UNITED STATES NOTES A HISTORY OF THE VARIOUS ISSUES OF PAPER MONEY BY THE GOVERNMENT OF THE UNITED STATES JOHN JAY KNOX LATE COMPTROLLER OF TfE CURRENCY WITH AN APPENDIX CONTAINING THE RECENT DECISION OF THE SUPREME COURT OF THE UNITED STATES AND THE DISSENTING OPINION UPON THE LEGAL TENDER QUESTION THIRD EDITION REVISED NEW YORK CHARLES SCRIBNER'S SONS 1892 COPV'RIGHT, 1884, BY CHARLES SCRIBNER'S SONS PREFACE. In the course of his official career the author has had occasion to deal with subjects kindred to those presented in this vohirae. From time to time, he has collected material with the hope of publishing at some future day a volume worthy of the title of " History of Bank- ing in the United States." The results of these investi- gations have appeared from time to time, in official re- ports, occasional addresses, and in articles contributed to various encyclopaedias. The present volume is pub- lished in accordance with the request of many friends, who believe that at the present time a small volume containing a historj^ of all the various issues of paper money by the Government will be useful and interest- ing to the public. The recent decision of the United States Supreme Court has virtually placed it in the power of Congress to issue United States legal tender notes in any amount, at any time it may be deemed politic or advisable. A Iv PREFACE. connected hiptory of tlie paper money issued by the CuivcM'iiincnt will enable the reader to trace the gradual rise and development of a doctrine which has at length been endorsed by so much Aveight of authority. At the date of the adoption of the Constitution, the issue of paper money in any form was popularly re- garded with aversion. The experience of the colonists with bills of credit, as paper money was then called, had been fraught with loss and political disturbance, and the experience with the like issues by the Contin- ental Congress had so affected the minds of the wisest and best men of that time, that in the Federal Conven- tion the general feeling was one of almost bitter opposi- tion to granting the power to emit bills of credit to the new Government. IS'o one can examine the records of those days without being thoroughly impressed that the sense of the Convention was in favor of an absolute prohibition. Further proof may be found in the fact that from 1791 to 1812, a period of twenty-one years, the method of raising funds for the Government by the issue of bills of credit was not even suo^cjested ; nor indeed were circulating notes, in form payable on demand without interest, issued at all, until moi-e than seventy years after the adoption of the Constitution. The charter of the first Bank of the United States expired in 1811, and the Federalists were not strong enough to secure a recharter. When the war of 1S12 PREFACE. V broke out, the necessity of funds was so imperative, that the Administration and Congress felt themselves forced, the one to recommend, and the other to author- ize, the issue of interest-bearing Treasury notes. They were regarded as a measure of necessity. Loans in the ordinary form had failed, and these notes were regarded as a convenient form of loan. They were not intended to circulate as money ; they were fundable into public stock, and, as a matter of fact, were retired as soon as possible after the close of the war. These issues were, however, a fatal precedent out of which has grown a latitude of constitutional construction not then antici- pated. From 1815 to 1837, a period of twenty-two years, there was no resort to this remedy for the relief of the Government finances. In 1836, the charter of the second Bank of the United States expired, and again party spirit prevented a recharter. Soon after came the financial disasters of 1837, and again the Ad- ministration recommended, and Congress authorized, the issue of interest-bearing Treasm-y notes as forms of short loans. These issues extended from 1837 to 1844, and diu-ing that period the views of many, as to the constitutionality of their use, considerably expanded. The discussions in Congress, and the executive docu- ments of that day, show how severe was the strug- gle between the strict constructionists and those who VI PREFACE. MCi-e in favor of a view of the Constitution giving wider powers to Congress. During the Mexican war, 1846-1847, the plea of necessity secured congressional authority for another issue of interest-bearing Treasury notes. The financial panic of 1857 again caused Congress to consider such notes as the only remedy for the existhig distress. It remained for the Civil war, however, to bring such pressure that all remaining constitutional scru- ples were swept away. Until 1862 no notes had been issued with the legal-tender quality. All propo- sitions to make Government paper a legal tender had been rejected almost with contempt by Congress. In 1862, however, the first Legal-tender Act was passed, and for the first time, notes having the quality of legal tender, and intended to circulate as money, were is- sued by the United States Treasury. These notes were at first fundable in United States bonds, and had not this provision been afterwai-d repealed by Con- gress, they would, like previous issues of Treasury notes, have soon disappeared from circulation. By this repeal they were made a permanent circulation. Then came the decision of the United States Supreme Court, reversing a former decision and making them a legal tender for all debts — for those contracted before the passage of the Legal-tender Act as well as for those contracted after that date. This decision, howev^er, PREFACE. vn based the constitutionality of legal-tender notes upon the war powers of Congress. This still left open the question whether such notes issued in time of peace were constitutional, and the Supreme Court has now settled that, under the Constitution, Congress has power, if it deems it expedient, to issue legal-tender money to any amount, either in time of peace or war. The chapter upon the distribution of the surplus money of the United States is, it is believed, the first complete history of that subject. It serves to illus- trate the subject of United States notes. The crisis of 1837, which at that time was deemed sufficient cause for the issue of the latter, can be readily traced to the withdrawal of the surplus from the banks to distribute it among the States. The late decision of the Supreme Court on t!i<} legal- tender question, and the dissenting opinion, on account of their importance, are given in an Appendix. A considerable portion of the material in the present volume was contained in the third voKime of the " Cyclopaedia of Political Science and Political Econ- omy," recently published by M. B. Cwry & Co., of Chicago ; and by their courtesy, and with their consent, it is given to the public in this convenient form. In addition to tlie authorities quoted, the following have been consulted : American State Papers ; Annals of Congress ; Madison Papers ; Elliot's Debates ; Con- via PREFACE. gressional Globe ; Bolles' Financial History of the United States; National Loans of the United States, by R. A. Bayley ; Annual Cyclopaedia ; Hunt's Mer- chants' Magazine ; Bankers' Magazine ; Schucker's Life of Chase; Spaulding's Legal-tender Paper Money; Newspapers, 1861, 1862, 1863. J. J. K. Washington, April 30, 1884. COE^TEI^TS. PAOX PREFACE, iii CHAPTER I. Colonial Paper Money, . . . . . . .1 CHAPTER II. Paper Money authorized by the Continental Congress, 9 CHAPTER III. Bills of Credit in the Federal Convention, . . •, 13 CHAPTER IV. Treasury Notes authorized under the Constitution, . 19 CHAPTER V. Treasury Notes of the War op 1812, .... 21 CHAPTER VI. Treasury Notes of the Period of the Financial Crisis OF 1837 40 X CONTENTS. CIIArTER VIT. PAGK Treasury Notes of tue Period of the Mexican War, 03 CHAPTER VIII. Treasury Notes of the Buchanan Administration, . 70 CHAPTER IX. 'J.'reastjry Notes of the Period of the Civil War, . 80 CHAPTER X. The Silver Dollar and the Silver Certificate, . . 148 CHAPTER XI. The Legal-tender Cases in the Supreme Court op the United States, 156 CHAPTER XII. The Distribution of the Surplus among the States, . 167 APPENDIX 193 INDEX 231 LIST OF FAC-SIMILES AND FORMS OF TREASURY NOTES. Form of One Hundred Dollar Note, Act February 24, 1815, bearing interest at 5| per cent, or one cent and one- balf a cent per day. Page 35 Form of Five Dollar Note, Act Februaiy 24, 1815, fund- able into seven per cent, bonds. Page 36 Form of One Hundred Dollar one year Note, Act March 81, 1840, bearing interest at five per cent. Page 47 Form of One Hundred Dollar one year Note, Act July 22, 1846, bearing interest at 5| per cent. Page 65 Form of One Hundred Dollar two years Note, Act January 28, 1847, bearing interest at six per cent. Page 67 Form of One Hundred Dollar one 3'ear Note, Act Decem- ber 23, 1857, bearing interest at three per cent. Page 1?\ Form of Fifty Dollar two years Note, Act March 2, 18C1, bearing interest at six per cent. Page 8 \ Form of Ten Dollar Note, being the first Demand Nota ever issued by the United States, Act July 17, 18G1. Page 91 xii FACSIMILES OF TREASURY NOTES. Fonn of Seven-thirty Fifty Dollar three years Note, in- terest one cent per day, Act March 3, 1865. Page 101 Form of Five Cent Postage Currency and Reverse, re- ceivable for Postage Stamps, Act July 17, 1862. Page 105 Form of Ten Cent Postage Currency and Reverse, Act July 17, 1862. Page 106 Form of Twenty-five Cent Postage Cun*ency and Reverse, Act July 17, 1862. Page 107 Form of Fifty Cent Postage Currency and Reverse, Act July 17, 1862. Page 108 Foi-m of Compound Interest three years Ten Dollar Note, bearing interest at six per cent., compounded semi- annuaUy, Act June 30, 1864 Page 111 Form of Reverse of Note, gi\ing interest for each six months. Page 112 UNITED STATES NOTES. CHAPTER I. COLONIAL PAPER MONEY. Previous to tlie Revolutionary War paper money was issued to a greater or less extent by each one of the thirteen colonies. The first issue M'as by Massachusetts in 1690, to aid in fitting out the expedition against Canada. Similar issues had been made by Isew Hamp- shire, Rhode Island, Connecticut, Isew York, and Isew Jersey, previous to the year 1711. South Carolina began to emit bills in 1712, Pennsylvania in 1723, Maryland in 1734, Delaware in 1739, Virginia in 1755, and Georgia in 17C0. Originally the issues were au- thorized to meet the necessities of the colonial treasuries. In Massachusetts, in 1715, as a remedy for the prevailing embarrassment of trade, a land bank was proposed with the right to issue circulating notes se- cured by land. John Colman, a merchant of Boston, urgently advocated its establishment. The land bank was forbidden by the Province Council, unless author- ized by the General Assembly. There was a large party, 1 2 UNITED STATES NOTES. liowover, in favor of paper money in some form. Tlie plan for the land bank was defeated, but the issue of paper money by the treasury was antliorized to the ex- tent of £50,000, to be loaned on good mortgages in sums of not more than £500, nor less than £50, to one person. The rate of interest was 5 per cent., payable with one-fifth of the principal, annually. The bills were in form the same as those previously issued for the benefit of the treasury. This round sum or aggre- gate of £50,000, to be so loaned, was styled a bank, and was the first of the so-called loan banks, which were afterward authorized by nearly, if not quite, all of the colonies. In 1733 an issue of bills to the amount of £110,000 was made by the merchants of Boston, which were to be redeemed at the end of ten years, in silver, at the rate of 19 shillings per ounce. In 1739, the com- mercial and financial embarrassment still continuing, another land bank was started in Massachusetts. John Colman was one of the corporators. The stock of the land bank was to be £150,000. Xo one was permitted to subscribe more than £2,000, nor less than £100. The, subscribers were to pay down lawful monej' at the rate of 40 shillings for every £1,000 subscribed, and for the remainder M^ere to pledge security in lands to the satis- faction of the directoi's. They were to pay 3 per cent, interest per annum, either in bills of the bank or in produce and manufactures, at prices regulated by the directors. Circulating notes equal to the capital were to be issued, payable in twenty years in produce or manufactures, and 5 per cent, of the capital was to be paid annually in the notes, produce, or articles manu- factured. The " manufactures, being the produce of FIRST Paper money issued,- bubble act. 3 this province," were enumerated as follows : ' " Hemp, flax, cordage, bar iron, cast iron, linens, sheep's wools, copper, tanned leather, flaxseed, beeswax, bayberry wax, sail cloth or canvas, nails, tallow, lumber or cord wood, or logwood from New Spain." This scheme was strenuously opposed by Governor Belcher, but in spite of all opposition £49,250 of its notes were struck off, of which the treasurer of the company issued £35,582, and £-4,007 were employed by the directors in trade. A specie bank was also formed in 1739, by Edward Hutchinson and others, which issued bills to the amount £120,000, redeemable in fifteen years in silver, at 20 shil- lings per ounce, or gold pro rata. The payment of these notes was guaranteed by wealthy and responsible mer- chants. These notes, and those of a similar issue in 1733, were largely hoarded and did not pass generally into circulation. In 1740 Parliament passed a bill to extend the act of 1720, known as the bubble act, to the American colonies, with the intention of breaking up all companies formed for the purpose of issuing paper mone}'. Under this act both the land bank and the specie bank were forced to liquidate their affairs, though not without some I'c- sistance on the part of the former. The Governors of Massachusetts rendered themselves very obnoxious to the people by their determined opposition to these banks and to paper money generally,'^ and Governor Belcher ' An Historical Account of Massachusetts Currency, p. 103. By Joseph B. Felt. Boston, 1839. '•' The History of Massachusetts Bay, vol. ii. , p. 396. By Lieutenant- Governor Hutchinson. Boston, 1707. 4 UNITED STATES NOTES. was recalled to England on account of misrepresentations of the paper money advocates, but was subsequently ap- pointed Governor of Xew Jersey. The paper money of the colonies, whether issued by them or by the loan banks, depreciated almost without exception as the amounts in circulation increased. The bills as originally emitted were intended to be equal to coin, but when depreciation advanced to such an extent as to appal the authorities, a new set of bills would be issued, with new assurances that they would be kept equal to coin. In these new bills the old bills would be redeemable at their depreciated value. Sometimes this second set of bills, having also depreciated, was replaced by a third set in the same Avay. These various sets were designated tenors ; the terms old tenor, middle tenor, new tenor, new tenor 1st, new tenor 2d, being used to distinguish them. To give all the details of the depre- ciation of this currency in each of the colonies would re- quire much space ; but the best authorities agree that it underwent in all cases a'constant diminution in value, inflicting loss and misery upon all classes of citizens. Pelatiah Webster says of this paper and the continental currency: "We have suffered more from this cause than from any other cause or calamity. It has killed more men, pervaded and corrupted tlie choicest interests of our country more, and done more injustice than even the arms and artifices of our enemies." The following table^ gives the price of £100 in coin in the currencies of the several colonies in the year 171:8 : ' A Short History of Paper Money and Banking in the United States, p. 10. By Wm. M. Gouge. Philadelphia, 1833. VALUE OF PAPER MONET IN COIN. New England £1,100 New York 190 New Jersey £180 to 190 Pennsylvania 180 Maryland 200 North Carolina 1,000 South Carolina 750 Virginia £120 to 125 The emission of bills by the colonies and the banks was not regarded with favor by the mother country, and the provincial governors were as a general thing opposed to these issues. They were consequently frequently em- broiled with their legislatures. Felt, in his " Massachu- setts Currency," gives examples of this controversj'. Governor Belcher, in 1740, issued the following proclama- tion : " Whereas, a scheme for emitting bills or notes by John Colman, Esq., and others, was laid before the General Court in their session held the 5th of December, 1739, and by a report of a committee appointed by said Court, was represented, if carried on, to have a great tendency to endamage His Majesty's good snbjects as to their properties ; and whereas, application has been very lately made to me and His Majesty's Council, by a great number of men of the most considerable estates and business, praying that some proper method may be taken to prevent the inhabitants of this province being- imposed upon by the said scheme ; and it being very apparent that these bills or notes promise nothing of any determinate value, and can not have any general, certain or established credit ; wherefore, I have thought fit, by and with the advice of His Majesty's Council, to issue this proclamation, hereby giving notice and warn- 6 UNITED STATES NOTES. ing to all II is Majesty's good subjects of tlio danger they are in, and cautioning them against receiving or passing the said notes, as tending to defraud men of their sub- stance and to disturb the peace and good order of the people, and to give great interruption and bring much confusion into their trade and business." Subsequently, on KovemberG, of the same year, being assured that part of the military corps encouraged the circulation of the land bank paper, he published the fol- lowing : " I hereby warn all commissioned officers in the militia from signing or giving any countenance to the passing of the said notes of hand, directly or indirectly. And as I apprehend that if these should obtain a cur- rency, it will reflect great dishonor on His Majesty's Gov- ernment here, and be \&Yy detrimental to the public in- terests of this province and people, I do hereby declare my firm resolution, that if after this publick notice given, any of the military officers of this province persist in being any way concerned in or giving any encouragement "whatsoever to the passing of the said notes of hand, and full proof be made thereof to my satisfaction, I will im- mediately dismiss them from their said offices." These proclamations had but little effect. A gentleman writing to a correspondent in London, nnder date of February 27, 1741, says: " Whole troops, nay almost whole regi- ments either resigned or told their colonels, who ex- amined them, that they wonld resign rather than not encourage the bills." Later in the same year Governor Belcher writes to Thomas Hutchinson : " You say it would be much better if some other waj- than by appli- cation to Parliament could be found to suppress it (land bank). I assure you, the concerned openly declare they PAPER MONEY A CAUSE OF THE REVOLUTION. 7 defy any act of Parliament to be able to do it. They are grown so brassy and hardy as to be now combining in a body to raise a rebellion, and the day set for their coming to this town is at the election, and their treas- in-er, I am told, is in the bottom of the design, and I doubt it not. I have this day sent the sheriff atid his officers to appi'ehend some of the heads of the conspir- ators." These continued disputes, which largely curtailed the use of an expedient which the colonists considered necessary to their prosperity, together with the action of Parliament in restricting the issue of paper money, embittered the minds of the colonists against England, and had undoubtedly much to do with the final out- break. The Bubble Act, M'hicli laid an interdict on all banking associations having no legal charter within the dominions of the king, was passed by Parliament in 1720. In 17-iO another enactment was made, extending the provisions of the act of 1720 to the American colo- nies, where it had been disregarded. Banking in those days consisted merely in the piivilege of issuing circu- lating notes, and this act restricted all private enter- prises of this kind. On June 25, 1751, Parliament enacted a law forbidding paper money of the colonies to be passed, except for current expenses of the Govern- ment each year, or in case of invasion by the enemy. It seems also that these exceptional cases, where paper money was permitted, were to be under control of the Crown, as Mr. Bollan, the agent in London of the prov- ince of Massachusetts, wi-ites that he opposed the bill on the ground that it might open the way for the un- constitutional exercise of the king's authority in the 8 UNITED STATES NOTES. colonies in other matters. Legal tender paper money was prohibited by this act of Parliament, and in 1703 such issues were declared void ; but subsequently, in 1773, they were allowed to be received as legal tender at the treasuries of the several colonies. CHAPTEE 11. PAPEK MONET AUTHORIZED BY THE CONTINENTAL CON- GRESS. The second Continental Congress was convened in 1775, and, in order to raise funds, having no power to insti- tute taxation, naturally turned toward the expedient of an emission of paper money on the credit of the Union, but in the redemption of which each colony was to bear a part. The first issue was made in June, 1775. For a year these issues continned equal to gold ; in two years they had depreciated to 2 for 1 ; in three years to 4 for 1 ; in nine months more their relative value was 10 for 1 ; in September, 1779, it was 20 for 1. Con- gress now determined that the total issues should not exceed $200,000,000, and renewed the declaration that this currency should be redeemed in full, and went to some labor to prove that the States had the ability to do so. In March, 1780, these issues had so depreciated that their value, as compared with specie, M\as as 40 to 1. Congress now required the whole to be brought in for redemption at its market value in coin, and also author- ized the emission of new notes bearing interest at 5 per cent., and payable six years from date in silver and gold. These were to be exchanged in the proportion of 1 dollar of the new for 20 dollars of the old emission. 1* 10 UNITED STATES NOTES. During the year 1780 tlic notes of tlio old issue sank lirst to 75 to 1, then ceased to cirenlate in the States north of tlie Potomac. In Virginia and North Carolina they passed for a year longer, and finally depreciated to 1,000 to 1, and tlien ceased to circulate. According to Thomas Jeiferson, but 200 millions of tlie first emission was issued, wliicli was the amonnt au- thorized by resolution of Congress ; but other authorities state the amount much higher. Joseph Kourse, register of the treasury in 1828, places it at $21:1, 552,780. The amount as given in the treasury statement of 1843 was 8242,100,176. The aggregate loss to the people of tlie country from this currency was estimated by Secretary Woodbury at 8106,000,000. During the war paper money, distinct from the continental currency, was also issued by several of the States. The amount thus issued has been placed at §209,000,000, which is probably too high. It is, however, diflScult to obtain exact informa- tion in reference to these emissions. At the close of the war the minds of all classes were imbued with a wholesome antipathy to paper money, and as a consequence, when the Federal Constitution was un- der consideration, the power to emit bills, which in the original draft was given to the United States, %vas sti'ick- en out. Moreover, the original draft having contained a qualified permission to the States to issue paper money, an amendment was inserted which took away from the States all power to coin money, emit bills of credit, or make anything but gold or silver coin a tender in pay- ment of debts. It has been held that the lack of power on the part of a State to coin money, taken in connection with the prohibition of the emission of bills, prevents the VIEWS OF WEBSTER AND STORY. 11 issue of paper money by baiilcs chartered by the State, as uell as such issue by the State itself. Tliis view was hekl by Daniel Webster, in his speech on the Bank of the United States, on the 25th and 2Sth of May, 1832, and his arguments are quoted "vvith commendation by Mr. Justice Story, in his commentaries on the Constitution, as follows: "It will be hereafter seen that this (the power to coin money) is an exclusive power in Congress, the States being expressly prohibited from coining money. And it has been said by an eminent statesman that it is difficult to maintain, on the face of the Constitution it- self, and independent of long-continued practice, the doc- trine that the States, not being at liberty to coin money, can authorize the circulation of baidc paper as curi'ency at all. His reasoning deserves grave consideration, and is to the following effect : The States cannot coin money. Can they, then, coin that which becomes the actual and almost universal substitute for money ? Is not the right of issuing paper intended for circulation in the place and as the representative of metallic currency, derived merely from the power of coining and regulating the metallic currency ? Could Congress, if it did not possess the power of coining money and regulating the value of foreign coins, create a bank with the power to circulate bills ? It would be difficult to make it out. "Where, then, do the States, to whom all control over the metallic currency is altogether prohibited, obtain this power ? It is true that in other countries private bankers, having no legal author- ity over the coin, issue notes for circulation. But this they do always with the consent of the Government, express or implied ; and Government restrains and regulates all their operations at its pleasure. It would be a startling propo 12 UNITED STATES NOTES. sition in any other part of tlie world, that the prerogative of coining money hekl by the Gcerninent was liable to be defeated, euiuiteracted, or impeded by another pi'e- rogative, held in other hands, of authorizing a paper cir- culation. It is further to be observed that the States cannot issue bills of credit ; not that they cannot make them a legal tender, but that they cannot issue them at all. This is a clear indication of the intent of the Con- stitution to restrain the States as w^ell from establish- ing a paper circulation as from interfering with the metallic circulation. Banks have been created by States with no capital whatever, their notes being put in circu- lation simply on the credit of the State. "What are the issues of such banks but bills of credit issued by the State ? " Mr. Justice Story says : " This opinion was not peculiar to Mr. Webster ; it was maintained also by Hon. Samuel Dexter, one of the ablest statesmen and. lawyers who have adorned the annals of the country." ISTearly thirty years after. Chief Justice Chase, w^hen Secretary of the Treasury, in his report to Congress, of December 9, 1861, said : " It has well been questioned by the most eminent statesmen, whether a currency of bank notes, issued by local institutions under State laws, is not, in fact, prohibited by the national Constitution. Such emissions certainly fall within the spirit, if not within the letter, of the constitutional prohibition of the emission of bills of credit by the States, and of the mak- ing by them of anything except gold and silver coin, a legal tender in payment of debts." CHAPTER HI. BILLS OF CREDIT IN THE FEDERAL CONVENTION. The committee appointed by the Federal Convention held in Philadelphia on May 14, 1787, reported, on August G, a draft of the Constitution, which contained, in article thirteen, a clause giving qualified authority to the States to issue paper money, as follows: "No State without the consent of the Legislature of the United States shall emit bills of credit, or make anything but specie a ten- der in payment of debt." This clause, after discussion, was finally so amended as to read as follows : '' No State shall coin money, emit bills of credit, make anything but gold and silver coin a tender in payment of debts." The eighth clause of the first section of the seventh article of the Constitution, as presented for the consid- eration of the Convention, provided that " the Legislature of the United States shall have power to borrow money, and emit bills on the credit of the United States." This clause, as embodied in the eighth section of the first article of the Constitution as finally adopted, reads, " The Congress shall have power to borrow money on the credit of the United States." The debate ' on the question of striking out the words " and emit bills," is important, for the reason that the subject of making ' Madison papers, vol. iii., p. 1343. 14 UNITED STATES NOTES. bills of credit issued l)y the Government a legal tender, uas there for the first time discussed, aud was not sub- sequently at any time, as far as I am aware, discussed at any length by Congress, though it was twice presented for its consideration, until the Legal Tender acts of 1SC2 were brought before Congress for its consideration. This debate was as follows : " Mr. Gouverneur Morris moved to strike out, ' and emit bills on the credit of the United States.' If the United States had credit, such bills would be unneces- sary ; if they had not, nnjust and useless. Mr. Butler seconds the motion. Mr. Madison : Will it not be suffi- cient to prohibit the making them a tender ? This will remove the temptation to emit them with unjust views. And promissoiT notes, in that shape, may in some emer- gencies be best. Mr. Gouverneur Morris : Striking out the words will leave room still for notes of a re- sponsible minister, which Avill do all the good without the mischief. The moneyed interest will oppose the plan of Government, if paper emission be not prohibited. "Mr. Gorham was for striking out without inserting any prohibition. If the words stand, they may suggest and lead to the measure. Mr. Mason had doubts on the subject. Congress, he thought, M^ould not have the power, unless it were expressed. Though he had a mor- tal hatred to paper money, yet as he could not foresee all emergencies, he was unwilling to tie the hands of the Legislature. He observed that the late M-ar could not have been carried on, had such a prDhibition existed. Mr. Gorham : The power, as far as it will be necessary or safe, is involved in that of borrowing. " Mr. Mercer was a friend to paper money, though BILLS OF CREDIT IN FEDERAL CONVENTION. 15 ill tlie pi-escnt state and temper of America, he should neither propose nor approve of such a measure. He was consequently opposed to a prohibition of it alto- gether. It will stamp suspicion on the Government, to deny it a discretion on this point. It was impolitic, also, to excite the opposition of all those who were friends to paper money. The people of property would be sure to be on the side of the plan, and it was impolitic to purchase their further attachment with the loss of the opposite class of citizens. Mr. Ellsworth thought this a favorable moment to shut and bar the door against paper money. The mischiefs of the vari- ous experiments which had been made were now fresh in the public mind, and had excited the disgust of all the respectable part of America. By withholding the power from the new Government, more friends of influ- ence would be gained to it than by almost anything else. Paper money can in no case be necessary. Give the Government credit, and other resources will offer. The power may do harm, never good. Mr. Randolph, not- withstanding his antipathy to paper money, could not agree to strike out the words, as he could not foresee all the occasions that might arise. " Mr. Wilson : It will have a most salutary influence on the credit of the United States to remove the possi- bility of paper money. This expedient can never suc- ceed while its mischiefs are remembered. And as long as it can be resorted to, it will be a bar to other resources. Mr. Butler remarked that paper was a legal tender in no country in Europe. He was urgent for disarming the Government of such a power. Mr. Mason was still averse to tying the hands of the Legislature altogether. 16 rxm:/) states notes. If there wns no cxaiiii)lo in Europe, as just reinarked, it might be observed, ou the other side, that there was none in which the Government was restrained on this head. Mr. Head thought the words, if not struck out, would be as ahirniing as the mark of the beast in Reve- lation. Mr. Langdon had rather reject the whole plan than retain the three words, 'and emit bills.' " On the motion for striking out, Xew Hampshire, Massachusetts, Connecticut, Pennsylvania, Delaware, Virginia, Xorth Carolina, South Carolina, Geoi-gia, aye — 9 ; New Jersey, Maryland, no — 2. The clanse for borrowing money was agreed to, nem. con. Adjourned." Kine States voted to strike out, and two States to re- tain. Virginia voted in the affirmative, and in explana- tion of his vote, Mr. Madison appended the following note : " This vote in the affirmative by Virginia Avas oc- casioned by the acquiescence of Mr. Madison, who be- came satisfied that striking out the words would not disable the Government from the use of public notes as far as they could be safe and proper, and would only cut off the pretext for a, paj^er currenc)/, and particularly for making the bills a tender either for public or private debts." Mr. Martin, of Maryland, a delegate to the Federal Convention, who was in favor of i-etaining the words, in his address to the Legislature of his own State, soon after the proceedings of the Convention, said : ' " By ' " The Genuine Information delivered to the Legislature of Mary- land, relative to the Proceedings of the General Convention lately held at Philadelphia, by Luther Martin, Esq., Attorney General of Maryland, and one of the Delegates in the said Convention. Phil- adelphia: printed by Eleazer Oswald, at the Coffee House. 1788." PHILIPPIC OF DELEGATE MARTIX, OF MB. 17 our original articles of confederation, the Congress have a power to borrow money and emit bills of credit on the credit of the United States ; agreeable to which was the report on this system as made by the Committee of Detail. When we came to this part of the report, a motion was made to strike out the words, ' to emit bills of credit ; ' against the motion we urged that it M'ould be improper to deprive the Congi-ess of that power ; that it would be a novelty unprecedented to es- tablish a government which should not have such au- thority. That it was impossible to look forward into futurity so far as to decide that events might not hap- pen that should render the exercise of such a power ab- solutely necessary. And that we doubted whether, if a war should take place, it would be possible for this coun- try to defend itself without having recourse to paper credit, in which case there would be a necessity of be- coming a prey to our enemies, or violating the Constitu- tion of our Government ; and that, considering the ad- ministration of the government would be principally in the hands of the wealthy, there could be little reason to fear an abuse of the power by an unnecessary or injuri- ous exercise of it. But, sir, a majority of the Conven- tion, being wise be3'ond every event, and being willing to risque any political evil rather than admit the idea of a paper emission, in any possible case, refused to trust this authority to a Government to which they were lavishing the most unlimited powers of taxation, and to the mercy of which they were willing blindly to ti'ust the liberty and pi'opcrty of the citizens of every State in the Union ; and they erased that clause from the sys- tem." IS UNITED STATES NOTES. Fortj'-ciglit 3'ears later, in a speech in the Senate on the famous "specie circnlar'- in 183G, Daniel Webster said : " Most nnqnestionablj there is no legal tender, and there can be no legal tender in this country, under the autlioritj of this Government or any other, but gold and silver, either the coinage of our own mints or foreign coins at rates regulated by Congress. This is a Constitu- tional principle, perfectly plain and of the highest im- portance. The States are expressly prohibited from making anything but gold and silver a legal tender in payment of debts, and although no such express pro- hibition is applied to Congress, yet, as Congress has no power granted to it in this respect but to coin money and to regulate the value of foreign coins, it clearly has no power to substitute paper or anything else for coin as a tender in payment of debts and in discharge of contracts. Congress lias exercised this power fully in both its branches ; it has coined money, and still coins it ; it has regulated the value of foreign coins, and still regulates their value. The legal tender, therefore, the constitutional standard of value, is established and can- not be overthrown. To overthrow it would shake the whole system." CHAPTEE IV. TREASUKY NOTES AUTHORIZED UNDER THE CONSTITUTION. The Constitution was adopted on September 17, ITST, and three yeai'S thereafter, Hamilton, in his report of December 13, 1790, on a national bank, said : " The emitting of paper money by the authority of Government is wisely prohibited to the individual States by the national constitution ; and the spirit of that prohibition ought not to be disi-egarded by the Government of the United States. Though paper emissions, under a gen- eral authority, might have some advantages not applica- ble, and be free from some disadvantages M'hich are ap- plicable, to the like emissions by the States separately, 3'et they are of a nature so liable to abuse — and, it may even be affirmed, so certain of being abused— that the wis- dom of the Government will be shown in never trusting itself with the use of so seducing and dangerous an ex- pedient." Although notes of different forms were issued subsequently by the Government at various dates, some of which were receivable for all dues payable to the Govei'innent, no circulating notes were authorized to be issued which were payable on demand in coin, until the passage of the act of July 17, 1861, which authorized the issue of fifty millions of notes payable " on demand" and "receivable in payment of all public dues;" and no circulating notes were authorized, which by the terms of law were made a full legal tender, until the passage of the act of Februaiy 25, 1SG2, which was nearly seventy- five years after the adoption of the Constitution. Some 20 UNITED STATES N02ES. of the treasury notes, issued since the adoption of tlio Ooiistitntion, and previous to the passage of the Legal Tender act, were receivahle for all dues to the Govern- ment, and others not ; some were payable at a fixed date, both with and without interest ; some were fundable at any time after the date of their issue, others at a fixed date in United States bonds. During the late civil war, treasury notes were also is- sued of all these different forms, and also notes payable on demand, receivable for all dues to the Government, and others pa^^able to bearer, not receivable for duties on imports, or payable by the Government for interest npon the public debt, but in every other respect a full legal tender to and by the Government, and between the people in all payments. Postage currency Avas also issued, re- ceivable in payment of all dues less than five dollars ; and fractional currency, which was " exchangeable for United States notes " in sums of not less than three dollars. ISo notes were issued from 1789 to 1812, a period of twenty-three years. Kotes bearing interest were issned in the years 1812, 1813, 1811: and 1815, and at various dates from 1837 to 1847. They were again issued in 1857, and subsequently, in the years 1860, 18G1 and thereafter. The periods for the issue of these notes may be summarized as follows : first, the war of 1812 ; second, the financial crisis of 1837 ; third, the Mexican war; fourth, the financial crisis of 1857, or during the Buchanan administration ; and fifth, the war of the rebellion. It will thus be seen that there have been four emergencies in which Congress has seen fit to authorize interest-beai'ing notes, and only one in which it has authorized bills of credit or circulating notes paya- ble on demand in lawful money. CHAPTER Y. TREASURY NOTES OF THE WAR OF 1812. The original debt had, at the beginning of 1812, been reduced from seventy -iive millions to forty-five millions. In 1810 it was found impossible to meet all of the annual reduction of the debt required by law from the sinking fund, and a temporary loan was authorized to make np the deficiency, which amounted to $'2,750,000. This loan was paid tlie next year. In 1811, however, re- com-se was had to a loan, and the one authorized by Congress for that year was taken so slowly, that, in the month of May of the following year the Seci-etary of the Treasury, for the first time since the adoption of the Constitution, recommended the issue of treasury notes npon the following principle, viz. : " 1. Not to exceed, in the whole, the amount which may ultimately not be subscribed to the loan ; that is to say, that the amount received on account of the loan, and that of the treasury notes, shall not, together, exceed eleven millions ; M'liicli limits, therefore, the greatest possible amount of treasmy notes to less than $4,900,000. 2. To bear an interest of 5| per cent, a year, equal to one cent and one-half a cent per clay on a hundred dollar note. 3. To become pay- able by the treasury one year after the date of their re- spective issues. 4. To be, in the meanwhile, receivable in 22 UNITED STATES NOTES. payment of all duties, taxes, or debts, due to tlie United States." He did not propose that the notes should be fundable in the loan which they were intended to re- enforce. This recommendation of Secretary' Gallatin Avas niade in his letter of May 14, 1812, to Mr. Langdon Chcves, chairman of the Committee of Ways and Means of the House, and, in conformity therewith, a bill was reported by that Committee on June 12, 1812. War was declared against Great Britain June 18, 1812. The failure of the loan "was due to the fact that the money had to be borrowed from the ^'ery classes who iiad been opposed to the Avar ; therefore, when the bill for authorizing treasury notes was put npon its passage on June 16, it met with much opposition. It was argued that the notes under the bill Avere not equal in value to gold and silver, and would not be received by the banks or the people, who were prejudiced against Buch Government paper ; that if issued they could not be redeemed, and would depreciate ; that the measure would be subversive of public and private credit ; that it was a confession of impaired credit ; that to allow the notes to be deposited in banks and to accept bank paper in exchange was to depreciate the Government's paper ; that if issued, additional taxes should be im- ])Osed and set apart for the redemption of the notes, as in the case of the English exchequer notes ; that the pro- posed notes Avere the same as the old continental money, and Avould depreciate in the same Avay. Others opposed the bill simply because they opposed the Avar or any preparation for it. In case Avar proved unavoidable the necessary funds should be raised by taxes and loans. The shortness of the time for Avhich ARG UMENTS FOR AND A GAINST ISSUE OF NOTES. 23 tlie notes were to be issued was another objection. The public revenues would not meet tlie engagement, and engagements shoukl not be entered into without a certainty of fnliihnent. Taxes were necessary. It was a paUry expedient never suggested by IlamiUon or Woleott, and not even the spontaneous production of Gallatin ; that the first suggestion of tlie latter "was to authorize a loan on such terms as would have insured its success. It was a humiliating spectticle to exhibit the Government failino; in nesrotiatino- its first war loan. o o o On the other hand, the supporters of the bill n)ain- tained that the notes would be received by the banks in the same manner as any good individual paper was re- ceived. The banks would give the Government credit for them, and in return the Government could draw gold and silver from the banks. The notes would be even more valuable to the latter than specie, as they could be kept as an interest-bearing reserve. They would have currency, being receivable in duties, taxes, and debts due the Government, and, as interest accumulated, they would increase in value. In reply to the suggestions that money should be raised by taxes, it was stated that when, previously, measures of that kind had been pro- posed, the opposition had refused to consent. The issue of treasury notes, bearing interest at 5-| per cent, oidy, did not indicate bad, but rather good credit. In- dividuals in good credit could not borrow at less than 6 per ccTit. Thwe was no de})reciatiou of Govei'nment paper in exchanging the notes for bardc paper, as the latter was ready money, while the foi-mer were payable one year after date. It was denied that the peo])le had or would have any prejudice against treasury notes. 24: V KITED STATES NOTES. Tliey wci-e not prejudiced against bank notes, and the proposed notes bearing interest bad many advantages over bank paper. Tlie proposed notes would be in no way inferior to exchequer bills ; in fact, it was only want of credit that compelled the English Government to set aside certain revenues to meet the latter. The treasury notes would have two advantages over ex- chequer bills : one, the superior credit of the United States, and the other, that they M-ere receivable for taxes and public dues. They were also superior to pub- lic stocks, in that, Mdiile bearing interest, they also can serve as currency, the same as gold and silver, thus en- hancing the medium of circulation. There was no re- sendilance between them and continental money. When the latter M-as issued, the Government was de- pendent on the pledges of the several States for its revenues, but now its credit was above suspicion, its power to raise reveime complete, and' its ability to pay its debts undoubted. AVar was unavoidable. Both loans and taxes would have to be resorted to. The pro- posed notes were nothing but a loan with extraordinary advantages, taking, however, but little from the circulat- ing medium of the country. In many transactions they would have all the effect of money. ^Yhile not secured by any specific fund set apart for their redemption, the entire duties and taxes of the year are indirectly pledged for this purpose, since they ai'e receivable in payment of such duties and taxes. The revenugs of the 3'ear were estimated at eight millions, and the proposed issue of notes was five millions only. The faith of the Gov- ernment was pledged for their i-edemption. That faith had never been violated. The resources of the Govern- FIRST ISSUES UNDER CONSTITUTION, 1812. 25 nient wei*e ample beyond those of any other nation. Its sources of revenue were unimproved land, a produc- tive agriculture, an extensive connnerce, an entei'prising people, and an unlimited right of taxation. The antici- pated abuse of a privilege was no argument against its legitimate use. The bill passed the House June IT, 1812, yeas 85, nays 41. It passed the Senate June 20, and became a law June 30, 1812. By it the Pi'esident was autjiorized to issue treasury notes to an amount not exceeding $5,000,000. Section two of the first " Act to authorize the issuing of treasury notes," read as follows : " That the said treasury notes shall be reimbursed by the United States, at such places, respectively, as may be expi-essed on the face of the said notes, one year, re- spectively, after the day on which the same shall have been issued ; from which day of issue they shall bear interest at the rate of five and two-fifths per centum a year, payable to the owner and owners of such notes, at the treasury, or by the proper commissioner of loans, at the places and times respectively designated on the face of said notes for the payment of principal." They were signed by persons designated by the Presi- dent, and the compensation of these persons was fixed at one dollar and twenty-five cents each for one hundred notes signed. They were countersigned by the Com- missioners of Loans for the State in which the notes were respectively made payable. With the approval of the Pi'esident, the Secretary of the Treasuiy^ was authorized to boj'row money upon the security of the notes, and to pay them to such banks as would give the Govei'nment credit for them at par. When the notes were paid to 2 26 UNITED STATES NOTES. collectors of revenue and receivers of public money, the interest ceased on the day of payment. The Commis- sioners of the Sinking Fund wei-e authorized to cause the principal and interest to be paid when due, and to purchase them at nut more than par, in the same way as they purchased other public securities, with a view of reducing the debt. They were made payable to order, transferable by delivery and assignment on indorsement by persons to whose order they were made payable. The notes wei-e made everywhere receivable for duties, taxes, and in payment of public land, at their par value with accrued interest on the day paid in. Penalties were imposed for counterfeiting them, and an appro- priation made for the expense of printing and preparing the notes. There was nothing in the law regulating the denomi- nations in which they should be issued, but, as a matter of fact, none were issued of a denomination of less than one hundred dollars. The largest amount authoi-ized under this act, outstanding at any one time, was five millions. The notes authorized were all issued before the end of the year 1813, and were all redeemed during the year 1814. JViles' Iie^/iste?' for July 4, 1812, in an editorial, thus refers to the issue of these notes. The arguments used in favor of their issue were almost pre- cisely the same as those afterward urged by Chase and Fessenden in favor of the issue of seven-thirty and com- pound-interest notes : " To meet any possible exigency from a transient failure of adecpiate supplies to carry on the war against an unprincipled and inveterate enemy, it has been re- solved to issue certain notes from the treasury depart' NILE& REG 1ST EU FAVORS TREASURY NOTES. 27 iiiont, to tlie amount of about five niilliou dollars, bear- ing; interest of tive and two-fifths per cent, per annum, equal to, one and one-half cents per day on everjMiote of $100 — which notes are to become payable at the treasury' one year after the date of their respective issues, and in the meantime are receivable (with interest that may have accumuhited upon them) in all payments to be made to the United States, " This plan appears the most eligible that could possi- bly have been adopted, as it will mutually accommodate the Government and the people, and be advantageous to both. Yet attempts are niaking (what will not the enemy attempt ?) to depreciate the value of this intended emission, by comparing it with the old continental money. The pitifnl design will not avail, for though treasur}' notes to the valae of five millions may issue, the probability is that a ten thousandth part of tlie population of the United States will never see one of them. The whole will be locked in the vaults of the bank, or snugly put away by individuals as soon as they appear; because they will be convertible into current money (specie or bank notes) at a moment's notice, and have constantly inci'easing value. The sum to be issued is so completely within the means of the Government, that these notes will always bear a premium equal to the interest that may have accunmlated on them. The city of ]S[ew York itself, in the com-se of one year would consume the whole emission. The proposed op- eration of these notes is so perfectly understood by the trading part of the community, particularly on the sea- board, tliat an explanation of it may well be thought superfluous ; but as bad men may seize upon them to 28 UNITED STATES NOTES. alarm tlic i_ VJ ^ ■N Jxau ^0- .=^eaiel. ssf. r r r r SO ^ay.k /^^ -- r r '/O ^// r r r r J /;/ r r r r / ^ay. TREASURY NOTES OF THE MEXICAN WAR. 69 in the midst of the war the honor of the country must be sustained. Finally, with some slight amendments, the bill passed on January 27, 1847, by a vote of 43 to 2, and became a law on the following day. Notes issued under this act were not to be of a less denomination than $50, and were receivable in paj^ment of public dues, including duties on imports, and were redeemable at the expiration of one or two years, and the interest was to cease at the expiration of sixty days' notice. On page 67 is the form of a 6 per cent. $100 note issued under this act. {A j[>hoto-litJcogra]_)h of thin note is given at end of the vohime.') The principal of the notes w^as fundable into 6 per cent, bonds, redeemable after December 30, 1867, and this privilege was extended to the holders of notes issued under previous acts. Reissues were authorized, but the amount of stock and notes, at any one time, was not to exceed twenty- three millions. The right to issue treas- ury notes, under the act of July 22, 1816, was extended by the fifteenth section to the period fixed by these acts, and on the same terms, but the issue, under this section, was not to exceed five millions. $12,371,150 of these notes were issued previous to July 1, 1817, and $11,- 956,950 additional notes were issued during the next fiscal year. The whole amount of issues and reissues under the act was $26,122,100, all of which wci'e either sold or paid to public creditors at par. Tlie rate of in- terest of the notes was 5| and 6 per cent., and United States 6 per cent, bonds, chiefly for the purpose of re- deeming these notes, were issued under the same act, amounting to $28,230,350. CHAPTER YIII. TREASURY NOTES OF THE BUCHANAN ADMINISTRATION. The treasury notes issued under tlie act of Januarj^ 28, 184:7, were all retired, with the exception of about $200,- 000, previous to July 1, 1850, and no additional treasury notes were authorized, until the passage of the act of December 23, 1857. Secretary Cobb, in his report for that year, estimated that the receipts would exceed the expenditures, but said that the financial revulsion which had caused the banks to suspend specie payment in Octo- ber of that year, had also caused a large part of the duti- able merchandise to be stored without payment of duty, where it could remain under the law for three years, although it was probable that a considerable portion would be withdrawn and the duties paid previous to that date. Meanwhile, means should be provided for meet- ing the demands upon the treasuiy, and he recommended that authority should be given to issue treasury notes '•for an amount not exceeding twenty millions of dollars, and payable within a limited time, and carry a specified rate of interest." A bill, in accordance with the sugges- tion of the Secretary, was introduced into both Houses of Congress on December IS, 1857. It passed the Senate on the following day, by a vote of 31 to 18, and the House on the 22d by a vote of 118 to 86, and was ap- proved on the following day and became a law. The bill provided for the issue of notes payable in one year NOTES OF TEE BUCHANAN ADMINISTRATION. 71 from date of issue, to an amount not exceeding twenty millions. $6,000,000 were to be issued at a rate of inter- est not exceeding 6 per cent. The i-emainder was to be sold after public advertisement of not less than thirty days, at their par value, for specie, to the bidders offering to take them at the lowest rate of interest, not exceeding 6 per cent. The interest upon the notes was to expire, after maturity of notes, upon sixty days' notice from the Secretary, of his readiness to redeem such notes ; they were to be issued in denominations of not less than $100, and were to be signed by the Treasurer and Register ; they were receivable in payment of all dues to the United States. The whole amount authorized was issued, and the amount of issues and reissues, in all, was $.52,T78,900. The interest upon these notes was as follows : $6,323,600 at 3 per cent.; $985,000 at from 3^ to 4 per cent.; $688,- 000 at 4i per cent.; 10,055,700 at 4^ per cent.; $4,532,- 500 at 4f per cent.; $7,533,900 at 5 per cent.; $8,204,- 500 at 52- per cent.; $3,514,100 at 5| per cent; and $10,941,600 at 6 per cent. On page 73 is the form of a 3 per cent. $100 note issued under this act. The following table exhibits the different kinds of treasury notes outstanding which were issued from the organization of the Government to the date of tiie pas- sage of the act of March 2, 1861, and which had not been presented for payment on October 1, 1887 : Notes. Rate of Interest. Treasury Notes, 18-lti. Prior to 1S46 1 mill to 6 por cent. Treasury Notes, 1S46 July 22, ]S4i)jl mill to per cent. Treasury Notes, 1847. Jan. 2H, 1847 fl jier cent. Treasury Notes, 1857. Dec. 23, 1857 3 to 6 per cent. Principal 32,425 5,900 '.)50 700 Interest. $2,6C.2.06 300.60 57.00 40.7tj 72 UNITED STATES NOTES. The total public debt on June 20, 1860, was $64,Y69,. 703.08. The outstanding treasury notes issued under act of June 23, 1857, were $19,690,500. The amount of treas- ury notes outstanding, issued under acts previous to that date, was $105,111.64. The act of June 22, 1860, au- thorized a loan of twenty-one millions, at a rate of in- terest not exceeding 6 per cent., to be reimbursed within a period not more than twenty years, and not less than ten years. The money was to be used in the redemp- tion of treasury notes, and to replace any amount paid to the treasurer in sucli notes for public dues. Under this authority, proposals were invited by Secretary Cobb, on September 8, 1860, for ten millions of this loan, whicli amount was " ample to meet all the treasury notes that would fall due before January 1, 1861." In his report for December 4, 1860, he says : " The rate of interest was fixed at 5 per centum per annum, under the conviction that the loan could be readily negotiated at that rate, for, at that time, the 5 per cent, stock of the United States was selling in the market at the pre- mium of 3 per cent. The result realized this just ex- pectation, and the whole amount offered was taken, either at par or a small premium." Before, however, the time had arrived for payment on the part of the bidders, political complications arose, which affected the credit of the Government so unfavorably that the amount realized was but $7,022,000, the subscribers of $2,978,000 having failed to make good their subscrip- tions. The Secretary stated that, in the present condition of the country, capitalists were unwilling to invest in United States stock at par, and recommended a repeal of so much of the act of June 22, 1860, as authorized RECOMMENDATIONS OF SECRETARY COBB. 75 the issue of the additional stock, and asked for authority for the issue of treasury notes for the same amount, " to be negotiated at such rates as will command the confi- dence of the country." He recommended that the public lands be unconditionally pledged for the ultimate re- demption of all the treasury notes which it may become necessary to issue, and suggested, " that there should al- ways exist in the Department power to issue treasury notes for a limited amount, under the direction of the President, to meet unforeseen contingencies. It is a power which can never be abused, as the amount realized from such source can only be nsed to meet lawful de- mands upon the treasury. ]S[o Secretary of the Ti-easury or President would ever exercise it, unless conipelled to do so by the exigencies of the public service. On the other hand, it would enable the Government to meet, without embarrassment, those sudden revulsions to M'hich the country is always liable, and which cannot always be anticipated. I have already stated that provision should be made at once to relieve the treasury from its present embarrassment, produced by the causes referred to. To do this, Congress should authorize the issue of an additional amount of treasury notes, not less than ten millions of dollars ; with this means the Department would be enabled to meet all lawful demands upon it for the present. The extent of the financial crisis, through which the country is now passing, cannot now be determined, and until it is better known, no policy can be recommended of a permanent character." Secretarj'- Cobb resigned on December 10th, but the act of December 17, 1860, was passed in compliance with the suggestions contained in his report. The pledge T6 UNITED STATES NOTES. of the proceeds of the public land ^-as not given in the act, and one of the reasons for withholding such legis- lation Avas, that it would interfere with the passage of the homestead bill which, was then under consideration. The act authorized the issue of ten millions of treasury notes in denominations of not less than $50, redeemable in one year from the date of issue, with interest at the rate of G per cent., but the Secretary was authorized to issue such notes after advertisement at the lowest rate of interest offered. Of these notes, iive millions were of- fered to subscribers. The bids were opened December 28th, and only B500,000 were taken at 12 per cent. It was important to negotiate the loan, in order to meet the interest on Government bonds npon January 1st. The remainder of the loan was subscribed by the banks in Xew York, previous to that date, at 12 per cent. Gen. John A. Dix was appointed Secretary of the Treasury on January 11th, and bids for the remaining $5,000,000 were opened on the 19th, and the notes awarded at the average rate of 10| per cent., as follows : $10,000 , at 8f per cent. 30,000 9 10,000 Oi " 140,000 9i " 67,000 9f " 721,000 10 " 265,000 lOi " 543,000 lOi " 1,267,000 lOf " 1,947,000 11 Total.. 15,000, 000 Average, 1 Of per cent. BIDS FOR TREASURY NOTES UNDER SECY DIX. 77 The whole ten millions were issued, redeemable at the expiration of one year from date, bearing interest as follows : $70,200 at 6 per cent. ; $384,500 at rates va- rying from G to 10 per cent. ; $1,027,500 at 10 per cent. ; $3,688,700 at rates from 10 to 12 per cent. ; and $4,840,000 at 12 per cent. Additional offers bearing in- terest, ranging from 15 to 3G per cent., were declined. The amount of treasury notes outstanding on Decem- ber 1, 1860, previous to the passage of this act, was $14,599,700, of which $42,600 was payable in 1859, $3,133,400 in 1860, and $11,423,700 in 1861. Of these notes, $8,684,200 bore interest at 6 per cent., and the remainder at lower rates. Secretary Dix, in a letter to the Chairman of the Com- mittee of Ways and Means, dated January 18, 1861, says: " Within the last few days the amount of over-due treas- ury notes presented for redemption lias exceeded the power of the Treasurer to place drafts for payment on the Assistant Treasurer at JSTew York, where the holders de- sire the remittances to be made ; and an accumulation of warrants, to the amount of about $433,000, has accrued on this account in the Treasurer's hands, which he has been unable to pay." He also says : " That notice issued on the 18th ultimo invited proposals for the exchange of five millions of dollars for treasury notes, and oifers at 12 per cent, or less were made only to the amount of $1,831,000 ; ofeers to exchange $465,000 for notes bear- ing interest at I'ates varying from 18 to 36 per cent, were also received. The offers at 12 per cent, and less were accepted ; those above that rate were rejected. The remainder of the five millions offered was soon thereafter taken at 12 per cent., and the whole amount 78 UNITED STATES NOTES. was pledged to tlie payment of over-due trecasurj notes and other pressing demands on tlie treasury. * ^' During the last quarter, about eight millions of treasury notes were redeemed, which, with the two and one-half millions redeemed since the first instant, make ten and a half millions. The amount received from the loan, a small fraction above seven millions, threw upward of three and a half millions of these notes on the other re- sources of the treasury for redemption. This is one of the principal causes of the delay and difficulty which have recently existed in providing for other demands of public service." So low had the credit of the Govern- ment fallen, through the political agitations and troubles just previous to the War of the Rebellion, that he closed his communication by calling attention to the fact, that, '' there are deposited with twentj'-six of the States, for safe keeping, over twenty-eight millions of dollars be- longing to the United States, for the payment of which the promise of these States is pledged by written instru- ments on file in this Department. The annual statement of receipts and expenditures for the year ending June 30, 1860, represents this amount as part of the ' balance in the treasury ' on that day. * * I refer to this final resource as an available one, should the public ex- igencies demand it. It is not doubted that the greater portion of the amount so deposited would be promptly and cheerfully paid should an exigency arise involving the public honor or safetv. If, instead of cahing for these deposits, it should be deemed advisable to pledge them for the repayment of any money the Government might find it necessary to borrow, loans contracted on fiuch a basis of security, superadding to the plighted LOAN'S AND NOTES OF 1861. T9 faith of the United States that of the individual States, could hardly fail to be acceptable to capitalists." During the following month the act of February 8, 1861, was passed, which authorized a loan not exceeding twenty-five millions of 6 per cent, bonds, the avails to be used in the payment of current expenses, for the redemp- tion of outstanding treasury notes, and to replace in the treasury such amounts as had been paid in treasury notes. Of this loan, bearing 6 per cent, interest, and having twenty years to run, $18,415,000 was issued, at an aggre- gate discount of $2,019,776, or an average rate of $83.03 for $100. In less than a month after the passage of this act providing for the payment of the treasury notes out- standing, the act of March 2, 1861, was passed, which au- thorized a loan of ten millions at 6 per cent., redeemable upon three months' notice, after July 1, 1871, payable July 1, 1881, or, histead thereof, the issue of $10,000,000 of new notes in denominations of not less than $50, bear- ing interest at the rate of 6 per cent, per annum, payable semi-annually, receivable in payment of all debts due the United States, including customs duties, and redeemable at pleasure, within two years from the passage of the act. The same act largely increased the duties on imports, and authorized the substitution of treasury notes for the whole or a part of the loans previously authorized. Under this act, $35,364,450 in all, of treasury notes, were issued, of which $22,468,100 were redeemable in two years, and $12,896,350 redeemable in sixty days after date ; and a considerable portion of these notes were paid out to cred- itors. A new series of plates was prepared for each of the issues of treasury notes under the acts of January 28, 1847, December 23, 1857, and March 2, 1861. The size of the latter note was 74 by 3| inches. CHAPTER IX. TKEASUKT NOTES OF THE PERIOD OF THE CIVIL WAR. General Dix was succeeded by Secretary Chase on March 7, 1861. The great increase of import duties, imposed by the act of March 2d, had caused the bonds of the Government to advance in the market, and it seemed to be a favorable time to offer the remainder of the bonds authorized by the act of February 8, 1861. Bids for eight millions of the bonds were opened on April 2d. Offers at from 9-1 to par were received for $3,099,000, and 93^ for the remainder of the loans. All bids below 94 were rejected. In tlie midst of these negotiations it became known that arrangements were being made to send an additional force for the relief of Fort Sumter. Xo additional bonds were sold until May 31st, when $7,310,000 were sold at an average rate of $85.34 for $100. In place of bonds, five millions of treasury notes were offered, and the bids opened on April 11th amounted to only one million; but shortly there- after the whole amount oifered was taken. On the fol- lowing page is the form of a $50 note issued under the act of March 2, 1861. The United States 6 per cent, bonds were selling in the market at 83, and money at call was worth from 4 to 5 per cent. ; but the treasury notes bearing 6 per cent, interest could be held and used or sold BEGINNING OF TUE CIVIL WAR. 83 at a profit for the purpose of paying duties. Additional treasury notes of the same kind, as has been seen, were subsequently sold, amounting, in all, to more than thirt}-- five millions, at rates ranging from par to 1 iVti P^^" cent. premium. Civil war was inaugurated by the attack on Fort Sum- ter on April 12th. The fort surrendered on April 14th, and on the following day President Lincoln issued a call for seventy-five thousand soldiers. The Southern States were declared blockaded. Seven of these States had, by ordinances, publicly declared their secession from the Union, and their defiance of the national authority, and a convention at Montgomery, Alabama, had organized a new government, under the name of " The Confederate States of America." Massachusetts soldiers, on their way to Washington, were attacked by a mob in Balti- more. In the month of May the Confederate capital was removed to Richmond ; North Carolina and Arkan- sas seceded, and the Union army crossed the Potomac into Yirginia, and took possession of Alexandria and Arlington Heights. In June, Tennessee passed an or- dinance of secession, and General Butler was defeated at Big Bethel. The two-year treasury notes which had been recently issued at par were at 2|- per cent, discount ; and the Government, instead of disposing of the notes, borrowed five millions at sixty days upon them as col- lateral security. During the following month the disas- trous results of the first battle of Bull Run startled the entire country. The Union army, defeated, fell back upon Washington, and the capital of the country was believed to be in danger. Two days thereafter, Presi- dent Lincoln called for five hundred thousand three-year 84: UNITED STATES NOTES volunteers. An extra session of Congress had been called for Jnlj 4, 18G1, and on that day, amid events like these, Secretary Chase transmitted his first report to Congress, which recommended measures to provide the means for continuing a civil war which proved in magnitude to be unequalled in the history of nations. Specie payments were suspended on December 28, 1861. The war was carried on chiefly by the use of treasury notes as a circulating medium. The purchasing po\ver of these notes rapidly declined. Prices of all kinds advanced rapidly, and particularly the prices of articles most needed for the supply of the army. The expenditures of the Government during the four years of the war were vastly increased beyond the amount which would have been necessarj^ if the war could have been conducted upon the gold standard, instead of upon the fluctuating standard of the legal tender paper dollar. Kever was a great national debt contracted so rapidly. In 1835, as has been seen, the countiy was entirely out of debt. General Lee surrendei'ed at Appomattox, on April 9, 1865 ; which date was four years, lacking five days, after Fort Sumter had surrendered to the enemy. On the first day of July, 1861, the debt was 90 millions ; at the close of that fiscal year it had reached 524 mil- lions ; at the end of the succeeding year, it was consid- erably more than twice that amount, being on July 1, 1863, 81,119,772,138. During the follownig year it in- creased nearly 700 millions. For the next nine months, to the close of the war, it increased at the rate of about sixty millions a month. An immense amount of obliga- tions against the Government were presented, after the close of the war, and for the five months thereafter the TREASURY NOTES OF THE CIVIL WAR. 85 ascertained debt increased at tlie rate of three millions a day. The cost of conducting the war, after it was once fully inaugurated, was scarcely at any time less than thirty millions a month. At many times it far exceeded that amount ; sometimes it was not less than ninety millions a month, and the average expenses of the war, from the date of its inception to its conclusion, may be said to have been not less than two millions each day. The public debt reached its maximum on August 31, 1S65, at which day it amounted to $2,845,907,626.56. Of this amount, $1,109,568,191 was in funded debt ; $1,503,020 was debt which had matured ; and $2,111,000 was in suspended requisitions. The remainder was as follows : United States legal tender notes $433,160,569 00 Compound interest legal tender notes 217,024,160 00 Five per cent, legal tender notes 33,954,230 00 Seven-thirty notes 830,000,000 00 Fractional currency 26,344,742 51 Temporary loans 107,148,713 16 Certificates of indebtedness 85,093,000 00 Total $1,732,725,414 67 There were more than 684 millions of these obligations which were a legal tender, of which 217 millions were bearing compound interest at the rate of 6 per cent. ; 830 millions were in treasury notes, bearing interest at the rate of 7/^- per cent, per annum. There were $1,540,483,701 of treasur}^ notes, either payable on de- mand or bearing interest. If thetemporary loans, which were payable in thirty dayn from the time of deposit. after iiotice of ten days, and the certificates of indebtedness, 86 UNITED STATES NOTES. Avliicli bore interest at per cent., payable one year after date, 01' earlier, at the option of the Government, are in- eluded with the treasury notes, the whole would amount to considerably more than three-fifths of the whole pub- lic debt of the country. Secretary Chase, in his report, estimated the whole sum required for the fiscal year to be not less than 318 millions, of which 215 millions would be required for the war and naval service ; more than twelve millions (§12,639,861. 61) to pay treasury notes due and to be- come due, and nine millions to pay interest upon the proposed new debt. He M-as of the opinion that not less than eighty millions sliould be provided by taxation, and 240 millions obtained by loans. The principal part of the revenue was to be obtained from the tanff, the remainder by a system of direct taxation or internal duties. Six per cent, bonds, amounting to $18,415,000, had already been sold at from par to $85.34 for $100, and treasury notes bearing interest at 6 per cent, had been paid to creditors. He considered that " in a contest for national existence and the sovereignty of the peo- ple, it is eminently proper that the appeal for the means of prosecuting it with energy to a speedy and successful issue sliould be made, in the first instance at least, to the people themselves." Among other recoroinendations, he proposed a loan of 100 millions, to be '.esued in the form of treasury notes, or exchequer bills, bearing interest at the rate of T^\ per cent., to be paid semi-annually, and redeemable at pleas- ure, after three years from date. The interest at this rate M^as suggested, because itAvas liberal to the subscrib- ers, convenient for calculation, and, under existing cir- UHA8E RECOMMENDS SEVEN-THIRTY NOTES. 87 cumstances, a fair rate for the Government. The rate would be convenient for calculation ; for, the interest being equal to one per cent a day on $50, two cents a day on $100, ten cents on $500, twenty cents on $1,000, and one dollar on $5,000, it would be only necessary to consider the number of days since the date of the note, to determine, at the close, the amount due on it. It was proposed to issue these notes in sums of fifty, one Inm- iired, five hundred, one thousand, and five thousand dol- lars, with the amount of interest for specified periods engraved on the back of each note, and the facility thus secured to the holder of determining the exact aniount of interest, it was thought, would enhance its value. "While the rate proposed is thus liberal and convenient, the Secretary regards it also as, nnder existing circum- stances, fair and equitable to the Government. The bonds of the United States, bearing an^interest of 6 per cent., and redeemable twenty years after date, cannot be disposed of at current market rates, so that the interest on the amount realized will not exceed Ty^y- per cent.; nor is there any reason to believe that treasury notes, bearing an interest of 6 per cent., receivable for public dues and convertible into twenty years' 6 per cent, bonds, can be disposed of in any large amounts, so that the interest on the sum realized will not fall much, if at all, short of the rate proposed. For the difference of interest, if any, be- tween such notes and those of the proposed national loan, the Secretary thinks that the absence of the feature of receivability for public dues in the latter is a sufificient compensation." He also proposed notes ot small denomi- ' nations, ten, twenty, and twenty-five dollars, payable one year from date, to an amount not exceeding fifty mil- 88 UNITED STATES NOTES. lions, bearing interest at the rate of ^{'{\ per 'U'lit., to be exchanged for the other form of treasury notes, bear- ing interest at Y-j\, or, if more convenient, made redeem- able in coin, on demand, without interest. " The great- est care," he said, "-will, however, be requisite to prevent the degradation of snch issues into an irredeemable paper currenc}", than which no more certainly fatal expedient for impoverishing the jnasses and discrediting the Gov- ernment of any country can well be devised." Treasuiy notes authorized by the acts of June 30, 1812, February 24, 1815, and thi-ee intervening acts, bore in- terest, as recommended by Secretary Gallatin, as has been seen, at the rate of 5f per cent, a year, and were receivable in payment of all duties and taxes laid by the authority of the United States, and for all public lands sold by said authority ; and when so received, interest was to be computed at the rate of " one cent and one-half a cent per day" on every one hundred dollars of principal, each month being I'eckoned as thirty daj's. It is prob- able that the proposition for the issue of the seven-thirty notes was obtained from this act, for a substitute was proposed for the legal tender act which passed tlie House of Representatives February 6, 1862, which con- tained a section providing for the issue of transferable certificates bearing interest at the rate of 5f per cent, per annum. These recommendations of the Secretary were em- bodied in the acts of July 17 and Augitst 5, 1801. The first was passed by nearly the unanimous vote of the House, only five votes (one from Kentucky, two from Missouri, one from Oliio, and one from Xew York) hav- ing been against it. It authorized the Secretary to bor- DEMAND NOTES REFUSED. S?' row 250 inillions, citlicr in twenty -year treasury notes, with interest not exceeding 7 per cent., or in seven-thirty three-year treasury notes, and to issue demand notes, bearing no interest, and receivable for public dues. Tliese latter notes were limited to fifty millions, and to denominations of not less than ten dollars. But the act of August 5th authorized the issue of five-dollar notes; also twenty -year 6 per cent, bonds for the amount of the seven-thirty notes issued, which bonds were to be used only in excliange, or for the purpose of funding such notes. Under these acts, nearly 140 millions of seven- thirty notes were issued, and sixty millions of demand notes, without intei-est ; ten millions of these notes hav- ing been authorized by the act of February 12, 1862. The first demand notes were issued in August, and paid for salaries at "Washington. They were received with reluctance, and the merchants and shop-keepers endeavored to discredit them. Railroad corporations refused them in payment of fares and freight ; and lead- ing banks in the city of Kew York refused to receive them except on special deposit. The Secretary and other ofiicers of the treasury signed a paper agreeing to accept them in payment of salaries. A circular was issued to the various assistant treasurers, stathig that treasury notes of the denominations of five, ten, and twenty dollars had been, and will continue to be issued, redeemable in coin on demand in Boston, New York, Philadelphia, St. Louis, and Cincinnati. Gen. Scott also issued a circular on September 3, 18G1, announcing to the army, " that the Treasury Department, to meet future payments to the troops, is about to supph-, besides coin, treasury notes in five, ten, and tv/enty dollars, as 90 UNITED STATES NOTES. good as gold in all banks and GovcrninoTit ofTices through out the United States, and most convenient for tianKniis- sion bv mail fi'om the officers and men to their families at home." Of these notes §24,550,325 were issued before December 1st, and 133,400,000 were in circula- tion at the time of the suspension of specie payment on December 2Sth. The whole amount authorized was issued prioi- to April 1, 1802. On page 91 is the form of the demand note, the size of which was precisely the same as the greenback, now in circulation. Notwithstand- ing the circular of the Secretary, it became necessary to use the available coin in payment of the interest upon the public debt, and there was at times some difficulty in redeeming the notes promptly in gold. Z' At a meeting of the associated banks in the city of Kew York, in January, 1862, it was resolved, "That ) before we receive such notes, we must require that snch legal provision be made by Congress as shall insure their speedy redemption, and that a committee of the associa- tion be appointed to consider the subject and report on it at an adjourned meeting." The notes were receivable for duties, and soon obtained good credit. After the suspension of specie payment, efforts Avere made to retire ' them as rapidly as possible, for as they were receivable for duties, they embarrassed the Government in provid- ing for the gold interest upon the public debt. On July 1, 1863, more than fifty-six millions had been re- tired, and a much larger amount of legal tender notes had been placed in circulation. The demand notes were not, by the terms of the law, made payable in gold, but as they were authorized prior to the suspension oi specie payment, and proclaimed as payable in coin by the 10 M X X X ^ X V V X •^ ^ V X V, >ll X v^ X X ^ -^ 6a ^ S «3 Uj § &: r^ Cj !^ . >s t^ < "X 1 — . •V K 'N ;\ »^ ^ Vi a: >^ cs ■& .a; ■s> S 01 X X X =» ^? yable the easure at Phi ^ ^ t'j ^ % ^ ^ X X X X X X X SEVEN-THIRTY LOAN OF 18G1. 93 circular of the Secretary, tliey were considered so pay- able, and, after the suspension of specie payment, were quoted at times at about the same premium for legal- tender notes as gold. Interest upon the first issue of the seven-thirty notes was paid in gold. These notes were fundable into twent}^- year 6 per cent, bonds of 1881, and but few were pre- sented for pajanent. The amount redeemed in money to November 1, 1864, was only $63,500, while the whole amount converted into bonds to that date was $125,864,- 900.' The seven-thirty loan was successfully negotiated through the associated banks of Xew Yoi'k, who, jointly with the banks of Boston and Philadelphia, made a con- tract with the Secretary on August 15, 1861, for tlie purchase of Government securities to the amount of 150 millions, in three different instalments. The total amount taken by the New York banks was 105 millions. Whenever subscriptions were made, 10 per cent, was paid to the Assistant Treasurers in New York, Boston, and Philadelphia, and the remainder was placed to the credit of the United States on the books of the banks subscribing. The arrangement of tl;e associated banks among themselves was to issue certificates to each sub- scriber, stating the amount so subscribed, and placed to the credit of the Government ; and, as such deposits w^ere withdrawn, or paid into the treasury, seven-thirty notes were issued for the same amount to the subscribers respectively. An immediate issue w\as to be made of seven-thirty treasury notes, dated August 15, 1861, to the extent of fifty millions, bearing interest from that • Finance Report, 18G4, p. 10. 94 UNITED STATES NOTES. date. The associated banks were to take jointly tliis amount at par, ^-ith the privilege of iifty millions on October 15th, and iifty millions on December 15tli ; the banks ii;iving their decision on the iirst days of these months. It was understood that, if the whole amount should be taken, no other Government stock or treasury notes, except demand notes, should be negotiated or paid out by the treasury until February 1, 1862, The details of this negotiation, which was perhaps the most impor- tant one during the war, are given in the Bankers' Mag- azine for September, 1861, and August, 1862. ^ The report of June 12, 1862, of the Loan Committee of the Associated Banks of Kew York, states that, at the time the negotiation was made, " the credit of the Gov- ernment had become impaired to such a degree that a large loan could not be obtained in any ordinary way, nor even a small temporary loan, except for a very short period at a high rate of interest. Men's hearts failed them ; the rebellion was on so large a scale, and had so unexpectedly broken out and raged with such fury, that to subdue it seemed to most persons to be impossible. Then it was, after careful deliberation and consultation Avith the SecretaiT, that the baidcs decided it to be wise for them to depart from their usual legitimate business, and sustain the Government credit, and stand or fall with it. This act restored the public confidence, and was the highest indorsement of the public credit that could then have been given. * * When the banks agreed to advance this large amount to the Government, they did so without hope or expectation of profit from it, and they earnestlj^ sought to obtain from the Govermnent the assurance that they should be indemnified from loss. REPORT ASSOCIATED BANKS OF NEW YORK. 95 It was not nntil five montlis after taking the first loan, and two months after taking the tliird, in the month of January last, that there was any reason to expect the securities to command in the market a price higher than that at which they had heen taken. * * Much douht was expressed, even by our most experienced bank- ers and financiers, when the contract was entered into, of the ability of tlie banks fo fulfil it. It has been ful- filled by them to the letter, and has proven of more value to the country than can be estimated. As foitu- nately as unexpectedly, it has resulted profitably for the associates, and has probably enabled them to employ their means to nearly as much advantage as would have been done but for the political disturbances of the country." Secretary Chase, in his report for December 9, 1861, thus refers to this negotiation : " Representatives from the hanking institutions of the three cities, responding to his invitation, met him for consultation in New York, and after full conference, agreed to unite as associates in moneyed support to the Government, and to subscribe at once a loan of fifty millions of dollars, of which five millions were to be paid immediately to the Assistant Treasurers, in coin, and the residue, also in coin, as needed for disbursement. The Secretary, on his part, agreed to issue three-year seven-thirty bonds, or treas- ury notes, bearing even date with the subscription, and of equal amount ; to cause books of subscription to the national loan to be immediately opened ; to reimburse the advances of the banks, as far as practicable, from this national subscription ; and to deliver to them seven- thirty bonds, or treasury notes, for the amount not thus 06 UNITED STATES NOTES. reiinbnrsed. It was further understood, that the Secre- tary of tlic Treasury should issue a limited amount of United States notes, payable on demand, in aid of the operations of the Treasury, and that the associated insti- tutions, when the first advance of fifty millions should l)e expended, would, if practicable, make another, and, when that should be exhausted, still another advance to the Government of the same amount, and on similar terms. * * All these objects were happily accomplished. Fifty millions of dollars were immediately advanced by the banks. The Secretary caused books of subscription to be opened throughout the country, and the people subscribed freely to the loan. The amounts thus sub- scribed were reimbursed to the banks, and the sum re- imbursed, though then covering but little more than half the amount, enabled those institutions, when a second loan was required, to make a second advance of 850,000,000. Thus, two loans, of 850,000,000 each, liave been negotiated for three-year seven- thirty bonds, at par. The first of these loans was negotiated, and the first issue of bonds bears date, August 19, the second October 1, 1861." On November 16th, a third loan was negotiated with the associated institutions, under the seventh section of the act of August 5, 1861, the Secretary agreeing to issue to them fifty millions of dollars in 6 per cent, bonds, at a, rate equivalent to par, for bonds bearing 7 per cent, interest, authorized by the act of July IT, 1861. The following table gives quotations of United States 5 and 6 per cent, bonds, of treasury notes and of gold, at the dates stated, compiled from tables in Hunt's Mev chants^ Magazine for 1862-63-64. I QUOTATIONS OF BONDS, NOTES, AND GOLD. 07 Yeap.b and Months. 18()2. February 5 March 1 April 1 May 30 June 7 July 5 AuKiist 2 September (i October 4 November 1 December G 18C3. Jannarj' 3 February 7 March 7 April 4 May 2. June 6. July 1 1 . August 1 September 5. October 3. November 7. November 27. 1864. January 2. February 6. March 5 . 6V, 1801. S: ^"'-'- April 2 May 7 June 4 July 11 August 6 September 3 October 1 November 5 December 12 m)4 9:i lO.'i lUdH' ]0.1>^ 104 101 92 99 '4- 104^ 1(B3<^ 104 1(141^ HM% KJfi 107 108 108 104?^ 107 '4 nv4 111 113 109 106 L^ 107 lOfi 1073^ 108>9' P9 t*2>^ 9.J 105 106 lOO'i 9S>^ 99'^' ]04j^ 1W34 104 10034 105 106% 108 i^ 105 105';^ 106 109 lOO 105,V 107i^ 111 110 113 113!:^ 102?:i- 10.51^ 107 m\}4 108?^ 0! M t B « "S o a 5 S in tP So '^f^Vi >-'5;tf 9!»>^ 87 «tji 965^' »1 104 99% 100'^ !I6 106)^ 1001^^ 101 m 102 98^'^ 1051^ 85!^ Wiy, ^y W.b}i 88>? 1031-4^ 99 108 94 105U 94 122;^ Vf^H ]05« 991^ 126'.^ 91 /'l? 104 97>^ 125 8S^ 102M %'i-i 129 85 .'^ 102 94 155 913^ 105 ^y 153 973^ 104,5^ 99 1 Yekr Certifi- cate.s New. my. ms% 102 my <>9 107 101 5^: VTi^ 97}^ 106 100 ?i 98?< 96>^ 106;^ 101 99% 95 106 100'^ «9% 95 106 >:i lon^ 99 ?i 98 107 101>^ 98% 1» imy 101><< 98 96 106X my W5^ io:> 108 1025^ 98?^ 100 111 103M 99% 100 111 99M 102 iwy i>8>i 102 1093;i 98 102 KS}4 94 >^ 99 my m}4 100 111 93% 103 1103i 94 Ji 100 iiiGK 953« 100 12U 97M ]02i^ 102 103% 104 Jg 109% 115 !< 1193^ 123 131 3^ 132 134)^ ir.7% l."i5>^ 1553:^ i.-^o;^ 145% 1323^ 1293< 131M 143% uoy 152 159 5^ 161% 166?^ l'<2% 191 i;85 243^ 193^4 214?^ 237X About three years after the passage of tlie act author- izing tlie first issue of seven-thirty notes, another act was passed, on June 30, 1864, authorizing 200 millions of similar notes, and a subsequent act of March 3, 1865, authorized (>00 luillions in addition, and under this act the whole amount (including $29,992,500 of reissues), was 5 08 UNITED STATES NOTES issued. Of this ainoiuit forty-four uiillious were in de- nominations of fifty dollars ; 137 millions, in one hun- dreds ; 2:28 millions, in five hundreds; 370 millions, in one thousands; and about fifty millions, in five thousands. They M-erc issued in three series, dated x\ugnst 15, 1864, June 15, 1865, and July 15, 1865. These notes, like those that preceded them, Avere fundable into ])er cent, bonds — the former into eighty-ones, and the latter into five-twenties — and this fact M-as printed upon the reverse of each note. The 800 millions last issued Mere payable, principal and interest, in la\vf ul money. More than twenty millions, which wei'e authorized by the act of June 20, 1864, were paid to the soldiers direct. Of the 600 millions, authorized by the act of March 3, 1865, seventy millions wei'e issued during that month, and the whole remainder was taken during the following four months. Secretary McCulloch, in his report for December 4, 1865, thus refers to the negotiations and issue of the remaining 530 millions of these notes: "Upon the captui-e of liichmond, and the surrender of the Confed- erate ai'uiies, it became appai'ent that there M'ould be an early disbanding of the forces of the United States, and consequently heavy requisitions from the AVar Depart- ment for transportation and payment of the army, in- cluding bounties. As it was important that these requisitions should be promptly met, and especially im- portant that not a soldier should remnin in the service a single day for want of means to pay him, the Secretary perceived the necessity of realizing as speedily as pos- sible the amount— $530,000,000— still authorized to be borrowed under this act. The seven and three-tenths notes had proved to be a popular loan, and although a SEVEN- THIRTIES OF 1864-5. 99 secni'ity on longer time and lower interest would have been more advantageous to the Government, the Secre- tary considered it advisable, under the circumstances, to continue to offer these notes to the public, and to avail himself, as his immediate predecessors had done, of the services of Jay Cooke, Esq., in the sale of them. The result was in the highest degree satisfactor3^ By the admirable skill and enei'gy of the agent, and the hearty co-operation of the national banks, these notes were dis- tributed in eveiy part of the Xorthei'n and some parts of the Southern States, and placed within the reach of every person desiring to invest in them. No loan ever offered in the United States, notwithstanding the large amount of Government securities previously taken by the people, was so promptly subscribed for as this. Before the first of August the entire amount of $530,000,000 had been taken, and the Secretary had the unexpected satis- faction of being able, with the receipts from customs and internal revenue and a small increase of the tem- porary loan, to meet all the requisitions upon the treas- ury." On page 101 is the form of the seven-thirty note issued under the act of March 3, 18G5, with one coupon attached. The whole half 3'ears interest was payable with the note, and there were five coupons upon the right end of the note. The size of the note was 3| by 11^ inches, in- cluding the coupons, which were 3^ inches in width. On the revei'se was printed these words : " Pay to bearer. At maturity convertible at the option of the holder into bonds redeemable at the pleasure of. the Government, at any time after five years, and payable twenty yeai's from 100 UNITED STATES NOTES. Jnlv 15, ISGS, Avith interest at per cent, per annum, pavable seuii-anniially in coin." During the month of Julv, 1802, gold was at a pre- mium for legal tender notes of from 10 to 15 per cent., and demand notes, which were receivable for customs, at a premium of about 8 per cent. The subsidiary silver coinage authorized by the act of February 21, 1853, was about 7 per cent, less in intrinsic value than the silver dollar, and this difference in weight was authorised, so that it might be retained in the country for purposes of change. This silver coin soon began to disappear. Con- siderable amounts were hoarded in the Xorth and South, and larger amounts were exported to Canada and South America ; and a premium of from 10 to 13 per cent, was offered for small amounts by business men who de- sired it for convenience in making change. Many in- dividuals as well as corporations issued small obligations, or " shinplasters," such as had been issued in 1812 and 1837. Postage stamps were used to a considerable ex- tent for purposes of change. The Postmaster-General, in his report of December, 1862, says: "In the first quarter of the current year, ending September 20th, the number of stamps issued to postmasters was one hundi-cd and four millions; there were calls for about two liun- dred millions, which would have been nearly sufficient to meet the usual demand for a year. This extraordi- nary demand arose from the temporary use of these stamps as a currency for the public in lieu of the smaller denominations of specie, and ceased with the introduction of the so-called ' postal currency.' '' On July 17, 1862, an act was passed which authorized the issue of " postage and other stamps of the United Pay Hearer f 1.82^-11'0 JaiV'y 15tA 1868 for hth nixmonths interest on ^ix per cent $60 U. S. Treas'y Note No. 123,150 JF. £!, Sphiner. Gold Option Treaa. uf tlie U. S. s.s 'umuuv j,9d }V9Q J,9d XtS fo 9}VJ, 9111 %V 910}^ m[% UO '}S9J,9fU} 911} utoQ m duifivd fo pifiui axii ii9dx9S)j, }U9muu,9aof) 9i[j^ ■t,'98 i Vi UOMji[ /opy H 0£^ 09 09 E POSTAGE STAMPS-POSTAGE CURRENCY. 103 States ;" which were receivable in exchange for United States notes, and in payment of all dues to the United States, in sums of not less than five dollars. Under this law, notes of the denominations of 5, 10, 25 and 50 cents were issued, and the denominations of 5 cents were printed on brown tinted paper, witli an engraved head of Jefferson, which was the exact counterpart of that used on the five-cent postage stamp. On the twenty-five- cent note the head of Jefferson was five times repeated. The form and size of these notes are given on pages 105-7. The ten-cent note was printed in green, with the head of Washington, the counterpart of that used on the ten-cent postage stamp. Upon the fifty-cent note this vignette was five times repeated. The form and size of the ten-cent and fifty-cent notes are given on pages 106-8. These notes were issued in the month of August, 1862, and were termed " postage currency,"" and continued in use until they were replaced by the fractional currency authorized by section four of the act of March 3, 1863. The previous act prohibited private corporations, bank- ing associations, and individuals from issuing or circulat- ing notes for fractions of a dollar, and imposed a pen- alty, upon conviction, of a fine not exceeding five hundred dollars, and imprisomnent not exceeding six months. The law did not prohibit the issue of frac- tional currency by cities, and considerable amounts were placed in circulation by various municipalities, notwith- standing that in many of the States, laws had been passed in the year 1837, or prior thereto, prohibiting such issues. The amount of fractional currency \vas limited to fifty millions of dollars, and denominations of from 1<»4: UNITED STATES NOTES. three cents to fifty cents were issued, wliich were ex- changeable for United States notes in sums of not less than three dolhirs. On the days on which this small currency was first issued to the public, the offices of the Assistant Treasurer in New York and in other cities were thronged with long lines of people anxious to obtain this paper currency to supply the deficiency caused by the with- drawal of silver coin. On account of the scarcity of one and two-dollar notes and of fractional currency, whole sheets of these notes, when they were first issued, were paid to the army, and subsequently were so cut that four 25-cent notes were used in place of' a one-dollar note, and four fifty-cent notes in place of a two dollar note, and in this form considerable amounts were paid out. These notes were universally used for small change in and out of the army. The total issue of " postage cur- rency," which commenced August 21, 1862, and ceased May 27, 1863, was $20,215,635. $^,282,082 was out- standing on April 1, 1884, of which $1,028,332 was in de- nominations of five cents; $1,243,974 in ten cents; $1,- 039,203 in twenty -five cents, and $970,572 in denomina- tions of fifty cents. The total amount of issues and reissues under both acts was $368,720,074. These little notes were stuffed in the trowsers pocket of the soldier, with the jack-knife, the cartridge, the plug of tobacco, and other handy articles, and soon became imfit for cir- culation. They wore out rapidly and became ragged and filthy, and were frequently returned for redemption. The first issues under the act of March 3 commenced on October 10, 1863, and ceased on February 15, 1876 ; and an act was passed on April 17th, of the latter year, directing the Secretary to replace this circulation by the [obverse.] POSTAGE CUMMENCT Furnished only by the Assistant Treasurers and Designated Dejiasitaries of the U. S. — . [■ U.S. Postage 1 _. \ Five <;eiits ^ EECEIVABLE FOE ( TT C ( POSTAGE STAMPS At Any 1 U.O. ) PobX Office. [rever.se.] EXCHANGEABLE FOR UNITED STATES NOTES By any Assistant C = g cj Treasurer or designated U. S. \ r- 1 Depositary in Receivable in f 5 5 5 5 payment of all dues to the U. States less than V\\lt DO\.\.kRS. ACT APPROVED JULY 17, 1862. [oirVTRSE.] POSTAGE CUMMJEWCT Furnished only by the Assistant Treasurers and Designated Dej>ositaries of the U. S. < p> \ ^-S. Postage b . ^ &. K WASHINGTON'S HEAO ; & fe. ^ ^ [| Ten Cents ■" ^ ^ |u. s.| ESCEI7ABLE POS (IT Q I POSTASE STAMPS At Any ( U . O. ) Pust Office. [reverse.] EXCHANGEABLE FOR UNITED STATES NOTES By any Assistant f v ^g, ^j y 5 Treasurer or designated U. S. \ ?, A r\ -^ \ Depositary in sutnstietlessthun > ^ 1 U ^ * VWJt t)0\.\.NRS. ^ Receivable in f^ ''''■^ ^5 piyment of all 1 1 duet to the U. States less than 9\\)t QO\.\.NRS. ACT APPROVED JULY 17, 1862. [obverse.] POSTAGJE CUMUJEWCT OK Furnished otily hy the Assistant Treasurers and Designated Depositaries of the U. S, \ This design RECEIVABLE FOR At Any :s 5| U. S. Postage % r JEFFERSON'S HEAO fl I Five Cents \ U.S. appears five times. POSTAGE STAMPS Post Office. [reverse.] EICHAUGEABLE FOR MTED STATES UOTES By any Assistant _^ _, Treasurer or Designated U. S. 4 f ^^ Depositary in sums not less than ^j m f WW. QOVLKRS, Receivable iti payment of all dues to the U. States less tha ' V\\lt 00\.\.kKS. »CT Approved, July 17, 1862. [obverse.] tKC\ JPOSTAGE CUjBMENCY KCi Furnished only by the Assistant Treasure} r and Designated Deposi taries 0/ the U, S, This design 1^ U. S. Postage [ ; WASHINGTON'S HEAD , c Ten Cents \ \\i- s. * appears five times. RECEIVABLE At Any '°" 1 U.S.I POSTAGE STAMPS Post Office. [reverse. ] EXCHANGEABLE FOR Wm STATES NOTES By any A ssistnnt Treasurer or desig7iated U. S. L^ / | Depositary in sums tiot less than » )\ / V\Mt QOVLNUS. Receivable in paymetit 0/ all dues to the U. States less than ^\\i\_ QO\.\.N^S. 1 Act approved, July 7, 1862. FRACTIONAL CURRENCY. 109 issue of subsidiary silver coin. The fractional paper currency was issued in five different series. Tlie high- est amount outstanding at any one time was less than fifty millions. Tlie amount outstanding on October 1, 1S87, was $15,319,885. A considerable amount is still held by banks and. bankers, M'hich is grudgingly paid out to those customers who desire it for purposes of remittance by letter. The principal portion of the amount out- standing will probably never be presented for redemp- tion. The proportion of loss to the people from this fractional currency is vastly greater than that of any other kind of circulation ever issued in this country, and this loss, in a large measure, must be attributed to the small value of the notes and the many casualties of the war. The proportion of legal tender notes and national bank notes, of the highest amount outstanding at any one time, not presented for redemption, or lost, in the coui'se of twenty years, is estimated at about 1|- per cent. Authority was given by the second section of the act of March 3, 1863, to issue 400 millions of ti'easury notes, bearing interest at a rate not exceeding six per cent, in lawful money for a term not exceeding three years, payable at periods expressed on their face, and in denominations of not less than ten dollars. These notes were exchangeable, together with the accumulated in- terest for treasury notes not beai'ing interest. They were made legal tender for their face value, excluding interest. Power was also given to the Secretary to issue 150 millions of additional greenbacks, which M^ere to be issued oidy in exchange for these interest-bearing notes. Under this act, $-ll:,520,000 notes were issued, redeem- able one year from date, and $166,480,000 two years no UNITED STATES NOTES. from date, bearing interest at 5 per cent, per ainmni, Avhicli were known as " one and two year notes of 1SG3." Antlioritj Avas given by the act of June 30, 18G4, for the issue of 200 millions of treasury notes in denomina- tions of not less than ten dollars, not exceeding three years, and bearing interest not exceeding 7.30 per cent, per annum, interest payable semi-annually, principal and interest to be paid in lawful money. The notes were to be a legal tender for their face value. Ko seven- thirty notes were issued under this act, but, in lieu there- of, $266,595,44:0 of compound interest notes were issued. The act did not authorize in terms the issue of compound interest notes, but as the interest at six per cent, com- pounded, would be considerably less than at 7.30 per cent, simple interest, their issue was not in conflict with the terms of the act. The notes Avere of the form shown on pages 111-112. The size of these notes was 3^ by 7^ inches. Of these notes, $177,045,770 were issued in re- demption of the one and two year five per cent, notes, and it is not probable that more than 200 millions of these notes were outstanding at any one time. Secre- tary Fessenden, in his report for December 6, 1864, thus refers to the issue of these notes : " The M-hole amount of national circulation, not bearing interest, ex- clusive of fractional curi-ency, and of notes issued by national banks, is limited to four hundred millions of dollars, subject to slight occasional increase from the fifty millions held in reserve for the payment of temporai-y deposits. Of five per cent, interest-bearing notes there were outstanding, on the first of November last, $120,- 519,110. To a considerable extent these notes have been, and will continue to be, used as currency. Those with k. ^ \s ^^ \J Ci »~. .- "^k h Ji CO 'a CO <* ^ J^ CO ^ "^ CO ^. =r^ <5i K r* => ^ ^ r«i S ^ "^ ^:) r-i CO -» 4 ^ Hi O !3 Hi r^ CO si 1^1 Co =0 ^ rS- ^■^ c -■^ Hi H-i H o 'li, A. "^•i c ^ CJ "* o ^ o «o 00 C! C5 ■*^ CO c 00 e« JO CO CO t: €^ T— 1 f^ tH oT oo" eo l-H O lO ~o Iffl lO o~ o ^o o "~c ^c • o o o 00 00 o t- o o o o S lO ■l-H 00 CO CO o CO LO o c; CO p< CI t- j^ c o C5~ cn^ cT LO" LO ■*" c €©■ lO 1—1 CO CI C5 CJ c* lO c^ 1—* r-4 LO CO ^ »i; CO cT M< ~J>^, -^ — o CO t3 P tj o o cS 3 •D " GO T-H 00 „oo' ,ao' d -*^ _C t-t ooo CO GO 0) o • ^ OD T-i 00 1-1 O CO O to tn o~ Lo" CO £ 00 tH "a "cl o 1-1 ^ 00 S Cj tJ TS p*^ p 1-1 CO J3 CS en P .2 02 P .2 04 p p oo" CJ -o' s < > > — , — — .^^ fe ^ ^• -^ fl p aj OJ M ^ o ^ o , ; s c 0) 2 "c P P "p tr 0- « l-H ^ tH c-

.3 C "^ .s 01 3 1 ^ p< o CO c Ph p* ft CO ft c o o ^ _J> Iz m »o o J> eo _^ !2i ^^,^ CI r: -* CO CO so"'* 1* LO C7 CO* ■^' ?j o o » CS o ■:£ o o o O CO coco coco i> CO 00 00 OD GC CCiX CO GO CO GO 00 00 00 00 00 X 00 1-1 1-1 I-H TH T-l 1-1 T-l 1-1 T-l tH 1-1 -M i-^^ "o CO CO CO o oo cfLO GC co' tH tH ■^ T-l CO CO eo JO CJ 03 ^ 1 Jl IS a 1^ ^-^ r — ^T' ^^ ^r CO \ 0) XT LO a o CO to > ■^ ec eo' p 00 c 'S u tH c « CO to t= «4H C oc GO "i ua K O a t^ 1 o o ^ Z c o to OJ CO CJ a c o o GC ^_ a QJ tS GO o to o CO ^ tp "2 2 [A c ;- o 3 O p o p< s o aj CJ ft 1 1 CJ QJ O H fi _JA ^ T- CI Q I- CO t-^ i^ 1 CONTINENTAL MONEY A TENDER. 319 the legislatures of the different States to pass laws mak- ing the bills of credit issned by Congress a lawful tender in payment of public and private debts, and a refusal thereof an extinguishment of such debts ; that debts ])ayable in sterling money be discharged in continental dulhirs at the rate of 43.6 sterling per dollar ; and that in the discharge of all other debts and contracts, conti- nental dollars shall pass at the rate fixed by the respect- ive States for the value of Spanish milled dollars. In accordance with the recommendation contained in these resolutions, continental paper money was made a legal tender in Connecticut, Massachusetts, Rhode Island, and Kew Jersey in 1776, and in Pennsylvania, Delaware, Maryland, and Yirginia in 1777. The legal tender act was passed auring the second ses- sion of the 32d Congress, which met December 2, 1S61. The report of the Secretary of the Treasury bears date December 9tli. The third instalment of fifty millions, of the loan of 150 millions already referred to, had been negotiated on the 16th of November previous, with the associated banks. The Secretary was hopeful that the war would be brought to an auspicious termination be- fore midsnnnner, but at the same time submitted esti- mates based npon its continuance. In this event, it was estimated that the public debt, M'hich, on July 1, 1861, was $90,867,828, would be on July 1, 1862, 517 millions, and on July 1st of the following yeai', 897 millions. He recommended the issue of circulating notes in place of the existing bank-note circulation, which depended ^'■{.m the laws of thirty-four States, and the character of somo sixteen hundi'cd ])i-ivate corporations."' Two plans for effecting this object were suggested; 120 UNITED STATES NOTES. tlie first Avas the withdrawal of tlie l)ank circulation, ami the issue of United States notes instead tlieieof, pay- able in coin on demand ; the second contemplated the delivery to banks of notes prepared for circulation un- der national dii-ection, and to secure pronipt convertibil- ity into coin by the pledge of United States bonds, and other needful regulations. Both of these plans were discussed at considerable length in the report, the pref- erence of the Secretary being decidedly in favor of the issue of bank notes. The avails of the large loan made from the banks were not allowed to remain on deposit, to be drawn by checks as the necessities of the Gov- ernment should require, but Avere, from time to time, paid into the treasury, so that it was quite difficult for some of the banks to meet the last instalment. The banks were in danger of suspending specie payment at the time of the meeting of Congress. Suspension finally took place on December 28, 1861, and two days later, on the 30th, Mr. Spaulding, of the sub-committee of the Connnittee of Ways and Means, introduced the legal tender bill. A national bank bill had been prepared previously, and when nearly completed, Mr. Hooper, of Massachusetts, also of the sub-committee, incoi-porated in it several pi'o- visions contained in a I'ecent free-banking bill, which had passed the Legislature of his own State. Two hundred copies of this bill, which was hastily prepared late in the month of December, were printed for the use of the Connnittee of Ways and Means, and a copy of this bill, which was the basis of the national bank act, which be- came a law about a year afterward, is in the possession of the wiiter. It beinsr evident that the bank bill would LEGAL TENDER NOTES DENOUNCED. 121 encounter considerable opposition from tlie friends of banks organized under State laws, and that great delay would necessarily occur from the consideration of an elaboi'ate bank bill of sixty or more sections, arranged for the organization of banks in the different States of the Union, the bill was laid aside, and the bill authoriz- ing the issue of legal tender notes was considered. An informal letter was read to the Committee from Attorney-General Bates, in which he gave it as his opinion that Congress had not only the right to issue such bills of credit, but also to make them a legal tender. Discussion of the bill continued for several days, and upon a vote being taken, it was found that the Committee w^as equally divided, but by the change of a vote it was fiirally repoj-ted to the House on July 7, 1862, and published in the leading New York news- papers. Only two dailj' newspapers favored the meas- ure, and it is said that other newspapers, wdiich were bitterly liostile, were for a time excluded from the privilege of the mails. The leading financial magazine ridiculed and denounced the plans of the Secretary and of Congress in its monthly issues, and at one time de- clared that " the financial fabi-ic of the Union totters to its base ! " Delegates f i-om ten of the principal banks in the three leading cities appeai-ed in Washington and opposed the bill. The bill was afterward submitted to the Secretary of the Treasury by the Committee, and, upon its return with his suggestions, was reported to the House on January 22, 18G2, with the title above given, as a substitute for the previous bill. The bill passed the House on February 6, 1862, by a vote of 93 to 59. There were no democratic votes in favor of the bill, and among 6 122 UNITED STATES NOTES. the nays M'crc : Morrill, of Yermont ; Coiikling and Pomeroy, of ^'e\v York ; Porter, of Indiana; Lovejoy, of Illinois ; Thomas, of Massachnsetts ; Ilollins, of New Hampshire, and other leading Ttepublicans. The chief amendments in the Senate were: requiring payment of interest semi-annually in coin on bonds and seven-thirty notes ; conferring ou the Secretary power to sell per cent, bonds at the market value thereof for coin ; making the bonds redeemable in five years and payable in twenty years from date at the option of the Government, and authorizing temporary deposits in tlie treasury at G per cent. There was considerable debate in both Houses upon the question of the right of the Government to issue demand notes, and the arguments were not unlike those which have already been given in previous debates in Congress. The principal discussion was, however, upon the consti- tutional right of Congress to make these notes a legal tender. Secretary Chase, afterward Chief Justice, in a letter to the Committee of Ways and Means on January 29, 1862, says: "It is not unknown to the Committee tliat I have felt, nor do I wish to conceal that I now feel, a great aversion to making anything but coin a legal ten- der in payment of debts. It has been my anxious wish to avoid the necessity of such legislation. It is, how- ever, at present impossible, in consequence of the large expenditures entailed by the war, and the suspension 'of the banks, to procure sutHcient coin for disbursement ; and it has, therefore, become indispensably necessary that we should resort to the issue of United States notes. The making them a legal tender might, however, still LEGAL TENDER A NECESSITY. 123 be avoided, if the willingness manifested by the people generally, by railroad companies, and by many of the banking institutions, to receive and pay them as money in all transactions, were absolutely or practically univer- sal ; but, unfortunately, there are some persons and some institutions which refuse to receive and pay them, and whose action tends, not merely to the unnecessary depreciation of the notes, but to establish discrimina- tions in business against those who, in this matter, give a cordial support to the Government, and in favor of those M'ho do not. Such discriminations should, if pos- sible, be prevented ; and the provision making the notes a legal tender, in a great measure at least, prevents it, by putting all citizens in this respect on the same level, both of rights and c^iities. " The Committee, doubtless, feel the necessity of ac- companying this measure by legislation necessary to se- cure the liighest credit, as well as the largest currency of these notes. This security can be found, in my judg- ment, by proper provisions for funding them in interest- bearing bonds ; by well-guarded legislation authorizing banking associations with circulation based on the bonds in which the notes are funded; and by a judicious sys- tem of adequate taxation, which will not only create a demand for the notes, but— by securing the pi-ompt pay- ment of interest — raise and sustain the credit of the bonds. Such legislation, it may be hoped, will divest the legal tender clause of the bill of injurious tenden- cies, and secure the earliest possible retuin to a sound currency of coin and promptly convertible notes." From the introduction of the bill in Congress on De- cember 30, 1861, to its final approval on February 25, 124 UNITED STATES NOTES 1862, a period of eight weeks, it was tlioroiiglilj dis- cussed l)otli ill Congress and tlironghout the conntiy. More thuii twenty members of the House j^ai'ticipated in the debate. Messrs. Spaulding, Hooper, Alley, Kel- logg, Campbell, IHcknuin, and Stevens were the most prominent speakers in favor of the measure. Messrs. Pendleton, Yallandigham, Morrill, Conkling, Wright, and Lovejoy opposed it. Mr. Spaulding made the speech introducing the bill. He said : " The bill before us is a war measure, a measure of necessity, and not of choice, presented by the Committee of Ways and Means to meet the most pressing demands upon the treasury to sustain the army and navy, until they can make a vigorous advance upon the traitors, and crush out the rebellion. These are extraordinary times, and extraor- dinary measures must be resorted to in order to save our Government, and preserve our nationality." In the course of the discussion the following extract from a letter just received by Mr. Spaulding from the Secretary of the Treasury was read : " Immediate action is of great importance. The treasury is nearly empty. I have been obliged to draw for the last instalment of the November loan. So soon as it is paid, I fear the banks generally will refuse to receive the United States notes, unless made a legal tender. You will see the necessity of urging the bill through without more delay." The influences which seemed to render it necessary that the notes authorized to be issued by the bill should be declared a legal tender, is shown, not only by the let- ters of the Secretary but by the debate which followed. Mr. Hooper said : " The unusual exigencies of the country require that we should look for other and deeper DEBATE m THE HOUSE. 125 Bonrces of revenue than any to which we have hevetofore been accnstonied. We are contending for maintenance of the Government, tlie preservation of the Union, and for the enforcement of the laws." Mr. Alley said : " Beneficent as this measure is, as one of relief, nothing could induce me to give it sanc- tion but uncontrollable necessity. * * There can bo no more issues than the real necessities of the Govern- ment require. The Government cannot make issues, like the banks, for profit. * * Its issues must neces- sarily be limited to its absolnte wants." On the same point Mr. Kellogg said : " If this ques- tion came up in ordinary times, I am frank to confess that I might, perhaps, have had some doubt of its con- stitutionality sufficient to induce me to oppose it. I mean by that only to say that in time of peace, when the integrity of the Government is not threatened, I would be more careful and cautions ; and if I doubted the con- stitutionality of tlie measure I would not vote for it. But, sir, in this onr extremity, while we are struggling to perpetuate our Government, I am willing to go to the very verge of the Constitution. I treat this, Mr. Chair- man, as emphatically and clearly a war measure." Mr. Blake argued that it was constitutional to issue A treasury notes and make them a legal tender. He in- \ sisted that it was a necessary and proper means of carry- ing into effect the war powers — to raise and support armies, and to provide and maintain a navy. We are now in the midst of a great national exigency, and one, too, that we must provide for ; and one that in the appli- cation of the means there must of necessity be great lati- tude of discretion. ,12G UNITED STATES NOTES. Mr. Ciimpbcll i-oinai-kcd : " Tlio bill now boforo flic Committee is necessary to sustain the credit of the conn- trv, and to carry on the war. It is with reluctance tliat I have come to this conclusion. I do not like the neces- sity which exists for the legal tender clause ; still less do I like to place the issiues of the Government in the liands of the brokers and money-lenders of the conntiy. Depreciated now, let the legal tender clanse fail, and mark the result to-moi'row. The treasmy notes will fall from 4 per cent, to 15 and 25 below par, and the Gov- ernment will have to pay that percentage additional for every article they pnrchase." Mr. Hickman, of Pennsylvania, on the same side, said : " I am disposed to waive the question of propriety or expediency, and to vote for it as a necessity." ,Mr. Stevens, who closed the debate, said : " This bill is a measure of necessity, not of choice. No one would willingly issne paper currency not redeemable on de- mand, and make it a legal tender. It is never desirable to depart from the circulating medium which, b}' the common consent of civilized nations, forms the standard value. But it is not a fearful measure, and when ren- dered necessarj^ by exigencies it ought to produce no alarm." He argued in favor of the constitutionality of the legal tender clause, and that it was a necessary and proper measure at this time. " In short, whenever any law is necessary and proper to carry into execution any delegated power, such law is valid. That necessity need not be absolute, inevitable, and overwhelming — if it be useful, expedient, profitable, the necessity is within the constitutional meaning. Whether such necessity exists SPEECH OF TIIADDEU8 STEVENS. 127 is solely for the decision of Congress. Their jnclgnierit is absolute and conclusive. If Congress should decide this measure to bo necessary to a granted power, no de^ partment of the Govei'nnient can rejudge it. The Su- preme Court might think the judgment of Congress erroneous, but they could not review it. ■■•■ * Our proposition is to issue United States notes, secured at the end of twenty years to be paid in coin, and the interest I'aised by taxation semi-annually ; such notes to be money, and of uniform value throughout the Union. I look upon the immediate passage of the bill as es- sential to the very existence of the Government. Reject it, and the financial credit, not only of the Government, but of all the great interests of the country, will be prostrated. Mr. Chairman, let me say in conclusion, that unless this bill is to pass with the legal tender clause in it, it is not desirable to its friends, or to the Administration, that it should pass at all; and those who think as I do will have to vote against it, if it should be thus mutilated and emasculated. If it is to be defeated, I should l)e glad if we had the power which they have hi the British Parliament — to resign our places on the C^ommittee of Ways and Means, and leave it to those who oppose this bill to mature some other measure. So far as I am concerned, I shall be modest enough not to attempt any other scheme. The Com- mittee of Ways and Means have labored in the prepara- tion of this measure anxiously, and to the best of their poor abilities. We are not infallible. We do not come near it. I am but poorly qualified for anything of this kind. But we have given it our most anxious consider- ation, and have consulted those whom we believed to 128 UNITED STATES NOTES be the Lest qualified to advise ns. We have FOiight to harmonize coiillictiiig views in the substitute Mhich the majority of the Committee liave prepared, and we hope it will pass. We believe that the credit of the country will be sustained by it, that under it all classes will be paid in money which all classes can use, and that it will confer no advantage on the capitalist over the poor laboring man." The following extracts from the speeches of those op- posed to the bill will indicate the drift of their argu- ments. Mr. Pendleton said : " These notes are to be made lawful money, and a legal tender in discharge of all pecuniary obligations, either by the Government or individuals, a character which has never been given to any note of the United States, or any note of the Bank of the United States, by any law ever passed. Kot only, sir, was snch a law never passed, but such a law M'as never voted on, never proposed, never introduced, never recommended by any department of the Government ; the measure was never seriously entertained in debate in either branch of Congress." He contended that the bill, if passed, would impair the obligation of past as well as of future contracts, and that it would make it il- legal to make a contract for dealing in gold or silver coin, for the reason that these legal tender notes might be tendered in payment of coin contracts ; and added : "When I come to examine the powers of Congress ac- cording to the principles of interpretation to which I ad- here, I look to the grants of the Constitution. I find no grant of this power in direct terms, or, as I think, by fail" implication. It is not an accidental omission ; it is not an omission through inadvertency, It was inten- DEBATE IN THE HOUSE: 129 tionally left out of the Constitution, becanse it was de- signed that the power should not reside in the Federal Government." Mr, Yallandigham denied the right of the Federal Government to provide a paper currency, intended primarily to circulate as monej', and meet the demands of business and commercial transactions, and to the ex- clusion of all other paper. It is not the intent or object of the substitute to furnish such a currency for the coun- try, lie said : "The ship of State is upon the Rocks. I was not the helmsman who drove her there ; nor had I part or lot in directing her course." Mr. Morrill protested " against making anything a legal tender but gold and silver, as calculated to undermine all confidence in the Republic, whose reputation should be dearer to statesmen, as well as to soldiers, than life itself." Mr. Conkling assigned his reasons for voting against the attempt to make paper a legal tender as follows : " The proposition is a new one. No precedent can be urged in its favor : no suo-gestion of the existence of such a power can be found in the legislative histoiy of the country ; and I submit to my colleague, as a lawyer, the proposition that this amounts to affirmative author- ity of the highest kind against it. Had such a power lurked in the Constitution, as construed by those who ordained and administered it, we should find it so re- corded. The occasion for resorting to it, or at least re- ferring to it, has, we know, repeatedly arisen ; and had such a power existed, it would have been recognized and acted on. It is hardly too much to say, therefore, that the uniform and universal judgment of statesmen, jur- ists, and lawyers has denied the constitutional right of 6* 130 UNITED STATES NOTES Congress to make paper a legal tender for debts to any extent whatevei-. But more is claimed here than the right to create a legal tender heretofore nnknovvn. The provision is not confined to transactions mfuture,h\\i is retroactive in its scope. It reaches hack and strikes at every existing pecuniary obligation." And he added : " I believe all the money needed can be provided in sea- son by means of unquestionable legality and safety. The substitute I have offered will, I believe, without essential alteration, effect that result." Mr. Wright thought that " the people had' means enough in their possession, and he was willing to go for taxation to the uttermost limit; but the time had not yet arrived when we should resort to such an extreme meas" ure as to make these notes a legal tender." Mr. Lovejoy held " that no respectable argument could be made in vindication of the constitutionalitj^ of this bill. He Avould admit the plea of necessity if he be- lieved it ; and he thought it more manly to confess it, as Jefferson did, than to attempt to torture the Consti- tution into the support of a measure which everybody must see to be unconstitutional." The bill passed the House on February 6th, b}^ a vote of 93 to 59. It was sent to the Senate on February Ttli. Mr. Fessenden, Chairman of the Finance Com- mittee, obtained unanimous consent to consider the sub- ject forthwith, and read a letter from the Secretary of the Treasm-y of which the following is an extract ; " The condition of the treasury requires immediate legis- lative provision." Mr. Fessenden opened the debate. He proposed to state brieflv the aro-uments on both sides without either SENATOR FESSENDEN'S SPEECH. 131 favoring or opposing the measnre. He said : " The ground upon which this clanse making these notes a legal tender is put, I have already stated. It is put upon the ground of absolute, overwhelming necessity ; that the Government has now arrived at that point M'here it must have funds, and those funds are not to be obtained from ordmary sources, or from any of the ex- pedients to which we have heretofore had recourse, and therefore, this new, anomalous, and remarkable provi- sion must be resorted to in order to enable the Govern- ment to pay off the debt that it now owes, and afford circulation which will be available for other purposes. The question then is, does the necessity exist ? " He did not hesitate to say that he " would advocate the use of the strong arm of the Government to any extent in ordei' to accomplish the purpose in which we are engaged. He would take the money of any citizen against his will to sustain the Government, if nothing else was left, and bid him wait until the Government could pay him. It is a contribution which every man is bound to make under the circumstances. We can take all the property of any citizen. That is what is called a forced contribution. * * The question after all returns : Is this measure absolutely indispensable to procure means ? If so, as I said before, necessity knows no law. Say what you will, nobody can deny that it is bad faith. If it be necessary for the salvation of the Government, all con- siderations of this kind must yield ; Init to make the best of it, it is bad faith, and encourages bad morality, both in public and private. Going to the extent that it does, to say that notes thus issued shall be receivable in payment of all private obligations, however contracted, 132 UNITED STATES NOTES. is in its very essence a wrong, for it compels one man to take from his neighbor, in payment of a debt, that which he would not otherwise receive or be obliged to receive, and what is probably not full payment." Ml'. Collamer made an elaborate speech against the legal-tender clause in the bill. He aigned that it was unconstitutional, and that even if it was a necessity, he could not vote for the measure. His honest opinion M'as that the Constitution never intended to invest Congress Mith any such power. He referred to the debates in the convention that formed the Constitution, to show that " the men of that period always entertained the opinion that the United States could have nothing else a tender but coin. While they lived there never was such a thing thought of as attempting to make the evi- dences of the debt of the Government a legal tender, let their form be what they might." He argued that there was an express power "to borrow money on the credit of the United States. That where there is an exj^ress power to do a thing, there can be no implied power to do the same thing. There were two modes of replenishing the trcasuiy. One was by taxation, and the other to borrow money. To borrow money thei'e nnist be a lender and a boi-rower; and both should act voluntarily, and not compel the lender to pai't with his money without an inducement. The operation of this bill was not anything like as honorable or honest as a forced loan." Mr. Sherman spoke in favor of the legal-tender clause, and in regard to its necessity said : " Every organ of financial opinion " — referring to the action of the Cham- bers of Commerce in the principal cities — " if that is a DEBATE IN THE SENATE. 133 correct expression — in this country agrees that there is such a necessit}', in case we authorize the issue of de- mand notes. " * Our arguments must he submitted finally to the arbitration of the courts of the United States. When I feel so strongly the necessitj' of this measure, I am constrained to assume the power, and re- fer our authority to exercise it to the courts. I have shown, in reply to the argument of the Senator from Maine, that we must no longer hesitate as to the neces- sity of tliis measure. That necessity does exist, and now presses upon us." He thought himself required " to vote for all laws necessary and proper for executing these high powers, and to accomplish that purpose. This is not the time when I would limit these powers. Rather than yield to revolutionary force, I would use re- volutionary force." Mr. Ilowe said : " Congress is also clothed with power ' to make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the Gov* ernmeut of the United States.' Those who denj^ the constitutional authority to pass this bill must deny its necessity or its propi'iety. Those who deny its necessity or its propriety ought to show us some plan for avoid- ing it, some measure adequate to the emergency, and more proper than the one proposed by this bill. Two months have elapsed" since the policy of this bill has been discussed, and no one of its opponents has yet pro- duced a substitute. The total neglect to offer a substi- tute \s,j>rima facie evidence of the necessity for this." Mr. Bayard said: ""No one can deny the fact that in contracts between man and man, and in government 134 UNITED STATES NOTES. contracts to pay money, the obligation is to pay intrin- sic value. If you violate that by tin's bill, which you certainly do, how can you expect that the faith of the community will be given to the law which yoii now pass, in which you say that you will pay hereafter the interest on your debt in coin? Why should they give credit to that declaration ? If you can violate the Constitution of the United States in the face of your oaths, in the face of its palpable provision, what security do you offer to the lender of money ? " Mr. Sumner argued, in the present existing state of the country, for the constitutionality and expediency of the legal-tender clause. He quoted from Mr. Justice Story " that all these prohibitory clauses as to coining money, emitting bills of credit, and tendering anything but gold and silver in payment of debts, are founded upon the same general considerations. The policy is to provide a fixed and uniform rule throughout the United States, by which commercial and other dealings of the citizens, 'as well as the moneyed transactions of the Government, might be adjusted" (2 Story's Com., Sec. 1372). " If this view be correct, then no inference adverse to the powers of the National Government can be drawn from these prohibitory clauses ; for whatever may be the policy of the Xational Government, it will be a fixed and uniform rule throughout the United States." " Surely, we must all be against paper money, we must all insist upon maintaining the integrity of the Govern- ment ; and we must all set our faces against any propo- sition like the present, except as a temporary expedient, rendered imperative by the exigency of the hour." " Others may doubt if the exigency is sufficiently ira- THE VOTE IN THE SENATE. 135 perative ; but the Secretary of the Treasury, whose dnty it is to understand the occasion, does not doubt. In his opinion the war requires this sacrifice. AVhatever may be the national resources, they are not now within reach, except by summary process. Kehictantly, painfull}', I consent that the process should issue. Aud yet I camiot give such a vote without Avai'uing the Government against the dangers from such an experiment. The medicine of the Constitution must not become its daily bread." The motion of Mr. Collamer, on February 13, to strike out the legal tender clause, was defeated, 17 yeas to 22 nays. Anthony, of Rhode Island, Collamer and Foot, of Vermont, Fessenden, of Maine, King, of New York, Cowan, of Pennsylvania, Foster, of Connecticut, and Willey, of Virginia, of the Republicans, voted yea. Four Democrats only — Davis, of Kentucky, McDougall, of California, Rice, of Minnesota, and Wilson, of Mis- souri — voted nay. The bill passed by a vote of 30 to 7, three Republicans — Collamer, Cowan, and King — and four Democrats — Kennedy, Pearce. PoM^ell, and Sauls- bury — voting nay. The Senate amendment to pay interest upon the five- twenty bonds in coin was adopted by the House, by a vote of 88 to 56. The amendment authorizing the Secretary to sell the bonds at the market value was also adopted — ayes, 72 ; nays, 6G. On February 20th the amendments were returned to the Senate with the concurrence of the House in part of them, and non- concurrence in others, and with some amendments to the Senate amendments ; after which a conference connnittee — Senators Fessenden, 136 UNITED STATES NOTES Sliennan, and Carlisle, and Representatives Stevens, llorton, and Sedgwick — was appointed, wliicli eonnnittee liad a lony; consultation extendini!; thi-onjjrli two or tlii'ee days. The report of the conference committee was agreed to on the 24th in the House by yeas 97, nays 22, and in the Senate on the 25th without a division, and on the same day the bill was approved by the President. It authorized the issue of 150 millions of United States notes, not bearing interest, payable to bearer at the Treas- ury of the United States, and of denominations of not less than $5, fifty millions of which were to be in lieu of the demand treasury notes which had been previously issued ; they were similar in form to those notes, but they were not receivable in payment of duties on imports, and M'cre not payable by the Government for interest upon its obligations, which were payable in coin ; they were to be a legal tender in payment of all other debts, public and private, within the United States. They differed from the first notes issued also, and in this respect — that all holders of legal-tender notes were authorized to de- posit any sum not less than $50, or any multiple of $50, with the Treasurer, or either of the Assistant Treasurers, and receive duplicate certificates, upon which were to be issued to the holder an equal amount of bonds of the United States bearing interest at the rate of 6 per cen- tum per annum, payable semi-annually, and redeemable at the pleasure of the United States after five yeai-s, and payable twenty years from the date thereof. The second section of the same act authorized the issue of 500 millions of five-twenty bonds into which the treas- ury notes were to be funded, in accordance with the previous section and as stated in the title of the bill. FIRST LEGAL TENDERS ISSUED IN 1862. 137 The first notes issued were of the (late of Marcli 10, 1862, and there was printed upon the back tlie following words : "This note is a legal tender for all debts, public and private, except duties on imports and interest on the public debt, and is exchangeable for United States 6 per cent, bonds redeemable at the pleasure of the United States after five years." The ten-dollar note was in its general appearance almost precisely like the demand note of that denomination ; the principal difference being that the words " on demand " were omitted, and the sig- natures of the Register and Treasurer were engraved. On June 7, 1862, the Secretary addressed letters to the chairmen of the Committee of Waj^s and Means of the House and the Finance Committee of the Senate, recommending a further issue of 150 millions of dollars of legal-tender notes. He said that nearly the whole issue of sixty millions in demand notes was held by bankers and by capitalists, and was at a premium of from f to 1^ per cent, on account of its availability for the payment of duties ; so that there was really only about ninety millions of United States notes in circulation. He said that the United States notes are maintained at near par in gold by the provision for their conversion into bonds bearing 6 per cent, interest payable in coin, and that resumption would be more easily effected " if the cur]-ency — small as well as large — were of United States notes, than if the channels of circulation be left to be filled up by the emissions of non-specie paying corporations, solvent and insolvent." With tliese letters he transmitted bills for the consideration of these com- mittees. The immediate necessities of the Government admitted of but little delay, and the bill, substantially 13S UNITED STATES NOTES. as reconmicnded by the Secretary, passed both Houses^ and was signed by the Pjesideiit on June 11, 18G2. The bill authorized the issue of 150 millions of legai- tendei' notes, thirty -five millions of which were to be in denominations less than $5. The subsequent act of March 3, 1863, authorized the issue of an additional 150 millions, making the ao^o-reo-ate authorized issue of legal-tender notes 450 millions of dollars. This act was similar to the previous legal-tender acts, so far as the issue of treasury notes was concerned, except that it provided " that the holders of United States notes issued under former acts shall present the same for the purpose of exchanging them for bonds as therein provided on or before July 1, 1863, and thereupon the right to exchange the same shall cease and determine." After the passage of the act of March 3, 1803, the Secretary decided to commence the negotiation of 5 per cent, ten-forty bonds, and gave notice that he should de- cline to allow the holders of legal tenders to fund such notes in bonds bearing a greater rate of interest than 6 per cent, after July 1, 1863. The negotiation of the 5 per cents was not successful at that time, and that por- tion of the act of March 3d which repealed the right to fund legal tenders into five-twenties, as printed upon the back of the notes, was not only a violation of the contract with the liolder, but also a serious financial mistake. It had the effect to materially reduce the value of the treasury notes in the market, prevented the further funding of treasury notes after July 1st, and nndoubtedly postponed for many months the date for the resnmption of specie payment. The liighest amount of legal-tender notes outstanding REPORT OF SECRETARY McCULLOCII, 1865. 139 fit any time was on January 3, 1864, when the amount reached $449,338,902. The second section of the act of June 30, 1864, provided tliat "the total amount of United States notes issued or to be issued shall not ex- ceed 400 millions, and such additional sum, not exceed- ing fifty millions, as may be temporarily required for the redemption of temporary loans." The following table shows by denominations the amount of legal-ten- der notes outstanding on January 1, 1885 : Ones $26,523,143 80 Twos 26,840,217 20 rives 77,538,815 GO Tens 67,860,366 00 Twenties 55,513,489 00 Fifties 22,703,695 00 One hundreds 33,263,790 00 Five hundreds 15,015,000 00 One thousands 22,272,500 00 Five thousands 100,000 00 Ten thousands 50,000 00 Less destroyed in the Chicago fire 1,000,000 00 Total $346,681,016 00 Secretary McCulloch, in his report for 1865, expressed the opinion that the legal-tender acts were war meas- ures, and ought not to remain in force one day longer than should be necessary to enable the people to prepare for a return to the gold standard. The House of Eepre- sentatives during the same month passed a resolution, by a vote of 144 yeas to 6 nays, " cordially concurring in the views of the Secretary of the Treasury in relation to the necessity of the contraction of the currency, with a view HO UNITED STATES NOTES. to fts early a resumption of specie payment as the Lnsi- iiess interests of the country will permit." In order to carry into effect this resolution, Congress, by an act ap- proved March 12, 1S6G, authorized the retiring and can- cellation of not more than ten millions of legal-tender notes within six months from the passage of the act, and thereafter not more than four millions in any one month. Under this act the amount outstanding was so far reduced that on December 31, 1S67, the amount was 356 millions. On February 4, 1868, the further reduc- tion of the vohnne of such notes was prohibited, leaving the last-named amount outstandii'.g nntil October 1, 1872. Between March IT, 1873, and January 15, 1874, nnder Secretary Richardson, tlie amount was increased to ?;3S2,971>,815, and on June 20, 1874, the maximum amount was fixed at $382,000,000 ; section six of the act of that date providing that " the amount of United States notes outstanding and to be used as a part of the circulating medium shall not exceed the sum of 382 mil- lions, which said sum shall appear in each monthly state- ment of the public debt, and no part thereof shall be held or used as a reserve." Section three of the act of January 14, 1875, author- ized an increase of the circulation of national banks, in accordance with existing law, without respect to the limit previously existing, but requiied the Secretary of the Treasury to retire legal-tender notes to an amount equal to eighty per cent, of the national-bank notes thereafter issued, until the amount of such legal-tender notes out- standing should be 300 millions, and no more. Under the operation of this act 835,318,984 of legal-tender notes were retired, leaving the amount in circulation on SPECIE PAYMENTS RESUMED, 1879. 141 May 31, 1S78, the date of the repeal of the act, $34G,- ()S1,016, M'hich is the amount now outstanding. Tlie table on page 142 exhibits the amount of the varions issues of Treasm-y notes outstanding on July 1st, of each year from 1862 to 1884, and on October 1, 1887; together with the amount of national-bank notes and the value of the legal-tender Treasury note as com- pared with coin for the same dates. The act of January 14, 1875, required the Secretary of the Treasury, on and after Januaiy 1, 1879, to re- deem in coin the legal-tender notes on their presentation at the office of the Assistant Treasurer in the city of I^ew York, in sums of not less than |50. In order that he might alwaj'S be prepared to do this, lie was authorized " to use any surplus revenue from time to time in the Treasm-y not otherwise appropriated, and to issue, sell, and. dispose of, at not less than par in coin, any of the five, four and one-half, and four per cent, bonds author- ized by the act of July 14, 1870. Under this act Sec- retary Sherman, in 1877, sold at par in coin fifteen millions of four and one-half per cents, and twenty-five millions of four's ; and in April, 1878, he sold fifty mil- lions of four and one-half per cents at a premium of 1^ per cent. This coin was placed in the Treasury for pur- poses of resumption, and on January 1, 1879, the Sec- retary held 135 millions of gold coin and bullion, and, in addition, over thirty-two millions in silver coin and bullion ; the gold coin alone being nearly equal to 40 per cent, of the United States notes then outstanding. 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The banks of the country, at the date of resumption, held more than one-third of the outstanding treasury notes ; but they had so much confidence in the ability of the Seci'etary to maintain re- sumption that none were presented by them for redemp- tion. The people pi*eferred the issues of national banks and of the Government to coin itself. There M^as, there- fore, no demand for payment of the notes of the Govern- ment, and the gold coin in the treasury, which amounted to 135 millions on the day of resumption, increased more than thirty-six millions in the next ten months. The amount held on November 1, 1879, exceeded 171 mill- ions, and on November 1, 1883, 209 millions. The amount held on October 1, 1887, was $290,702,630, in- cluding $97,984,683, held for the redemption of gold certificates outstanding. The resumption act is still in force, and gives the Secretary unlimited power with which to provide for the redemption in coin of the legal- tender notes. He is thus enabled, so long as the credit of the Government continues good, to check, by the sale of United States bonds, any exportation of coin which miglit endanger the redemption of the United States legal-tender notes. From the date of the passage of the act of April 12, 1866, which authorized a reduction of the amount of legal-tender notes, to the passage of the act of July 12, 1882, enabling national banking associations' to extend their corporate existence, a period of more than sixteen 11:4: rXITED STATES NOTES. years, liuiulrcds of l)ills()f almost every conceivable form to regulate the cnn-ency were introduced in Cong)'ess. Throughout the country the subject was continually dis- cussed, not only during political campaigns and at pnblic conventions, but in the snuiUer gatherings of the school district and the meetings of individuals by the wayside. Speeches and political pamphlets by the thonsand, essays, cam])aign papers innumerable, and caricatures of almost everv kind and description, npon the subject of the ex- pansion and contraction of the currency, and its effect upon business, were distributed broadcast in all directions. Perliaps the most plausible argument which was pre- sented, over and over again, in every portion of the coun- try during these continued discussions, was in reference to the retirement of the national bank-notes, and the substitution therefor of treasury notes, in order, as was claimed, to save to the Government the interest npon the bonds held by the national banks as security for their circulating notes. Discussions of this subject in its vari- ous forms, and statements of the profits of the circula- tion of the national banks at different dates, may be found in the reports of the Comptroller of the Currency during the last nine years. A recent and distinguished writer, discussing the policy of the legal-tender issues, says : " Grave differences of opinion exist, even to this day, concerning the neces- sity and expediency of the legal-tender provision. The judgment of many whose financial sagacity is entitled to respect is that if the internal tax had been first levied, and the policy adopted of drawing directly npon the banks from the treasuiy for the amounts of any loans in their hands, the resort by the Government to BLAINE ON LEGAL TENDER. 145 irredeemaLle paper might at least have Leen postponed and possibly prevented. The pretninni on gold became the measure of the depreciation of the government credit, and practically such premiums were the charge made for every loan negotiated. In his report of De- cember, 1862, Secretary Chase justified the legal-tender policy. He explained that by the suspension of specie payments the banks had rendered their cunency unde- sirable for government operations, and consequently no course other than that adopted M'as open. Mr. Cliase declared that the measures of genei'al legislation had M^orked well. ' For the fiscal year ending with June,' he said, ' eveiy audited and settled claim on the Gov- ernment, and every quartermaster's check for supplies furnished which had reached the treasury, had been met.' For the subsequent months the Secretary ' was enabled to provide, if not fully, yet almost fully, for the constantly increasing disbursements.' " The political effects of the legal-tender bill were of large consequence to the Administration and to the suc- cessful conduct of the war. If it had been practicable to adhere rigidly to the specie standard, the national ex- penditure Tuight have been materially i-educed ; but the exactions of the Avar would have been all the time grat- ing on the nerves of the people and oppressing them with remorseless taxation. Added to the discoui-age- inent caused by our military reverses, a heavy financial burden might have proved disastrous. The Adminis- tration narrowly escaped a damaging defeat in 18G3, and but for the relief to business wliich came from the circulation of legal-tender notes, the political struggle might have been hopeless. But as trade revived under 140 UNiriW STATES NOTES. tlie stimulus of an expanding circulation, as the market for eveiy species of product was constantly enlarging and prices were steadily rising, the su]~»port of the war policy became a far more cheei-ful duty to the mass of our people. " This condition of affairs doubtless carried with it many elements of denioralization, but the engagement of the people in schemes of money-making proved a great support to the war ];)olicy of the Government. "We saw the reproduction among ns of the same causes and the same effects which prevailed in England dur- ing her prolonged contest with Xapoleon. Money was superabundant ; speculation was rife ; the Government was a lavish buyer, a prodigal consumer. Every man who could work was employed at high wages ; every man who had commodities to sell was sure of high prices. The whole community came to regard the prev- alent prosperity as the outgi'owtli of the war. The ranks of tlie army could be filled by paying extravagant bounty after the ardoi* of volunteering was past, and tlie hardship of the struggle was thus in large measure concealed if not abated. Considerate men knew that a day of reckoning would come, but they believed it would be postponed until after the war was ended and the Union victorious. " The policy of the legal tender measure cannot there- fore be properly determined if we exclude from view that which may well be termed its political and moral influence upon the mass of our people. It was this which subsequently gave to that form of cui-rency a strong hold upon the minds of many who fancied that its stinnilating effect upon business and trade could be POLITICAL EFFECTS OF LEGAL TENDER. 147 reproduced under utterly different circumstances. Ar- gument and experience liave demonstrated the fallacy of this conception, and averted the evils which miglit liave tlowed from it. But in the judgment of a lai'ge and intelligent majority of those who were contempo- rary with the Avar and gave careful study to its progress, the legal-tender bill was a most effective and powerful auxiliary in its successful prosecution." ' ' Twenty Tears of Congress. James G. Blaine. Vol. I., pp. 427- 429. Norwich, Coun. : The Henry Bill PuLlialiing Company. 1-'^S4. CHAPTER X. THE SILVER DOLLAB AND THE SILVER CERTIFICATE. The act of April 2, 1792, for establishing a mint and refill atino; the coinaa;e of the United State?, anthorized the free coinage of a silver dollar of 412.5 grains, and this provision remained in force until 1873. The act of June 28, 1834, which reduced the gold standard about six and one-foui-th per cent., practically demonetized the silver coinage. Previous to the date of the passage of that act American gold and silver coins of all denominations were equally a legal tender, and the silver coins of less denomination than one dollar were chiefly in use, only $1,369,517 in silver dollars having been issued from the mint at that date. The act of 1834 overvalued the gold coinage, driving from the country the full-weight silver coins previously in circula- tion ; and it may be confidently stated that from 1834 to 1873 no silver dollar-pieces had been presented at any custom-house in payment of duties. The entire customs-duties of the country during this period were, with the exception of silver used in change^ paid in gold coin, and from this fund the interest paid upon the pub- lic debt has been chiefl}' derived ; and it is not probable that during this time any of these silver dollar-pieces were used in this country in the payment of debt, except SILVER COIN THE BASIS UNTIL 18U. 149 in certain cases of special contract, while tliousands of }uillions in gold coin have been used to liquidate debts, both public and private. The average amount in silver dolhir-pieces annually coined from 1S34 to 1873 was about $160,000. From 1793 — the date of the first issue of silver coin by the United States — to 1834 the silver and the gold dollar were alike authorized to be received as legal ten- der in payment of debt, but silver alone circulated. Subsequently, however, silver was not used, except in fractional payments, or, since 1853, as a subsidiary coin. The silver coin, as a coin of circulation, had become obsolete. The reason why, prior to 1834, payments were made exclusively in silver, and subsequently^ to that date in gold, is found in the fact that prior to the legislation of 1834 the weight of fine silver in the silver dollar was fixed at fifteen times the weight of fine gold in the gold dollar ; but after that date, owing to a reduction in the weight of gold required for the standard gold dollar, the silver dollar was made to contain of fine metal almost precisely sixteen times that of the new gold dollar, the actual market value of gold during the entire period having been greater than fifteen and less than sixteen times the value of silver of equal weight. During the earlier period, therefore, the standard silver coins were relatively the cheaper, and consequently cir- culated to the exclusion of the gold ; while during the later period the standard gold coins were the cheaper, circulating to the exclusion of the silver. The Coinage Act of 1873, by which the coinage of the silver dollar was discontinued, became a law on Febru- ary 12th of that year. The act of February 28, 1878, 150 UNITED STATES NOTES. \vliieli passed Congress bj a two-thirds vote over the veto of Fi'esident Haj'es, again provided for the coinage of a silver dollar of 412.5 gi-ains, the silver bullion to be purchased at the niai'ket price by the Government, and the amount so purchased and coined not to be less than two millions of dollars per month. During the debate on this bill the charge was repeatedly made, in and out of Congress, that the previous act of 1873, discontinuing the free coinage of tlie silver dollar, was passed surrep- titiously. This statement has no foundation in fact. The report of the writer, who was then Deputy Comp- troller of the Currencj', transmitted to Congress in ISTO by the Secretary, three times distinctly stated that the bill accompanying it proposed to discontinue the issue of the silver dollar-piece.' Various experts, to whom it had been submitted, approved this feature of the bill, and their opinions were printed by order of Congress. The House was informed by its members of this provi- sion, and the bill was printed thirteen times by order of Congress, and once by the commissioners revising the statutes, and was considered during five successive ses- sions. If the question of the double standard did not become prominent in the discussion upon the bill, it was for the reason that nsagehad established the gold dollar as the unit, the silver dollar, on account of its greater relative value, having, Avitli the Mexican dollar and the pistareen, disappeared from the circulation of the coun- try. The Coinage Act of 1873" and the Hevised Statutes of 1874 simply registered in the form of a statute what 1 Senate, Mis. Doc. No. 132, XLI. Cong., 2d Sess. - For the history of the Coinage Act of 1873, see pp. 170-175, Re- port of the Comptroller of the Currency for 1876. COINAGE ACT OF 1873. 151 IicicI been really the imwritten law of the land for nearly forty years. It is not probable that any act passed by any Con- gi-ess ever received more care in its preparation, or was ever submitted to the criticism of a greater number of pnictical and scientific experts' than was this Coinage Act of 1873. The statements in reference to the surrep- titious or inadvertent passage of the bill was subsequently repeated in the city of Paris by a member of the Silver Commission. A well-known scientific author ^ and writer on finan- cial subjects, in criticising the report of the Paris Silver Commission, says : " Another act which must have placed our commis- sioners at a moral disadvantage \vas their filing the hu- miliating plea that the act of 1873, demonetizing the silver dollar, was passed through inadvertence. "It is difficult to see what this plea meant, what re- lation it had to the business of the conference, or what object was to be gained by raising it. If a proposed law can be debated in Congress for five years, be reported several times from committees in various forms, be rec- ommended by the Secretary of the Treasury in at least one amuial report, finally pass both Houses of Congress, and be signed by the President, then remain on the statute-books for two or three years without any one knowing it, and all through ' inadvertence,' what shall we say of our political system, or of the attention of ' H. R, Ex. Doc. No. 807, XLT. Cong., 2d Sess. ''The Silver Commi^^sion aiiy Profes.'^or Simon Newcomb : Int»;riaatioual Review, Marclx, 1879. ]''2 UNITED STATES NOTES. our people or our legislators to public affairs ? Every one who cares for the good name of his countiy will certainly say, ' Try to keep the fact out of the newspa- pers, and by no means confess it to our neighbors,' The plea was as pointless as humiliating. Had our delegates frankly said that at the time of the passage of the act silver had long ceased to circulate in their country, ex- cept as a subsidiary coin ; that, therefore, the legislation discontinuing its coinage and legal tender was, at the time, only a matter of form, the acceptance of a histori- cal fact ; bat that the extraordinary fall in the price of silver which had occurred in the meantime had again called public attention to the subject, and convinced us that silver should be money of full power, and thus led us to retrace our steps, the statement w^ould have been correct and frank, and would have produced a much better effect than did the plea actually put forward." The act of February 28, 1878, also authorized the holder of these silver dollars to deposit the same with the Treasurer, or any Assistant Treasurer, of the United States, in sums not less than ten dollars, and receive therefor certificates of not less than ten dollars each, corresponding with the denominations of the United States notes. It required that the coin deposited or rep- resenting the certificates should be retained in the treas- Vivy for the payment of the same on demand, and that said certificates should be receivable for customs, taxes, and all public dues, and also authorized their reissue. This act did not authorize their use as clearing-house certificates, nor make them available as lawful reserve for the national banks. The following table shows the amount of standard silver dollars coined under the act of EAril) INCREASE OF SILVER COINAGE. 153 February 2S, 1S78, the amount in tlio treasurj', and the amount of silver certiticates outstanding on July 1st, from 1878 to 1884, and on October 1, 1S87 : 1878 1879 1880 , 1881 1882 1883 1884 1887, October 1 Coinage. $8,573,500 35,801,000 03,734,750 91,372,605 119.144,780 147,255,899 175,355,829 273,600,157 Amount in treas- ury. $7,718,357 28,358,589 45,108,296 63,349,300 87,524,182 111,914,019 135,560,916 213,043,790 Silver certi- ficates out- Ktanding. $1,850,410 2,529,950 12,374,270 55,166,530 66,096,096 88,616,831 96,427,011 154,354,826 This table exhibits the rapid increase in the coinage of the silver dollar and in the issne of silver certificates. The law requires the purchase of not less than two millions of silver bullion each month for coinage into silver dollars. It provides for a forced coinage of silver dollars at the e.xpense of the gold coin in the treasury ; and the various efforts to repeal this law have been fruit- less. If not repealed the result will be, not long hence, the demonetization of the gold coin which is now the standard, and the substitution of the silver dollar in place thereof. This law would doubtless have been repealed long since if silver certificates had not been issued in place of the silver dollar, the latter coin becoming unpopular when forced upon a people so long accustomed to a paper medium. The silver certificate, which is a substitute for the cumbrous dollar, performs every service of the coin itself, with a single exception. It is not a legal tender in payments between individuals, but it is receivable in pay- ment of all public dues, may be included in the reserves of the banks, and used in the payment of clearing-house 154 VXITI-JD STATES NOTES. halanccs. Even the legal-tender note is not and never lias been authorized to be received in payment of customs duties. The cost of the transportation of gold coin between remote points is so great that many millions of gold coin liave been exchanged during the last two years for paper silver certificates, the treasury itself, without any spe- cial authority of law, encouraging in this way the circula- tion of this inferior medium, which is issued against deposits of silver dollars only, thus rendering this other- wise undesirable silver coinage available for use by the banks and the people. In the opinion of those who believe in a single gold standard, the silver certificate is a most dangerous substitute for money. The recent decision of the Su- preme Court places in Congress the power to increase the issue of legal-tender notes at all times, and there is great danger that every commercial crisis or sudden panic, or cry of hard times, may be succeeded by legis- lation which shall increase the issue of the greenback and reduce its value even below the level of the silver certificate ; the former being a promise to pay dollars either gold or silver, while the latter represents the silver coin itself safely stored in the vaults of the treasury. The Government may at any tiine bring the nation upon the silver standard by declining to make payments or to redeem the legal-tender notes in gold, thus taking from the holder the option of payment. In such an event the hoard of coin will not be increased by customs duties paid in gold as at present, but by the return of silver dollars and silver certificates and legal-tender GOLD CERTIFICATES. 155 notes, tlms demonetizing all of the gold coin of the country, and advancing prices to the level of the silver standard. The act of July 12, 1882, authorized and directed the Secretary of the Treasury to receive deposits of gold coin in denominations of not less than $20 each, coi-res- ponding with the denominations of the United States notes. The coin deposited for the certificates is re- quired to be retained for the payment of the same on demand, and these certificates, and also silver certificates, are authorized to be counted as part of the lawful re- serve of the national banks. The act also provides, not- withstanding the fact that these issues are not a legal tender, that no national banking association shall be a member of any clearing-house in which such certificates shall not be receivable in the settlement of clearing- house balances. The amount of gold certificates which have been is- sued under the act of Julj^ 12, 1882, was, on Novem- ber 1st, $21,790,000, and on April 1, 1884, $87,874,500, and on October 1, 1887, $95,630,083. The act of August 4, 1886, authorized, for the first time, the issue of silver certificates of the denomination of five and two dollars and one dollar. The amount of certificates of these denominations outstanding on Octo- ber 1, 1887, was, one's, $17,595,173 ; two's, $10,987,553 ; five's, $13,900,935. Total, $42,483,661. CHAPTER XL THE LEGAL-TENDER CASES IN THE SUPREME COURT OF THE UNITED STATES. On April 30, 18C6, the Legislature of New York pro- vided bj law for refunding to the banks and other corporations in like condition, the taxes of 1863 and 1864 collected upon tliat part of their capital invested in securi- ties of the United States exempt by law from taxation. The Board of Supervisors of the County of New York was charged with the duty of auditing and allowing, with the approval of the Mayor of the city and the Cor- poration Counsel, the amount collected from each corpor- ation for taxes on the exempt portion of its capital, to- gether with costs, damages, and interest. This act M'as passed in conformity with the decisions of the United States Supreme Court in Bank of Commerce vs. New Y'ork City (reported in 2 Black, 620), and in the Bank Tax Case (reported in 2 Wallace, 200), which decided that a tax on banking capital invested in Government securi- ties — being a tax on the obligations of the United States, by State authority — was void. The Bank of New York presented a claim to the said Board of Supervisors for the refunding of those taxes which the bank had paid on the United States notes commonly called "greenbacks" during the 3'ears aforesaid. The Board refused the ap- LEGAL TEND Ens NOT TAXABLE. 157 plication on the gvonnd that " greenbacks " were not " securities " of the United States Government, but were practically and in effect " monej'," taxable as cash. The Conrt of Appeals of the State of IRew York sustained the action of the Board, but on appeal to the United States Supreme Court (Bank t^s. The Supervisors, 7 Wal- lace, 26), that court, at its December term, 1808, re- versed the opinion of the State court. The court said : " The act of February, 1862, declares that 'AH United States bonds and other securities of the United States held by individuals, associations, or cor- porations within the United States, shall be exempt from taxation by or under State authority.' We have already said that these notes are obligations. They bind the national faith. They are, therefore, strictly securities. They secure the payment stipulated to the holders by the pledge of the national faith, the only ultimate secu- rity of all national obligations, whatever form they may assume." On June 20, 1860, a certain Mrs. Hepburn made a pi'omissory note, by which she promised to pay to Henry Griswold, on February 20, 1862, eleven thousand two hundred and fifty " dollars." At the time when the note was made, and also at the time when it fell due, there was, confessedly, no lawful money of the United States, or money which could be lawfully tendered in payment of private debts, but gold and silver coin. Five days after the day when the note by its terms fell due, that is to say, on February 25, 1862, Congress passed the first legal-ten- der act, commonly so called, by which the United States notes issued thereunder were made a legal tender for " all debts, public and private, within the United States," 15S UNITED STATES NOTES. except certain public debts. In JNFarcb, 1SG-1-, Mrs. Hep- burn, ba\ing been sued un the note in the Louisville Chancery Court, in the State of Kentucky, tendered pay- ment of tlie debt, pi-incipal and interest, in the United States notes issued under this act. The amount ten- dered, $11,250 in legal-tender notes, at that time was worth only about $7,000 in coin. The tender was re- fused. The notes were then tendered and paid into court. It was declared by the Chancellor to be a satis- faction of the debt. The case was appealed to the Court of Errors of Kentucky. That court reversed the Chan- cellor's decision, and ordered a contrary judgment to be entered. Whereupon Mrs. Hepburn took the case to the United States Supreme Court, where it was tirst ar- gued upon printed briefs at the December term, 180 7, and afterward reargued by very numerous and able counsel at the December term, 1808, but not decided un- til the December term, 18G9 (Hepburn ?;5. Griswold, 8 "Wallace, 603). The court was comprised of Mr. Chief Justice Chase and Associate Justices Xelson, Clifford, Field, Grier, Davis, Miller, and Swayne. Mr. Justice Grier resigned before the opinion of the court was an- nounced, but agreed with the majority in the consultation room, as was announced by the Chief Justice. The Chief Justice delivered the opinion of the court. In this opinion Justices Kelson, Clifford, and Field con- curred. The court held that the language of the act of February 25, 1862, making the United States notes issued thereunder " a legal tender in payment of all debts, pub- lic and private, within the United States," included pre- existing debts as well as debts which should be incurred after the passage of the act, and while it might be an LEGAL TENDER ACT UNCONSTITUTIONAL. 159 exercise of riglitf iil power in Congress, under the powers granted it by the Constitution, to declare war, suppress in- surrection, raise and support armies and navies, borrow money on tiie credit of the United States to pay the debts of the Union, and to provide for the conmion defence and general welfare — to emit bills of credit or United States notes intended to circulate as money, and make the same legal tender for debts to be incurred after the passage of the act, yet inasmuch as the act by construction de- clared these notes to be legal tender in payment of pre- existing debts, that the act was inconsistent witli the spirit of the Constitution, and was not a law " necessary and proper " for carrying into execution the powers vested by the Constitution in Congress or in the Government of the United States. The Constitution reads that Congress shall have, besides certain powers granted in express terms, " power to make all laws which shall be necessary and proper for carrying into execution the fore- going powers, and all other powers vested by this Consti- tution in the Government of the United States, or in any department or offices thereof." The court held that the legal-tender clause was unnecessary and improper ; that the notes would have maintained themselves equally well without it. The Chief Justice quoted the fact that the three hundred millions of dollars in notes issued by the national banking associations under the act of Feb- ruary, 1SC3, and the fifty millions of fractional currency issued under the act of March, 1SG3, were not made a legal tender, and a]-gued that it was the quality of re- ceivability for public dues, and not the quality of legal tender which made these United States notes circulate as freely as they did. The Chief Justice declared that the 160 UNITED STATES NOTES. act was ohnoxions to tliose clauses of the Constitntion, also, which forbade the iiiipairmeut of the obligations of contracts, the taking of private property for public nse without compensation, and the deprivation of any person of his property without due process of law. And that the Constitution was ordained to " establish justice," which this act did not do, so far as regards pre-existing debts. For all of which reasons, elabor- ately stated, the court held the act unconstitutional and tlierefore void. Mr. Justice Miller, with whom concurred Justices Davis and Swayne, delivered a dissenting opinion. lie held that what was " necessary and proper " to carry into execution the powers vested by the Constitution in the Government of the United States, cannot right- fully be construed to mean only such legislation as is indispensably necessary, but that Congress has the choice of means, and is empowered to use any means which are, in fact, conducive to the exercise of the power granted or calculated to produce the end de- sired. He fortified this position by the clear, strong deci- sions of the court delivered by Chief Justice Marshall, who announced this exposition of the Constitution in United States vs. Fisher (2 Cranch, 358) and in McCul- loch m. The State of Maryland (4 Wheaton, 316). He further said that, while the Constitution forbade any State from impairing the obligation of a contract, it said nothing about the power of Congress in the premises. And that the provision that private property should not be taken for public use without due compensation, nor any person be deprived of his property without due course of law, had no application to the indirect ef« DISSENTING OPINION OF JUSTICE MILLER. 101 feet of great public measures whereby lands, stocks, contracts, etc., might depreciate in value, because, for in- stance, such an effect would doubtless succeed an imme- diate abolition of the tariff on iron by depreciating the value of furnaces and the capital employed in its man- ufacture, and yet no one would claim that such a re- peal was therefore unconstitutional and void. That the whole argument of the injustice of the law and of its being opposed to the spirit of the Constitution M'as too abstract and intangible for application to courts of jus- tice. That the act M'as passed to save the life of the Gov- ernment, to pay its soldiers and sailors, and other public debts. That the legal-tender clause was considered "necessary and proper" by Congress, and that the courts had no right to interfere with that discretion. " It would authorize this court to enforce theoretical views of the genius of the Government, or vague notions of the spirit of the Constitution and of abstract justice, by declaring void laws wliich did not square with those views. It substitutes our ideas of policy for judicial construction, an undefined code of ethics for the Consti- tution, and acourtof justice forthelS^ational Legislature." One Parker (Legal-Tender Cases, 12 Wallace, 457) was under contract to convey a lot of land to one Davis, upon payment of a certain sum of money. The contract was dated, and suit was brought upon it before the pas- sage of any of the legal-tender acts. After their pas- sage, to wit, in February, 1SG7, the Supreme Court of Massachusetts decreed that Davis should pay into court a certain sum of money, and that Parker should there- upon execnt-e a deed to him for the land in question. Davis accordingly paid into court tlie given sum in 162 UNITED STATES NOTES. United States notes. Parker refused to execute the deed on the ground that he was entitled to coin ; whereujwn the court changed the decree, and ordered that Parker sliould execute tlie deed upon payment by Davis into court of tlie specificed sum in United States notes. From that decree the case was appealed to the United States Supreme Court. The ease was argued at its De- cember term, ISTO, and decided on May 1, 1871 ; and on January 15, 1S73, the opinion of the court was de- livered by Justice Strong, who, with Justice Bradley, had been added to the court in 1870, by President Grant, making a full bench of nine. The other justices had sat in the case of Hepburn vs. Griswold. The court overruled the latter case and held the legal-tender acts to be constitutional both as respects contracts made be- fore their enactment as well as after. The court said, in reference to the case of Hepburn vs. Griswold : " That case was decided by a divided court, and by a court having a less number of judges than the law then in existence provided that this court shall have. These cases have been heard before a full court, and they have received our most careful consideration." Mr. Justice Bradley, in his separate concurring opinion, said : " And in this case, with all deference and respect for the former judgment of the court, I am so fully con- vinced that it was erroneous and prejudicial to the rights, interests, and safety of the general Government, that I, for one, have no hesitation in reviewing and overruling it. It should be remend^ered that this court, at the very '.erm in which, and within a few weeks after, the decision in Hepbui-n vs. Griswold was delivered, Avhen the vacancies on the bench were filled, determined to PREVIOUS OPINION OVERRULED. 163 hear the question reargued. This fact must necessarily liave had the effect of apprising tlie country that the de- cision was not fully acquiesced in, and of obviating any injurious consequences to the business of the country by its reversal." Justice Strong, in delivering the opinion of the court, reiterated and enforced the arguments made by the minority in Hepburn vs. Grisvvokl. He held tliat the distinction made by the Chief Justice in regard to the constitutional validity of the act as to debts contracted after its passage and debts conti-acted before, was not Avell founded, and that the fundamental question Avas, Can Congress constitutionally give to United States notes the character and quality of money ? If they can, then such notes can be made legally available to fulfil all contracts solvable in money, without reference to the time when such contracts were made, unless ex- pressly othei-wise provided. It was not insisted that Congress might make money of that which possessed no value. " What we do assert is, that Congress lias power to enact that the Govern- ments promises to pay monej^ shall be, for the time being, equivalent in value to the representative of value deter- mined by the coinage acts, or to multiples thereof." And that, therefore, all contracts calling for " dollars " simply, can be legally fulfilled by a tender of the Gov- ernment's promises to pay dollars, by force of the legal- tender acts, without regard to date. And on this point Mr. Justice Bradley, in his concurring opinion, after no- ticing that life, liberty, and property are enuallj sub- ject to be impaired, from the exercise of undoubted national powers in times of emei'gency or necessity, 164 UNITED STATES NOTES. says: " So with the power of tlie Government to borrow money, a power to be exercised by the consent of the lender, if possible, but to be exercised without his con- sent if necessary. And when exercised in the form of legal-tender notes or bills of credit, it may operate for the time being to compel the creditor to receive tlie credit of the Government in place of the gold which lie expected to receive from his debtor. All these are fun damental political conditions on which life, property, and money are respectively held and enjoyed under our sys- tem of government, nay, under any system of govern- ment. There are times when the exigencies of the State rightly absorb all subordinate considerations of private interest, convenience, or feeling ; and at such times the temporary, though compulsory, acceptance by a private creditor of the Government credit, in lieu of his debtor's obligation to pay, is one of the sliglitest forms in which the necessary burdens of society can be sustained. Instead of being a violation of such obliga- tion, it mei'ely subjects it to one of those conditions under which it is held and enjoyed." The Chief Justice, with whom concuri-ed Justices Kel- son, Field, and Clifford, delivered a dissenting opinion. He strenuously maintained his former views, as did also Justices Field and Clifford, in separate opinions. Tlie burden of their argument was, that the Constitution for- bade any State to make anything but gold and silver a legal tender, and granted to the Government only the right to coin this gold and silver, and regulate the value thereof and of foreign coin. And while the power to emit treasury notes was conceded as one means of bor- rowing money, yet that Congress had no right to make DISSENT OF CHIEF JUSTICE CHASE. 165 such notes money, or legal tender as money. Mr. Jus- tice Clifford showed that the words "and emit bills on the credit of the United States" were originally reported ill article seven, in the draft of the Constitution as sub- mitted to the convention. Mr. Morris moved to strike the clause out on the ground that it was unnecessar}', and a vicious suggestion of a power which would be unquestionably used anyhow without it. Mr. Madison thought it would be sufficient to let the clause remain, as it did not contain the hurtful power to make such bills legal tender, but finally voted in favor of striking out the clause entirely as was done, as elin)inating even a ''^j.yretext for a j^ajyer currency., and j>artiGula7''ly for inaking the hills a tender either for jpuhlic or jjrivate dehts,^'' without disabling the Government from the use of treasury notes. One Juilliard, a citizen of New York, made a sale of cotton to one Greenman, the defendant, wdio is a citizen of Connecticut, in Api-il, 1879, for $5,122.90, payable on delivery. The defendant tendered in payment $5,100 in United States notes of the series of 1ST8, which had been redeemed and reissued under the act of May 31, ISrS, and $22.90 in gold and silver coin. The coin was accepted, but the tender of the United States notes was rejected, and Juilliard claims judgment for $5,100 with interest and costs. The case was submitted in the United States Circuit Court at isew York in June with- out assignment, and a pro forma decision was rendered for the defendant, whereupon the plaintiff appealed to the Supreme Court. The opinioii of the court in the first legal-tender case submitted, which was concurred in by five judges out of lOG UNITED STATES NOTES. eight, was that at no time could Congress constitution- ally give the quality of legal tender to United States notes. Then came the decision of the United States Supreme Court, after the number of judges had been in- creased to nine, making these notes a legal tender for all debts, whether contracted before the passage of the legal-tender act or after that date. The constitutionality of the legal-tender acts was based upon the war powers of Congress, leaving the question still open whether said notes could be issued in time of peace. The decision of the Supreme Court delivered during the present term, wdiicli has been concurred in by eight judges, with but one dissentient, holds that under the Constitution Congress has power, if it deems it expe- dient, to issue legal-tender notes to any amount either in time of peace or war. The opinion of the court and the dissenting opinion are given in the Appendix. Since these opinions were rendered, resolutions have been introduced in the present Congress, both in the Senate and the House, proposing an amendment of the Constitution in regard to the issue of legal-tender paper money. As the Constitution provides that amendments to it sliall be concurred in by a vote of two-thirds of each House, and subsequently ratified by three-fourths of the Legislatures of the several States, it is probable that the questions presented in this volume will con- tinue to be discussed, both in Congress and by the people for many years to come. CHAPTER XII. THE DISTRIBUTION OF THE SURPLUS AMONG THE STATES. The following historical sketch is properly included in this volume, not alone on account of the recent dis- cussion of similar pi-opositions and the introduction of similar measures in Congress, but also for the reason, as may be seen by reference to Chapter YI., that the dis- tribution of the surplus was the immediate cause of the issue of treasury notes during the period of the finan- cial crisis of 1837. The report of the Secretary of the Treasury, William H. Crawfoid, for 1816, and his reports and those of his successoi', Hichard Hush, for succeeding years up to 1827, had in the estimates made shown an available sin'plus of revenues over all expenditures of from two to six millions of dollars. This led to some discussion as to the best method of employing this surphis. Secretary Crawford suggested in 181G that it be used in internal improvements. In 1827 the first proposition to distribute the surplus was made in Congress, A bill for the distribution of $5,000,000 annually for four years was introduced and Laid on the table. On motion of Mr. Dickerson, of IS^ew Jersey, the author of the measure, it was taken up for discussion. He stated its principal object to be to pro- lOS UNITED STATES NOTES. viilc tlic States witli money for edneatioiuil and internal improvenionts. But Congress adjourning soon alter- ■\vard, it received but little attention. The Secretary of the Treasury (Ingham), in his report to Congress in December, 1829, estimated that the reve- nues of the Government for that year wonld amount, in- cluding the balance on hand on January 1st, to $30,574,- Q>m, and the expenditures to $26,164,595, of which $9,841,011 was on account of principal and $2,563,994 on account of interest of the public debt. He also esti- mated that the public revenue for the next five years would be such as to leave free for application to the pay- ment of the public debt about twelve millions yearly. The amount of debt becoming due or payable during the next five years was $48,522,869. The surplus, after paying this indebtedness, would be twelve millions. The Secretary did not favor a sudden change in the tariff, bnt recommended such gradual changes as would reduce the revenues to correspond with the existing ex- penditnre. President Jackson, in his message to Congress in 1829, said : " After the extinction of the public debt, it is not probable that any adjustment of the tariff, npon principles satisfactory to the people of the Union, will, vmtil a remote period, if ever, leave the Govern- ment without a considerable surplus in the treasury be- yond what may be required for its current service. As, then, the period approaches when the application of the revenue to the payment of debt will cease, the disposi- tion of the surplus will present a subject for the serious deliberation of Congress, and it may be fortunate for the country that it is yet to be decided. Considered in JACA'SOS FAVORS DISTRIBUTION IN 1829. 1G9 connection with the difficulties which have lieretofore attended appropriations for purposes of internal im- provement, and with those which this experience tells lis will certainljarise whenever power over such subjects may be exercised by the general Government, it is hoped that it may lead to the adoption of some plan which will reconcile the diversified interests of the States, and strengthen the bonds which unite them. Every mem- ber of the Union, in peace and in war, will be benefited by the improvement of inland navigation and the con- struction of highways in the several States. Let ns, then, endeavor to attain this benefit in a mode which will be satisfactory to all. That hitherto adopted has, by many of our fellow-citizens, been deprecated as an infraction of the Constitution, while by others it has been viewed as inexpedient. All feel that it has been employed at the expense of harmony in the legislative councils. To avoid these evils, it appears to me that the most safe, just, and federal disj)osirioii which could be made of the surplus revenue, would be its ajiportionment among the several States according to their ratio of rep- resentation ; and should this measure not be found war- ranted by the Constitution, that it would be exjiedient to propose to the States an amendment authorizing it. I regard an appeal to the source of power, in cases of real doubt, and where its exercise is deemed indispensable to the general welfare, as among the most sacred of all our obligations." It thus appears that President Jackson regarded as unconstitutional the appropriation of money for in- ternal improvements by Congress, and, in view of the anticipated surplus, suggested that its distribution 8 170 UNITED STATES NOTES. among the States will enable tliem to make such im- provements without the assistance of Congress. lie in- timated that such a distribution would be constitutional, but if there was any doubt on this point, an amendment would remove the difficult}'. During the session of Con- gress of 1829-30, the duties on tea, coffee, cocoa, salt, and also on tonnage, were reduced, but the reductions were not sufficient to exhaust the surplus after the debt then maturing should be paid. In his message for December, 1830, President Jack- son referi-ed to this subject as follows : " In my first message I stated it to be my opinion that it is not prob- able that any adjustment of the tariff, upon principles satisfactory to the people of the Union, will, until a re- mote period, if ever, leave the Govermnent without a considerable surplus in the treasury beyond what may be required for its current services. I have had no cause to change this opinion, but much to confirm it." The Secretary of the Treasury', in his report for 1832, says: "After January 1, 1833, no part of the public debt, except the remaining fragments of the unfunded debt, of which only small portions are occasionally pre^ sented, will be redeemable before the following year ; and, though there will be in the treasnry during the year ample means to discharge the whole debt, they can be applied only to the purchase of stock at the market prices." The whole public debt was virtually extinguished by January 1, 1835, on which date the balance of available funds in the treasury was 85,586,232. It was estimated that for the year 1835 the receipts from all sonrces would be twenty millions ; the actual receipts wero WOODBURY OPPOSES DISTRIBUTION. Ill $35,430,087, the receipts from the sale of the public liuids during that year having gi-eatly increased. In 183-i these receipts were only $4,857,600, but in 1835 they were $14,757,000. The receipts from the sales of public lands in 1834-5-6 were $44,492,381, and the total receipts from this source, from 1796 to 1834, were but $44,595,000. The balance left in the treasury at the beginning of the year 1833 was $2,011,777 ; in 1834, $11,702,905; in 1835, $8,892,858, and on Janu- ary 1, 1836, $26,749,803. In view of this large balance, and its probable large increase by January 1, 1837, the act of June 23, 1836, was passed, authorizing the distribu- tion of the surplus among the States. As has been seen, this method of disposing of the sur- plus was favorably suggested by President Jackson in his message for 1829, and again indorsed by him in his message for 1830. In 1836, however, the views of the President appear to have changed. Secretary Wood- bury, in his report for 1835, disapproved of the distri- bution of the sui'plus among the States, intimating that it was unconstitutional. He said : " The people them- selves, it is believed, can best manage all their own money which they and their representatives think may not be wanted for public purposes ; and it would seem to be far preferable to leave it originally in their possession, than to withdraw it for the expensive operation of returning it substantially to the place whence it came, and that probably in a manner not conformable to the Constitution, till after the delay of procuring an amendment to it ; and even then not expedient, because calculated injudiciously to strengthen the general Government, and to render the States more 1(2 UNITED STATES NOTES. dopemlent on a great central power for yearly and im- portant resources. Indeed, a reduction in the price of public lands, whose unusually lai'ge sales the past year are the source of most of the present surplus, would, if their sales should not thereby be much increased, seem another mode far more natural to obviate the present difficulty. But, before adopting it, this and various other considerations must be weighed, and it must be fully considered wliether all the revenue anticipated from them at their present prices would not be neces- sary, after the great reductions in the tariff in 18^2, and W'hether a resort to a higher tariff would not then be- come indispensable, if the average receipts from lands or customs should, from any new legislation, become then nnich diminished below the estimates which Lave been submitted on the present occasion." This change of opinion of the Administration from 1829 to 1836 was probably owing to the hostility of the President to the Bank of the United States, result- ing in the veto of the bill for renewal of its charter on July 10, 1832, and the removal of the United States deposits from the bank hy order of the Secre- tary of the Treasury of September 26, 1833. In 1835 and 1836 the revenues of the Government were de- posited with the State banks, the favorites of the Ad- ministration, and the distribution of the surplus at this time among the States would have deprived these banks of the deposits. In his message to Congress of 1836, after the passage of the act of June of that year, regulat- ing the public deposits, and providing at the same time for the distribution of the surplus in the treasury on January 1, 1837, President Jackson said : " Without de- JACKSON OPPOSES DISTRIBUTION IN 1836. 173 siring to conceal that the experience and observation of tlie last two years have operated a partial change in my views upon this interesting subject, it is nevertheless re- gretted that the suggestions made by me in my annual message of 1829 and 1830 have been greatly misunder- stood. At that time the great struggle was begun against that latitudinarian construction of the Constitu- tion which authorizes the unlimited appropriation of the revenues of the Union to internal improvements within the States, tending to invest in the hands, and place under the control, of the general Government all the principal roads and canals of the country, in violation of State rights and in derogation of State authority. At the same time the condition of the manufacturing; interest was such as to create an apprehension that the duties on imports could not, without extensive mis- chief, be reduced in season to prevent the accunmlation of a considerable surplus after the payment of the na- tional debt. In view of the dangers of such a surplus, and in preference to its application to internal improve- ments, in derogation of the rights and powers of the States, the suggestion of an amendment of the Consti- tution to authorize its distribution was made. It was an alternative for what was deemed greater evils — a temporary resort to relieve an overburdened treasury until the Government could, without a sudden and de- structive revulsion in the business of the countiy, grad- ually return to the just principle of raising no more revenue from the people, in taxes, than is necessary for its economical support. Even that alternative was not spoken of but in connection with an amendment of the Constitution." 174 UlTITED STATES NOTES In the nipfiiitinie Jackson, in liis attack on tlie T?ank of tlie United IStates, liad been bitterly opposed by Clay, Callionn, Webster, and a majority of both Houses of Congress, hy whom many of his acts were re- garded as an exercise of arbiti-ary power. In his lirst message in 1829 he recommended that the Bunk of the United States should not be rechartered. In Jan- uary, 1832, the bank's memorial for recharter was pre- sented both in the House and Senate, and, after some de- bate, the bill for the recharter passed both Houses. This bill was vetoed, on July 10th, by the President, and the recharter of the bank was made one of the issues of the campaign of 1832. Henry Clay was defeated and Jack- son re-elected, and the latter claimed that the result was an indorsement of his policy against the bank. During the suuimer of 1832, Jackson, as a measure of hostility against the bank, conceived the project of the removal of the United States deposits. Benton, in his " Thirty Years' View " (vol. i., p. 377), says : " General Jackson was not the man to tolerate these illegalities, corruptions, and indignities. He therefore determined on ceasing to use the institution any longer as a place of deposit for the public moneys ; and accordingly conmm- nicated his intention to the Cabinet, all of whom had been requested to assist him in his deliberations on the sub- ject. The major part of them dissented from his design ; whereupon he assembled them on September 22d and read to them a paper containing his views on this subject. This paper concludes as follows : ' Under these convic- tions he feels that a measure so important to the iVmeri- can people cannot be commenced too soon ; and he there- fore names the first day of October next as a period PUBLIC MONEY IN THE PET BANKS. 175 proper for tlie change of the deposits, or sooner, pro- vided the necessary arrangements with the State banks can be made.' " Secretary Duane refused to carry out the wishes of the President without a previous refer- ence to Congress. Roger B. Taney, tlien Attorney- General, was made Secretary of the Treasury, and issued the order for the removal of the deposits on September 2G, 1833. The opponents of the Administration, looking at the snrplus revenue, regarded the propositions made for dis- tribution of the surplus among the States favorably, as tending to deprive the President of a portion of au immense patronage. The deposit of the public money in the pet banks had been followed by great financial distress, continuing during the year 1834 ; and previous to and during that year propositions were frequently made in the public press for distribution of the surplus revenue among the States as a measure of relief. These propositions were first in the form of a distribu- tion of the revenue from public land, then a distribution of the public lands themselves, and finally the distribu- tion of both land and customs revenues. During the session of 1835, on motion of Mr. Cal- houn, a select connnittee, consisting of Calhoun, Web- ster, Benton, Bibb, Southard, and King, were appoint- ed to inquire into the extent of executive patronage, the increase of public expenditures, and the number of persons employed or fed by the executive Government, The connnittee assumed that there w^ould be an annual surplus of nine millions for the next eight years. It re- garded the disposal of this surplus as a problem to be solved with great difficulty, but one wdiich was import- 170 UNITED STATES NOTES. nut to determine, lest the Executive should greatly increase his power by depositing the public funds with the favorite banks. The committee accordingly "re- ported a resolution so to amend the Constitution that the money remaining in the treasury at the end of each year, till January 1, 1843, deducting therefrom the sum of §2,000,000 to meet current and contingent expenses, shall annually be distributed among the States and Ter- ritories, including the District of Columbia; and, for that purpose, the sum to be distributed to be divided into as many shares as there are Senators and llepresent- atives in Congress, adding two for each Territory and two for the District of Columbia ; and that there shall be allotted to each State a number of shares equal to its representation in both Houses, and to the Territoi'ies, including the District of Columbia, two shares each. Supposing the surplus to be distributed should average isO,000,000 annually, as estimat"erices of the multitude ; they cannot be manufactured or decreed into existence, and they do not peiish by lapse of time. They have, therefore, naturally, if not necessarily, become throughout the world a standard of value. In exchange for pieces of them, products requiring an equal amount of labor are readily given. When the product and the piece of metal rej^resent the same labor, or an approxi- mation to it, they are freely exchanged. There can be no ade- quate substitute for these metals. Says Mr. Webster, in a speech made in the House of Representatives in 1815 : " The circulating medium of a commercial community must be that which is also the circulating medium of other commer- cial communities, or must be capable of being converted into that medium without loss. It must also be able, not only to pass in payments and receipts among individuals of the same society and nation, but to adjust and discharge the balance of exchanges between different nations. It must be something which has a value abroad as well as at home, by which foreign as well as domestic debts can be satisfied. The precious metals alone answer these purposes. They alone, therefore, are money, and whatever else is to perform the functions of APPENDIX. 223 money must be thoir representative, and capable of being tnrnetl into them at will. So long as bank pajjer retains this quality it is a substitute for money ; divested of this, nothing can give it that character " (3 Webster's Works, 41). The clause to coin money must be read in connection with the jDrohibition ui)on the States to make anything but gold and silver coin a tender in payment of debts. The two taken together clearly show that the coins to be fabricated under tho authority of the general Government, and as such to be a legal tender for debts, are to be composed principally, if not entirely, of the metals of gold and silver. Coins of such metals are necessarily a legal tender to the amount of their respective values without any legislative enactment, and the statute of the United States providing that they shall be such tender is only declaratory of their effect when offered in payment. When the Constitution says, therefore, that Congress shall have the power to coin money, interijreting that clause with the pro- hibition upon the States, it says it shall have the power to make coins of the precious metals a legal tender, for that alone which is money can be a legal tender. If this be the true im- jjorfc of the language, nothing else can be made a legal tender. We all know that the value of the notes of the Government in the market, and in the commercial world generally, depends upon their convertibility on demand into coin ; and as confi- dence in such convertibility increases or diminishes, so does the exchangeable value of the notes vary. So far from becom- ing themselves standards of value by reason of the legislative declaration to that effect, their own value is measured by the facility with which they can be exchanged into that which alone is regarded as money by the commercial world. They are promises of money, but they are not money in the sense of the Constitution. The term money is used in that instrument in several clauses ; in the one authorizing Congress " to borrow money;" in the one authorizing Congress "to coin money;" in the one declaring that " no money " shall be drawn from the treasuiy but in consequence of appropriations made by law ; and in the one declaring that no State shall " coin money." 224 APPENDIX. And it is a Rottlocl rule of interpretation that the same term occurring in dill'ereut parts of the same instrument shall ba taken in the same sense, unless there be something in the con- text indicating that a different meaning was intended. Now, to coin money is, as I have said, to make coins out of metallic substances, and the only money the value of which Congress can regulate is coined money, either of our mints or of foreign countries. It should seem, therefore, that to borrow money is to obtain a loan of coined money, that is, money composed of the jjrecious metals, representing value in the purchase of property and payment of debts. Between the promises of the Govern- ment, designated as its securities, and this money, the Constitu- tion di'aws a distinction, which disappears in the opinion of the COUl't. The opinion not only declares that it is in the power of Con- gress to make the notes of the Government a legal tender and a standard of value, but that under the power to coin money and regulate the value thereof, Congress may issue coins of the same denominations as those now already current, but of less intrinsic value, by reason of containing a less weight of the precious metals, and thereby enable debtors to discharge their debts by payment of coins of less real value. This doctrine is put forth as in some way a justification of the legislation authorizing the tender of nominal money in jslace of real money in payment of debts. Undoubtedly Congress has power to alter the value of coins issued, either by increasing or diminish- ing the alloy they contain ; so it may alter, at its pleasui'e, their denominations ; it may hereafter call a dollar an eagle, and it may call an eagle a dollar. But if it be intended to assert that Congress can make the coins changed the equivalent of those ha^ang a greater value in their previous condition, and compel parties contracting for the latter to receive coins with diminished value, I must be permitted to deny any such authority. Any such declaration on its j^art would be not only utterly inopera- tive in fact, but a shameful disregard of its constitutional duty. As I said on a former occasion : " The power to coin money, as declared by this court, is a great trust devolved upon Con- ArrENDIX. '225 gress, carrying with it the duty of creating and maintaining a uniform standard of value throughout the Union, and it would be a manifest abuse of this trust to give to the coins issued by its authority any other than their real value. By debasing the coins, when once the standard is fixed, is meant giving to tlie coins, by their form and impress, a certificate of their having a relation to tbat standard different from that which, in truth, they possess ; in other words, giving to the coins a false certifi- cate of their value. Arbitrary and profligate governments have often resorted to this miserable scheme of robbery, which Mill designates as a shallow and impudent artifice, the ' least covert of all modes of knavery, which consists in calling a ehilling a pound, that a debt of one hundred pounds may be cancelled by the payment of one hundred shillings.' " No such debasement has ever been attempted in this country, and none ever will be so long as any sentiment of honor influences the governing jjower of the nation. The changes from time to time in the quantity of alloy in the different coins have been made to preserve the proper relative value between gold and silver, or to prevent exportation, and not with a view of debasing them. Whatever j)ower may be vested in the Government of the United States, it has none to perpetrate such monstrous iniqiiity. One of the great purposes of its creation, as expressed in the i^reamble of the Constitution, was the establishment of justice, and not a line nor a word is found in that instrument which sanctions any intentional wrong to the citizen, either in war or in peace. But beyond and above all the objections which I have stated to the decision recognizing a power in Congi-ess to impart the legal-tender quality to the notes of the Government, is my objection to the rule of construction adopted by the court to reach its conclusions, a rule which, fully carried out, would change the whole nature of our Constitution and break down the barriers which separate a government of limited from one of unlimited powers. When the Constitution came before the conventions of the several States for adoption, apprehension existed that other powers than those designated might be claimed ; and it led to the first ten amendments. When these lU* 220 APPENDIX. were iivesented to the States they wore preceded by a preamhle stating that the conventions of a number of the States had, at the time of adopting the Constitution, expressed a desire, " in order to prevent misconception or abuse of its powers, that further deehxratory and restrictive clauses should be added." One of them is found in the tenth amendment, which declares that " the powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the peoi^le." The framers of the Constitution, as I have said, were profoundly impressed with the evils which had resulted from the vicious legislation of the States making notes a legal tender, and they determined that such a power should not exist any longer. They therefore prohibited the States from exercising it, and they refused to grant it to the new government which they created. Of what purpose is it, then, to refer to the exercise of the power by the absolute or the limited governments of Europe, or by the States previous to our Constitution ? Congress can exercise no j^ower by virtue of any siipposed inherent sovereignty in the general Government. Indeed, it may be doubted whether the power can be correctly said to appertain to sovereignty in any ^jroper sense as an attribiite of an independent political community. The power to commit violence, perj^etrate injustice, take jiri- vate property by force without compensation to tlie owner, and compel the receipt of promises to pay in place of money, may be exercised, as it often has been, by irresi^onsible authority, but it cannot be considered as belonging to a government founded upon law. But be that as it may, there is no such thing as a power of inherent sovereignty in the Government of the United States. It is a governmant of delegated powers, supreme within its prescribed sphere, but jjowerless outside of it. In this coimtry sovereignty resides in the people, and Con- gress can exercise no power which they have not, by their Constitution, entnisted to it ; all else is withheld. It seems, however, to be supposed that, as the power was taken from the States, it coiild not have been intended that it should dis- appear entirely, and therefore it must in some way adhere to APPENDIX. 227 the general Government, notwithstanding the tenth amend- ment and the nature of the Constitution. The doctrine, that a power not expressly forbidden may be exercised, would, as I have observed, change the character of our Government. If I have read the Constitution aright, if there is any weight to be given to the uniform teachings of our great jurists and of com- mentators previous to the late civil war, the true doctrine is the very opposite of this. If the power is not in terms granted, and is not necessary and proper for the exercise of a power which is thus granted, it does not exist. And in determining Avhat measures may be adojited in executing the powers granted, Chief-Justice Marshall declares that they must be appropriate, l^lainly adapted to the end, not jjrohibited, and consistent icith the letter and spirit of the Constitution. Now, all through that instmment we find limitations upon the jDower, both of the gen- eral Government and the State Governments, so as to prevent oj^pression and injustice. No legislation, therefore, tending to l^romote either can consist with the letter and spirit of the Consti- tution. A law which interferes with the contracts of others and compels one of the parties to receive in satisfaction something different from that stipulated, without reference to its actual value in the market, necessarily works such injustice and wrong. There is, it is true, no provision in the Constitution of the United States forbidding in direct terms the passing of laws by Congress impairing the obligation of contracts, and there are many express jsowers conferred, such as the power to de- clare war, levy duties, and regTilate commerce, the exercise of which affects more or less the value of contracts. Thus war necessarily suspends intercourse between citizens or subjects of belligerent nations, and the jierformance during its con- tinuance of previous contracts. The imposition of duties upon goods may affect the prices of articles imported or manufac- tured, so as to materially alter the value of previous contracts respecting them. But these incidental consequences arising from the exercise of such jiowers were contemplated in the grant of them. As there can be no solid objection to legis- lation under them, no just complaint can be made of such con- 228 APPENDIX. Beqxiences. But fai' difTeront is tlie case when tlie impairment of the contract does not follow incidentally, but is dii'ectly and in terms allowed and enacted. Legislation operating directly upon private contracts, changing their conditions, is forbidden to the States ; and no power to alter the stipulations of such contracts by direct legislation is conferred upon Congress. There are also many considerations, outside of the fact that there is no grant of the power, which show that the framers of the Constitution never intended that such power should be exercised. One of the gi-eat objects of the Constitution, as al- ready obsei"ved, was to establish justice, and what was meant by that in its relations to contracts, as said by the late Chief Justice in his opinion in Hei^burn vs. Griswold, was not left to inference or conjecture. And in support of this statement he refers to the fact that when the Constitution was undergoing discussion in the convention, the Congress of the Confedera- tion was engaged in framing the ordinance for the government of the Northwest Territory, in which certain articles of com- pact were established between the people of the original States and the i^eople of the Territoiy for the purpose, as expressed in the instrument, " of extending the fundamental i^rinciples of civil and religious libeiiy, whereon these republics [the States united under the confederation], their laws and constitu- tions are erected." That Congress was also alive to the evils which the loose legislation of the States had created by inter- fering with the obligation of private contracts and making notes a legal tender for debts ; and the ordinance declared that in the just jjreservation of rights and j)roperty no law " ought ever to be made, or have force in the said Teridtoiy, that shall in any manner whatever interfere with or r.fifect private con- tracts, or engagements, bona fide and without fraud, previously formed." This principle, said the Chief Justice, found more condensed expression in the prohibition upon the States against impairing the obligation of contracts, which has always been recognized " as an efficient safeguard against injustice ; " and the coxirt was then of opinion that " it is clear that those who framed and those who adopted the Constitution intended that APPENDIX. 220 the spirit of this prohibition should pei-vade the entire body of legiskxtion, and that the justice which the Constitution was ordained to establish was not thought by them to be coni- palible with legislation of an opposite tendency." Soon after the Constitution was adopted the case of Calder vs. Bull came before this court, and it was there said that there were acts which the Federal and State legislatures could not do without exceeding their authority ; and among them was mentioned a law which jjunished a citizen for an innocent act, and a law which destroyed or impaired the lawful private contracts of citizens. "It is against all reason and justice," it was added, ' ' for a peojDle to entrust a legislature with such powers, and, therefore, it cannot be presumed that they have done it " (3 Dallas, 388). And Mr. Madison, in one of the ai-ticles in the Federalist, declared that laws impairing the obligation of con- tracts were contrary to the first principles of the social com- pact, and to every principle of sound legislation. Yet this court holds that a measm-e directly operating upon and neces- sarily impairing private contracts, may be adopted in the execu- tion of powers specifically granted for other pui'poses, because it is not in terms prohibited, and that it is consistent with the letter and spirit of the Constitiition. From the decision of the court I see only evil likely to fol- low. There have been times within the memory of all of us when the legal-tender notes of the United States were not exchangeable for more than one-half of their nominal value. The possibility of such depreciation will always attend paper money. This inborn infirmity no mere legislative declaration can cure. If Congress has the power to make the notes a legal tender and to pass as money or its equivalent, why should not a sufficient amount be issued to pay the bonds of the United States as they mature ? "Why pay interest on the millions of dollars of bonds now due, when Congress can in one day make the money to pay the principal ? And why should there be any restraint upon unlimited appropriations by the Government for all imaginary schemes of public improvement, if the print- ing-press can furnish the money that is neeeled for them ? INDEX, Accumulation of notes in Treasury, 45. Action of Piirliamont in 1720, ,1 ; of Parliament in 17 tU, o ; of Parlia- ment in 1751, o; of Colonies, o ; of Continental Congress, 9 ; of Federal Convention, 13. Acti m, Congressional. See Acts. Action of States in regard to sur- plus, 181. Acts of Parliament prohibiting paper money in Colonies, of 1720, 3; of 1740, o; of 1751, :; ; for issue of Treasury notes, of June 30, 1812, 2U; of February 2.5, 1813, 29; of March 14, 1814, 30; of December 2(i, 1814, 30 ; of Feb- ruary 24, 1815, 33; of October 1. 1837, 42; of May 1, 1838, 45; of March 2, 1839, 45 ; of March, 31, 1840, 4(5; of February 15, 1841, 49; of January 31, 1843, 51; of August 31. 1842, 51 ; of March 3, 184 J, 51 ; of July 22, 1846, 04 ; of January 28, 1847, (YJ ; of Decem- ber 23. 1857, 70 ; of December 17, 18fi0, 75. Acts authorizing Treasury notes, of March 2, 1861, 79. Acts authorizing 7-30 notes, of July 17, 1861, 88; of August 5, 1861, 88 ; of June 30, 1864, 97 ; of March 3, 1865, 97. Acts authorizing demand notes, of July 17, 1801, 88; of August 5, 1861, 88. Acts, miscellaneous, of June 22, 18(;0, 72 ; of February 8, 1861, 79 ; postal note, 100 ; prohibiting shin- plasters, 103 ; for retiring 7-30 notes, 113; authorizing four per cent, ccrtiticatts, 1 17 ; authorizing additional issue bank circulation, 114; authorizing issue of legal ten- ders, 136, 138 ; authorizing issue of gold certificates, 115; authorizing issue of legal-tender note cer- tificates, 116; authorizing cancel- lation of legal tenders, 140 ; repeal- ing right to fund legal-tender notes, 138 ; for resumption of specie payments, 141 ; removing restrictions as to limit of issue of National bank notes, 140 ; coinage of 1792, 148; of 1873, 149; au- thorizing silver dollars, 152 ; au- thorizing silver ceitificates, 152 ; regulating deposits with State banks, Vt2 \ authorizing deposit of surplus money with the States, 172. Adams, John Qiiincy, opposes post- ponement bill, 187. Additional issue of notes, 30. Administration, Harrison's, 49 Van Burin's, 50; Tyler's, 53 Buchanan's, 71; Lincoln's, 117 Jackson's, represented by Benton in Senate, 176 ; Hayes', 150. Advances made by banks to Govern- ment, 96. Advantages to banks in placing 7-30 notes, 94. Allegations of favoritism to banks, 29, 175. Alley, John B. B,emarks on legal- t-nder bill, 12.5. Amendment to Constitution to per- mit distribution of siuplus, sug- gesteil by Jackson, 169. Amount of Treasury notes author 232 INDEX. kcd in 1812, LTi ; of bank currency, ;>1 ; of Treasury notes outstand- ing iu IS14. 31 ; of notes author- i'.ed, 4"3 ; largest outstanding at any one time, 45 ; amount out- standing at advent of Harrison's administration, 50 ; issued under Act of Februarv, 1841, 4'J; of notes issued fi-om iS3T to 1841, 49; notes falling due dtiringyear 184o, 51 ; of loan of 184(5, (14 ; issues and reissues under Act of 1847, C9 ; Treasury notes outstanding in 18G0, 71 ; in 1884, 71 ; of Treasury notes issued under the Act of March 2, 18t)l, 79; of 7-30 notes taken by New York bankers, 9o; of fraction- al cun-ency issued, 104 ; of surplus due from States carried as una- vailable on Treasury books, 188 ; authorized under v irious Acts, 52. Anticipation of revenues by u&e of Treasury notes, 41). Antipathy to paper money, 10. Anxiety to obtain fractional cur- rency, 104. Apportionment of deposit banks among States, 182. Apportionment of surplus revenue among States, recommended by Jackson, 169; opposed by Jackson, 171 ; basis of, 180. Appropriation of public money for improvements thought unconsti- tutional, 169 ; required to take surplus from Treasr.rj-, 189. Approval of bills. See Acts. Arguments for and against Treasury notes in 1812, 22; in 1813, ^9; iu 1814-15, 31 ; in 18:;7, 41 ; in 18:J8, 43; in 1840, 46; in 1842, 51 ; of Committee of Ways and Means in 1844, against Treasury notes, 54 ; in Federal Convention, 14; in 1802, 125 ; in legal-tender cases, 150- 166 ; relative to distribution of sur- plus, for and against, in 1829, 111 ; in 1835, 172 ; of Jackson's oppo- nents, 175 ; of Ben tou, against, 177; for and against po.'itponemeiit of fourth instalment, 183-188. Arrangements with New York banks for placing 7-30 loan, 93. Attorney General Bates' opinion as to legal tender, 121. Authority to issue bills, States de- j)rivcd of, 10. Authority to coin money, States de- {)nved of, 10. Available balance in Treasury at various dates, I'll. Banks, land, proposed by John Coleman, 1 ; deteat of laud, 2 ; paper money, under auspices of Treasury, 2 ; loan of mercliants of Boston, 2 ; second land, proposed by Coleman, 2 ; plan of, 3 ; oppose 1 by Governor Belcher, 3; Hutchi- son's .'■pei ie, o ; charter of, liy Stares, 11 ; power of Congress to create, to circulate bills, 11 ; Na- tional r&c( mmencled, 31 ; Second, of United States, 41 ; National, Hamilton's repoit on, 19; propo- sition to tax circulation on, 51. Banks of New York City strengthen hands of Government, 143. Banks, right to issue paper money when chartered by States, 11 ; to circulate bills when chartered by Congress, 11; bad condititn of currency of, iti 181.5, 31; great increase iu number of, 31 ; alleged favoritism shown to, 29; resump- tion of specie payments by, 43 ; negotiations and agreements with, 95 ; advances agreed to be made by, ',:6; National, bill for, 120; of deposit in 1837, 182 ; forms of let- ters sent to, directing transfer of deposits, 183 ; losses from failure to pay specie, 183; specie pajments suspended by, in 1814. 31 ; in 1837, 40 ; in 1857, 70 ; am.ounts due Gov- ernment from insolvent, 43 ; re- sumption of specie payments by, in 1837, 43 ; use of, as depositories of Government money, 40, 172; favor- ites of the administration, 172. Bank circulation, Benton's propo- sition to tax, 51 . Bank vs. Supervisors, legal-tender case, 156. Bank of Commerce vs. New York City, 156. Banking Act, free, of New York State, 43. Banking Act, National, 120. Bates, Attorney-General, opinion INDEX. 233 as to constitutionality of legal- tender bill, 1:31. Bayard, Thomas F. , Delaware, re- maiks on legal-tender Ijill, 133. Ueloher, Governor, Massachusetts, intrij;ues of paper money advocates against, 4 ; proclamation of, 5 ; difierences with Legislature, 6 ; forced to retire, 4 ; subsequently Governor of New Jersey, 4 ; let- ter to Hutchison, 0. 3ell, John, Tennessee, opposes bill for postponement of I'ourtli instal- ment of surplus, 1ST. Benton, Thos. H., Missouri, moves to increase denominations of Treas- ury notes, 41 ; in favor of Treas- ury notes, 41 ; in favor of Treasury note bill of 1 SoJS, 4.t ; proposes to ta.K bank circulation, 51 ; objects generally to issue of Treasury notes, 41 : '' Thirty years' view " upon Jackson's course toward Bank of United States, 174; made member of committee to inquire into Federal expenditure, 175; defends Jackson's administration, 17G ; opposes bill for distribution of surplus, 177 ; his description of Jackson's repugnance to sign bill for distribution of surplus, 178 ; remarks on use of deposits made by States, 190. Bibb, Geo. M. , Secretary of Treas- ury, 53 ; member of committee to inquire inio extent of Executive patronage, 175. Bids, for Treasury notes, 76 ; for bonds, 80. Bills, for Treasury notes 1813, 15 ; arguments for and against, 23 ; for Treasury notes 1813, 29 ; for Treasury notes 1837, 41 ; for new issue of Treasury notes 1838, 43; for Treasury notes 1840, 4(5 ; long debate on bill of 1840, 4() ; loan introduced by Millard Fill- more, 50; objections to Fillmore's loan bill, .50; Fillmori's loan, bitter debate on, 50 ; for issue and reissue of Treasury notes intro- duced 1842, 51 ; Treasury notes of 1843, 51 ; Treasury notes of 184(i, 63; Treasury notes of 1847, 04; Treasury notes of 1857, 70 ; National Bank, 130 ; legal-tender, 121 ; exchequer of President Ty- ler, 53 ; for loan and issue of Treasury notes, 63 ; legal tender (.stf Legal tenilcrs) for rechartcr of Bank of United States, 174 ; for distribution of surplus rev- enue, 167. 177 ; for postponement of payment of fourth instalment of surplus, 184. Bills of credit, in Federal Conven- tion, 13 ; authority of States to issue, 13 ; power of Congress to emit, 13 ; discussion of right to make legal tinder, 14 ; Hamilton's opinion as to, 19 ; revolutionary, bore interest, 44 ; definition of, by Chief Justice Marshall, 44 ; argu- ment of committee of House in 1844 as to rignt to issue, 54-61. Blaine, James G., Maine, discusses policy of legal tender issues in "Twenty Years m Congress," 144-147. Blake, Harrison G., Ohio, remarks on legal-tender bill, 125. Board of Supervisors of New York City claim greenbacks are not obligations of the United States, 1.56, 157. Bollan, Tl.os. , agent of Province of Massachusetts in England, 7. Bonds, U. S., discount during period 1812-1815, L9 ; discount during 1860, 1861, "ja Bradley, Mr. Justice, of Supreme Court, separate concurring opin- ion in legal-tender case, 1 62. Brown, Bedford, Senator from North Carolina, in favor of Treas- ury note bill, 4.5. Bubble Act enacted by Parliament in 1720, 7. Buchanan, Jas., President, Treasury notes of administration of, 70 ; amendment to bill for postpone- ment of fourth instalment of sur- plus, 186. Cabinet, Jackson's, dissent from his views, 174 ; paper read to, 174 ; changes in, 17.5. Calhoun , Jno. C. , of South Carolina, in favor of Treasury note bill of 1838, 45 ; makes motion in Senate for select committee, 175. Cambreling, Churchill C, of New 234 INDEX. York, introduces Treasury note bill, 4o ; aigiimeut of, in favor of 1)11), 4:;. Capital, of Confeekrate States at M.>nt^';oinery, Ala., 85 ; Washing- ton, D. (1, in danr;er, 8- J Capital of depository banks in 1S30, 1><3. Cases, legal-tender. Bank vs. Su- pervisors, 157; Hepburn vx. Gris- wold, l.")8; Parker r.s. Davis, 1(3; Juilliard rs. lUie man, Ki"). Certificates, tour per cent., denomi- nations of, 117; convertible into four per cent, bonds, 117; unneces- 1 6ary, 117; eagerness of the people I to obtain, 117. Certificates, gold, issued under act 1 of March d, 1863, 11.5; used for! Clearing-house purposes, 114; de- nominations of, 115 ; coin an I bullion deposited for, 115; issued in payment of in erest on public debt, 115; terms of issue, 115; amount outstanding, IIG; of act of July 12, 1882, 1.55 ; amount issued under act of July 12, 1882, 15.5. Certificates, legal-tender, bear no in- terest, 110; used for Clearing house purposes, 116; payable in U. S. notes at place of issue, 116; held in reserve by national banks, 1 16 ; amount reduced after resumption of specie payments, 116 ; amount outstanding, 118. Certificates, loan, to be made a legal tender, 43. Certificates, silver, authorized by act of February 28, 1878, 1.52 ; denom- inations of, 152; coin deposited for, to remain in Treasury, 1.52 ; to be receivable for customs, taxes, and dues, 152; may be reissued, 152; amount outstanding, 153 ; act of July 12, 1882, makes available for reserve of national banks, aud re- servable for Clearing-house bal- ances, 155 ; not a legaFtender, 155. Certificates, three per cent. , author- ized, 113; excess of bank reserve invested in, 114 ; advantage for Clearing-house purposes, 114; amount of lirst issue, 114; addi- tional amount, 114; to 1 >e cancell- ed, 114 ; terms of redemption, 1 15. Chase, Salmon P., Ohio, (Secretary of Treasury, S6 ; estimates in 1861, 86 ; recommends loan of one liiiu- dicn nullions in Treasury notes bearing 7-, ',5 per cent, interest, 86 ; signs circular to receive demand notes for .salary, 89 ; consults with the banks, ',)4, U5 ; letter of, to the Ways and Means Committee, 122 ; propo.^es tvyo plans for strength- ening finances, 120; recoraniend- iug further issue of lcg;d-teiider notes, 137; gives notice of with- drawal of right to fund legal-ten- ders into 5-2li"s, 138 ; Chief-Jus- tice, 1 58 ; delivers opinion in first legal-tender case, 158 ; dissenting opinion in second legal-tender case, 164 ; justifies legal-tender policy, 145 ; opinion as to power of States to create banks to issue bills, 12. Cheves, Laugdon. South Ca: olina, reports first bill for issue of Treasury notes, 22. Circular, of Secretary Chase and other officials agreeing to receive demand notes in payment of sal- aries, 89 ; announcing redemption of small notes in coin, 93 ; of Gen- eral Scott to army, 89 ; notifying deposit banks of drafts to pay in- stalments of surplus, 182. Circulating medium, condition in 1814, 33 ; inquiry as to, 53 ; unfit- ness of Treasury notes for use as, 39. Cities omitted from law forbidding issue of fractional notes. Civil war, inauguration of, 83. Claims of States for payment of fourth instalment, 191. Clay, Henry, Kentucky, opposes issue of Treasury notes, 42, 45 ; attacks Jackson, 174; defeated in Presidential campaign of 1832, 174 ; supports bill for aistribution (;f revenues, 177. Clearing-house, Assistant Treasurer of U. S. at New York member of, 141. Clifford, Mr. Justice, concurs with Chief Justice in first legal-temler decision, 1.58; concurs with Chief Justice in dissenting opinion in second legal-tender decision, 164. Cobb, Howell. Georgia, Secretary of Treasury, 70 ; estimates of, foi INDEX. 235 1857, 70; recommends Treasury notes, 70 ; proposals invited by, for loan, 73 ; recommends that Government lands be pledged for payment of Treasury notes, 75 ; resigns, 75. Coin, gold and silver, only legal tender, 18 ; subsidiary silver, 10',) ; fold, Secretary may sell bonds for, or res iniption purposes, 141. Coinage of silver dollars, 150 ; Acts regulating, 148, 140. Coinage acts, of J7:i;3, 148; of 1834, 148; of 18r)3, 149; of 1873, 149; of 1878, 149. Collamer, Jacob, Vermont, moves to strike out legal-tender clause, 135; voces against legal-tender bill, 135. Coleman, John, advocates land bank, 1 ; incorporates a second land bank, 2 ; his scheme opposed by Governor Belcher, 3. Colonies, paper money in, 1 ; Par- liament forbids issue of paper money by, 3. Colonists embittered against Eng- land, 3. Commissioners of Loans to coun- tersign Treasury notes, 25. Commissioners of Sinking Fund au- thorized to pay notes, 26. Comndttee of Ways and Means, Mr. Cheves chairman of, 23 ; Mr. Eppes chairman of, 3' ; Mr. Cam- breling chairman of, 43 ; Mr. Jones chairman of, 46 ; Millard Fillmore chairman of, 50 ; instructed to in- quire into issue of Treasury notes, 53 ; reports of, 33, .54 ; Gallatin's letter to, 23 ; Dallas' report to, 31 ; Spencer's Istter to, 53 ; Di.x:'s letter to, '77, 89 ; letter of Chase to, 133. Committee, Finance, of Senate, letter of Secretary Chase to, 137. Committee, select, to inquire into extent of Executive patronage, 175; report of, 176. Compound interest notes issued in plaje of 7-3) notes, 110; form of. 111; amount of, 85; amo mt outstanding, 118; Secretary on, 110; Acts to retire, 113, 114; were legil tender, 100. Condition of postal currency bad, 104. Congress, power to coin money 10 ; authority to create banks, 11; to authorize bills of credit (see Legal tender) ; Acts of (see Acts); reduction of revenues by, in 1845, 03 ; extra session of 1837, 183 ; in 1801, 84 ; considers Spencer's issue of Treasury notes an evasion of law, 54. Conkling, Roscoe, New York, objects to making U. S. notes a legal ten- der, 129; remarks on legal-tender bill, 1:29. Constit'ition, Federal, debate on, 10 ; adopted, 19 ; original draft of, 13. Constitutional rig lit of Senate to originate money bill, 41. Constitutionality of issue of Treas- ury notes discussed, in 1813, 2"3 ; in 1813, 29; in 1837, 41 ; in 1838, 45 ; by Committee of Ways and Means, in 1844, 53; in 1801 and 1863, 134-1.36 (also see Cases, Legal-tender). Continental Congress, no legal-ten- der i;otes issued by, 117; recom- mends Legislatures of States to pass tender laws, 119 ; authorized issue of paper money, 9 ; fixed total issue, 9 ; authorized a new i.ssue to redeem old, 90. Coniinental money, first issue of, 9 ; depreciation of, 9 ; required to be bought in for coin at ma; ket value, 9; new issue of, 9; total amount of, 10 ; loss on, 10 ; an- tipathy to, 10 ; convention (see Federal Convention). Convention, Federal (see Federal Convention). Cooke. Jay, services in placing 7-30 loan, 99. Co-operation of National banks in placing 7-30 loan, 93. Court, Supreme, of United States, J 56 ; of Appeals, of fetito of Nev/ York, 157 ; of Errors, of Ken- tucky, 158 ; Supreme, of Jlassa- chusetts, 101. Counterfeiting, penalty for, 26. Crawford, Wm. H. , Gtorgia, S^crc- tai-y oc Treasury, resigns in 1814, 31 ; again Secretary in 1816, 16i' ; reports of, show sm'plus, 167 ; sug- gests that surplus be used in internal improvements, 167. 23G INDEX. Credit, rovolnfcionary l)ills of, horc interest, 43 ; of notes receival)le for duties, good, UU ; motion of Mr. Hull to revive, of Treasury notes, 'V,i. Ciisis, financial, of 1814, 31 ; of l!s37, 40; of 1857, 70. Crittenden, John J., Kentucky, op- poses use of Treasury notes in 18:^8, 40 ; opposes postponement of distribution of surplus, LS!!. Cushin ; of surplus revenues, KJT ; of defi- ciency in revenue for year 1841, 4it ; of amount of public debt in the year 1S41 , 50 ; of deficiency in the year 1840, 6o. Evils of paper money in colonies, 4. Ewing Thomas, Ohio, appointed Secretaiy of Treasury by Harrison, 49 ; report on exj)eu(iitures of Gov- ernment, 4'J ; estimates of public debt, 50 ; resigns, 50. Excess of bank reserve invested in '6 per cent, certificates, 114. Expectations of States receiving deposits of surplus, 187. Expedients to prevent depreciation, of colonial paper money, 4 ; of Continental money, 9. Expense of printing and prepar- ing Treasury notes, how paid, 26. Expiration of authority to issue Tre:isury notes in 1S39, 45 ; in 1842, 51. Extra session of Congress, in Sep- tember, 1837, 18:j ; in July, 18(Jl, 84. F.vc-SIMILE of large notes of 1815, o5; of small notes of 1815, oO ; of $100 notes of 1840, 47; of note of JIarch 3, 1 843, end of text ; of .$U0 note of 184G, 65 ; of §100 note of 1847, 67; of $100 note of 1857, 73 ; of $.50 note of March 2, 18G1, 81 ; of demand note, 91 ; of seven- thirty note of March 3, 186.5, lOO ; of fractional currency, 105-108; of compound interest note of 1864, 111, 112. Faith of Government pledged for payment of Treasury notes, 24. Favoritism, alleged, shown to banks, 29, 42; to deposit banks, i:3, 176. Federal Constitution, original draft of, 13 ; deljate on clause relative to emission of bills of credit, 14-lS ; power to emit bills struck out, 16; States deprived of authority to issue bills, 13 ; comments of Mr. Justice Strong, 11; views of Daniel Webster, 11.18; power of State to create banks to issue bills under, 1 1 ; opinion of Samuel Dexter, 12 opinion of Secretary Chase, 12. Federal Convention, when held, 13 debate in, on power to emit bills 14 ; motion of Gouverneur Morris 14; Mr. Butler seconds, 14; re- marks of iMr. Madison, 14; re- marks of Mr. Gorham, 14 ; remarks of Messrs. Miisou, Mercer, Ells- . worth, Randolph, Wilson, Butler, Road, Langdon, 14-16; Mr. Mar- tin delegate to, 16; report on pro- ceedings of, by Mr. Martin, 17; vote ot States, 16 ; voteof Virginia, 16. Fessenden, Wm. P., Maine, Chair- man of Finance Committee of Senate, 130 ; introduces legal-ten- der bill, 130 ; opens deliate, 130; Secretary of the Treasury, 110; authorizes issue of compound in- terest instead of seven -thirty notes, 110 ; extract from report of, 110. Field, Mr. Justice, of Supreme Court of United State.s, concurs with Chief Justice in first legal- tender decision, 158 ; concurs in dissenting opinion of Chief Justice in second legal-tender decision, 164; dissents singly to the third legal-tender decision, 166, 210. Fillmore, Millard. New York, Chair- man of Committee of Ways and Means, 50 ; introduces a bill for a loan, 50; concedes that the loiin shall be for short term, 50 ; intro- duces Treasury note bills, 51 ; op- poses postponement of fourth instalmeut, 187. First issue of colonial paper money, 1 ; of Continental paper money, 9 ., of Treasury notes, 25. First three instalments of surplus money, payment of, 40, 181. Fiscal operations of Government embarrassed in 1814, 32. Five-dollar demand notes iss;ied, 89. Five Treasury note acts of period of 1812, 38. Folger, Charles J., New York, Sec- retary of Treasurj', 191 ; letter of, relative to fourth instalment of snrplus, lii2; mandamus on, 192. Form of Treasury notes (see Fao- simile.) INDEX. 239 Forms used in making deposit with Slates, 181 ; used in witlidiawing money from depository banks, 183. Fort Sumter, attempt to relieve, 80 ; attack on and surrender of, 83. Forward, Walter, Pennsylvania, Secretary of Treasury, 50 ; suc- ceeds Mr. Ewing, 50 ; succeeded by John C. Spencer, 53. Fourth instalment of surplus, dif- ficulty in paying, 183 ; bill to post- pone payment of, 184 ; debate on postponement of, 187, 188 ; post- ponement of, 188 ; demand for, made by Virginia and Arkansas, 193. Fractional currency, necessity for, 100; Act of July 17, 1803, author- izing postal, 100 ; denominations of, 103; receivable in sums of $5 for dues, etc. , 103 ; fac-similes of, 10.5-108; issue of, by privats per- sons, corporations, etc., prohibited, 103 ; amount of limited, 103 ; ex- changeable for United States notes in suras not less than three dollars, 104 ; people anxious to obtain, 104; paid in sheets to army, 104; total amount issued, 101; wore out rapidly, 104 ; replaced by sub- sidiary silver coin, 105. Funding, of legaV-teader notes pro- vided for, 137, 136 ; of legal-tender notes to cease after certain date, 138; of seven-thirty note.>, 98; of one- and tAO-year notes into com- pound interest notes, 110, 115; of compound interest notes into three par cent, certificates, 113, 115; of Treasury notes of 1813-1815, 38. Funds, public, difficulty in transfer- ring, 33 ; kept with banks, 2t), 40, 183 ; kept with Bank of United States, 40; changed to State banks, 175 ; unavailable, 43, 78, 183; losses of, through banks, 43, 183. Gallatin, Albert, Secretary of the Treasury, 31 ; first suggests issue of Treasury notes, 3~i ; his plan for Treasury notes, 33 ; letter of, to Ciiairman of VVay.s and Means Co.mmittee, 23. General Scott, his circular to the army as to demand notes, 89. General sentiment in favor of Treas- ury notes in 1847, 04. Gold and silver coin only can bo made a legal tender by States, 13 ; only legal tender until passage of legal-tender act in 1803, 19. Gold coin, demand notes payable in, 90, 91 ; seven-thirty notes payable in, 93 ; the standard after 1873, 150; over-valued by Act of 1834 and took place of silver, 148. Gorham, Nathaniel, Massachusetts, remarks in Federal Co7ivention, 14. Gouverneur Morris, remarks in Fed- eral Convention, 14. Government, Federal, operations of, in 1814, 31 ; deprived of use of specie, 14, 33 ; Treasury notes based on faith of, 24 ; Treasury notes 1813-1815 receivable for dues to, 24, 29, 39 ; Treasury notes 1837 receivable for dues to, 43, 05; Treasury notes of 1857 receivable for dues to, 73 ; Treasury notes of 1801 receivable for dues to, 81 ; loan certificates to be receivable for dues to, 43 ; credit of, affected by political complications, 73. Government of Confederate States, organization of, 83. Governor Belcher, Massachusetts, in- trigues of paper money advocates against, 4 ; differences with Legis- lature, 6 ; forced to retire, 4 ; Governor of New Jersey, 4 ; letter to Hutchison, 6. Governors of Massachusetts, opposi- tion to paper money, 3. Gray, Mr. Justice, delivers opinion of court in third legal tender de- cision, 193. Halsted, William, New Jersey, claims that deposit act was not a contract, 187. Hamilton, Alexander, report on Na- tional Bank, 19 ; opinion as to emission of bills of credit by Gov- ernment, 19; never suggested Treasury notes, 23. Harrison, William H., elected Presi- dent by Whig party, 49 ; appoints Ewing Secretary of Treasury, 49 ; death of, 49 ; policy of administra- tion changed by death of, Hickman, John, Peuns- Ivania, votes 240 INDEX. for legal-tender bill as a necessity, 1 •-'»•). Hooper, Rajinuel, Massachusetts, pre- pares National liank bill, l.'2() ; re- marks on legal -tender l)ill, 131. HoTise of Representatives, refuses to consider resolutions to make Treasury notes a legal tender. ;>> ; does not di.scuss piopcsition to make loan certificates a legal ten- der, 4o ; long session of, ni 181i>, 41) ; objects to S nate introduciug money bill, 41 ; act;oa of (see Bills and Acts). Howell Cobb, Georgia, Secretary of Treasury, 70 ; estimates for year 1857, 70 ; recomiMcnds Treasury notes, 70 ; invites proposals for loan, 7^ ; recommen(is that public lands be pledged for payment of Treasury notes, 75. Hutchison, Edward, Massachusetts, forms specie bank, 3. Hutchison, Thomas, JIassachusetts, letter to, from Governor Belcher, 0. Increase of public debt, from 1837 to 1841, .'".U ; from 1841 to 1844, Go ; from 1844 to 18(31, 73; to August 31, 1805, 85. Independent Treasury Act, repeal of, 50. Ingham, Samuel D., Secretary of Treasury, 168 ; estimates for year 1829, 1(58 ; reports amount applica- ble to payment of debt, 108 ; re- ports probable! surplus, 108. Interest, paper money issued by States durini; Revolution bore, 44; on Continental money, 9 ; on Treas- ury notes of 1812. 25; on notes of 1813, 1814, and 1815, 39; small notes of 1815 bore no, 34; on notes of 1837, 42 ; on notes of 1838, 45 ; nominal, of one mill per cent., 40 ; on notes issued by Secretary Spen ■ cer, 52 ; report on, by Committee of Ways and Means, 5() ; on notes of 1846, 64 ; on notes of 1847, 69 ; on notes of 1857, 71 ; bids on notes of 1800, 7t; ; on notes of 1801, 8 > ; on notes of the civil war, 88, 1(.0, 110; on certificates, 114, 116, 117. Introduction of bills (see Bills). Issues, paper money, in Colonies, object of, 1 ; by means of loan banks, 2 ; by merchants of Boston, 2; by Hutciiison's specie bank, 3; opposition to, by Parliament, 3 ; Acts of Parliament prohiljiting, 3, 7 ; depreciation of, 5 ; loss, and money inflated bj'. 4. Issues of paper money by Conti- nental Congress, first issue of, 9 ; depreciation of, 9 ; bought in at market value for coin, 9 ; new in place of old, 9 ; total amount of, 10; loss on, 10; antipathy to, 10. Issues of paper money from 1 il2 to 1815 (see Notes, Treasurj', fiom 1812 to 1815). Issues of paper money of period of 1837 (see Notes, Treasury, of pe- riod of 183T). Issues of paper monej' of Mexican War (see Notes, Treasury, of Mex ican War). Issues of })aper money of Buchan- an's Administration (see Notes, Treasury, of Buchanan's Adminis- tration). Issues of paper money o* Civil War (see Notes, Tieasury,of Civil War). Jackson, Andrew. President of United States, 1(;8 ; message to Cong: ess of 1829, 16S ; thinks u.=e of surplus for internal improve- ments unconstitutional, 169; ad- vises apportionment of surplus among States, 169; message of 183(), 170; views as to surplus, change in 1830, 171 ; causes of change in his views, 172; message of 1836, 173 ; attack on Bank of the United States, 174 ; declares in 18'.9 against rechaiter of bank, 174 ; determines to receive public deposits from bank, 174 ; disa- grees with his Cabmet, 174; reads paper to Cabinet. 1 74 ; makes Taney Secretary of Treasury, 175 ; orders removal of deposits, 175; pioposes method of distribution of surplus, 1 79. Jay Cooke, services of, in placing seven -thirty loan, 99. Justice Story, comments on consti- tutionality of issue of notes by bank chartered by State, 11. Justices of Supreme Court, in 1809, 158; in 1871, 162. INDEX. 241 KELi,oon, Stkpiien W., Massachu- setts, remaiks of, oa legal-tender bill, 125. Kiiif,' oE England, issue of paper mo-.iey in Colonies to be under control of, 7. Land Bank, proposed by John Cole- man in 1715, 1 ; sec(jnd, proposed in 173'.l, 3 ; plan of, 2 ; opposed by Governor Belcher, 3. Lingdon, John, New Hampshire, remarks in Federal Convention, 16. Laws (see Acts and BillsV Legil tender, paper money prohib- ited in Colonies, IS ; gold and silver coin, only, a, under Constitution prior to 18)3, It); proposition to make Treisary notes a, rejected, 33 ; proposition t > make loan cer- titicates a, rejectsd, 43 ; (!!onti- nsntal Congress had no power to make paper, 117 ; States pass ten- der laws. 111); discussed in Fed- eral Convention, 14. Legal-tender Act, bill introduced in Committee by Mr. Spaulding, 130 ; letter of Attorney-General Bates in regard to, 131 ; reported to House, 131 ; hostility of the press, 131 ; hostility of tlie banks, 131 ; bill submitted to the Secrstary, 131 ; again reported to House with the Secretary's amendments, 131 ; passed the House, 131 ; vote on bill in House, 131 ; amendments in Senate, 13*; charactjr of debate, 13i; Secretary Chase's letter to Committee of Ways and Means, 133 ; bill thoroughly discussed throughout the country, 134 ; a meisure of necessity, 131 ; ex- tracts from debate in Senate, 130- 13.T ; Conference Committee, 13 ; approved by President February 25, 1863, 13(); of 1863, authorized issue of 150 millions dollars in note.s, 136; of June 11, 1862, 138; of March 3, 1863, 138; policy of, discussed by Mr. Blaine, 140-147 ; Secretary McCulloch's opinion of, 139. Legal-tender decisions. Bank v. Su- pervisors, 156-157; Hepburn v. Griswold, 157-161 ; Parker v. Da- 11 vis, 161-165; JuHliard v. Green- man, 165, 193; dissenting opinions, 100. 164, 166, 310. Legal-tender notes, authorized by act of February 35, 18r.3, 136; bore no interest, 136 ; payable to bearer at Treasury. 136; denomina- tions not less than f 5, 136 ; difl'ereil from demand notes, fundable into bonds, 136 ; receivable for all debts, public and private, except duties on imports, 137 ; descrip- tion of, 137 ; act of June 11, 1862, authorizes under $5, 138 ; whole amount authorized, 138; restric- tion on funding, 138 ; effect of re- striction, 138 ; highest amount outstanding. 139; retirement of under Secretary McCulloch, 140; increase under Secretaries Bout- well and Richardson, 140; restric- tion of amount in 1874, 140 ; re- tirement after 1875, 140; amount outstanding fixed in 1878, 141 ; amounts at various dates, 1 43 ; payment on presentation in coin, 143 ; certificates of deposit for (see Certificates, Legal -tender). Legal reserve of national banks, gold certificates held as, 155 ; sil- ver certificates held as, 155; cer- tificates for legal-tender notes hold as, 116; three per cent, certificates held as, 114. Legislature of New York, action remitting taxes on U. S. securi- ties, 156. Legislatures of States accept depos- its of surplus money, 181. Letter, of Governor Belcher to Thomas Hutchison, 6 ; of Mr. Bol- lan, agent, 7; of Seeretary GjUa- tin to Committee of Ways and Means, 33 ; of Secretary Chase to Committee of Ways and Means, 133; of Secretary " Chase to Mr. Spaulding, 134 ; of Secretary Spen- cer to Committee of Ways and Means, 53. Lincoln, Abraham, President of the United States, 117 ; signs legal- tender act, 117. Loans, temporary, of 1810, 22; of 1813, 29 ; policy of Congress as to, in 1812-15, 33 ; authorized in 1815to fund Treasury notes, 34 ; discount 242 INDEX. on, from ISl?-!?;, 30; bill for, in- troduced by MiUard Fillmore, 50 ; object defeated, 5't ; Treasury tiotcs a form of, 59 ; Treasury notes of Mexican War fundable into, (iU ; of IS'.UI, 70; of 18(il, 7'.); on August '6\ , 18(>5, iS5 ; tjmporary, 85 ; by the New York banks, '.)5 ; seven-thirty notes a popular, '.Kt ; for funding legal-tender notes, 117; obtained on security of Treasury notes, 35 ; to aid in resumption of specie pay- ments, 141. Loan banks, bills issued by, S. liOsses on colonial paper money, 4 ; on Continental paper money, 10; on fractional currency, 104. jVIauison, James, remarks on Fed- eral Convention, 14 ; note on vote of Virginia, 16. Mandamus on Secretary of Treasury by ytate of Virginia, 192. Marshall, Chief Justice, definition of bills of credit, 44. Martin, Luther, Maryland, delegate to Federal Convention, lii; address to Maryland Legislature, 17 (also see note on page 10). Mason, George, Virginia, remarks on Federal Convention, 14. Massachusetts, paper money issues in, I; loan banks, «; specie banks, 2, 3 ; governors of, oppose paper money, 3 ; makes Continental money a legal tender, 110. Maximum of public debt, 85 ; of le- gal-tender notes, 1:^8 ; of Treasury notes prior to civil war, 52, G9, 70 ; of fractional currency, 104. McCulloch, Hugh, Sacretary of the Treasury, b^9 ; opinion of Legal- tender Act, 139 ; retires legal-ten- der notes, 140. Measures (see Bills and Acts). Mercer, John F. , Maryland, friendly to paper money in Federal Con- vei!tion, 15 ; remarks of, 15 Mexico, declarat'on of war with, 68. Miller, Mr. Justice, dissents to first legal-tender decision, 160. Money, power of Congress to bor- row. 59, 159; borrowed on security of Treasury notes, 25 ; specie, stock diminished, 81 ; Continental, made legal tender by States, 119; colonial paper, 2; surplus of United Rtatea (see 1 )eposit of Snrj)lus); legal-ten- der (see Legal-tender); power of Congress to coin, 11. Morrill, JustinS. , Vermont, remarks on Legal-ttnder Act, 1^9. Morris, Gouverneur, moves to strike out '"emit bdls" from draft of Constitution, 14. National bank, Secretary Dallas I'ecommends establishment of, 31 ; bill for, referred to committee, 12; bill for, vetoed by President Tyler, 53. National banks, bill for, prepared, 120 ; co-operation of, in placing seven-thirtv loan, 90. National debt in 1812. 21 ; extin- guished in 18;j5, 170; anrount of, in* 1841, 50; amount of, in 1860, 72 ; maximum of, in 1S65, 85 ; form of, in 1 865, 85. Newcomb, Prof. Simon, criticism npon Silver Commission, 151 (see also nore at foot of page 151). New York C.ty banks, action of, as to demand notes, 90 ; first seven- thirty loan negotiated by, 93 ; total amount of seven-thirty notes taken by, 9o ; arrangements of, for placing .seven-thirty loans, 93 ; re- port of Loan Committee of, 94 ; Secretary Chase's report in regard to action of, 93 ; loans made by, in 1861. 16. Niles, John M., Connecticut, op- poses Mr. Buchanan's amendmei.t to postponement bill, 186. Niles' Register, extract from, relative to Treasury notes of 1812, 26; notice of distiibution of surplus sent to banks, 131. Note of Madison on vote of Virginia in the Federal Convention, 1(5. Notes, compound interest (see Com- pound interest notes). Notes, Exchequer, recommended by President Tyler, 53. Notes, fractional (see Fractional currency). Notes, legal-tender (see Legal-ten- der notes). Notes, one- and two-year (see Ona- and two-year notes) . INDEX. 243 Notes, Beven-thirty (see seven- thirty notes). Notes, Tieasiuy (see Treasury notes). Objections to issue of Treasury notes 1812-1815, 22, 29, 32 ; to issue of Treasury notes in 1837, 41, 44, 4(i, 53 ; of Committee on Ways and Means to spurious notes, 5:! ; to legal-tender bill, 128 ; Woodbury's j to distribution of surplus, ]?1 ; to postponement of fourtli instal- ment, 180; to loan bill of 1841, 50. Obligations of the United States, legal-tender notes held not to be, 156 ; legal-tender notes held to be, 157. One and two year notes of 1863, 1C9 ; bore interest at live per cent., 110 ; redeemed in compound interest notes, 110. Opinion of Hamilton on authority of Government to emit paper money, ly ; of Samuel Dexter as to right of States to charter banks to issue notes, 12 ; of Clii'-f Justice Chase, 13 ; of Secretary McCulloch, as to Legal-Tender Act, 139; of At- torney-General Bates as to legal- tender bill, 121. Opinions of courts. (See Decisions.) Opposition of Presiilent Jackson to distribution of surplus, 171 ; to bill postponing payment of fourth instalment, 186; of newspapers and banks to legal-tender bill, 121. Outstanding Treasury notes, 71, 118. Paper read by President Jackson to his cabinet, 174. Paper money of the colonies, first issued in Massachusetts, 1 ; issued in other colonies, 1 ; dates of first issues, 1 ; issued by loan banks, 2 ; rate of interest on, 2 ; payable in silver issued by merchants in Boston, 3 ; prohiVjited by Parlia- ment, 37 ; opposition of governors to, 3 ; intrigues of advocates of, 4 ; depreciation of, 4 ; terms ap- plied to, 4 ; loss and misery in- flicted by, 4 ; value in coin in dif- ferent States, 5 ; disputes about, 7 ; attitude of mother country, 7. Paper money of Revolution emit- ted by Continental Congress, 9 ; first issue of, 9 ; depreciation of, 9, 10; naw issue bearing interest payable in coin, 9 ; amount lim- ited, 1 ; redeemable in coin at market value, 9 ; ceases to circu- late, 10 ; loss through, 10 ; made a legal-tender in certain States, 119 ; issued by States, 10. Paper money under constitution, power of States to emit, taken away, 10, 13; power of States to charter banks to issue, doubted, 11, 12 ; discussion on, in Federal con- ventions (see also Notes). Paris, Silver Commission meets at, 151. Parker v. Davis, legal-tender case, 161. Parliament, acts of, in reference to paper money. 7. Pay of signers of Treasury notes, 25. Payment of fourth instalment of sur- plus postponed, 188. Payment, specie, suspended in 1814, 31; suspended in 1837, 40; re- sumption of, in 1838, 43 ; suspen- sion of, in 1857, 70 ; suspension of, in 1861, 84; resumption of, on January 1, 1879, 141. Peace, treaty of, with England, 34. Pelatiah Webster recites evils of Colonial paper money, 4. Pendleton, George H., Ohio, remarks of, on legal-tender bill, 128. People, seven-thirty loans taken by the, 98 ; anxiety of, to obtain frac- tional currencj', 104 ; ansi;ty of, to obtain four per cent, certificates, 117. Pickens, Francis W., South Carolina, on postponement of fourth insta?.- inent of surplus, 138. Plan for Treasury notes, Secretary Gallatin's, 21 ; Secretary Dallas', Plans of States to use surplus depos- ited, 190. Postage stamps used for change. 100. Postal currency (see fractional cur- rency). Postmaster-General's report on use of postage stamps for change, 100. Postponement of fourth instalment, rendered necessary by financial pressure, 182 ; extra session of 244 INDEX. Coiipvoss pallod to considpr, 18" ; lVe.-i(l(,'iifc Van I?iiicn on, \'6'\\ bill for, introduced liy Siias Wiight, l>i4 ; long debate on. in House and Senate, 184, 187 ; bill for, amended, 187 ; bill for, passed, 188. Power of Executive, select commit- tee to inquire into, 1 75. Prejudices against Treasury notes, Premium, on .small Trea.'ury notes of 181.5, 37; on Treasury iiotcs of 18^7, 45 ; on 5 per cent. U. S. stock, 72 ; on demand notes, 9o ; ; on gold, 97, 100; on four per cent, bonds, 117. Preparation.s of Secretary Woodbury for distribution of surplus money, ISl, mi. Presidents, Jackson, 168,170, 172; Harrison. 49 ; Tyler, .^3 ; Van Buren, 183 ; Lincoln, 117 ; Hayes, | 150. Preston. William C, South Caro- \ lina, opposed to Treasury note bill of 1 838, 45 ; opposes postpone- ment of fourth amendment, 18(J. Proclamation of Governor Belcher, 5. Pro\incial Governors, trouble with their Legislatures, 3. Public advertisement for bids for Treasury notes, 71, 70 ; for loans, 80. Public debt (see National debt). Public lands, distribution of revenue from, 175 ; distribution of, 175. QtOTATiONS of coin value of Colonial paper money, 5 ; of bids for Treas- ury notes in 1861, 76; of bonds, notes and gold for 1863, 1863, 1864, 97. Quotations from Governor Belcher's proclamation, 5 ; from Chief Jus- tice Story, 1 1 ; from Secretary Chase, reports and letters, 12, 80, 95, 1:2, 124; from Daniel Webster, 18 ; from debate in Federal Con- vention, 14; from Luther Martin, 16; from Niles' Register, 20; from Secretary Dallas, 31 ; from report of Committee on Ways and Means, in Spencer's notes, 5, 3 ; from Secretary Dix, 77, 1 89 ; from General Scott's circular, 91 ; from report of associated banks, 04 ; from Secretary iMcCiilloch, 9^, 139; from Postmaster-dlencral's report, 100; from dtbate on Kgal- tendcr bill, 124-135; from James G. Blaine, 144-147; from Prof cssor Ncwcomb, 151 ; from legal-tender decisions, 157, 11)2 ; from Presi- dent Jackson, 168, 170, 174; from Secretary Woodbury, 171 ; from Thomas H. Benton, 190. Randolph, Edmund, Virg nia, re- marks in Federal Convention, 15. Rates of interest (see Interest). Read, remarks in Federal Conven- tion, K". Reasons for failure of loan bill of 1841. 50. Rebellion, war of, inaugurated, 83. Rebellious demonstrations among colonists, 6. ' Receipts, from sale of public lands, 171 ; from loans, 1812-1815, 39. Re-charter of Bank of U. S. op- posed by President Jackson, 174; bill for, passes both Houses, 174; bill for, vetoed, 174 ; made an issue in campaign of 1832, 174. Refusal of Wnigs to vote on Treasury note bill in 1840, 96. Register of Treasury, notes first signed by, 42. Reissues of Treasury notes (see Treasury notes). Removal of deposits from Bank of U. S., 175. Report of Hamilton on a National bank, 19 ; of Secretary Dallas in 1814, 32; of Mr. Eppes, 32 ; of Secretary Dallas in 181.5, 37; of Secretary Woodbury in 1839, 45 ; of Secretary Woodbury in 1840, 49 ; of Secretary Ewing in 1841, 49; of Committee of Ways and Means on Spencer's notes, 54 ; of Secretary Cobb in 1857, 70 ; of Secretary Cobb in 1860, 73; of Secretary Chase, for year 1861, 86, 9.5; of loan committee of associated banks of New York City, 94 ; of Secretary McCiilloch for 1865, 98 ; of Postmaster-General in 1862, 100 ; of Deputv Comptroller of Currency in 1870, 100; of Paris silver commission, 151 ; of Secre' INDEX. 245 taries Crawford, Rush, and suc- cessors, 167 ; of Secretary Ingham in 1829, 168. Reserve, National Bank (see Na- tional Bank Reserve). Resohition of Continental Con- gress recommending that States make paper issues legal tender, 117; of associated banks in New York City, 90 ; making Treasury notes a legal tender, 33. Resumption of specie, payments, in 1838, 43; on January 1, 1879, 141 ; act of 1875 requiring, 141. Revenues from public land.s, distri- bution of, 17.5 ; surplus (see Sur- plus Revenues) ; deposited with State banks, 40, 182. Revenues for 1837, 41 ; expenditures exceed, from 1837 to 1841, 49. Richardson, Secretary, increase of legal-tender notes under adminis- tration of, 140. Rush, Richard, Secretary of Treas- ury, 167. Scott, General, issues circular about demand notes to army. 89. Secession of Southern States, 83. Secretaries of the Treasury, Hamil- ton, 19 ; Gallatin, 22 ; Dallas, 31 ; Crawford, 31, 167 ; Rush, 167 ; Ingham, 168; Duane, 175; Taney, 175 ; Woodbury, 41, 42, 45, 49, 171, 180; Spencer, 52; Ewing, 49 ; Forward, 52 ; Bibb, 53 ; Cobb, 70, 75 ; Dix, 76, 77 ; Chase, 80, 95, 122; Fessenden, 110; Walker, 63; McCulloch, 98, 139 ; Richard- son, 140 ; Sherman, 141 ; Folger, 192. Secretary of the Treasury author- ized to borrow money on security of Treasury notes, 25. Series of fractional currency, 103, 104 ; of seven-thirty notes, 93, 97 ; of colonial currency, 4 ; of Conti- nental currency, 9. Seven-thirty notes, first issue au- thorized by acts of July 17, and August 5, 1861, 89 ; suggested by Gallatin, 88 ; interest on first is- sue paid in gold, 93 ; fundable into bonds, 93 ; negotiation of first loan on, with New York banks, 93, 96 ; act of June 30, 1864, authorizing second issue, 97 ; act of March 3, 186.5, authorizing third issue, 97 ; denominatioua of, 98 ; last two issues fundable into bonds, 98 ; a popular loan, 98 ; services by Jay Cooke in negotiating, 99 ; co-operation of national banks, 99 ; form of, 100 ; reverse described, 99. Sherman, John, Secretary of Treas- ury, favors legal tender clause, 132 ; votes in favor, 135 ; member of Conference Com., 136; sells bonds to prepare for resumption, 141 ; confidence of note holders in, 1^3. Signers of Treasury notes, pay of, 25. Silver certificates authorized, 152 ; denomitations of, 1.52; coin depos- ited for, to be returned in Treasury, 152 ; amount outstanding, 153 ; not a legal-tender, 155 ; count as reserve of national banks, 155 ; receivable for Clearing-house bal- ances, 1.55 , receivable lor customs, taxes, and all public dues, 1.52 ; dangerous substitute for money, 154. Silver coinage, acts regulating, 148, 149, 152. Silver commission, report of, criti- cised, 151. Silver dollar, authorized by act of April, 1792, 148 ; coinage discon- tinued by act of 1873, 150; revived by act of 1 878, 1 52 ; weight of, 1 50 ; amount coined per month, 150; amount outstanding, 153 ; effect of continued coinage, 153. Small Treasury notes of 1815, descrip- tion of, 34. Spaulding, E. G., New York, brings legal- tender bill before Committee of Ways and Means, 120 ; intro- duces iaiU in House, 124 ; letter of Secretary Cha.se to, 124 ; extract from speech of, on legal-tender bill, 124. Special session of Congress, in 1837, 183; in 1861, 84. Specie, difficulty to procure, 31 ; de- mand notes payable in, 53 ; legal- tenders payable in, after January 1, 1879, 141 ; first instalment of surplus paid to States in, 184. Specie bank, Hutchison's, 3. Specie payments suspended in 1814,. 246 INDEX. 31 ; snspendcd in 1837, 40 ; resump- tion oT, in ISoS, 43 ; suspension of, in IS57, 70 ; suspension of, in IStil, 84 ; resumption of, by United States on Januaiy 1, 1S70, 141 ; ail but six deposit banks suspend, 1S3. Bpencer, John C. , Secretary of Treas- ury. 5"i ; issues Treasury notes at nominal interest payable on de- mand, 52 ; his notes investigated by Committee of Ways and Means, 53. State banks, public funds deposited with, 40 ; act regulating depo.sit of lawful money with, 40, 178 ; de- prived of deposits by distribution of surplus, Ibl ; forms of drafts on, 182. States recommended to make Con- tinental money legal-tender, 119; paper money issued by, during Revolution, 10 ; deprived of au- thority to issue paper money, 13 ; right to charter banks to issu3 notes, 11 ; lack of authority to coin money, 11 ; deposit of surplus with, 181 ; table showing appor- tionment among, 180 ; to give au- thority to Treasurers to receive de- posit of surplus, ISO ; laws of, rela- tive to deposit of surplus, 181 ; use of depo.sits by, 190; amounts deposited with, carried on Treas- ury books as unavailable funds, 1 90 ; public works undertaken by, 186; power to borrow money, 59. States, Southern, secession of, 83. Stevens, Thaddeus, Pennsylvania, close debate on legal-tender bill, 126 ; extract from speech on legal- tender bill, 126. Story, Mr. Justice, comments on power of States to charter banks to issue notes, 11. Sumter, Fort, effect of attack on, 83. Supreme Court decisions in legal-ten- der cases (see Decisions and Dis- senting Opinions). Surplus revenues, estimates from 1816 to 1829, 167, 168 ; propo.sition to distribute among the States, ?C9; Mr. Dickerson's proposition in 1827, 167 ; estimate of amount on January 1, 1836, 171 ; views of President Jackeon as to disposi. tion of, 171-116 ; report of select committee on, 175 ; bill to deposit with States, 178; ai)portionment among States, 180 (see Deposit of Surplus with States). Swayne, Mr. Justice, concurs in dissenting opinion in first legal- tender case, 160. Talmadge, Nathaniel P., New York, in favor of Treasury notes, 45. Taney, Roger P., Secretary of Treasury, 175 ; issues orders for removal of deposits, 175. Tariff of 1842, 63. Taxation, reduction of remedy for surplus, 173. Tender (see Legal Tender). Three per cent, certificates (see Certificates). Three-sixty-five notes proposed, 88. Treasuries of colonies, issue of paper money by, 1, 2. Treasury notes of 1812-1815 author- ized, 25, 29, 30, S3 ; signed by per- sons designated by President, 25 ; countersigned by Commissioners of Loans, 25 ; money borrowed upon security of, 26 ; receivable for dues, duties, etc., 26; Niles' register upon, 26 ; small notes of 1815, 34 ; denomint-tions of, 26, 30, 38 ; interest on, 39 ; penalties for counterfeiting, 26. Treasury notes of period of 1837 au- thorized, 42, 4.5, 46, 51 ; signed by Treasurer, 42 ; countersigned by Register, 42 ; receivable for all debts due Government, 42 ; inter- est on, 42, 4.5, 52 ; denominations of, 41, 52 ; payable one and two years after date, 51 ; outstanding, 52. Treasury notes issued by Jolm C Spencer, 52, 54, 60. Treasury notes of Mexican War, authorized, 63, 64 ; signed by Treasurer and Register, 64 ; othei features of, 64; amounts issued, 64, 69 ; denominations of, 64, 69. Treasury notes of Buchanan Admiu- istration, recommended by Sec- retary Cobb, 70; authorized, 70: features of law authorizing, 71 ; INDEX. 247 offered to lowest interest bidder, 71 ; amount issued, 71 ; denomina- tions of, 71 ; act of December, 18()0, 75; operations of Secretary Dix, 76. Treasury notes of Civil War (see Seven-thirty notes. Compound in- terest notes, One- and two-year notes, and Notes). Treasury notes, outstanding in 1884, 71, 118; forms of, 3.5, L!6, 47, O.i, 67, 73. 81, 91, 100, 105-108, 111- 112, 137, end of text; no legal- tender until 1801, 117; depreciation of, 33, 38, 44, 76, 77 ; premium on, 37, 45. Tyler, John, President, .53 ; vetoes bill to create a National Bank, 53 ; recommends bill for Exchequer notes, 53. Understandino of Treasury with banks in 1862, 9.5. United States, JJank of, question of recharter, 174 ; Jackson's attack on, 174 ; veto of recharter bill, 172 ; removal of deposits, 175 ; charter expires, 40. United States notes (see Treasury notes, and Notes). Use of postage stamps for change, 100. United States Supreme Court (see Courts). Vallandigham, C. L., Ohio, op- poses legal-tender bill, 129. Van Buren, Martin, President of the United States, 183 ; calls extra session of Congress, 183. Veto of bill rechartering Bank of United States, 174 ; of bill for National Bank by President Tyler, 53 ; of act for coinage of silver dollar by President Hayes, 1.50. Vote of States in Federal Conven- tion, 16 ; on first Treasury note biU m House, 25; in House and Senate on second Treasury note bill, 29 ; on Treasury note bill of 1837 in House and Senate, 41, 42 ; on Treasury note bill of 1 838 in House and Senate, 45 ; on Treas- ury note bill of 1840 in House, 46 ; on legal-tender bill, 135 ; on coinage act of 1873, 150; on de- posits of surplus with the States, 178 ; on postponement of lourth instalment, 187 War declared -with England, 22; declared with Mexico, 63 ; Jack- son's, with Bank of United States, 174 ; Civil, inaugurated, 83. War measure, issue of Treasury and legal-tender notes a, 22, 64, i24. Ways and Means Committee (see Committee of Ways and Means). Webster, Daniel, views on right of State to charter bank to issue notes, 11 ; on legal-tender under Constitution, IS. Webster, Petaliah, views as to evils of paper money in Colonies, 4. Whig party, opposition to Treas- ury notes, 44, 49 ; support a loan bill, 50. Whigs refused to vote in House in 1840, 46. Wilson James, Pennsylvania, op- posed to paper money in Federal Convention, 15. Wise, Henry A., Virginia, favors paying fourth instalment, 187. Withdrawal of deposits from Bank of the United States, 175 ; fi-om de- posit banks, 181 ; from States. 190. Woodbury, Levi, Secretary of Treas- ury, 41 ; recommouds Treasury notes, 41 ; reports amount of Treasury notes outstanding, 46 ; disapproves of distribution of surplus among the States, 171 ; method of distribution of surplus, 181. Wright, Silas, New York, Chair- man Senate Finance Committee, 184 ; reports bill for postponement of fotu'th instalment, 184. POLITICAL SCIENCE AND ECONOMY. POLITICAL SCIENCE; Or, The State Theoretically and PractH caliy Considered. By THEODORE D. WOOLSEY, D.D., LL.D.j late President of Yale College. 2 vols., 8vo, $5.00, THE BOSTON TRANSCRIPT.— "No work 'in Political Science has ever been |»nbUshe(l In America which covers so wide a. ground and which treats the sub- ject so fairly and impartially, and with so thorough knowledge and judgment." THE CINCINNATI GAZETTE.— " This work is indeed one of the most im portant contributions of the century to the science of natural and national law ana ethics." THE N. Y. TRIBUNE. —" In the discussion of the macifold questions suggested by the general theme of the work Dr. Woolsey exhibits the same cautiousness of judgment, moderation of tone, and vigor of expression which characterize his previous writings. His volumes abound with the signs of profound study and copious erudition as well as of original thought." INTRODUCTION TO THE STUDY OF INTERNATIONAL LAW. Designed as an Aid in Teaching and in Historical Studies. By THEODORE D. WOOLSEY, D.D., LL.D-, late President of Yale College. Fifth edition, revised and enlarged. Crown 8vo, $2.50. A complete outline of that grand system of ethical j">risprudence which holds, as it were, in one community the naftions of Christendom. Its appendix contains a most useful list of the principal treaties since the Reformation. The work has no rival as a text book. Special attention Is directed to the fact that this FIFTH EDITION of Dr. Woolsey's International Law is entirely re-written and enlarged, and is printed from new plates. THE ST. LOUIS REPUBLICAN.— "A compendium treatise. Intended not for lawyers nor for those having the profession of law in view, but for young men who are cultivating themselves by the study of historical and political Science. While Jhe work gives the state of the law of nations as it Is, It compares the actual la'v fvith the standard of justice, and, by exhibiting the progress of science In n tistorical way, brings It Into connection with the advances of humaoHf attA liTllization." STAND A ED TEXT BOOKS. POLITICAL ECONOMY. By ARTHUR LATHAM PERRY, Pro- fessor of History and Political Economy in Williams College. Crown 8vo, $2.50. Professor Perry's book has passccl throngh many editions and baa recently been subjected to a thorough revision and recasting. Ilia work is a complete exposition of the Science of Political Economy both historically and topically, his style is admirably clear and racy ; his illustrations are forcible and well chosen, and he has made a subject interesting- and open to the comprehension of any diligent student, which has often been left by writers vague and befogged and bewilder- ing. This work has stood excellently the test of the class room, and h^iij been adopted by many of the chief educational institiitions in this country. Among them are Yale College, Bowdoiu College, Dartmouth, Trinity, Wesleyan, University of Wooster, Denisou University, Rutgers College, New Y'ork University, Union College, and many other colleges and normal and high schools. T. D. WOOLSEY, President of Tale College.— "Yom: book interests students more than any I liave ever instracted from." THE NEW YORK TIMES.— "As a manual for general reading and popular Instruction, Prof. Perry's book is far superior to any work on tUe subject before Issued in the United States." TH E N ATION.— " We cordially recommend this book to all, of whatever school of political economy, who enjoy candid statement and full and logical discussion." THE INDEPENDENT.— "There is more common sense in this book than in any of the more elaborate works on the same subject that have preceded it. It is tho most interesting and valuable one that has been given to the American public oa this important subject." INTRODUCTION TO POLITICAL ECONOMY. By ARTHUR LATHAM PERRY, Professor of History and Political Econ' omy in Williams College. Revised edition. 12moj S1.50. FROM THE PREFACE.— "I have endeavored in this book so to lay the founda- tions of Political Economy in their whole circuit, that they will never need to be disturbed afterwards by persons resorting to it for their early instruction, how- ever long and however far these persons may pursue their studies in this science." THE N. Y. EVENING POST.— "This work is not meant in any way to take the place of its author's larger treatise, but rather to occupy a field which, in the nature of the case, that work cannot occupy. It is net an abridgment of that work but a separate treatise, intended primarily for the use of students and readers whose time for study is small, but who wish to learn the broad principles of the science thoroughly and well, especially with reference to the scientific principles which are involved in the practical discussions of our time. • * « We need scarcely add, with respect to a writer so well known as he, that his thinking b sound as well as acute, or that his doctrines are those which th« greatest toasters of poUtical science have approved.'' CHARLES SCninNEB'S SONS' AMERICAN POLITICAL ECONOMY. By FRANCIS BOWEN, Professor of Natural Religion and Moral Philosophy in Harvard College. 8vo, S2.50. This treatise presents views compatible with the idea that ' ' every country has a political economy of its own, suitable to its own physical circvinistances of position on the globe, and to the character, habits, and institutions of the people. " THE PHILADELPHIA AGE. — "If our members of Congress would votethem- eelves a copy of this book, and read it, fewer wild schemes would be concocted by them, and a great saving of time and the people's m'bney would be secured." THE SPRINGFIELD REPUBLICAN.— "His arguments are worth considering, lind his whole book is of high value to any American to study economical ques- tions." CONTEMPORARY SOCIALISM. By JOHN RAE, M.A. 8vo, S2.50. Such a book as this which Mr. Rae has written — a thorough history fend analysis by a mian of singularly candid and liberal mind, equally without prejudice and fanaticism — has long been needed and earnestly wished for by every student of socialism, and in all countries. THE LONDON SATURDAY REVIEW.— "A useful and ablywritten book." THE CONGREGATIONALIST.— "No subject more needs thorough and Im- partial discussion at present than this, and the work before us by John Rae is em- inently able and helpful. It is distinguished in a remarkable degree by breadth of view and the grasp of underlying and widely reac'uing principles, and also by his minuteness of detail and the careful relation o'. facts and figures In support of its position." COMMUNISM AND SOCIALISM. In their History and Theory. A Sl