taught us
that the public faith of a nation alone is not sufficient to maintain
a paper currency. There must be a combination between the interests
of private individuals and the government. Our revolutionary
currency, continental money, depreciated until it became worthless.
The assignats of France, issued during her revolutionary period,
shared the same fate. Other European countries which relied upon
government money alone had a similar experience. An excessive
issue of paper money by the government would produce bankruptcy
and repudiation, not only of the notes abroad, but of bonds also.
The government of the United States had in circulation nearly
$400,000,000 United States notes. We had a bank circulation of
$160,000,000. If we increased our circulation, as was then proposed,
it would create an inflation that would evidently lead to the
derangement of all business affairs in the country. Whatever might
be the hazards, we had to check this over expansion and over issue.
If a further issue of United States notes were authorized, it would
be at once followed by the issue of more bank paper, and then we
would have the wildest speculation. Hitherto the inflation had
not extended to many articles. Real estate had not been much
affected by it.

The question then occurred whether the bank bill proposed by the
Secretary of the Treasury, and introduced by me into the Senate,
would tend to secure a national currency beyond the danger of
inflation. This, the principal question involved, was discussed
at length. I contended that the notes issued would be convertible
into United States notes while the war lasted, and afterwards into
coin; that the currency would be uniform, of universal credit in
every part of the United States, while the bank bills, which it
would supersede, were current only in the states in which they were
issued. It would furnish a market for our bonds by requiring them
to be held as the security for bank notes, and thus advance the
value of the bonds. The state bank bills would be withdrawn, and
the state banks would be converted into national banks with severe
restrictions as to the amount of notes issued, and these only issued
to them by the general government upon ample security. The similarity
of notes all over the United States would give them a wider
circulation. I insisted that the passage of the bill would promote
a sentiment of nationality.

The policy of this country ought to