be one span of at least five hundred feet clear between piers. The corporation may execute a mortgage and issue bonds payable, principal and interest, in gold; and their bridge across the Mississippi river and approaches thereto, when constructed. is to be a post road to carry the mails of the United States, and enjoy the rights and privileges of other post roads. The corporation may hold their meetings in either the State of Illinois or the State of Missouri, as the board of directors may elect, and the directors may be citizens of any of the United States; and the corporation may sue and be sued in any circuit court of the United States. Nothing in the act or in any previous legislation affecting the premises is to be so construed as to deprive the Legislatures of the States of Illinois and Missouri of the right to regulate the tolls and fares which may be charged by the company for the use of the bridge; but the tolls now fixed by the Legislatures of Illinois and Missouri shall not be increased.

Mr. HOWARD. I do not know from what committee the bill now before us has proceeded, but I observe, from the reading of the bill, that it assumes to recognize two State corporations as constituting but one, for the purpose of erecting this bridge across the Mississippi river; and the bill goes further: it assumes to limit and regulate the powers and faculties of that corporation by providing that the bridge shall be built in a particular manner, and with a certain span. I wish to inquire of the hon

orable Senator from Missouri whether the State corporation, or corporations, having this bridge in charge will be bound to follow out the provisions of the bill which we now have under consideration. If those provisions alter the charter of the company granted by the State, may it not turn out that these companies will refuse to comply with the provisions of the act, to build the bridge in the manner prescribed by it; and if they should so refuse, I inquire of the honorable Senator from Missouri what remedy the United States will have? Have Congress a right to alter and amend charters granted by the States? That is the question to which I desire an answer.

Mr. HARLAN. I believe there can be no doubt but that Congress could prohibit the construction of any bridge across the Mississippi river under existing laws. This bill provides that the bridge may be built as provided for by the laws of Illinois and Missouri, with the condition that one of the spans shall be five hundred feet in length, and the company agree to put in a span of that length. There is no conHlict, therefore, between the company as now organized and the Government either of the United States or of Missouri or Illinois.

Mr. HOWARD. Suppose they should fail to comply with that provision?

Mr. HARLAN. I suppose if they decline to build the bridge no damage will be done except to those who expect to use it; certainly no detriment to the Government of the United States only so far as they would be deprived of the use of the bridge for a post road.

Mr. HENDERSON. The bill under consideration provides simply for a change, as I understand it, in the construction of this bridge from the requirement of the act of July 26, 1866, which the Senator from Michigan will remember required bridges to be built in a certain style. This bill requires a wider span, a span of five hundred feet. Some say that the bridge cannot be built with that span. The engineers at St. Louis say that it can be built. The State charters did not require any particular width of span, and, as stated by the Senator from Iowa, there is no conflict between this bill and the State charters. The State charters authorize the construction of a bridge in such a manner as not to obstruct navigation at the city of St. Louis. The Senator from Michigan will remember that in 1866 there was a general law passed upon the subject of bridging the Mississippi river. I resisted the passage of that bill, but I was overpowered; the Senate passed it, and it has become a law.

Mr. RAMSEY. The Senator will recollect 40TH CONG. 2D SESS.--No. 250.

Mr. RAMSEY. This is amendatory of that. Mr. HARLAN. I understand that two companies were organized to construct a bridge in pursuance of that law, one under the authority of Missouri and another under a charter granted by the Legislature of Illinois. These two companies were for a time in conflict; that is, they were contending each for the right to construct the bridge; but ultimately they have consolidated under the law of the State of Missouri authorizing them to do so. A certified copy

of that act was before the committee, and also a certified copy of the articles of consolidation, so that it appeared to the committee that there was a perfect agreement now that these two companies would consolidate and construct the bridge after the pattern mentioned in this bill.

Mr. HOWARD. I understand the Senator from Missouri to say that there is not laid down in the charter any particular mode or manner in which this bridge shall be built, except that it shall not be so built as to obstruct navigation. Now, suppose the State corporation should refuse to make the bridge according to the requirement of this act, what would be the result? Is there any remedy which the United States could resort to? They are authorized to construct a bridge across the river so as not to obstruct navigation. I am not sure by any means that the States have not the right to authorize the construction of a bridge across the Mississippi river, and I am by no means sure that it is in the power of Congress to say that they shall not do it. It is on this point that I wish a little light from the Senator from Missouri. If the State corporation refuses to do what we prescribe, is there any remedy for the United States?

Mr. HENDERSON. I do not know that the United States could compel the construction of a bridge at St. Louis. That is not the purpose of this bill; it is merely to declare the mode of constructing by State corporations, a consolidation of which has now taken place, a bridge which shall be a post road. I believe it has been customary to pass such bills here in Congress.

Mr. HOWARD. I understand that very well; but there is a corporation authorized to construct a bridge in its own way across the Mississippi river, and we undertake to dictate to that corporation as to the manner in which the bridge shall be constructed. Suppose the corporation refuses to construct it in that manner, and contends for making it in a different style?

Mr. HENDERSON. I do not understand that this bill dictates to the corporation in what manner they shall construct the bridge. It does require them to construct it of a certain span, and the company desire to construct the bridge in that way. Senators may rest assured there will be no difficulty, so far as the company is concerned, about their building the bridge. They intend to proceed and construct it, and their plans have been adopted in strict accordance with the principles laid down in this bill.

Mr. HOWARD. Suppose they should wish to depart from them?

Mr. HENDERSON. Then it might, perhaps, defeat the construction of the bridge; that is all; but the bridge, I apprehend, will be built, as the bridge company itself is willing to build under this restriction; that is, with span of five hundred feet, a greater span than has been required of any bridge over any navigable waters of the United States at the present time. Surely the Senator from Michigan should not object. The company are willing to take upon themselves this restriction and build a bridge wide enough in the span to admit the largest steamers and the largest rafts that float upon the Mississippi river, and high enough to allow even the largest New Orleans steamers

to go beneath it. Of course the Senator ought not to object. I understand the consolidated company is now anxious and desirous to proceed to the construction of the bridge, subject to these restrictions.

Mr. HOWARD. The Senator from Missouri entirely misunderstands me if he supposes that I am objecting to the bill. I merely put an inquiry to the Senator involving a question of law as to the rights of the United States.

Mr. HENDERSON. It is a very nice question of law, and really I am not prepared to discuss it this morning. I have not examined the question as to the authority of a State Legislature to authorize the construction of a bridge over a navigable stream of the United States. I refer the Senator, however, to various decisions on that subject, the Wheeling cases and other very interesting cases decided by the Supreme Court of the United States, where he can find perhaps much more law than I should be able to give him in the short compass of an hour this morning. I hope he will withdraw his objection and let the bill pass.

Mr. MORTON. I had supposed that there was no doubt that the Government of the United States had a right to prevent the building of a bridge over any navigable water, which would obstruct_navigation, and I had supposed there was no doubt about the power of the Government to pull down any bridge that had been built under State authority which did obstruct navigation.

Mr. POMEROY. I am very anxious that this bill should pass, because it is an experiment in bridge building. This is to be a bridge without a draw, with a span of five hundred feet, and eighty or ninety feet above low water. There is no such bridge built anywhere in the United States. An engineer states that he can build this bridge and I want it tried. It is so high as to be out of the reach of human sympathy; but if he builds it so that it can stand I shall be gratified. I confess I have my doubts about the whole project, but these companies are willing to try it, and I want to see it done if possible.

Mr. CONNESS. I rise only to say a word or two about this bill. To me it is one of the strangest bills that has been presented to Congress since I have been in it. It proposes to take two corporations, organized under the laws of different States, for the purpose of building a bridge across the Mississippi river; and by this act to recognize and declare them to be a corporation by a given name. In other words, it organizes two corporations, chartered under an act of Congress. The language is under separate States, into one corporation specific. I beg to read it:

That the company formed by this consolidation, under the name and style of the Illinois and St. Louis Bridge Company, is hereby recognized, and declared to be a corporation by that name, with full power and authority to construct a bridge across the Mis

sissippi river, &c.

Then it imposes a limit upon the extent of the span of the bridge, that is to reach, as the Senator from Kansas says, out of the range of human sympathy, and the second section continues the purpose of the first, and says:

That the said corporation may execute a mortgage and issue bonds payable, principal and interest, in gold, and their bridge across the Mississippi river, and approaches thereto, when constructed, shall be a post road.

Now, sir, if we can pass an act of this kind, I do not know any reason why this should not be passed. I certainly have no objection to the limit upon the span, and am as anxious as any one that the experiment shall be tried; but by act of Congress consolidating two corporations organized in several States under the laws of those States into one, and giving them authority to proceed to do certain acts within each of those States, is at least a novel proposition.

Mr. HENDERSON. The difficulty about this matter is this: the Illinois Legislature organized a company under a charter to build a bridge at the city of St. Louis, and the Legislature of the State of Missouri passed a similar

act, but organized into a corporation different individuals. A conflict of right and of jurisdiction over the river occurred between these two companies, each claiming the sole and exclusive right to construct a bridge at St. Louis, and claiming the right by virtue of the respective charters of the different States. They enjoined each other from proceeding, each company claiming, as the Senator from Michigan now claims, that the Legislature of a State interested has a perfect right to proceed to authorize the construction of a bridge across the navigable waters of the United States. The Senate will observe that these two companies are now organized into one. They have so organized themselves, so far as they possibly can, by articles of agreement into one company, thereby doing away with the difficulty that occurred from this claim of right of each State.

Mr. CONNESS. I have no objection to the bill except to call attention to its peculiarity. I should not object to a bill, and I should think it entirely right, giving the consent of the United States to the consolidated corporation doing certain things, namely, building a bridge.

Mr. HENDERSON. That is all the bill does.

Mr. CONNESS. No; the bill goes further. It organizes these companies into a corporation under a national statute, and authorizes them to issue bonds, declaring the manner in which they shall be made payable, and that, I submit, is going further than we have ever gone.

Mr. HARLAN. The Senator from California is evidently in error in that respect. Congress has recognized a railroad company under the laws of California, and authorizes that railroad company to do certain things, among others to issue bonds, the principal payable in thirty years, and the interest payable in gold at a certain rate; and the same law authorized certain companies incorporated in Kansas and certain companies in California to consolidate and proceed to do certain work as consolidated companies, or as one company consolidated under that provision.

Mr. HENDERSON. All that will be found in the Pacific railroad charter.

The bill was reported to the Senate, ordered to a third reading, read the third time, and passed.

NAVY AND MARINE CORPS.

Mr. DRAKE. I move that the Senate take up for consideration House bill No. 941.

The motion was agreed to; and the Senate, as in Committee of the Whole, proceeded to consider the bill (H. R. No. 941) to amend certain acts in relation to the Navy and Marine corps.

The bill provides that from and after its passage the Marine corps shall consist of the number of officers, non-commissioned officers, and musicians authorized by the act for the increase of the Marine corps of the United States, approved March 2, 1847, and the acts previous thereto, and of fifteen hundred privates; but the commissions of officers now in the Marine corps are not to be vacated by this act, and no appointment is to be made in any of the grades of the said corps until the number in the corps is reduced below the number herein provided for each of the grades.

No appointment of engineers is to be made in either of the grades of the corps until the number is reduced below that provided in the first section of the act to regulate the appointment and pay of engineers in the Navy of the United States, approved August 31, 1842, and the number so authorized is to be based upon the number of steamships now in commission, and the grade of third assistant engineer is abolished.

The third section proposes to repeal the second section of an act entitled "An act to increase the pay of midshipmen and others," approved March 3, 1865, and the ninth section of an act entitled "An act to amend certain

acts in relation to the Navy," approved March 2, 1867; but the repeal of the section is not to be construed to increase the pay now allowed by law to officers promoted in accordance with its provisions.

The fourth section repeals all acts and parts of acts authorizing the appointing of temporary acting officers in the Navy.

The Committee on Naval Affairs reported the bill with various amendments. The first amendment was to strike out the first section of the bill after the enacting clause in the following words:

That from and after the passage of this act the Marine corps shall consist of the number of officers, non-commissioned officers and musicians authorized by the act for the increase of the Marine corps of the United States, approved March 2, 1847, and the acts previous thereto, and of fifteen hundred privates; and all acts and parts of acts inconsistent herewith are hereby repealed: Provided, That the commissions of officers now in the Marine corps shall not be vacated by this act, but no appointment shall be made in any of the grades of said corps until the number in said corps is reduced below the number herein provided for each of said grades.

The amendment was agreed to.

Mr. MORRILL, of Vermont. I think it would be well to have the Senator from Missouri explain this bill and state how much it increases the pay of any officers of the Marine corps or of the Navy.

Mr. DRAKE. That explanation would come proposed by the committee. If, however, the up in proper connection with an amendment honorable Senator from Vermont desires to have that explanation made before we come to that amendment, I will make it now. There are several amendments of small character that can be acted upon at once. I will explain the point referred to when we come to the amendment which involves it.

The next amendment was in section two, to strike out the enacting clause; in line three to insert the words "first three" before the word "grades;" in line four to strike out the word "provided" and to insert "authorized;" in line eight, after the word "steamships," to insert of war;" in lines nine and ten to strike out the words, "and the grade of third assistant engineer is hereby abolished," and to insert, "and no appointment of third assistant engineer shall hereafter be made;" so as to make the section read:

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That no appointment of engineers shall be made in either of the first three grades of said corps until the number is reduced below that authorized in the first section of the act to regulate the appointment and pay of engineers in the Navy of the United States, approved August 31, 1842, and the number so authorized shall be based upon the number of steamships of war now in commission. And no appointment of third assistant engineer shall hereafter be made. The amendment was agreed to.

The next amendment was in section three, now made section two, lines four, five, and six, to strike out the words, "and the ninth section of an act entitled 'An act to amend certain acts in relation to the Navy,' approved March 2, 1867, are," and to insert the word "is ;" and in line nine, after the word "repealed," to strike out the following proviso:

Provided, The repeal of said section shall not be construed to increase the pay now allowed by law to officers promoted in accordance with its provisions. So that the section will read:

That the second section of act entitled "An act to increase the pay of midshipmen and others," approved March 3, 1865, is hereby repealed.

The amendment was agreed to.

The PRESIDENT pro tempore. The morning hour having expired, the unfinished business of Saturday, being the funding bill, is now before the Senate.

Mr. DRAKE. As this is a bill of very great public importance, reducing the expenses of the Navy more than half a million dollars a year, and conforming its official personnel to

the reduction of the number of seamen in the Navy which Congress has already made at this session, I ask the honorable Senator from Ohio in charge of the funding bill to allow us to go through with the amendments which the com. mittee have reported, which will probably take but a few minutes, and let the bill be sent back

to the House for concurrence. I would not ask this for any private measure, or any measure of individual interest; but this is a bill of great public importance, and it is very desirable to get it through, and I think it will take but a little while to do it.

The PRESIDENT pro tempore. The cnfinished business can be laid aside informally, if there no objection.

Mr. SHERMAN. I happen to know that that bill will probably excite some comment and create some delay. It is a bill of much greater importance than I supposed when the Senator spoke to me about it a little while ago. I desire to get through with the funding bill to-day if possible, so as to get it out of the road. Senators all around me are impatient. They say it stands in the way of other business; and I hope, therefore, we shall proceed with the regular order. I have no doubt I shall vote for the Senator's bill when it comes up again.

RIGHTS OF CITIZENS ABROAD.

Mr. CONNESS. With the leave of both Senators I desire to submit a motion to transfer the special order appointed for to-day to another day, which will be removing one of the obstacles. I move to make the special order for to-day at one o'clock, the bill for the protection of American citizens abroad, the order of the day for Thursday next at one o'clock, by agreement with the chairman of the Committee on Foreign Relations, giving notice that we shall expect it to be considered on that day.

The PRESIDENT pro tempore. The Chair will put the question on that motion. The motion was agreed to.

The PRESIDENT pro tempore. The unfinished business of Saturday, the funding bill, is now before the Senate.

Mr. DRAKE. I will say to the Senator from Ohio that if this bill of mine should lead to debate, I would, of course, give way at once; but if it should not lead to debate, we could get through with it in a few minutes.

Mr. SHERMAN. I can say to the Senator that I am requested by other Senators to state that the bill will lead to discussion. They wish time to look into it. It is a very important bill, which is called up now for the first time. No doubt the Senator having called it up now and called the attention of the Senate to it will get the advantage of that when he calls it up again.

ENROLLED BILLS SIGNED.

A message from the House of Representatives, by Mr. McPHERSON, its Clerk, announced following enrolled bills and joint resolutions; that the Speaker of the House had signed the and they were thereupon signed by the President pro tempore of the Senate:

Thomas Connolly;
A bill (H. R. No. 676) granting a pension to

A bill (H. R. No. 938) to authorize the sale of twenty acres of land in the military reservation at Fort Leavenworth, Kansas;

A bill (H. R. No. 201) declaratory of the law in regard to officers cashiered or dismissed from the Army by the sentence of a general court-martial;

A bill (H. R. No. 1119) for the registration or enrollment of certain foreign vessels;

A joint resolution (S. R. No. 139) excluding from the Electoral College votes of States lately in rebellion which shall not have been reorganized;

A joint resolution (H. R. No. 201) in relation to Rock Island bridge;

A joint resolution (H. R. No. 281) authorizing the issue of clothing to company F, eighteenth regiment United States infantry;

and

A bill (H. R. No. 1099) for the relief of Wait Talcott.

HOUSE BILLS REFERRED.

The joint resolution (H. R. No. 335) for the protection of settlers on the Cherokee neutral lands, in Kansas, was read twice by its title,

and referred to the Committee on Indian Affairs.

The joint resolution (H. R. No. 837) continuing the refining of bullion in the Mint of the United States and branches, was read twice by its title, and referred to the Committee on Finance.

The bill (H. R. No. 1428) authorizing the admission in evidence of copies of certain papers, documents, and entries, was read twice by its title, and referred to the Committee on the Judiciary.

THE FUNDING BILL.

The Senate, as in Committee of the Whole, resumed the consideration of the bill (S. No. 207) for funding the national debt and for the conversion of the notes of the United States, the pending amendment being on the amend ment reported by Mr. SHERMAN, from the Committee on Finance, as a substitute for the bill. Mr. HENDERSON. I move to amend the amendment in line nine by striking out "five" and inserting "four and a half;" in line ten, after the word "four," by striking out the words and a half;" and in line eleven by striking out four" and inserting "three and a half;" so that the clause will read:

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The issue of bonds falling due in twenty years shall bear interest at four and a half per cent.; bonds falling due in thirty years shall bear interest at four per cent,; and bonds falling due in forty years shall bear interest at three and a half per cent., which said bonds shall be exempt from taxation, &c.

I should like to have the yeas and nays on this proposition.

The yeas and nays were ordered.

Mr. FESSENDEN. I shall feel disposed to vote for this amendment if the bill is to stand as it does now, issuing bonds at twenty, thirty, and forty years; but I have an amendment to propose which I think ought to be made to the bill, and if that amendment be adopted I shall not vote for this amendment because I think it would be limiting the interest too much. I propose to amend the bill, when I have an opportunity, in the first section, line five, by inserting after the word "after," the words

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ten years and payable after," so that it will read, redeemable in coin at the pleasure of the United States after ten years, and payable after twenty, thirty, and forty years respectively." If that amendment should be adopted, I should be willing to vote for the rates of interest as they stand now in the bill, and think that would be as well as we could do.

I am opposed to taking off the limit of ten years. As our financial system stands at the present time it is a perfectly fixed and stable system. We have, in reality, only two kinds of funds, the five-twenties, so called, redeemable after five years, and payable in twenty years, and the ten-forties, redeemable after ten and payable in forty years. I think ten years is the furthest point to which we ought to go and put out of our hands the power to redeem. The system as it stands now was predicated upon the idea of controllability; that our funds bearing the interest they did, might, in a reasonable time, be within our control; that if a better state of things occurred, as we believed a better state of things would occur, and the country became stable and prosperous again, it would be perfectly easy for us then to reduce the rate of interest, and reduce it materially, and place our funds on a very different footing from that on which they now stand. That is a power, and an important power, which those who had charge of the finances thought should always be retained as far as possible. I presume that there is no one of the committee but what would agree with me upon the important principle; and yet the first section of this bill abandons that idea and carries the lowest point forward for ten years more, so that the bonds we may put out now are not to be redeemable within twenty years, or only after that time has expired. I think that that is inexpedient and||

unuecessary.

I know the answer that may be given. It is that we shall not be likely to negotiate the bonds with such a provision. I think, in the

first place, we should be quite as likely, because the people wouldreason, If I should get my

money at that time, very well; but if not, I go on precisely as if this limit had not been placed upon the bill originally." In my judgment, we had very much better pay the six per cent. interest, as we are paying it, for a few years longer, than put the control of the finances, of the funds, so called, out of our hands for the period of twenty years. Remember that when we have once transposed these bonds in this way, they are no longer within our control for the long periods that we fix. If this country becomes as prosperous as I believe it will within ten years from this period, if it arrives at that point of prosperity, which we may well foresee for it, with our troubles settled, and everything going on as it did, I believe that within ten years from this time the credit of this country will be rivaled by the credit of no country on the face of the earth, and that it will be perfectly easy for us to borrow money, if we are disposed to borrow it to take up the debt that falls due, the accruing debt, upon terms most favorable to ourselves, and at the lowest rate of interest. Believing that for the sake of putting out a bill at the present time for any purpose, either to affect the mind of the public at this particular crisis, or for the still better purpose of reducing the interest, I have not been able to persuade myself that what we should gain for a short period in interest by the reduction of one per cent. would, by any means, pay us for putting the control of these large sums of money out of our hands for so long a period as twenty years.

Now, sir, this is an opinion which I state for what it is worth. It is my settled conviction, and I know it to be the settled conviction of men wiser than myself. For that purpose I propose to offer the amendment I have suggested to the Senate, and see what the Senate think of it, and upon the vote on that will depend my vote upon my friend's amendment to reduce the interest. If my amendment prevails, I shall let the interest stand as it does now; if not, I shall vote for the Senator's amendment.

Mr. HENDERSON. I shall not argue this financial subject. I did not suppose, a short time since, that anything would be done upon these bills at the present session; but it seems to be the desire of the chairman of the Finance Committee at least to put before the creditors of the United States a proposition for funding their debt, and for the reduction of the rate of interest. At an early part of the session, on the 21st of January last, I introduced a bill, the second section of which provided for the funding of the public debt

"Principal and interest to be paid in coin, and bearing interest at a rate not exceeding three and a half per cent., payable semi-annually, the same to be paid in fifty years from their date, but redeemable at the pleasure of the Government after ten years from the date of issue, which said bonds the Secretary may dispose of at not less than their par value," &c.

The Committee on Finance reported a bill for funding the debt-I do not remember the time at five per cent. I desire simply to state, without taking up any of the time of the Senate during such hot weather as this in the discussion of a proposition of this character, that a large portion of the people of the United States believe that about two thousand million dollars of our public debt is payable in lawful money; in other words, in greenbacks. A large number of them also believe that the Government may properly issue any quantity of United States notes for the payment of the public debt; while another large portion of the people believe that we have a perfect right to pay the five-twenties in lawful money of the United States, but that it would be bad faith to exceed in the issue of lawful money $400,000,000; but that with an outstanding circulation of $400,000,000 we may proceed from year to year to pay off the greenbacks in five-twenties. In this coutrariety of opinion a proposition is now presented to fund the public debt, includ ing the five-twenties, in a new set of bonds or

a new fund, payable at the pleasure of the United States after twenty, thirty, and forty years, but to change the character of the payment; in other words, that if we have the right now to pay the five-twenties in lawful money of the United States, which is worth, say seventy cents to the dollar, we will make an agreement upon this occasion to pay it, not in lawful money, but in coin; to make a new contract with our creditors, and, as the Senator from Maine says, extend the time from two years, in fact, two, three, and five years, payable now at the pleasure of the United States, up to twenty years, and debar ourselves of the priv ilege of making payment to the creditors in that time, and agree to pay upon that twenty years' security five per cent. in coin.

I for one am totally unwilling to make any such contract. I believe with the Senator from Maine that it is possible at least-I do not say that it is probable, but it is possiblethat with lessened expenditures of the Government, with economy on our part, and with an intention to pay off the public debt at an early day, with prosperity in the country, good crops, and a revival of industry, we may possibly be able to borrow money within twenty years for far less than five per cent. Suppose such should be the case, we shall by this bill have tied up our hands in such a way that it will be utterly impossible for us to do it. We have changed this contract, which we may now liquidate in lawful money of the United States, into a gold bond, binding ourselves to pay the principal in gold. We shall then be obligated for twenty years to pay five per cent., when in all probability we may be able to borrow money at three and a half or four per cent. Even if we could borrow it at four per cent. it would be a very large saving. Then we further obligate ourselves upon the thirty-year bonds to pay four and a half per cent., and upon the forty-year bonds to pay four per cent. I think that that interest ought to be reduced. I do not know that I desire especially a funding of the public debt under a proposition such as is contained in this amendment. It is too much interest.

Mr. FESSENDEN. It is already funded. Mr. HENDERSON. It is true it is already funded; and although we are paying six per cent. upon it, yet we certainly do have the advantage, in my judgment, of the right to pay it off in lawful money. I do not desire now to go into the discussion of that question. I discussed it at an early part of the session, whether to the satisfaction of any member of the Senate or not it is now unnecessary to inquire. I do not desire to renew the discussion. But this is a proposition made to the creditors. It is not obligatory upon the creditors to take it. It is not mandatory upon them. We do not pretend to force them to take this course. We do not do as some Governments have done, and, in fact, as the English Government has done on several occasions. Although we hear the credit of England boasted of in our country so much, they have actually put their creditors in a position upon several occasions to compel them to take a fund with a smaller rate of interest.

I

I do not advocate any such legislation on our part. I do not think it is necessary. I did not advocate it before and I do not now. do not desire to make it obligatory on our creditors to reduce their interest or to confiscate any part of their indebtedness. I think it is bad legislation, but if we are to repudiate any part of our debt we shall do it after it becomes perfectly manifest that we cannot pay the interest, and not until then. I know that some have called those who believe that the five-twenties can be paid in lawful money, repudiators. I for one say that I have no feeling of that kind, although I believe that the contract is such that they can be lawfully so paid, and believing it, of course, I never could consent to such rates of interest as are prescribed in this bill, especially as the Senator from Maine says, if the time of payment is to be so long prolonged, Now, inasmuch as this

is a mere proposition to the creditors, and they can take it or not take it, I do not think we have much to gain by it. For myself, I would rather the creditors should refuse to fund than to fund under the proposition of this bill. I must say that the securities this bill will give them will be infinitely better to the creditors than the present securities. In other words, this is a bad contract on the part of the Government; it is a contract we, as guardians of the public interest, ought not to be willing to make, and I for one, being unwilling to make it, move this amendment, and I hope it will be adopted.

Mr. CATTELL. Of the two propositions, the one presented by the Senator from Missouri and the one presented by the Senator from Maine, I very greatly prefer that presented by the Senator from Maine. There is a manifest propriety in holding the control of this large indebtedness, if we can possibly do it at this rate of interest, and succeed in funding the debt, or, as the Senator from Maine says, in refunding it. The proposition of the Senator from Missouri proceeds on the opinion which he expresses here that we may lawfully pay the five-twenty bonds in lawful money. To that proposition of the Senator from Missouri I respectfully enter my dissent. I believe, in the language of the platform of the great party which the majority in this Chamber represent, that we are bound to maintain the public faith and honor. and to meet our obligations not only in the letter but in the spirit of the laws under which they were contracted; and so long as I occupy a seat in this body I cannot consent, under any conceivable circumstances, to give my sanction to the payment of the public debt in anything else than that in which the Government of the United States has always paid its bonded debt, in coin, the legal tender of the country and of the world. I therefore must vote against the proposition of the Senator from Missouri, because I believe the rate of interest which he proposes is so low as to entirely defeat the operation of this bill. I believe all the members of the Finance Committee, with the exception of the Senator from Missouri, are under the impression that the terms proposed in the bill under consideration are the shortest in point of years and the lowest in point of interest under which the public debt inay be refunded.

It is perfectly proper that those who entertain the views of the Senator from Maine, who prefer that the debt should remain in its present position at the interest of six per cent. rather than be refunded under this bill fixing the time so long as twenty years, without any option of the Government, should be opposed to the bill; but whoever is in favor of refunding the public debt at five per cent. interest, with a bond of positive conditions, payable in twenty years, should vote in favor of this bill, in my judgment. If you attach to it any other conditions or any other rate of interest I fear that you defeat the working of the bill. It is with this view that I shall vote against the proposition of the Senator from Missouri; and I hope it will not prevail.

The question being taken by yeas and nays, resulted-yeas 8, nays 25; as follows:

YEAS-Messrs. Buckalew, Cole, Conkling, Davis, Henderson, Hendricks, Patterson of Tennessee, and Vickers-8.

NAYS-Messrs. Anthony, Cameron, Cattell, Conness, Cragin, Drake, Ferry, Fessenden, Howard, Morgan, Morrill of Maine, Morrill of Vermont, Morton, Nye, Osborn, Ramsey, Rice, Ross, Sherman, Sumner, Van Winkle, Wade, Welch, Williams and Wilson-25.

ABSENT-Messrs. Bayard, Chandler, Corbett, Dixon, Doolittle, Edmunds. Fowler, Frelinghuysen, Grimes, Harlan, Howe, McCreery, McDonald, Norton, Patterson of New Hampshire. Pomeroy, Saulsbury, Sprague, Stewart, Thayer, Tipton, Trumbull, Willey, and Yates-24.

So the amendment to the amendment was rejected.

Mr. FESSENDEN. I move to amend the amendment by inserting in the fifth line of the first section after the word "after," the words

ten years and payable after;" so as to read "redeemable in coin at the pleasure of the

i

United States, after ten years, and payable after twenty, thirty, and forty years respectively." Mr. SHERMAN. I wish to submit to the Senate a few considerations that bear directly on this proposition, and trust, on account of the importance of the subject, that Senators will give them such weight as they merit.

due sooner than the old one. That is a con clusive argument against it.

When I found that Congress was not willing to take my legal opinion as to the right of the Government of the United States to pay the five-twenties in lawful money I as a matter of course was compelled by these reasons to waive my opinion and favor a longer bond in order to make an additional inducement for the funding of the debt. The Senator from Maine seems to think that the United States may very soon negotiate a bond at less than five per cent. I do not believe that time will arrive in this country for thirty or forty years. My own impression is that the rate of interest cannot be kept below that in this country. Although we are growing rapidly we are yet a vast new country, with undeveloped enterprises demanding capital, and a great deal of it. I do not believe that in this country the rate of interest will fall below five per cent. for a generation or two generations of men, because the demand for capital is so great and the accumulation is so little. I think five per cent. will be the lowest rate of interest that can be had for many years to come; and if we desire to make this funding scheme a success it is idle for us to issue a bond running for a shorter time than twenty years, and bearing a less rate of interest than five per cent.

The proposition to issue a bond redeemable at the pleasure of the United States after ten years was the original proposition made by me in January last. It is one which I submitted, and which, for the reasons stated already by the Senator from Maine, met my judgment at the time. But there was great difference of opinion in regard to terms and conditions of the various bonds proposed to be issued. That difference existed in the Committee on Finance, and after the fullest consideration I was willing to waive my opinion and vote for a twenty-year five per cent. bond in connection with a proposition to issue a thirty-year bond at four and one half per cent., and a forty-year bond at four per cent. I will state the reason which induced me to change my position on this question. In order to make this funding a success one of two things must be done. One is for you to declare that the bonds of the United States now redeemable may be paid in the lawful money of the United States, and if that is done we can undoubtedly receive enough money for a five per cent. ten-year bond to pay off the principal of the five-twenty bonds. But the Senate were indisposed to adopt any such view. No doubt a large majority of the Senate is against any such proposition. Therefore there is no inducement for the holder of a five-twenty bond bearing six per cent. interest in gold to take a five per cent. bond unless you give to him a longer time for it to run. Let us reason on this point precisely as we would if we were the holders of five-twenty six per cent. bonds. The holder of such a bond will say "the United States offers me a five per cent. twenty-year bond; what reason is there why I should give up a six per cent. for a five per cent. bond? One answer is that by this new bond the time within which it may be redeemed is extended. The present bond is redeemable on the payment of its face in gold according to the claiming the new bonds at a rate which will take up of a majority of the Senate. Why, then, surrender my six per cent. bond and take a five per cent.? The answer is that an extension of time is had, the redemption of the bond is postponed. The five-twenty bond becomes payable in 1882, and this new bond is not redeemable until 1888. There is an extension of time, which gives additional value always to a bond.

Another argument in favor of these new bonds, and which will induce many people to fund in them, will be this: the old bonds are taxable by the United States to a certain extent; we now levy an income tax on them, and the House of Representatives, by a decided vote, directed a bill to be reported levying an income tax of ten per cent. on all bonds issued by the United States. Although this proposition never will meet the sanction of the Senate, in my judgment, yet it tends to impair the market value of the five twenty bonds, and the holders of those bonds, in order to get a bond which is definite on its face, clear in its terms, which limits the power of the United States to tax it to the same income tax that is levied on all other incomes, will take this new security, and it will have an additional value on that account.

These two incidents of the new bond, together with the clear stipulation that the principal and interest shall be paid in gold, give to the new bond a value which, in my judgment, will induce the great body of the holders of the five-twenties to convert them into the new bond without any other stipulation or any threat or any other measure.

If the amendment of the Senator from Maine prevails, and you reduce the running of these bonds to ten years, the new bonds will fall due before the old ones. The old bonds would fall due in 1882, and the new one would fall due in 1878 so that the new bond would fall

My friend from New Jersey said that he desired to make the best terms possible for the United States. The Committee on Finance, with possibly a single exception, agreed that a less rate than five per cent. and a shorter time than twenty years would not do, and I will say, as my friend from Maine knows also, that that is the opinion of the Secretary of the Treasury. It is true his opinion would not prevail against our deliberate judgment; but we can only make this negotiation through him. He is limited by this bill so that he cannot sell a single bond unless he can redeem an equal amount of fivetwenties. He must, therefore, sell them aecording to the market rate, now 118 or 114. A five per cent. ten-year bond cannot be sold at that rate unless you give it additional value. You limit him by the terms of this bill to sell

an equal amount of five-twenties. He cannot sell them at par in lawful money, he can only sell them in such a way as to take up an equal amount of five-twenties. He cannot do that, because he cannot get anybody to give that price for a five per cent. ten-year bond, and surrender a six per cent bond which has fifteen years yet to run.

In regard to all these details, let me say to Senators who have not examined this subject, and probably will not give to it the consideration we have done, that in my judginent, unless they are clearly convinced by reasons given, it is better to take the terms of the bill as reported here by the committee after careful and mature consideration rather than make changes, unless the changes are defended and maintained by reasons that approve themselves to their consciences. If I thought it possible, I should be very glad to negotiate a shorter bond, but in my judgment you cannot negotiate on the basis of this bill in exchange for an equal amount of five-twenties a bond more favorable to the Government than a twenty-year five per cent. bond.

Mr. FESSENDEN. On looking further at 'this provision I find it is new; it does not impose upon the Government the obligation of paying the principal of these bonds at any time. It takes what I believe is the English system, the idea of a permanent debt. It says "redeemable after twenty, thirty, and forty years respectively." Redeemable when? At no specific time; but it simply says: "If you take this bond we will not redeem it before twenty years, or thirty years, or forty years shall have expired, as the case may be, and after that we will redeem it when we can." The bonds which were first issued during the war were redeemable after five years, and payable in twenty years, as I recollect; that is, we became absolutely bound to pay them at the end of

twenty years. It is a question to be considered whether in our country, where money is chang. ing hands so rapidly, a bond which imposes no obligation to pay at any specific time would be favorably received. I propose to modify my amendment by substituting for the last word, "after," the word "in;" so as to read redeeniable after ten years, and payable in twenty, thirty, and forty years respectively."

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Mr. SHERMAN. I have all the loan laws before me, and I will state to the Senator from Maine that, with two or three exceptions, their provisions have been in this form, redeemable after a certain time.

Mr. FESSENDEN. And payable when? Mr. SHERMAN. Payable at the pleasure of the United States after a certain time. Even in regard to the bonds redeemed in July last we were not bound to pay them unless we chose. I have here the act of 1790, the original funding act of Hamilton which made the same provision.

Mr. FESSENDEN. My idea is that we should follow out the system which was inaugurated at the beginning of the rebellion. It might have done in old times when our debt was very small and we were borrowing small sums to leave the time of payment indefinite; but my judgment is that if you want bonds to be taken you should fix a definite period when they become payable, and that it will not do to issue a bond which is simply redeemable at the pleasure of the Government, because that is the amount of this bill as it stands. I think the people prefer to take a bond which has some definite period of payment fixed. I still adhere to what the Senator has said to be my original opinion. He says truly that this bill confers additional advantages upon the takers of these bonds. One which is a very important one is that it settles the doubt as to the medium in which they are payable, whether in coin or in currency. If the holders exchange the present bonds for those issued under this act they get rid of that difficulty. Then there is a limitation upon the power of taxation by the General Government which does not apply to the other bonds. Thus making these two things definite and taking the bonds out of the domain of legislation or of temporary excitement or temporary purposes, you give to them a character of stability which at present our public obligations very much need. I think with these changes it becomes an object with the holders of the bonds to exchange them, and that they would probably because it is all mere probabilitytake the bonds which they hold now, redeemable but not exactly payable, floating in the market, subject to all the contingencies, and exchange them for ten-year bonds on these

terms.

But, sir, I recur to my original proposition. I believe it would be better for the United States to let their bonds already funded and not yet payable for many years stand as they are at present. I believe the five-twenty bonds, although redeemable, do not become payable for thirteen or fourteen years to come, so that we have an ample margin. Our obligations are not pressing upon us. It would be better, in my judgment, to let them remain as they are funded for the present, rather than make an effort at this time, when the credit of the United States, owing to certain circumstances, accidents, and considerations to which I need not advert, does not stand as it ought to stand, and defer that effort to refund them until a few years longer. I would prefer to pay the additional per cent. for a few years rather than put ourselves in a position where we could not lay our hands on any of these bonds, whatever might be our condition and circumstances, and whatever might be the state of the money market, and however high our credit might be, until the expiration of such a long period of time.

That is the answer I make. I do not agree with the honorable Senator that the change would necessarily affect their negotiability, because in the constantly fluctuating state of things in this country, particularly with regard

to the demands for money, people would just as willingly, in my judgment, have a bond liable to be redeemed in ten years as in twenty provided that the bond itself had what they considered ample security for its redemption in the credit of the obligor, but whether they would or not I think we had better let things stand as they are for any purpose whatever except for the mere temporary purpose of making an impression on the public mind, which in my judgment amounts to just nothing at all. Nothing will be affected by it at the present period by changing our bonds from one condition to another. The effect will be to put off the period when we shall have power to take them into our own hands by payment. I am strongly impressed with the belief that. I am right about this matter; but whether I am or not will be for the Senate to judge.

Mr. SHERMAN. I have looked over the loan laws, and I find that all the loans of the United States up to 1862 were in the form contained in this bill as to redeemability. The loan of 1881 now running is not payable in 1881, but payable at the pleasure of the United States after 1881.

Mr. FESSENDEN. I am aware of that. Up to that period the bonds were always so issued, making no difference between redeemability and payability; they were all redeemable and payable at the same moment, and it would amount to the same thing. But when we found that we were to be so largely in debt, having a war upon us the end of which we could not foresee, the system was adopted of fixing a short time within which the bonds might be redeemable if the Government was able to redeem them and another time when the Government would be obliged to pay. That is the system which we then adopted, and which we have carried through. In my judgment it was one of the wise ideas of the then Secretary of the Treasury who had recourse to it, and I have always believed that we ought not to depart from it, and that we should not issue long bonds which were entirely out of our power for the whole time they have to run.

Mr. EDMUNDS. If the Senator will permit me in that connection I will say that is the actual form in which the form was actually issued. The bond reads "redeemable at the pleasure of the United States after the 30th of April, 1867, and payable the 1st day of May, 1882." That is the express form of the

contract.

Mr. SHERMAN. The United States never stipulated to pay money at a specific day until it was done under the severe pressure of the war, and we never ought to do it again. Suppose a great amount of bonds, $500,000,000 or $1,000,000,000, should fall due when the five-twenties would be due, the 1st of May, 1882, the United States are compelled on that day to pay this vast sum of money, because they have no power as before to pay it at their pleasure after a specific day, but they must pay on that day. That is a very severe and onerous burden on the Government of the United States, and the stipulation that was put in the five-twenty bonds was an advantage to the creditor which at that time the United States was compelled to insert, that they would pay the money at a certain time whether it was able to pay or not. Now, however, the United States is at peace, and I think we ought to go back to the old system, make our bonds, like the bonds of other Governments, payable at the pleasure of the Government after a specified time. The specified time is for the benefit of the holder of the bond, within which his investment may not be interfered with. The time after that is for the benefit of the Government, which may not find it convenient to pay at the stipulated time. Therefore the language used in this section is introduced following the uniform language of all loan laws with the exception of those in regard to the five-twenties and ten-forties.

Mr. FESSENDEN. That is the very ques tion I am trying to test in the Senate. If we go back to the old system we necessarily take

from the Government the power, whatever may be the state of things, to take these bonds out of the market and stop the interest on them. I know that was the old system, but I wish to adhere to the system we adopted since the war began.

But, Mr. President, what I wish to impress on the Senate is the importance to this country, in my judgment the great importance, of retaining control over its bonds in regard to the time of paying them. We have it now. The five-twenties are becoming redeemable. It is in our power to pay them; but, as I remarked before, we are not compelled to pay them. I wish to retain that principle. The moment you depart from it, whatever may be the state of our credit, however flush we may be in funds, we cannot take up our obligations, because the very fact that they are not payable until after a certain time in the future swells the value of your paper, and you cannot take it up unless you go into the market and buy it at the mercy of the holders; whereas if you fix a short time and adhere to the system of controllability which has been adoped, the result is that in a short period the Government can take up its bonds, and, of course, a large premium will exist upon them. Then when the time arrives, if we have the money we pay it; but we know that if our credit is good it will be very easy to substitute a similar bond. There is no question about that. The interest is what the creditor looks to, and the right to pay off within a reasonable time is what the debtor wants. I do not know that it is worth while for me to say anything more about it. It is for the Senate to say. I do not like to abandon the system which we have adopted.

Mr. MORGAN. The amendment proposed by the Senator from Maine is more advantageous to the Government than the bill. That was the case with the amendment of the Senator from Missouri, and that is the real trouble about them. They are too advantageous to the Government, for neither of them can be availed of. I should gladly have voted for the amendment of the Senator from Missouri, because I would much prefer that the Government should pay four and a half, four, and three and a half per cent. per annum, than to pay five, four and a half, and four. So by this amendment there is a great advantage reserved to the Government in having control of all its debt in ten years, so that it can at the end of ten years pay it; but it is impossible to make the loans if that advantage is retained, in my judgment.

I suppose, sir, that if there is anything well settled among financial men and in the country generally, it is that we are not disposed to pay off a public debt of $2,000,000,000 rapidly. The Secretary of the Treasury commenced it rapidly, but Congress has stopped him, and the general judgment of the country is that the payment of the debt should be spread over a long period and should be very slow until the country, especially the South, has more ability to pay than it now has. If that is the case, what are you to do?

Gentlemen object to this rate of interest; but you now pay six per cent. in gold; and if I am correct in saying that there will be no great attempt to pay the debt, then it will at that rate take fourteen years, and we shall have to pay six per cent. for fourteen years and pay it in gold. I prefer to make the time twenty years and the interest five per cent.

Certainly, Mr. President, there are a great many very intelligent men all over the country who believe that if Congress will give the option this debt can be exchanged for a lower rate of interest. Will Congress hesitate to give the option? We do not propose to compel anybody to make the exchange. We do not propose to say to the holders of our bonds that if they do not take these new bonds they shall be paid in greenbacks. We do not propose to repudiate. We propose to pay our debts honestly, in the spirit in which they were contracted.

It seems to me to be proper that Congress