Reduced to a mathematical form, the problem stands as follows: Total amount of bonds (Cleveland Administration).... $262,315,400 Rate of interest authorized under McKinley...... .03 7,869,462.00 It will thus be seen that if the bonds issued under the Cleveland Administration had been floated at the low rate of interest authorized under the McKinley Administration: Cleveland annual interest. It would have saved the people.... 11,492,616 7,869,462 .$3,623,154 or $36,231,540 in ten years, and $108,694,620 in thirty years. And how easy it was to float a 3 per cent bond was shown by the extraordinary demand of the public for the $200,000,000 placed in small sums last July at that rate. The bids exceeded a round billion. Nothing demonstrates better than these two financiering feats the difference between the economic administration of the Republican party and the blundering policy of the Democrats in national affairs, especially if we consider, as we certainly should do, that the Democrats floated their loan in time of peace, while the Republicans floated $200,000,000 bonds-$62,315,400 less than under Cleveland-in the midst of war, at a relative saving to the country of $3,623,154 per annum. BOND ISSUE OF 1898 TO DEFRAY WAR COSTS-HOW THE BONDS WERE PLACED. On June 13, 1898, the Treasury Department called for subscriptions to $200,000,000 of the $400,000,000 bonds authorized by the war-revenue act to provide ways and means for carrying on the war with Spain. Subscriptions were received at par for a period of thirty-two days, closing July 14. The bonds were issued in denominations of $20, $100, $500, and $1,000, so that every mechanic and wage worker had an opportunity to invest in these Government securities. The response was enormous. By the time the subscriptions were closed upward of a billion dollars had been offered, or more than six times the amount of the bonds. To prevent them from falling into the hands of syndicates, as under the late Democratic Administration, they were not only offered in small amounts, but Secretary Gage inserted in his circular setting forth the conditions of the sale the following clause: The law authorizing this issue of bonds provides that in allotting said bonds the several subscriptions of individuals shall be first accepted, and the subscriptions of the lowest amounts shall be first allotted. In accordance with that provision, allotments to all individual subseribers will be made before any bonds will be allotted to other than individuals. All individual subscriptions for $500 or less will be allotted in full as they are received, and such subscriptions must be paid in full at the time the subscription is made. If the total sum subscribed for in amounts of $500 or less should exceed $200,000,000, the allotments will be made according to the priority of the receipt of the subscriptions. Allotments on subscriptions for over $500 will not be made until after the subscription closes, July 14, and will then be made inversely according to the size of the subscription, the smallest subscription being first allotted, then the next in size next, and so on, preference being given to individual subscriptions. Persons subscribing for more than $500 must send in cash or certified checks to the amount of 2 per cent of the sum subscribed for, such deposit to constitute a partial payment and to be forfeited to the United States in the event of failure on the subscriber's part to make full payment for his subscription, according to the terms of the circular. Allotments to subscribers for more than $500 will be made as soon as possible after the subscription closes. It is impossible as this book goes to press to give the allotment of bonds by amounts, or to present more than a general statement of the result of the sale. At the proper time the Treasury Department, will give a statement to the public showing in detail the amount of bonds allotted by denominations, in pursuance of the plan defined in Secretary Gage's circular. The total number of bids received, including offers made by syndicates, which were not considered, amounted to $1,325,000,000, or over six times the amount of the issue. Over four hundred clerks were required to handle the work entailed by the enormous correspondence. In an interview regarding the sale, Assistant Secretary Vanderlip, of the Treasury Department, a few hours after the bids closed made the following statement: "It is, of course, impossible to give final figures at this hour. The Department received to-day just under 25,000 letters, and yesterday 24,300. The mass of applications must be put through a detailed operation before a total can be arrived at and the exact line at which allotments will be made announced. My estimate at this hour is that it will be around $5,000; that is to say, that all applications for a smaller amount than that figure will be allotted in full, while all applications for larger amounts will receive nothing. At this hour there has actually been listed $84,300,000 of the $500 and smaller subscriptions, and the amount now on the tables will carry that probably just above $90,000,000. "The amount scheduled and totaled in the subscriptions larger than $500 is at this hour $690,610,840, and I estimate it will reach $735,000,000. Thus the total subscription, including the $500,000,000 of syndicate bids, will reach $1,325,000,000. We have held out cases where there were doubts as to the bona fide character of sub scriptions amounting, in the subscriptions for $500 and under alone, to $19,494,740. The total number of subscriptions for $500 and under that has now passed the stampers is 228,000, and that figure will be somewhat further increased. The total of larger subscriptions numbered is 65,800, and there are still several thousand of these larger subscriptions to be listed. In the last nineteen days the Department received 255,800 subscriptions, an average of 13,262 a day. The last letter was opened within two hours after the subscription closed. We have had at the close of the work 400 employees, working from 9 in the morning until 10.30 at night. The fact that there are at this hour out of nearly 300,000 subscriptions received only 71 cases held up because of some irregularity, such as a misplaced remittance or informality of subscription, is some indication of the thoroughness of the work." GREENBACKS OR BONDS? WHICH POLICY IS THE MOST PATRIOTIC? Under the head of "Money," in another part of this handbook, is a brief history of the issue, value, etc., of our paper money from 1862 to 1878. Supplementary to that information, the attention of the reader is called to the attempt of the Democrats in the Fifty-fifth Congress to substitute an issue of $150,000,000 of greenbacks for bonds bearing 3 per cent interest, as proposed by the Republicans, and as finally adopted by both Houses, which is now the law. A great to-do was made by the Democrats over the bond issue, and in the House Representative Champ Clark, of Missouri, threatened to read out of the party the six Democrats who voted for the war-revenue bill and against the proposition of their colleagues to tie the hands of the Government in its conduct of the war. In their arguments against bonds the Democrats and their allies did all in their power to create the impression that an issue of greenbacks was vastly preferable to bonds, because it is a noninterest-bearing debt, while the bonds draw 3 per cent. A glance at the history of our experience with the greenbacks will show the fallacy of this argument. Having no intrinsic value, the value of all paper currency must depend upon the power of the government to keep it at par with the best metallic coin, which was gold during the war of secession and was still gold during the war with Spain. In another place will be found a table showing the premium on gold and gold value of United States legal-tender notes from 1862 to January 1, 1879. It shows that these notes fell in value to 49.2 cents in 1864, so that any person working for wages or a farmer receiving pay for a bushel of grain was compelled to sacrifice 51 cents on every dollar paid him. With the close of the war there was a slight increase in the value of the greenback, but from 1865 to 1869 it constantly fluctuated from 63.6 to 75.2, rose to 87 in 1870, the year in which the Franco-Prussian war broke out; fell from 89 to 87.9 in 1873, rose to 89.9 the next year, and dropped again to 87 in 1875. The proposition to resume specie payment-that is, the use of silver and gold-began to be agitated about this time, and with this in prospect the greenback, assured of redemption in coin, began a steady upward tendency, rising to 89.8 in 1876, 95.4 in 1877, 99.2 in 1878, going to par after the resumption of specie payment. Acting under the so-called Gresham law, by which the better money is driven out of circulation by the cheaper, gold, on account of its greater value, went to a premium and was exported in such large quantities that Congress decided to adopt a policy which is one of the articles of faith of the Populists and other fiat money advocates. It attempted to legislate on the subject, and passed a law to prohibit the export of gold. And right here is shown a true object lesson in the utter powerlessness of legislation to regulate the value of money that has no intrinsic value. A gold dollar was worth nearly two greenbacks in June, 1864. In fluctuated from 194 cents, to 1984 early in June, 1864. On June 17, 1864, a law went into effect entitled "An act to prohibit certain sales of gold and foreign exchange" (Statutes at Large, vol. 13, p. 132). This was an attempt to keep gold in the country and to stay the downward tendency of the greenbacks. On that day gold was quoted at 196%. The day following the enactment of this law it fell to 1954. The day after was Sunday, but bright and early Monday morning, June 20, the slaughter of the greenback continued, undismayed by statutory acts or Congressional makeshifts. Gold rose to 1984, and thence on rapidly, from day to day, jumped to 208, 230, 240, and 250. When it reached this point it was July 2, less than two weeks from the enactment of the law, and Congress passed another act, entitled "An act to repeal the act of the 17th of June, 1864, prohibiting the sale of gold and foreign exchange” (Statutes at Large, vol. 13, p. 344). Legislation had not been able to check the outflow of gold by the act of June 17; and the act of July 2, 1864, again demonstrated the impotency of Congressional enactments, for the greenback still kept falling, while gold rose, until one gold dollar was equal in value to nearly three paper dollars, touching, the high-water mark on July 11, when it was quoted at 285. For convenient reference, the following table is attached, showing the fluctuation of the greenback from June 1 to July 31, 1864, covering the dates of both acts of Congress to which reference has been made-i. e., that of June 17 and that of July 2-and before and after those dates: Table showing quotations of gold exchange from June 5, to July 31, 1864 13. 19534 14. 15. 19734 16. 19714 17. 1965-196% 22. 210-230 23. 205-223 24. 213-217 25. 214-220 26. Sunday 27. 221-240 28. 234-240 29. 235-250 13. 26834-273 14. 258-268 15. 244-256 16. 24812-2611⁄4 18. 25414-2611⁄2 25. 255-2583/1 26. 25734-259% 29. 250-2532 30. 253-258 31. Sunday There can hardly be any sincere patriotism at the bottom of a proposition to conduct a great international war on a fiát money basis, which will swindle our own people; and there can be no denial of the charge that the Democratic leaders were aware of the worthlessness of the greenbacks in a crisis like the war |