out his policy if you gave him
the power to do it."

This bill became a law on the 12th of April, 1866. President
Johnson relied entirely upon McCulloch, and had no opinions upon
financial topics.

Now, nearly thirty years after the passage of this act, it is
manifest that it was far the most injurious and expensive financial
measure ever enacted by Congress. It not only compelled the United
States to pay the large war rates of interest for many years, but
postponed specie payments until 1879. It added fully $300,000,000
of interest that might have been saved by the earlier refunding of
outstanding bonds into bonds bearing four or five per cent. interest.
Mr. Fessenden, then chairman of the committee on finance, committed
a grave error in hastily supporting the bill, an error which I
believe he greatly regretted and which, in connection with his
failing health, no doubt led him to resign his position as chairman
of that committee. Although our debate was rather sharp, it did
not disturb our friendly relations. With McCulloch in the treasury
department, nothing could be done.

If the funding clauses of this act had been limited to the conversion
of compound interest notes, treasury notes bearing interest,
certificates of indebtedness, and temporary loans into bonds
redeemable at the pleasure of the United States after a brief time,
bearing not exceeding five per cent. interest, retaining in
circulation during this process of refunding all the then outstanding
United States notes, the result would have been greatly beneficial
to the United States, but this was not the chief object of the
Secretary of the Treasury. His primary object was to convert United
States notes into interest-bearing bonds, and thus force the
immediate resumption of specie payments or the substitution of
national bank notes for United States notes. The result of his
refunding was largely to increase the amount of six per cent. bonds,
the most burdensome form of security then outstanding. In October,
1865, the amount of six per cent. bonds was $920,000,000; on the
1st of July, 1868, the six per cent. bonds outstanding were
$1,557,844,600. The increase of these bonds under the operation
of this law was thus over $637,000,000.

The result of this policy of contraction was not only to increase
the burden of the public debt, but it created serious derangement
of the business of the country. It excited a strong popular
opposition to the me