rest in gold should not be paid on the bonds issued, nor
more than seven and three-tenths interest in currency should be paid
on the notes issued; and _second, all the loans provided by this
act were short loans_, redeemable within a short period of time at
the pleasure of the United States. Thus the gold bonds were
redeemable after five years, the treasury notes were redeemable
after three years, and all forms of security were within the power
of the United States at the end of five years at furthest. And
third, no securities were to be sold at less than par. Their
unavoidable depreciation was measured, not by the rate of their
discount, but by the depreciation of the currency. We held our
bonds at par in paper money, though at times they were worth only
forty per cent. of gold. . . .

"Now, Mr. president, it may be proper to state the reasons for this
policy. Short loans were adopted that we might not bind the future
to the payment of usurious rates of interest. We recognized the
existence of a great pressing necessity that would tend to depreciate
the public credit; and we took care, therefore, not to make these
loans for a long period, so as to bind the future to the payment
of the rates which we were then compelled to pay.

"We provided for gold interest and gold revenue, to avoid the
extreme inflations of an irredeemable currency. We wished to rest
our paper fabric on a coin basis, and to keep constantly in view
ultimate specie payments. I believe but for that provision in the
loan act of February 25, 1862, that in 1864 our financial system
would have been utterly overthrown. There was nothing to anchor
it to the earth except the collection of duties in coin and the
payment of the interest on our bonds in coin.

"But, sir, the most important and the most revolutionary principle
of the act of February 25, 1862, was the legal tender clause. This
was a measure of imperious and pressing necessity. I can recall
very well the debates in the Senate and in the House of Representatives
upon the legal tender clause. We were then standing in the face
of a deficit of some $70,000,000 of unpaid requisitions to our
soldiers. Creditors in all parts of the country, among them the
most powerful corporations of this country, had refused our demand
notes, then very slightly depressed. We were under the necessity
of raising two or three million dollars per day. We were then
organizing armies unheard of before. We