any bonds payable, by their terms, either principal or interest, in gold coin or in silver coin. Before the war, the obligations of the Government contained no statement as to the kind of money in which they should be paid, and none of the war obligations contained any such provision, except the certificates of temporary loan and the 7-30 notes of 1864 and 1865, which were all payable, by their terms, in lawful money.

BONDS.

Republican Economy Demonstrated by Comparison with
Cleveland's Bond Issue.

Under the Cleveland Administration this Government was compelled to sell $262,315,400 in bonds. The issues were made as follows:

The interest on this amount of bonds for ten years is $114,926,160, or nearly $11,500,000 per annum.

Now, let us see what these bonds would have cost, premium barred, if issued under the same terms as those authorized by a Republican Congress to raise revenues to conduct the war with Spain. These bonds were sold for 3 per cent, instead of 4 and 5.