onds into
five per cent. bonds, under the refunding act, continued at the
rate of about $85,000,000 a year. The credit of the United States
steadily advanced during this period, so that the Secretary of the
Treasury, in his report of 1873, stated that it had not stood higher
since the close of the Rebellion than it did at that time. This
improvement of the public credit was accompanied with a large
reduction of internal taxes and duties on imported goods. The
business of the country was prosperous, the increase and extension
of railroads and the development of new industries was marked,
indicating great prosperity.

All this was subsequently changed by the happening of a panic in
September, 1873. The cause of this was attributed to over-trading,
to the expansion of credits, and to rash investment made in advance
of public needs. This panic commenced by the failure of Jay Cooke
& Co., of Philadelphia, an enterprising firm of high standing, then
engaged in selling the bonds of the Northern Pacific Railroad
Company. I was engaged at that time, with a committee of the
Senate, of which William Windom was chairman, in examining many
plans of public improvements, especially in the increase of facilities
for water transportation at the mouth of the Mississippi river,
and at the great lakes on our northern boundary, improvements since
then made with great benefit to the commerce of the United States.
Roscoe Conkling, of New York, was a member of that committee. We
were at Buffalo when the failure of Cooke & Co. was announced. We
all felt that for the present, at least, our duties as a committee
were at an end. The panic spread so that in a month all industries
were in a measure suspended. The wildest schemes for relief were
proposed, in and out of Congress. The panic spread to the banks,
which were compelled in self-defense to call in their loans, to
withhold their circulating notes, and contract their business. As
usual on the happening of such a panic, an appeal was made to the
treasury for relief, a demand was made for an increase in the volume
of the United States notes, and that the Secretary of the Treasury
should use the money of the government to buy exchange.

The New York Produce Exchange applied to the Secretary of the
Treasury on the 29th of September, 1873, in resolutions, as follows:

"Whereas, The critical condition of the commercial interests of
the country requires immediate relief by the removal