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_<i;iioi-ant and unsuspecting', it appeal's I'iglit
Ave should offer a few propositions to show their folly
and wickedness. A person receives of the United
States $10,000 in treasury notes ; if he has no use for
tlie money for ten days, lie lays them in his desk for
that time— the interest in the interim amounts to $15.
lie then carries them to a bank and deposits them with
other monies, for $10,015, or exchanges them with a
friend or neighhor (and in our seaports he can always
find such) who has duties to pay for that amount. Thus
the money is never idle, it works night and day, in the
language of money lenders, and is constantly accumu-
lating. The hanks will he glad to receive these notes
in exchange for their own ; the advantage is on their
side, as the treasury notes hear a daily interest, and their
own bear none at all. If the stock should rise to a
greater amount than the bank may think it advisable to
keep, which can hardly be possible, they are immedi-
ately convertible into any kind of money desired, for
the banks always have customers who will use them in
payment of bonds due the United States for duties.
They are better as deposits than specie, gold, and silver,
for gold and silver lie dormant in the vaults, whereas
the treasury notes will be an active capital, every hour
becoming more and moi'e valuable, and as fully compe-
tent to all the purposes of the banks as specie, because
they will produce it.
" From these brief remarks it will appear evident that
treasury notes, the moment they are issued, will be
hoarded up by the banks, if they can get them ; and
very few of us will be alarmed at the sight of one unless
M'e seek it as a matter of curiosity."
ADDITIONAL ISSUES IN 1813. 29
The Secretary estimated that there would Ije a deficit
of nineteen millions for the year 1813. Congress au-
thorized sixteeTi millions of this amount to be obtained
by loans, without the usual provision that the bonds
should be sold at par, or specifying the rate of interest.
The loan Avas placed with great difficult}', the sixteen
millions authorized being obtained from the avails of
$18,109,377.43 of stock, bearing interest at six per cent.
To supply the remainder, a bill was introduced into
the House on January 27, 1813, to authorize a new issue
of treasury notes. The bill was similar in its provisions
to the act of 1812 ; the arguments for and against the
measure were in the main the same as those of 1813.
The opposition complained that nnich favoritism had
been shown in the dealings with the banks. It Avas al-
leged that among the banks granting credit jn return
for the treasury notes deposited, as authorized by the
law of 1812, M'ere those acting as depositaries of public
moneys derived from the deposits of collectors and pub-
lic agents ; that this very money so deposited by the
Government agents was again loaned to the Government
ou the credit of treasury notes. On the other hand, it
was urged that the use of banks as depositaries was un-
avoidable, and that, in any event, banks would receive
incidental benefit from keeping Government deposits.
Even if a stock loan was substituted for treasury notes
the money realized therefrom would be deposited with
the same banks until required by the Government. The
bill passed the House by a vote of 79 to 41, and the Sen-
ate by a vote of 17 to 9, and became a law on February 25,
1813. The greatest amount of notes authorized by this
act, outstanding at anyone time, was five millions; they
30 UNITED STATES NOTES.
v:oro all I'cdcemnble by the first quarter of ilic calendav
year of 1815, but at the close of that quarter only
81,483,900 had been redeemed, and all of the remainder
was not finally paid until the year 1820, although the
gi'catest portion was called in by ISIT. They M'ere is-
sued in denominations of not less than ^100.
An act similar in all respects to that of February 25,
1813, passed the House by vote of 83 to 48, and the Senate
without debate, on March 1, and was approved March 4,
1814. It authorized the issue of five millions of treasury
notes, and of an additional five millions, which, if issued,
was to be considered as part of a stock loan for the year,
which was subsequently to be authorized. This loan for
twenty -five millions was authorized on March 24th of the
same year, and could only be placed at a laige discount.
An additional five millions was therefore issued in place
of an equal amount of stock, making in all ten millions
of treasury notes issued undei- this act. These notes
were for the first time issued in denominations of less
than 8100, notes of the denomination of twenty dollars
being placed in circulation. The whole ten millions
were issued previous to June 30, 1815. The policy of
Congress seemed to be to keep the authorized issue of
treasnr}^ notes each year below the amount of the reve-
nue of the year, or, if more was authorized, they were to
be in lieu of, and to re-enforce, stock loans.
On December 26, 1814, an act was passed which
authorized the issue of 8T,500,000 of treasury notes in
place of portions of the loans of March 24th and jS'ovem-
ber 15th not already placed, and three millions moi-e for
the expenses of the War Department. These notes bore
the sauic rate of interest and Mere for the same time as
LEGAL TENDER A "■ DESPERATE EXPEDIENT." 31
tliose of the act of June SO, 1812, and nndor this act
$8,318,400 of notes were issued, a portion of which was
in tlie denominations of twenties and fifties.
On Au[2;nst 31, lSl-4, specie payments were suspended
except in Kew England. The accounts of tlie Treasury-
Department sliow that tliere were outstandhig on Sep-
tember 30, 1814, $10,649,800 of treasury notes. Mr.
Crawford was succeeded in October by Secretary DaUas,
and the latter, in his report to tlie Committee of Ways
and Means on October 17, 1814, said the condition of the
circulating medium presented another copious source of
mischief and embarrassment. The stock of specie was
diminished by exportation, and by its withdrawal into
the private coffers of individuals. The multiplication of
banks had increased the paper currency, so that it was
difficult to calculate its amount, and still more difficult
to ascertain its value. Baidv cuiTency was of no beneiit
since the suspension of specie payments, and tliere virtu-
ally existed no circulating medium common to all the
citizens of the United States. The money transactions
of private individuals were at a stand, and the fiscal opera-
tions of the Government labored with extreme inconven-
ience. Under favoi-able circumstances, the limited issue
of treasury notes would probably aiford relief, but they
were an expensive and precarious substitute for coin or
bank notes, lie concluded by recommending the estab-
lishment of a national bank, and added : '" But whether
the issues of paper currency proceed from the national
treasury, or from a national bank, the acceptance of the
paper in a course of payments and receipts must be for-
ever optional with the citizens. The extremity of that
day cannot be anticipated, when any honest and enlight-
32 UNITED STATES NOTES.
enod statcsinnii ^\ ill again venture npon the desperate
expedient of a tender law." This statement was called
out hj a report made by Mr. Eppes, Chairman of the
Committee of Ways and Means of the House, on Octo-
ber 10, 1814, in which, in order to secui-e the circulation
of treasury notes, it was recommended that notes of small
denominations should be issued, to be funded into 8 per
cent, stock, payable to bearer, and transferred by deliv-
ery, receivable in all payments for public lands and taxes.
The internal i*evenue taxes were to be pledged for pay-
ment of interest, and they were to be exchangeable for
stock at 8 per cent., or redeemable in specie after six
months' notice from the Government.
On November 24, 1814, in a report to the committee
to which a bill for establishing a national bank had
been referred, Mr. Dallas mentions, as one of tlie means
at the disposal of the Treasury, the issue of treasury
notes, " which none but necessitous creditors, contractors
in distress, or Government agents acting officially M'cre
willing to accept." He also states that the act of Ko-
vember 15, 1814, authorizing treasury notes to be taken
in payment for subscriptions to loans, Avas passed too
late ; that the interest on the public debt had not been
punctually paid, and that a large aniount of treasuiy
notes had already been dishonored. In a subspquent
connnunication of December 14, 1814, he said that the
non-payment of treasury notes, and the lisk of not pay-
ing the interest on the funded debt, were chiefly owing
to the suspension of specie payments by the banks, and
the consequent impracticability of transferring public
funds from the place where they were deposited to the
place where they were needed. The difficulty referred to
LEGAL TEKDER FLRST PROPOSED 73" CONGRESS. 33
in meeting the interest upon the public del)t was in Bos-
ton. A State bank liad hirge Government deposits, and a
draft was sent to meet the interest, upon October 1, 1814.
Tlie State bank declined paying in coin or bank notes,
and the creditors refused to receive the treasury notes
tiiat were offered instead. After the suspension, the
Government was deprived of the use of specie, and as
the banks in each State refused credit and circulation to
the notes of banks in other States, no transfer of funds
could be made to places where they were wanted to
meet treasury notes ; consequently the credit of these
notes was lessened, and creditors refused to accept them
in payment.
On November 12, 1814, Mr. Hall, of Georgia, intro-
dnced in the House a series of five resolutions to revive
the credit of treasury notes. The second resolution pro-
vided that the notes should be a legal tender between
citizens, and between citizens and foreigners, for all debts
then due or afterward to become due, which the House
refused to consider by a vote of 95 to 42 — more than
two-thirds. These resolutions were evidently introduced
as measures in opposition to the proposition for a na-
tional baidc, and the other four resolutions were subse-
quently laid upon the table by a large majority.
On January 30, 1 815, a bill authoi-izing the issue of
treasury notes in accordance with the recommendations
of Secretary Dallas in his communication of January
ITtli, was introduced in the House and referred to the
Connnittee of the Whole. The bill passed the House
February 11th, and the Senate February 21st, and was
approved February 24, 1815 ; it was the last of a series
of five acts, connnencing with that of June 30, 1812, the
2*
^•i UNITED STATES NOTES.
first fonr of M-liieli had authorized the issue of treasury
notes hcai'i ng interest at the rate of 5| per cent. The
forui of the large notes issued nnder this act, which iii
size were 7f by 3f inclies, is shown on tlie next page.
This act authorized the issue and reissue of treasury
notes to an amount not exceeding twenty-five millions,
upon principles essentially different from those govern
ing prior issues. These notes might be of &nj denomi-
nation : if of a denomination less than $100, they were
designated as " small treasury notes," were payable to
bearer, and bore no interest ; if of a denomination of
$100 or upward, they were payable to order, transferable
by indorsement, and bore interest at the same rate as
those of $100 and upward previously authorized. The
form of the "small treasury notes," in size 6^ by 3
inches, is shown on page 36.
These notes were not chargeable upon the sinking fund,
as in the case of the first three acts of the series, nor
were they payable out of any money in the treasury not
otherwise appropriated, as in the previous act of Decem-
ber 26, 1814, but rested entirely upon the provision
making them fundable into stock. The principal and
interest were not payable at any specified time, but the
notes were everywhere receivable in all payments to the
United States. The act reduced the pay of those sign-
ing the notes to seventy -five cents for each one hundred
notes, and also provided that treasury' notes of previous
issue should be fundable into 6 per cent, stock. The
holders of the small treasury notes could exchange them
at pleasure, in sums of not less than $100, for certificates
of funded stock bearing interest at 7 per cent. The
treaty of peace was signed on December 14, 1814, but
ONE
HUNDRED.
1
ONE
HUNDRED
DOLLARS.
•SI
0)
^
^
^
^
ss
«
'Si
•si
^
8 V
s.-
sS
|S.
■^
X
^
.^
s,- e
^
^
^
V,
-^
WT\i
g, .^ n CO ra a
•19WVvyiyQ
si
Si
S^
^
5i
sS
ONE
HUNDRED
DOLLARS,
• a a a a K n H
3N0
FIVE DOLLARS
O
©:<
•1 .^
l\
55
^
^
o
•SHVTTOa 3AId
o
TOTAL NOTES ISSUED DURING WAR OF 1813. o1
tlie news reached Washington a few davs only before
the passage of the bill, which, althongh a war measure,
was cari'ied through, inasmuch as it was considered
necessary to the regulation of the disordered finances of
the country. The whole amount of treasury notes, ab-
solute and contingent, which was authorized by these
five acts, was $60,500,000, of Mdiich amount $36,680,794
was issued. The following table exhibits the amount
issued under each act :
Under act of June 30, 1812 $5,000,000
Under act of February 25, 1813 5,000,000
Under act of March 4, 1814 10,000,000
Under act of December 26, 1814 8,318,400
Under act of February 24, 1815— $100 notes. ,$4,969,400
Under act of Febriiary 24, 1815 — small treas-
ury notes 3,392,994
8,362,394
Total amount issued $36,680,794
Although the treasury notes of 1815 of small denomi-
nations, originally issued, amounted to only $3,392,1)0-1,
the law made them fundable into 7 per cent, stock,
payable after December 31st; and as the notes were rc-
issuable, the}^ were, under various exigencies, again and
again paid out, until the whole amount of the 7 per
cent, stock issued for the purpose of funding them,
amounted to $9,070,386. On account of the high rate
of interest of these bonds, the small treasury notes were
in demand, and a small amount was sold at a premium
of 4 per cent., and $1,365,000 at a premium of
$32,107.64, or about 2| per cent. The Secretary, in
his annual report for 1815, says : " The treasury notes,
38 UNITED STATES NOTES.
Mliicli wore issued under act passed previous to February
24, 1815, were, for the most part, of a denomination too
iiigli to serve as a current medium of exchange ; and it
was soon ascertained that the small treasury notes,
fundable at an interest of 1 per cent., though of a con-
venient denomination for common use, would be con-
verted into stock almost as soon as they Avere issued." '
The notes of Si^lOO and upward, though fundable into 6
per cent, bonds, were depreciated from 8 to 10 per cent,
below bank notes, which bore no interest, but were re-
deemable in specie.
In recapitulation, it may be stated that the treasury
notes of the period of the war of 1812 w-ere issued under
five acts of Congress, as stated in the table. The notes
of the first three acts were made chargeable to the sink-
ing fund — those of the last two, not ; those of the first
two acts were in denominations of not less than $100 ;
those of the next two were not less than $20 ; and those
of the last act were in denominations of |3, $5, $10, $20,
$50, $100 and upward. Those of the first three acts
were not originally fundable into stock, but were made
so by the act of jS'ovember 15, 1814, and by the subse-
quent act of February 24, 1815. The notes of the acts
of December 2G, 1814, became fundable by the act of
Febi'uary 24, 1815, but those of the last-named act were
fundable by the terms of their authorization. The notes
of all the acts but the last were made payable one year
from the date of their issue ; those of the last act were
payable at no fixed date. All of these notes (with the
exception of the small treasury notes, wliich were with-
' Report of tlie Secretary of the Treasury, 1815, p. 26.
DEPRECIA TION OF GOVERNMENT LOANS, 1812-1815. 30
out interest) bore interest at the rate of 5f per cent.
Kone were in the form of a promise to paj coin on de-
mand, bnt all in the form of a receipt for all dues pay-
able to the Government. IS^one of these notes had any
legal tender quality, and Congress, without debate, re-
jected the only proposition made to give them this
quality. The denominations, except in the case of the
small notes of 1815, were too large for general circulation,
and the inducements for funding the latter were so great
that they were speedily funded into seven per cent, bonds.
As long as the banks redeemed their notes in specie, treas-
ury notes appear to have been kept at par, bnt when
specie payments were suspended, they began to depreci-
ate, but were kept from great discount by the funding
acts of l^ovember 25, 1814, and February 24, 1815. It
is said, " that of eighty millions of loans negotiated by
the Government during this period, the avails were
only tliirty-four millions, after deducting discounts and
depreciations.'" After the close of the war, in Decem-
ber, 1814, these notes were rapidly funded.
' Report of Committee of Ways and Means, April 13, 1830.
CHAPTER VL
fEEASUET NOTES OF THE PERIOD OF THE FINANCIAL CRISIS
OF 1837.
In anticipation of a large surplus, Congress, by act of
June 23, 1836, provided for the distribution of a large
amount of Government money among the States in pro-
portion to their representation in the Senate and House
of Representatives, and three instalments, amounting in
all to $27,063,130, were so distributed.' In the mean-
time, about May 1, 1837, specie payments were suspended,
owing to the great depression in commercial circles. An
extra session of the 25th Congress was called in Septem-
ber of the same year. The charter of the second Bank
of the United States had expired on March 4, 1836, and
on June 23, 1836, Congress had passed an act authoriz-
ing*and regulating the deposit of public moneys in State
banks. J^o action was taken during the exti-a session
toward rechartering the Bank of the United States.
The distribution of the fourth instalment to the States
was, however, postponed, but the Secretary was pro-
hibited from calling for any of the money already dis-
tributed without special authority from Congress, which
has not, up to the present date, been given.
The revenues for the year (1837) were from six to ten
' See page 180.
DISCUSSION OF TREASURY NOTE BILL, 1837. 41
millions short of the expenditures. The public funds
already deposited with the States were unavailable, and
there was another instalment to be deposited on Octo-
ber 1st. The Secretary recommended the withholding of
this instalment, and, in order to supply currency, an is-
sue of treasury notes, the small denominations to bear
no interest, and the large M^ith interest.
A large party in Congress w^ere in favor of recharter-
ing the Bank of the United States. The advocates of
treasury notes urged the issue principally upon the
ground of necessity, tliere being no currency upon which
the Government could rely to make and receive pay-
ments. Many w^ere in favor of a substitute to be issued
by the proposed new Bank of the United States. A
bill was presented and passed by the Senate. When it
came to the House, objection was made that it was a
money bill, which the Senate had no constitutional right
to originate. This point was not discussed, but the
Committee of Ways and Means presented their own bill,
by which the issue of ten millions in treasury notes was
authorized. The bill encountered much oj^position, par-
ticularly from those in favor of authorizing a new bank,
but passed the House on October 9, 1837, by a vote of
127 to 08, which was a strict party vote. In the Senate,
the next day, Mr. Benton moved to make the lowest de-
nomination of notes 8100, instead of $50, as provided in
the bill. He presented strong objections to the issue of
treasury notes. Nothing but the fact that the Govern-
ment nmst otherwise stop for M^ant of funds, would in-
duce him to vote for paper money in time of peace.
He pai'ticularly ol)jected to the policy of reducing the
denominations of paper currency. It was the most dan-
42 UNITED STATES NOTES.
gerous feature of the system, and would diivc all specie
froin circulation. Mr. Clay spoke in favor of Mr. I3eu-
ton's motion, and characterized the M-hole measure to be,
to all intents and pui'poses, a great hank experiment, and
alluded to the inconsistency of issuing, in time of pro-
found peace, ten millions additional notes after decrying
the banks for enlarging their circulation. Mr. Webster
favored Mr. Benton's motion. It was lost by a vote of
25 to 16. The bill then passed by a vote of 85 to 6,
both Mr. Benton and Mr. Webster voting for it, and Mr.
Clay against it. This bill authorized the issue of treas-
ury notes to an amount not exceeding ten millions, and
in denominations not exceeding fifty dollars. The in-
terest was not to exceed 6 per cent ; and they were to be
j)ayable, principal and interest, after one j-ear from date,
and were, for the first time, signed by the Treasurer and
countersigned by the Begister. They M^ere to be issued
in payment of the debts of the United States to any
creditor who would receive them, and were to be re-
ceivable in payment of all debts and dues to the Gov-
ernment. They were not reissuable, and the authority
to issue terminated December 31, 1838. The ten mil-
lions authorized M'ere issued by Secretary Woodbury
previous to July 1, 1838. About two millions were is-
sued at the nominal rate of interest of 1 mill per cent.;
three millions at 2 per cent.; and over four millions at
5 per cent. On account of the low rate of interest
upon a large portion of the notes, the object for which
they were issued, namely, to supply a circulating me-
dium, was thwarted, for they were soon presented in
payment of taxes, and over five millions were retired be-
fore the whole amount had been issued.
SECOND PROPOSniON OF LEGAL TENDER. 43
At the end of 1837 the Secretary estimated tliat the
balance in the treasury for July, 1838, would be $34,-
187,000, of which $28,101,644 was due from the States,
$1,100,000 due chiefly from insolvent banks, and $3,500,-
000 from other banks, payment of which was postponed.
These sums, and the bullion fund in the mint, reduced
the estimated available balance in July, 1838, to about
one million. This estimate was nearly correct, for Con-
gress was advised by the President, in May, 1838, that
only $210,000 of available funds remained in the treas-
ury. There were several propositions iu the House, one
of which was a bill for authorizing loan certificates, which
should be a legal tender to public creditors, but not re-
ceivable for dues to the Government. The question of
the legal tender was not discussed. Mr. Cambreleng, of
JSTew York, from the Committeeof Ways and Means, re-
ported a short bill, authorizing the issue of treasury notes
to the amount of the issue of October, 1837, which had
been redeemed and cancelled. The interest upon the
issues already made under the laws of 1837 had been too
small, and they had been immediately paid into the treas-
ury when due. There were gratifying signs of a revival
of prospei'ity. The Northern banks had resumed specie
payment sooner than expected. This he ascribed to the
firmness of the President in refusing to allow dues to the
United States to be paid in notes of banks not paying
specie. He referred to the passage of the Free Banking
act of New York as a presage of sound banking in future.
He also urged the necessity of providing notes to enable
the treasury to meet its payment. The objections to the
bill were much the same as those urged in the debate dur-
ing the previous session, though they were presented with
4-i UNITED STATES NOTES
inoi-G force and completeness, particiilarlj by^Mr. Caleb
Cushing. Ho said that sncli issues Mere bills of credit
not wari-anted by the Constitution ; that they were based
only upon the faith of the Government ; that such meas-
ures were considered of doubtful and dangerous charac-
ter by all the friends of democratic institutions ; and that
Madison and others had always been opposed to the issues
of Government paper founded not on funds or specie,
but only upon faith or credit, and only consented to its
expediency in remarkable exigencies. Experience had
shown, that whatever interest they might bear, Avhether
1 mill or G per cent., they would not be above the value
of the notes of good banks. It was said that, if the
United States under the Constitution co«uld issue these
bills, so could the States. They were the same as con-
tinental money, although bearing interest. Much of the
currency issued by the States, during the revolution, de-
nominated bills of credit, bore interest. Ciiief Justice
Marshall's definition' of bills of credit was, "paper issued
by the sovereign authority, and intended to circulate as
money." These notes are issued by sovereign authority,
and intended to circulate as money. They operate un-
equally, and afford no general relief; they are below par
' The Supreme Court of the United States in a famous case, Briscoe
vs. Bank of Kentucky, 11 Pet., 257, held that a note of circulation
" issued by a State, involving the faith of the State, and designed to
circulate as money on the credit of the State, in the ordinary course
of business," is a bill of credit. Other decisions of the Supreme
Court— Craig rs. Missouri, 4 Pet., 410 ; Byrne vs. Missouri, 8 Pet., 40 —
hold "that certificates is.^ued by a State in sums not exceeding ten
dollars nor less than fifty cents, receivable in payment of taxes, the
faith and credit of the State being pledged for their redemption, are
bills of credit within the prohibition of the Constitution."
MARSHALL'S DEFINITION OF BILLS OF CREDIT. 45
in Xew York, and at 5 per cent, pi-emium in Charleston.
The bill was amended to obviate some technical objec-
tions, and finally passed by a small majority, 106 to 99,
on May 16, 1838, It came np in the Senate on May 18th.
Wright, of New York, Benton, Calhoun, Brown, and Tal-
madge were in favor of it. Webster, Clay, Crittenden,
and Preston were on the other side. The discnssion
took a wide range, involving the causes of the condition
of the treasury, and the constitutionality of the issue of
treasury notes. It passed by a vote of 27 to 13, and was
approved on May 21, 1838. Nearly five millions wei'e
issued within one month after the passage of the bill,
which showed conclusively the pressing needs of the
treasury. Under the previous acts of October, 1837, and
May 21, 1838, the authority to issue treasury notes ex-
pired on January 1, 183*J. The whole issue was not to
exceed ten millions, and the latter act permitted the re-
issue of those paid in.
The whole amount which had been issued to Decem-
ber, 1838, was $15,709,801.01, with interest as follows:
$6,888,809.60 at 6 per cent. ; $4,280,273.72 at 5 per
cent. ; $2,784,844.73 at 2 per cent. ; and $1,755,881.96
with interest at 1 mill per cent. There had been re-
deemed, np to the same date, $7,955,250, leaving
$7,754,560 outstanding. The authority to reissue ex-
pired with the year. On January 1, 1839, there was
a large amount of notes in the treasury, which con-
tinued to grow larger nntil March 2, 1839, when an act
was passed, extending the authority to reissue until June
30, 1839, provided the whole amount outstanding did
not exceed ten millions. In December, 1839, Secretary
Woodbury reported that at no time had more than ten
46 UNITED STATES NOTES.
millions been outstanding, and that the amonnt ont-
standiiig was less than the amount due from suspended
banks, and from the Pennsylvania bank of the United
States, to the Government, and that the principal and
interest on the treasury notes had always been promptly
paid when desired.
A bill was subsequently presented by Mr. Jones,
Chairman of the Connnittee of Ways and Means,
Amendments were oft'ei-ed requiring that the notes
should bear interest at not less than 2 per cent., and
making them negotiable and transferable only by in-
dorsement, in the same manner as bills of exchange : the
first to prevent the issuance of notes at the nominal rate
of 1 mill per cent., or one-thousandth of 1 per cent, per
annum, and the second to prevent their circulation as
money, and both to cure, as was alleged, the constitu-
tional difficulty which pertained to bills of credit issued
by sovereign authority and intended to circulate as
money. The Whigs refused to vote, leaving no quorum.
On March 24, 1840, the House continued in session
from ten o'clock until five p.m. of the next day. Finally,
when the House adjourned, the consideration of the
bill was fixed for the following Friday, and on that day
— March 27, 1840 — it finally passed the House by a vote
of 110 to QQ. It passed the Senate on March 30, 1840,
and was approved the following day. On page 47 is
the form of a $100 note issued under this act. On each
end of the reverse were printed the figures 100. Under
this act the issues amounted to 87,114,251. Xotes
were to be ]-edeemed sooner than one year, if the condi-
tion of the treasury would admit, and at any time with*
in the year, after sixty days' notice.
^
^
^
^
^
«
^
^
^3.-^
Si
"to
Si
REPORT OF SECRETARY EWINO. 49
The Secretaiy, in his report for 1840, states, that
treasury notes had been at par during the year, although
never bearing interest higher than 5|- per cent.,' and
subject to payment after sixty days' notice. To meet
the wants of tlie treasury, a treasury note bill was intro-
duced, and passed Congress on February 15, 1841. This
law authorized an issue of notes, in the aggregate, of
$10,000,000, one-half to be issued in payment of amounts
due and payable prior to March 4, 1841, and the remain-
ing $5,000,000 in payment of amounts due and payable
after that date. In all, $7,529,063 were issued under
act of February 15, 1841.
In the fall of 1840, Harrison had been elected Presi-
dent to succeed Yan Buren, but died April 4, 1841.
He was the representative of the Whig party, which had,
since the year 1837, so bitterly opposed the issue of
treasury notes. Mr. Ewing, of Oliio, was appointed Sec-
retary of the Treasury by President Harrison, In his re-
port to Congress at its special session of May 31, 1841,
he said that, from January 1, 1837, to March 4, 1841,
the expenditures of the Government had exceeded the
revenues by over $31,000,000. Of about twenty-six
millions of treasury notes issued under the acts from
October 12, 1837, to February 15, 1841, inclusive, all
but about six millions had, as claimed by Secretary
Woodbury, been issued in anticipation of revenues, or
upon the basis of existing debts due to the United States,
leavino; about six millions outstandino; when the new ad-
ministration came in. Mr. Ewing estimated that the
deficit in the revenues for the year 1841, after meet-
' Finance Report, vul. iv., p. 354.
3
50 UNITED STATES NOTES.
m^ the current expenses and redeeming the treasury
notes tlien outstanding and to he issued, would he
^12,088,215, wliieh he considered to he tJie amount
of the puhlic deht. lie ohjected to the issue of treas-
ury notes, and recommended a loan redeemable after
eight years or upon six months' notice hy the Govern-
ment.
A bill was introduced by Millard Fillmore, Chairman
of the Committee of Ways and Means, on June 2-lth. It
provided a loan, payable after January 1, 1S5G, with in-
terest at 5 per cent., and authority was given the Seci'e-
tary to purchase the bonds out of any surplus in the
treasury. It was objected that the loan was unnecessary,
and that it was the commencement of a scheme to or-
ganize a national bank. The debate was bitterly politi-
cal. It was urged, that as this was an administration
measure, the loan should be paid within the term of the
administration. This point was foolishly conceded, but
the rate of interest M-as raised to G per cent. As thus
amended the bill became a law on July 21, ISil. The
reduction of the length of the loan from eight to three
years, together with the proviso that no stock could be
sold below par, destroyed the usefulness of the measure,
and less than one-half, or only $5,672,076, of the stock
was sold, wdiich was about equal to the amount of treas-
ury notes outstanding.
On September 13, 1811, Mr. Ewing was succeeded by
Secretary Forward, of Pennsylv^ania. The policy of the
administration was changed by the death of the Presi-
dent. The repeal of the Independent Treasury act
August 13, 1811, which had been authorized at the close
of the Yan Buren administration, was about the only
BILL OF 1842 INTRODUCED BY MR. FILLMORE. 51
point gained by the Harrison administration, and this
repeal pi-actically left the treasury to be managed by
tliose who were unfriendly to the policy of the Whig
party.
A bill for the issue and reissue of treasury notes was
introduced into the House by Mr. Fillmore, January 5,
1842. Among other proposed amendments wdiich were
rejected, was one by Mr. Benton, heavily taxing all
bank circulation, especially small notes. The bill be-
came a law January 31, 1812. Under it the amount
authorized to be outstanding at any one time was limited
to five millions, but the total amount issued and I'eissued
was $7,959,991. The subsequent act of August 31,
1812, authorized the issue and reissue of treasury notes,
provided tlie amount outstanding at any one time
should not exceed six millions, and under it notes to
the amount of $3,025,554.89 were issued.
All of the notes issued since the act of October 12,
1837, were issued payable either one or two years after
date, chiefly for one year. These notes were continually
falling due and embarrassing the treasury. Eleven
millions of such notes were to fall due during the year
1813, and accordingly another bill was introduced by
Mr. Fillmore, providing for the reissue of such notes as
should be redeemed before July 1, 1811. The bill be-
came a law on March 3, 1843.
The amount of the treasury notes outstanding on the
dates named from November, 1837, to March, 1813, are
shown in the followinir table : '
' Page 186, 3d Session 27 th Congress, Appendix. Speech of
Woodbury.
52
UNITED STATES NOTES.
MOXTUS.
1837.
March
1838.
1839.
1840.
5,518,964. 65 §6,552,946 §2,176,981
November. . . . ! §53, 723. 83 8,009,760.01
1841.
3,394,180 4,664,200
1842.
1843.
March §5,393,094.00 .•?8,539,115 §11,656,387
November I 7,371,705.00 10,039,056
I I i
Jolin C. Spencer succeeded "Walter Forward as Secre-
tary of the Treasury, on March 3, 1843, and was himself
succeeded, on June 15, 18-1-1, by George M. Bibb. Under
the act of March 3, 181:3, Mr. Spencer issued about
$850,000 treasury notes. On the face of each note' was
engraved '' The United States promise to pay, one year
after date, to or order, fifty dollars, with interest
at the rate of 1 mill per $100 per annum." On the back
of each note, lengthwise, was engraved, " This note will
be purchased at par for the amount of principal and in-
terest thereof, on presentation at either of the Deposi-
taries of the Treasury in the City of Xew York." These
notes, which were issued at the nominal I'ate of interest
of one-thousandth of 1 per cent, per annum, and by the
indorsement made payable on denumd, were considered
by Congress an evasion of the act under which they were
issued. The Seci-etary of the Treasury, in his report for
December 6, 1843, had stated that less than $1^70,000
of these notes had then been issued, and asserted that
the right to purchase such notes at par on presentation
was given by the eighth section of the act of October 12,
1837, as follows : "And the said Secretary is further
authorized to make purchases of the said notes, at par,
' See Frontispiece.
NOTES ISSUED BY 8ECRETABT SPENCER. 53
for tlie amount of the principal and interest due at the
time of purchase on sucli notes." The Committee of
Waj's and Means were instructed, on January 15, 1844,
" to inquire and report whetlier tlie notes lately issued
by the Treasury Department, bearing a nominal in-
terest and convertible into coin on demand, and now
forming part of the circulating medium of the country',
are authorized by the existing laws and Constitution of
the United States ; " and the report of the Commit-
tee, which also contains a letter of the Secretary
giving his views on the subject, is interesting from
the fact that it contains the principal constitutional ar-
guments against the issue of paper money by the Gov-
ernment.'
During the second session of the 27th Congress,
after the veto, by President Tyler, of a bill to au-
thorize the organization of a Bank of the United
States, he recommended the passage of a bill for the
issue of exchequer bills of not less than $5 in denomina-
tion, which notes were to be signed by the Treasurer of
the United States, and countersigned by the President of
the Board of Exchequer, and redeemable in gold and
silver on demand at the agency where issued. This bill,
which was prepared at the Treasury Department, did not
become a law, and it was claimed by the Committee that
the notes issued by Secretary Spencer were in most re-
spects like the exchequer notes proposed in this bill.
The principal difference M'as, that while the exchequer
notes were to be in denominations as low as $5, without
interest, the notes issued were of denominations not less
' Report No. 379, 28th Congress, 1st Session, H. of R.
54 UNITED STATES NOTES.
than i?50, and bore a merely nominal rate of interest.
It was claimed by the Committee that the Constitution
antliorized the Government to borrow money, but not to
issue bills of credit ; tliat borrowing money implied the
paying of interest for the money borrowed ; tliat inter-
est-bearing treasury notes payable at a future day were
a temporary loan, not designed to circulate as money,
and could properly be issued ; while notes bearing no
interest and payable on demand were bills of credit, and
could be issued only in violation of the Constitution.
The following are extracts from the report of the
Committee : " The power to issue treasury notes
under the act of March 3, IS-iS, at a rate of interest
not exceeding six per centum per annum, should the
wants of the public service require, in place of others
redeemed before the fii'st day of July, 18-44, seems to
be clearly granted. The notes are to be redeemed at
the Treasury after one year from their dates, respect-
ively ; and the Secretary is authorized to make pur-
chases of said notes, at par, for the amount of principal
and interest due at the time of purchase. This is con-
strued to mean, and the Committee do not intend to
question such construction, a purchase before the expira-
tion of one year, when the notes would, by limitation of
time, become payable. Such purchases, however, in an-
ticipation of time, necessarily imply the ability of the
treasury to make them, and fair notice to the holders.
These issues promise, on their face, to pay one year
after date. In good faith, in point of fact, they are is-
sued because required by the M^ants of the public ser-
vice. If the wants of the public service really require
the issue of treasury notes, to supply the deficiency of
COMMITTEE'S REPORT ON SPENCER'S NOTES. 55
means, then it is clearly impossible that the ability to
purchase the notes should exist at the time of issue, and
to make them, 2)resentl//, convertible into coin. If the
means to purchase are coextensive with the amount is-
sued, coeval and coexistent, then it is perfectly manifest
that the wants of the public service do not require the
issue. If the wants of the public service require the is-
sues, then there must be a present inability to redeem.
Wliether this inability will be removed before the efflux
of one year depends upon the income of revenue, and
consequent improved condition of the treasury.
" Tlie ability to purchase the notes within the year,
tlierefore, is, at the time of issue, a future contingency ;
which cannot be foreknown by the Secretary, so as to
authorize him to give notice that the notes will be pur-
chased at par, at all times on presentation, and at any
time after the date of issue. The sound construction
and the common-sense view of the matter seem to be,
that the notes may be issued, if the wants of the public
service require ; and if it shall be seen, subsequently,
that the treasury can spare the means, then, and not till
then, is the Secretary authorized, or indeed able, to
make the purchase ; and ought not, and cannot, but
upon ascertainment of the existence of those means,
give notice to the holders of the notes to be purchased.
How can it be known what amount in the treasury, not
otherwise appropriated, will be applicable to the pur-
chase ? How can it be known what specific amount can
be drawn from the treasury to make purchases of notes ?
"These views render it clear that the notice endorsed
on the notes, and issued sinniltaneously with them, that
they will be purchased on presentation, is not such
56 UNITED STATES NOTES.
notice of purchase, as to time or amount, as tlie act au-
thorizing the purcliase contemplates ; nor is it such
notice as a connnon borrower of nionej^ upon time, of
one year, with the privilege of redeeming within the
time, if able, would give to his lender. * '^ It is
a useless and dangerous experiment with the public
faith and public credit in times of peace. The public
credit should be used sparingly in time of peace ; should
be nursed and invigorated, so that it might be a safe
reliance in great and pressing emergencies. But nobody
can suppose that the Secretary either expected, desired,
or intended, that these notes should be actually forth-
with presented and paid. It is impossible to avoid the
conclusion, that the M'hole plan of issuing notes payable
on demand, as these notes are, in fact, made payable on
demand, by the endorsement, is a deliberate contrivance
of the Secretary of the Treasury, with the approbation of
the President, to infuse into the circulation of the coun-
try', Government paper. * * The Committee may
admit that the maximum rate of interest being six
per cent, per annum, and no restriction as to a mini-
mum rate, that a mere nominal rate of interest cannot,
of itself, be charged as transgressing the letter of the
law. But if a mere nominal rate of interest be charged
for the purpose of aiding in an object not contemplated
by the law or authorized by the Constitution, then such
nominal rate of interest is a mere pretext to cover a
perversion of law, and a violation of the Constitution.
The nominal rate of interest is so very small as hardly
to admit of computation ; and for all practical purposes,
the notes may be regarded as carrying no interest ;
wdiilst the endorsement, that they will be paid at sight,
CONSTITUTIONALITY OF DEMAND NOTES. 57
at either of tlic depositaries of the Treasurj^, in the city
of New York, imparts to th.ein tlie character of ordinary
bank paper, calcidated and intended to cirenlate as
money, in the hands of the citizens. It is an emission
of paper, on the pnblic credit, to be circnlated as money,
like bank notes. * "^
" It is strongly to be inferred that Congress did not
intend or expect any departnre from the former prac-
tices, nuich less the introduction of a new principle.
For the Committee conceive that the issue of notes pay-
able on demand, out of funds then on hand, and in the
treasury, is totally different in principle from the issue
of notes promising to pay one year after date, intended
to supply a present deficit in the treasury, and to be re-
imbursed thereafter out of accruing j-evenue. * * The
power to borrow money on the credit of the United States
was unanimously given, whilst the power to emit bills of
credit was refused — was struck out of the plan proposed,
by a vote, in convention, of nine States to two. And
yet the Secretary of the Treasurj^ contends that because
there are no express words of prohibition, as there are
a})plied to the States, that Congress may exercise the
jxnver incidentally or appertinently to the power of bor-
rowing money, whilst the States are totally precluded
from a resort to bills of credit, either as a principal or
primary power, or in any way as incidentally or appro-
priately connected with some other power clearly re-
served to the States. It was thought that it was too
late to undertake to revive the exploded Federal doc-
trine of claiming power because it had not been ex-
pressly forbidden. And it is a matter of ecpial surprise
that, at this late day, it should be seriously maintained
3*
58 UNITED STATES NOTES
by any federal officer, that bills of credit (a paper cnr-
reucy) may be supplied to the country under cover of the
granted power to borrow money. The powder to supply
a paper currency is thus made of contingent existence,
depending, fii-st, upon the necessity of exercising the
primary power to borrow money, and then upon the
polic}' adopted of making the loan more permanent, in
the shape of funded debt, or upon shorter time, in the
shape of treasury notes. The want of additional cur-
rency might possibly be experienced by the country,
when there would be no deficiency of means in the
treasury to make a loan necessary or proper. In this
condition of affairs there would exist no authority to
supply the needed currency. Again, a temporary loan
might become necessary, and might be authorized by
Congress in the form of treasury notes, at a time when
the country was abundantly supplied with a sound cir-
culating medium, and in that condition of affairs, accord-
ing to the argument of the Secretary of the Treasury,
under cover of the authorized loan, and by the adoption
of a peculiarly ingenious mode of issuing the notes of
the treasmy, a currency, not needed, might be sup-
plied. * * The omission to give the power to the
Federal Government ' to emit bills of credit ' as com-
pletely bars that Government from the exercise of the
power, as does the express prohibition to the States ' to
emit bills of credit ' bar them from the exercise of such
power. According to the received and well-established
loctrine, that the States are sovereign, and have the
right of self-government, it would follow that they
might impart to their legislatures ample powers to leg-
islate upon all subjects whatsoever meet for legislation ;
REPORT OF COMMITTEE CONTINUED. 59
that they might constitute them, under their own con-
stitutions, C077ij)lete legislatures. Hence they agreed, in
convention, to abstain from the exercise of certain enu-
merated powers, which otherwise would justly and right-
fully pertain to them as ' free and independent States.'
And intending, in good faith, to relinquish and abandon
the exercise of those certain powers, they inserted in
their constitutional compact of union express prohibi-
tions. The States, by fair and natural construction,
would retain to themselves all powers not conferred ex-
clusively upon the Federal Government, or expressly
prohibited to the States ; and yet, out of abundant cau-
tion, and to remove the possibility of doubt or cavil, an
express amendment of the Constitution to that effect was
adopted and ratified.
" It will not be questioned by the Secretary, the Com-
mittee suppose, that the States did possess, and have re-
served the power to borrow money. Certain it is, that
they have very generally and very extensively exercised
such power. Now, if the power to boi-row money on the
credit of a State be unqualified, like the power of Con-
gress to borrow money on the credit of the United
States, the Committee cannot comprehend the logic by
which the conclusion is reached, tliat, in the latter case,
whilst the absolute and independent power of issuing
bills was intentionally withheld, yet it was meant to
leave Congress unrestricted in the choice of such means
of borrowing, if the emission of bills should, at any
time, be deemed the most expedient mode of attaining
that object ; and by which, in the former case, the other
and contrary conclusion is also reached, that whilst the
absolute and independent power of emitting bills of
60 UNITED STATES NOTES.
credit is proliibitod to the States, the like unrestricted
choice in the means of borrowing, bj the emission of
bills, should at any time be deemed the most expedient
mode of attaining that object, is not left to the States,
I^either Congress nor the States can emit bills of credit,
in the exercise of an absolute and independent power.
Congress and the States possess the unqualified power
to borrow money. Congress is unrestricted in the choice
of means, and may issue bills of credit, if that mode of
borrowing should, at any time, be deemed the most ex-
pedient. The States, however, are not equally unre-
stricted in the choice of means, and may not issue bills,
although that mode of borrowing should, at any time,
be deemed the most expedient. * * When the
loan obtained is for any considerable length of time,
it is usual to fund the debt thereby created by issuing
certificates of stock. Where the loan obtained has only
a short time to run, and it is proposed to pay it off
speedily with the accruing revenue, the ordinary mode
is, to authorize the Secretary of the Treasury to issue
treasury notes, payable at the expiration of a limited
time, bearing such interest as may be expressed and al-
lowed by the act directing the issue of the notes. Such
notes are intended, hooia Jidc\ as a temporary loan, and
are not designed or expected to circulate as a currency.
Such notes were doubtless within the contemplation of
Gouverneur Morris, when he remarked, that striking
out the authority to issue bills of credit, would not
prevent the use of the notes of a responsible minister,
and that would do all the good without the mischief.
* * The use of public notes can be justified only
us the mode of effecting a loan — they are employed to
AMOUNT OF NOTE ISSUES, 1837-1844. CI
acknowledge the existence of a debt due by the United
States, and contain a promise to pay it, at some future
stipulated time, with interest, as may be agreed. To
issue notes for circulation, payable on demand, under
cover of the authority to borrow money in the form of
treasurj' notes, is deemed an abuse of authority which
ought to be con-ected."
From March 3, 1843, until July 2G, 1S4G, no new is-
sues of treasury notes were authorized. From 1837 to
1844 treasury notes amounting to $47,002,900 were is-
sued under eight different acts, of which |46,21G,935.82
were redeemed by the close of 1845. The lowest de-
nomination for any one note was $50, but where new
notes were issued in place of old ones the accrued inter-
est was often added. The amount authorized to be
originally issued by these several acts was thirty-one
millions. The remainder consisted of reissues.
The notes issued under the act of October 12, 1837,
and the six succeeding acts were all printed from the
same series of plates, and the different rates of interest
were inserted in writing. A new set of plates were
prepared for notes issued under the act of March 3, 1S43,
and the following words, " with interest at the rate of one
mill per $100 per annum," were engraved in the body
of the note. These notes were all of the same size, the
largest ever issued, and measure eight by four inches.
Photo-lithographs of the originals issued under these acts
may be found at the begimiing and end of this volume.
The following table exhibits the amount of treasury
notes issued each year, under different acts of Con-
gress, from October 12, 1837, to March 3, 1843, from
which it will be seen that the total amount issued M'as
C2 UNITED STATES NOTES.
$47,002,900, all of wliicli was sold or issned at par.
Interest varied from 1 mill per cent, to 6 per cent., and
the amount authorized was liftj-one millions.
1837— Act of October 12, 1837 $2,992,989 15
1838— Act of October 12, 1887 7,007,010 85
1838— Act of May 21, 1838 5,709,810 01
1839— Act of March 2, 1839 3,857,276 21
1840— Act of March 31, 1840 5,589,547 51
1841— Act of March 31, 1840 1,524,703 80
1841— Act of February 15, 1841 6,468,856 70
1842— Act of February 15, 1841 1,060,206 05
1842— Act of January 31, 1842 7,914,044 83
1843— Act of January 31, 1842 45,350 00
1843— Act of August 31, 1842 2,408,554 89
1843— Act of August 31, 1842 617,000 00
1844— Act of March 3, 1843 1,806,950 00
Total 147,002,900 00
CHAPTER YII.
TREASURY NOTES OF THE PERIOD OF THE MEXICAN WAR.
On July 1, 1844, the public debt of tlie United States
amounted to $24,748,188, and consisted principally of
stocks not payable until the lapse of ten and twenty
years.' The 5 per cent, stocks payable in ten years
were at a premium of 106, and the 6 per cent, stocks
payable in twenty years, at a premium of 116. The
Secretary estimated that the revenue under the tariff of
1842 would yield a much larger amount than was neces-
sary. Accordingly, Congress, in July, 1846, passed a bill
amending the tariff and reducing the duties on imports.
In the meantime, during the year 1845, difficulties with
Mexico, owing to the annexation of Texas, rendered war
inevitable, and on May 13, 1846, war was declared.
Secretary Walker estimated that, if the war should
continue for a 3'eai-, there would be a deficiency of more
than twelve millions ; and, in order to meet this defi-
ciency, a bill was repoi-ted from the Committee on Ways
and Means, which, with some additions, embodied the
provision of the act of October 12, 1837, as to treasury
notes, and that of April 14, 1842, as to a loan. The
following is the form of a $100 note issued under this
act : Seepage 65.
' Report of Secretary Bibb, 1844.
C4 UNITED STATES NOTES.
These notes -were printed from tlie plates nsed foT
printing the notes authorized by the acts of October 12,
1837, to Angust 31, 1842. The bill referred to anthor^
ized an issue of treasury notes to an amount of ten mil-
lions, which could also be reissued, and also a loan which
could be issued in lieu of treasury notes ; the amount of
both not to exceed ten millions. The stock was to be
redeemable after ten years, no notes of less than $50
w^ere to be issued, and they were to be signed by the
Treasurer and the llegister. The rate of interest was
not to exceed 6 per cent. Kotes were to be used in pay-
ment of public creditors who would receive them, and
the Secretary could borrow money on them. The
bill became a law July 22, 1846. Under tliis act, $7,-
CS7,800 of notes were issued, and 8J:,999,149 of stock.
Of these notes $2,086,550 bore interest at 5| per cent,
and $1,766,450 at 1 mill per cent, per annum.
In January, 1847, the treasury was again in need, and
to meet this necessity a bill M'as introduced, authorizing
the issue of twenty-three millions of treasury notes, and
an additional five millions under the act of July 22,
1846. This was an clal)orate bill, containing all neces-
sary^ provisions within itself, without referring back to
the provisions of previous acts, as had been usually the
case in legislation of this kind. The debate was princi-
pally upon the conduct of the war, and, after one or two
amendments had been agreed to, the bill passed the
House on the same day that it M^as introduced, by a vote
of 166 to 22. In the Senate, on January 25th, a resolu-
tion to postpone its consideration was lost, and the debate
took considerable latitude, principally upon the tariff
question. Tlie general sentiment appeared to be, that
^
^
^
^
^ ^
N^ V
<
^
-^
v>
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
!^
.<o
S
s:
Cl
<50
S
!^
•^
o
\
o>
>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
^
<r^
r^l
t?;
^
t^,
fi o
^
i5.
M^
THREE PER CENT. CERTIFICATES. 113
conpons have been found particularly objectionable, as,
thoug-li witlidrawn to a certain extent while the interest
is maturing, they are liable to be periodically rushed
upon the market. In consideration of this feature, a
large amount, viz., about ninety millions of the original
issue of one hundred and fifty millions of these coupon
notes, have been withdrawn and destro_yed, and their
place occupied by notes payable in three years, bearing
interest at six per centum, compounded semi-annually.
This is believed to be the best form of interest-bearing
legal-tender notes, as being more likel}^ to be withdrawn
and held until maturity, as an investment. Of these,
fifteen millions in amount were issued under the act of
March 3, 1S63, and about ninety millions under the act
of June 30, 18G4. The total amount of interest-bearing
notes outstanding on the 22d of November last was $210,-
222,870. What proportion of these may be considered as
an addition to the circulation I am unable to determine.
To that extent, whatever it may be, they contribute to
the amount of the currency, and thus in some degree
occasion, and in still greater degree sustain, an increase
of prices, and depress values."
About two years and eight months after the passage
of the last act, authority was given for the issue of tem-
porary loan 3 per cent, certificates, for the purpose of
retiring the compound interest notes. When these latter
notes were issued, it was expected that they would, as the
interest accumulated, soon pass out of circulation into the
hands of bankers and capitalists. These expectations
were realized, for the interest was only payable at ma-
turity, three years from date. Such notes, with accrued
interest, would not be paid out by the holders except va
114 UNITED STATES NOTES
cases of absolute necessity. In order to insure the re-
tirement of these notes, " An act to provide ways and
means for the payment of compound interest notes,"
was passed on March 2, 1867. This act authorized the
issue of 3 per cent, certificates in denominations of not
less than Sj^lOO, payable on demand. The national banks
wei'e authoi'ized to hold these certificates as a part of
their reserve, provided that not less than two-fifths of
the entire reserve should consist of lawful money of the
United States. This privilege did not largely diminish
the amount of gold coin and greenbacks which the
banks were required continually to keep on hand, as
most of the banks held a large amount of cash reserve,
in addition to the amount required by law. This excess
could with great pi'ofit be invested in the new certifi-
cates, and they could be used to advantage for clearing-
house purposes, and the banks at once availed them-
selves of this privilege. The amount authorized by this
act was fifty millions, which was increased to seventy-
five millions by the act of July 25, 1868. These certifi-
cates were payable on demand, and redeemable at the
pleasure of the Government ; they were cliiefl,y issued
during the fiscal j-ear 1868 and 1869, and for the most
part retired in the fiscal years from 1869 to 1873 —
$12,195,000 being retired during the latter year.
The act of July 12, 1870, authorized the issue of $54,-
000,000 additional bank circulation, and section two of
that act provided that, at the end of each month after
the passage of this act, the Comptroller of the Currency
should report the amount of such circulating notes issued,
whereupon the Secretary of the Treasury should redeem
and cancel a like amount of 3 per cent, certificates; and
FIRST GOLD CERTIFICATES. 115
in order to retire sncli certificates he was authorized to
give notice to tlie holders, designating the number, date
and amount, that such certificates shall cease to bear
interest and be available for reserve, from and after the
day designated in the notice.
Thus it will be seen that the compound interest notes
were issued for the purpose of retiring 5 per cent, notes,
the 3 per cent, certificates for the retirement of the com-
pounds which were maturing, and the act of July 12,
1870, was passed in tui-n for the retirement of the 3 per
cents ; and the different acts authorizing these issues had
the effect of rapidly accomplishing these results, with but
little inconvenience either to the banks or to the public.
The act of March 3, 1863, authorized the issue of gold
certificates, of one and two-year notes, and of compound
interest notes ; and certificates under the fifth section of
that act were used for clearing-house pui-poses soon after
the passage of the national bank act. They were au-
thorized to be issued in sums of not less than $20, cor-
responding with the denomination of United States
notes. The coin and bullion deposited were required to
be retained in the treasury for the payment of the same
on demand. Certificates representing coin in the treas-
ury were authorized to be issued in payment of interest
on the public debt, but it was provided that the amount of
certificates issued should not, at any one time, exceed 20
per centum beyond the amount of coin and bullion in
the treasury. These certificates were authorized to be
received at par in payment of duties. The first issue
was made on JSTovember 13, 1865. On June 30, 1875,
there were outstanding |2 1,796,300, of which the na-
tional banks in New York City held $12,642,180.
lie VNITED STATES NOTES.
Tlieir issue was discontinued on December 1, 1S78, just
pi-evious to tlie resumption of specie payments, and the
amount outstanding- liad decreased on June 30, 1870, to
815,413,700. The amount outstanding on October 3,
1883, was $4,007,440, of whicli the national banks held
$4,504,300. On Octol)er 1, 1887, tlie amount outstand-
ing was $2,354,600. Most of these certificates were is-
sued for clearing-house purposes, in denominations of
$1,000, $5,000, and $10,000.
On June 8, 1872, an act was passed authorizing the
Secretary of the Treasury to receive United States notes
on deposit without interest from na.tional bank associa-
tions, in sums not less than $10,000, and issue certifi-
cates therefor, of denominations not less than $5,000.
These certificates were similar to the 3 per cent, cer-
tificates just referred to, except that they bore no in-
terest, and were largely used in place thereof for clear-
ing-house purposes. The certificates were payable on
demand in United States notes at the place of issue,
and they were authoi'ized to be held and counted by
national banks as part of their legal reserve, and to be
nsed in settlement of dearing-house balances. These
certificates were not properly treasury notes, and the
highest amount issued was $64,780,000, on August 3,
1875, which amount was ray)idly ]-educed after the I'e-
sumption of specie payments. On June 30, 1875, there
were outstanding $50,045,000, of which the national
baidvs held $47,310,000. On June 30, 1876, the amount
outstanding was $33,140,000, of which the banks held
$27,055. The amount outstanding on August 1, 1887,
was $8,460,000, of which the banks held $7,810,000.
FOUR PER CENT. CERTIFICATES. 117
Tlie act of February 2G, 1879, authorized tlie issue
of 4 per cent, certificates, of the denoinination of $10,
M'hicli were convertible at m\y time, with accrued in-
terest, into the 4 per cent, bonds autliorized to be issued
July 14, 1870. This act was passed for the pnrpose of
facilitating the refunding of 5 and 6 per cent, bonds
then falling due into 4 per cents, but the act was really
nnnecessary, for about the time the certificates began to
be issued, the 4 per cent, bonds were above par in the
market. Long lines of people gathered at the different
Government dcpositoi'ies where the certificates were
offered, and the amount was taken as fast as they could
be furnished. $40,012,750 were disposed of at par, of
which $39,398,110 were issued during the fourth quarter
of the fiscal year 1879, and the amount outstanding on
October 1, 1887, was $163,430.
The table on page 118 exhibits the amount of treasury
notes of the different forms issued during the late civil
war, outstanding on October 1, 1887, interest upon all
of which has long since ceased.
" An act to authorize the issue of United States notes,
and for tlie redemption or funding thereof, and for re-
funding the floating debt of the United States," which
was signed by President Lincoln on February 25,
1862, is the first law ever placed upon the statute books
making treasury notes, or anything but gold and silver
coin, a tender in payment of debts. Indeed, it may be
said that neither the Congress of the United States nor
the Continental Congress, which preceded it, issued any
form of legal tender treasury notes. The Continental Con-
gress had no power to enact such a law. It did, however,
pass a resolution, on Januai-y 4, 1777, recommending to
lis
UNITED STATES NOTES.
o
O
m
'^
-»1<
CO
.,_,
. \
-w
in
00
CO
«o
CO
o
to
i
x*
-rH
to
LO
i>
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-
<P
0)
ft
o
o
u
tH
^
0^
o
0)
P< a
o
O
o
CJ
a
^
■a
a>
.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
of
t-^c^"
i>
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.
The Assistant Ti'casurer of the United States, at New
York, became a menjber of the clearing-house, thus fa-
cilitating the business of the banks with the Government,
Ji2
V NIT EI) STATES NOTES.
•tllOO t]11.tt
O
■:c
r~t
o
?^
,-1
10
CO O lO 't p Ci lO
t--J<00000©0 ,
p.xuMluma s«
oooioor-iocoiooit-^o-Hr-^ci^cidoodcJdo 1
oDi-cci-»i>t-i-~QOooa)30C500coc5CiOO=;=:--;oo
iv\\o]) jhIuU
d t-i T-i i-H i-I i-i 1-! — ■' 1
€©•
OOQOCSliO-^Tjti-itiOT-iClXOCJ-^t-t-LOTttOCOO
C-. O O l^ IC 0« X ■* Ci O CC ^ CO t- X Ci C^ i~ CO 1^ X lO
oJ^xci CO X » o^cj t- C2 = o CO X c( ;o^T)|^;o_^=:_^LO X x
J3 .
1 o* £- ci lo' cf cT o' T-' r*; 1-' — r x' x' x' -* r-' Lo'^ of cf LO cT co"
"r 3
CO CO i - c^» CO c» CO :o o CO X -:; — . '^ -^ CI c: -* -* — 1 c: Oi
c 2
CJ ^ Tt< CO t- c: t- cJ CO c^ Ci ^ Ci c; LO CO LO ;^ i- X ^ X
■-r "*
— CO — X Ci Ci Ci X f^ 1-- !-■ -* C^ t- -* Ci -^ LO X CO Ci C J
CO ^ X Ci Ci Ci Ci --1 CO -^ LO LO CO 1— C'« CJ ^ lO LO lO CO L-
rt
»
^ r^ Ci Ci CJ Ci Ci CO CO CO CO CO CO CO CO CO CO CO CO CO CO Cf
Lo o o o o (?} ci ot ci « »a i-o- to lo lo lo lo l.o o io !-o
LOlO
o w
J> ifo 1-1 CO CO s; £- i~ t- <oj o cj t- c; CI X X X X -^ -Ci o CO
Is
•^ ^ t~ Ci CD Tfi t- C^ LO LO 1-1 0_CO J>i--^^'*C;S5L-t-C:
"*^ X r?
cT^' x'^'co^Lo't-' x' x'c-'cf t-'co' Tt<' Lo' o'd" c? ci -rfi th cT^*'"
'C ^ Ci
t- I- CO i-O C! i.O -* ^ C: CO -* C? 1-1 O Ci C5 X 00 t- t~ C- CO o
C ^ 30
X T}<^C0^Tt<_i-_LO OOdT-lrMTHi-ii-irH
C i **:?
cTco'cfoo'i-T
J-; >. O
XLO^
o
m^
CO «> C5 t-- -* CI I- ■* LO LO ir; O -^ LO «> C3 ;S X !> CI -^ >0 lO
LO l- Cf I- CI LO CO X I- CO ^ c: C( s; CO :o O X X x ci ci x
1—
^ X X X LO C; to --O X X CO CJ "* LO r- L-- w X X T-i O CI X
cS-
c^ "* LO o I- -^ -* X c» LO c: ^ o CO CO t- cj o r^ CO o LO c;
<^ s
c: C5 — i- ~' CJ ^ t- X LO o X c< ^ o -* Tt< c; X oi i- lO r-i
i 5;
!-__ X = O CO_^ CO .-i_ X_^ LO X I- X r-^_ '^ ^_ LO XT^ LO '^ '^^ CO CO CO
cT MO* i -' x' c> cf cT d c ^'' lo' ci -* c; o lo" lo' lo' lo' lo lo' lo
C)CiCJCJClCOC0cC-*-*T}t^^C0C?i-ir-li-lT-<r-li-lrHrH
€&■
Lc ir:».it-oe«r-i>ooooooooooo» cTo o o
cr cc Tc ci o cQ -^ cs o o LT' IS L'? o I."? o lo 1.0 o Lf lO o IS o
DC
-* -* r; r;__o^o_x_^ ^-^o c^-r^ -* o ci X;^^ ^^""l '-'^ ■* c-? -^ ^s tC"
is
ci^S^^~^i---'-L'^'>i'>ii~':i^^':-i-^-r^-j5i^vti c^ ifT
o
X' t- 3D " o :o ■* c; o i^ i-c o rti T-H o 00 £- ::; o Lt i.o ir; -^ Tti
n
LT ^:__-^( CC w_-* CC_tO_:C ^COCviC^CiOJr-ii-.T-,-iT-lrHT-iT-lT—
o
(?f cT cT T-^ d CO oT t-
"
o^ n sc t- TO 1-^ X) 10
t-
1-1 T-1 rl O X X ■<*<
6©-
0-*OOOOJOOOOOOOO^C"i:SOOOOOOO
u
OT-::SCi«iOOOOOC:OOL-?C}COOOOOOOOC;
s
- m
Ct^Xl^SiCOC-OOOOOO-^C^-^ — 1-^^-^ — r^^--
K C
C( C£ I- X' T- X O » O O O O C t- t- O X X X' X X X X X
^ o
o t- T-H o o 1.^ o_o^c:^o_i.-c_c; o^t- t--_i^ ^ o -r" -o :s o_*-o o
o i-^T-^c-roT-H 'S->£ iS^t-^^ c-^ i^ 1^ diS^SSStS^ ^
C5 Oi CC CO O t^ i-l L~ LO IC lO lO X) t- i^C LT ■* "^ ^ -^ -rt* -rt< ^ Tf
.2
^>.<M •^■^■^cococococococooocococccocococccocococo
O CI CI CO -CI CQ CO O O LO CS t- CI f^ «> « t- O LO LO 1(0 IC O lO
w
O -r-^ CI O O CO CJ CO LO C; CI --S CO O ^ -^ C: t- i> CO Ci X -^ o
C = — --C' -^'^ t- t- 07_LO^oj_c;__t- -- c:__C:^':)_^__C5_i.O_:c Ci_'* '-^
iJ
o
c
o" »-i' o" oT cT c<r T-T CO »~ :o x" cT '^~ o' :£" CO c>r T-T o o cT 3D x" t-^
^ lO X I- t- O ^ d O C5 X t- i' t- O O O O O O K3 iO o o
'2
c;coi-'*c^«T-<'-"-'
s
g
co"co~
p
€©•
l-(
X
o
>j
CJ
1-5
o
Oi CO -*' IT
co' t- X C"
O T-i Ci CO M< L-
'cOt-XCiO^CJCC^t-T
O ;^ ^ :^ ^ t= t= " l^ l^ I- l^ l~ I' I- I- I- I- X X X CO X 3D
cr
^ y
•■ X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
SPECIE RESUMPTION, JANUARY 1, 1879. 143
TliG banks in Xew York strengthened the hands of tlie
Government bj agreeing to receive United States notes,
no'; onjy for their ordinary bahances, but in payment of
the interest upon the public debt, and of other coin ob-
ligations of the Government. 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 aii<l tlie Silver Question, \>y 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"e<l, it would give to each
share §30,405, Avhich, multiplied by the number of Sen-
ators and Itepresentatives fi'oni a State, will show the
amount to which any State will be entitled.'"
This resolution was opposed by Benton, who repre-
sented the Administration in the Senate. He argued
that the customs revenues could be largely reduced by
changes in their methods of collection ; that the reve-
nues from the sale of land could be made to disappear by
selling these lands at nominal prices to the people. If,
after this, there should still be a surplus, he advocated its
use in the construction of fortifications to protect tlie
coasts and frontiers of the country. The proposition of
the committee to amend the Constitution to authorize
the distribution was never brouu'ht to a vote.
DEPOSIT OF SURPLUS WITH THE STATES. 177
In the spring of 1836 the following paragraph ap-
peared in the Philadelphia National Gazette: "The
great loss of the bank has been in the depreciation of
the securities, and the only way to regain a capital
is to restore their vahie. A large portion of them
consists of State stocks, which are so far below their
intrinsic worth that the present prices conld not have
been anticipated by any reasonable man. Ko doubt
can be entertained of their ultimate payment. The
States themselves, unaided, can satisfy every claim
against them ; they will do it speedily if Congress adopt
the measures contemplated for their relief. A division
of the public lands among the States, which would en-
able them all to pay their debts, or a pledge of the pro-
ceeds of sales for that purpose, Avould be abundant secur-
ity. Either of these acts would inspire confidence and
enhance the value of all kinds of property." A bill for
the distribution of the revenues was introduced in the
Senate, and supported both by Mr. Clay and Mr. Web-
ster. It was opposed by Mr. Benton, who introduced
an antagonistic bill devoting the surplus revenues to
public defences. The bill passed the Senate by a vote
of 25 to 20.
Being sent to the House for concurrence, it became
evident that it could not pass that body, as a majority
of its members regarded the project in its form of a
distribution as unconstitutional. The friends of the
measure in the Senate determined to change its form so
as to remove the difficulty. Instead of a disti-ibution it
was to be a deposit, and the faith of the States was to
be pledged to the return of the money. There was an-
other bill in the Senate for regulating the deposit of
178 UNITED STATES NOTES.
public moneys with the State hanks, and the proposi-
tion in the form of a de])Osit with tlie States became
sections thirteen and fourteen of this bill, which passed
with oidy six dissenting votes. It passed the House bj'
a Large majority, 155 to 3S. In the form of distribution
it had no chance of passing the House. " It was ap-
proved by the President," Benton says, "but with a re-
pugnance of feeling and a recoil of judgment which it
required great effort of friends to overcome." Probably,
if he had returned it with his veto, it would have had
two-thirds of each House in its favor.
The following is a copy of the thirteenth and fourteenth
sections of the act of June 23, 1836 : " An act to regulate
the deposits of the public money." "• Section 13. That the
money which shall be in the treasury of the United States
on the first day of January', eighteen Imndred and thirty-
seven, reserving the sum of five millions of dollars, shall
be deposited with such of the several States, in propor-
tion to their respective representation in the Senate and
House of Pepresentatives of the United States, as shall,
by law, authorize their Treasurers, or other competent
authorities, to receive the same on the terms hereinafter
sj^ecified ; and the Secretary of the Treasury shall deliver
the same to such Tj-easnrers, or other competent authori-
ties, on receiving certificates of deposit therefor, signed
by such competent authorities, in such form as may be
prescribed by the Secretary aforesaid ; which certificates
shall express the usual and legal obligations, and pledge
the faith of the State for the safe-keeping and repayment
thereof, and shall pledge the faith of the States receiv-
ing the same, to pay the said moneys, and every part
thereof, from time to time, whenever the same shall be
THE ACT AS PASSED. 179
required by the Secretary of tlie Treasiny, for the pur-
pose of defraying any \vants of the public treasury, be-
yond the amount of the five millions aforesaid : Provided,
that if any State declines to receive its proportion of the
surplus aforesaid, on the terms before named, the same
shall be deposited with the other States, agreeing to ac-
cept the same on deposit in the proportion aforesaid :
And jyroinded, fu7'tJie)\ that when said money, or any
part thereof, shall be wanted by the said Secretary, to
meet appropriations by law, the same shall be called for
in ratable proportions, within one year, as nearly as con-
veniently may be, from the different States with Avhich
the same is deposited, and shall not be called for, in
sums exceeding ten thousand dollars, from any one
State, in any one month, without pi-evious notice of
thirty days for every additional sum of twenty thousand
dollars which may at awy time be required. Section 14.
And he it further enacted, That the said deposits shall
be made with the said States in the following propor-
tions and at the following times, to wit : one-quarter
part on the first day of January, eighteen hundred and
thirty-seven, or as soon thereafter as may be ; one-quar-
ter part on the first day of April, one-quarter part on
the first day of July, and one-quai'ter part on the first
day of October, all in the same yeai-."
In his message for December, 1836, President Jack-
son objected to the method of distribution provided
in the law, viz., according to representation, and ad-
vocated a method founded on the population of each
State.
On January 1, 1S37, the surplus in the treasury, after
reserving the five millions required by law, was $37,-
ISO
UNITED STATES NOTES.
408,850.07, and the apportiomneiit amoncj the several
States is sliowii by the following table :
Maine
New Hamijsliire
Massiiclnisetts . .
Eliode Island . .
Vermont
Connecticut. . . .
New York
New Jersey . . . .
Pennsylvania . . .
Delaware
INIaryland
Yirgiuia
North Carolina .
Bontli Carolina .
Georgia
Alabama
Mississippi . . . .
Louisiana
Missouri
Kentucky
Tennessee
Ohio
Indiana
Illinois
Arkansas
Michigan
Total
Number . ,. ^ -^
of dec- Amount to be
toral deposited during
votes. the year 18.i7.
10
7
14
4
7
8
42
8
30
3
10
23
15
11
11
7
4
5
4
15
15
21
9
5
3
3
§1,274,451.02
892,115.71
1,784,231.43
509,780.41
892,115.71
1,019,560.81
5,352,694.28
1,019,560.81
3,823,353.06
382,335.31
1,274,451.02
2,931,237.34
1,911,676.53
1,401,896.12
1,401,896.12
892,115.71
509,780.41
637,225.51
509,780.41
1,911,676.53
1,911,676.53
2,676,347.14
1,147,005.92
637,225.51
382,335.31
382,335.31
First
instalment.
§318,612.75
223,028 . 93
446,057.86
127,445.10
223,028.93
254,890.20
1,338,173.57
254,890.20
955,838.26
95,583.88
318,612.75
732,809.03
477,919.13
350,474.03
350,474.03
223,028.93
127,445.10
159,306.38
127,445.10
477,919.13
477,919.13
669,086.78
286,751.48
159,306.38
95,583.83
95,583.83
§37,468,859 . 97 §9,367,214. 98
The above table, with the exception of the last column,
is copied from the report of Mr. Woodbury to Con-
gress, of January 3, 1837. It will be noticed that
by the law authorizing the deposit of the surplus,
each State was requked to authorize its Treasurer by
FIRST THREE INSTALMENTS PAID. 181
law to receive the deposit and to give certificates of
deposit therefor. The necessary forms for carrying ont
this plan were prepared by the Sccrctai-y of the Treas-
ury, and may be found in Ex. Doc. and Reports of
Committees, 1st Sess. 25th Congress, Doc. No. 30. All
of the States named in the foregoing table of apportion-
ment passed laws authorizing the receipt of the deposit,
and some took the opportunity of instructing their rep-
resentatives to protest against, or to endeavor to obtain
changes in, some of the features of the law.
The Legislature of the State of I^ew Hampshire, by
resolution, declared that any distribution of surplus was
imconstitutional. They instructed their delegates to
vote for a reduction of revenue and against any measure
for relinquishment, by the United States, of the sunison
deposit with the States. The Legislature of the State of
Indiana requested its Senators and Representatives to
use their exertions to procure the passage of an act of
Congress for the relinquishment, on the part of the
United States, of all claims of surplus revenue deposits
under act of June 23, 1836. These resolutions show
conclusively that these States regarded the monej' re-
ceived as a deposit to be likely to be recalled, and not as
a gift.
The first three instalments w^ere paid to the States
as nearly as possible on the following dates, viz. : one-
fourth on January 1, 1837, one-fourth on April 1st, and
one-fourth on July 1st, following. The sums were paid
by transfers from the deposit banks. On November 1,
1836, the Secretary of the Treasury notified the banks of
the requisition which would be made upon them to meet
the instalments due to the several States on January
182
UNITED STATES NOTES.
1st. On Febniarj 18, 1837, lie gave similar notification
in reference to the next three instalments. Forms of
the letters sent to each of the deposit banks are given,
also, in Document 30, September 26, 1837, before re-
ferred to. The instalments payable on January 1st,
April 1st, and July 1st, were transferred to the States
on or near those dates. Tliey amounted in all to
$28,101,645, and proportionate amounts were deposited
with and receipted for by each State.
In May, 1837, the financial pressure became so great
that the banks generally suspended specie payments.
The fifth section of the act of June 23, 1836, for regu-
lating the deposits of public money, provided that no
bank shall be selected or continued as a place of deposit
of public money wdiich shall not redeem its notes and
bills on demand in specie. On May 1, 1837, the num-
ber of the deposit banks was eighty-eight, distributed
by States as follows :
Maine 8
New Hampshire 4
Vermont 2
Massaclmsetts 6
Connecticut 3
Rhode Island 2
New York 16
New Jersey 3
Pennsylvania 3
Delaware 2
Maryland 2
District of Cohimbia 1
Virginia 3
North Carolina 1
South Carolina 3
Georgia 3
Alabama 1
Mississippi 2
Louisiana 2
Tennessee * , . 2
Kentucky 7
Ohio 9
Indiana 1
Illinois 1
Michigan 2
Total 88
The number of deposit banks on Xovember 1, 1830, was
eighty-nine. Their capital was $77,576,449; United States
VAN' BUREN CALLS AN EXTRA SESSION. IS J
deposits, $49,377,980 ; other deposits, only $26,573,479.'
The difficulties arising from the necessity of discontinu-
ing as public depositories those banks which refused to
pay specie, made it apparent that it would be very in-
convenient, if not impossible, to transfer the fourth in-
stalment of the deposit with the States.
Further legislation was deemed necessary in this emer-
gency, and an extra session of Congress was called by
President Van Buren. Congress met on September 4th.
Among other reasons for the extra session, the President
in his message mentioned that " questions were also ex-
pected to arise in the recess in respect to the October
instalment of those deposits, requiring the interposition
of Congress." Secretary Woodbury, in a report made on
the safe-keeping of the public moneys, on September
23d, in answer to a resolution of the House of Representa-
tives, said : "This last mode [viz., deposit with selected
State banks] ceased by operation of law during the last
spring, except in relation to live or six deposit banks
which have continued to redeem their notes in specie.
The direct losses sustained under it appear to be large.
But, in the end, they are not considered likely to
amount to anything, though the disappointments, de-
lays, and injuries under it must, it is manifest, in sev-
eral cases be great. The indirect losses to the public
creditors and contractors have been considerable, and
are difficult to be computed." From this it will be seen
that only six out of the eighty-eight banks designated
as public depositories on May 1st could bo used as such
in September.
' For Btatemeiit of resources and liabilities of tliese banks, see Re-
port of Comptroller of the Currency', p. 43. 187G.
IS-i UNITED STATES NOTES.
Betiton sajs, in relation to tliese payments: "Tlio
deposit with the States had only readied its second
instahnent when the deposit banks, unable to stand a
continned qnarterly strain of near ten millions to the
qnarter, gave np the effort, and closed their doors.
The first instalment had been delivered on January 1st,
in specie or its equivalent ; the second in Apiil, also in
valid money ; the third one, demandable on July 1st, was
accepted by the States in depreciated paper ; and they
were very willing to receive the fourth instalment in
the same way. The Secretarj^'s report shows that there
would be a deficiency in the revenues to meet expendi-
tures of over ten millions of dollars, which would render
it necessary either to recall some of the money deposited
with the States, or to postpone the payment of the fourth
instalment due on October 1st. The Secretary men-
tioned the inconvenience of paying the fourth instal-
ment, arising from the difiiculty of transferring from the
West and Southwest, where the money received from
sales of public lands had accumulated. The lack of rev^-
enue was his principal reason for urging the withholding
or postponement of the fourth instalment. Believing the
money w^ould be immediately necessary to the Govern-
ment, he thought it would be less inconvenient to with-
hold payment than to pay and immediately recall."
On September 11, 1837, Mr. Silas Wright, from the
Senate Committee on Finance, reported a bill which pro-
vided " that the transfer of the fourth instalment of de-
posits directed to be made with the States, under the
thirteenth section of the act of June 23, 1836, be and
the same is hereby postponed until further provision by
law." The bill was brought up for consideration on the
DEBATE IN THE SENATE. 1S5
1-itl), wlien lie said tliat, according to tlie report of tlie
Secretary of tlie Treasurj of the 28tli iilt., tliei'e was then
in the treasury subject to draft, avaihible and unavail-
able, but $8,100,000. If the expenses of the month of
September were deducted, which were estimated at two
and a half millions, there would be in the treasury, sub-
ject to draft on October 1st, less than six millions, with-
out the transfer of a dollar to the States toward the Oc-
tober instalment. If the October instalment was to be
transferred to the States, all the means in the treasury
on the day when that instalment was made transferable
would not be equal to two-thirds of the amount, and
money must be borrowed upon the credit of the United
States to supply the deficiency. The largest portion of
the funds in the treasury was wholly unavailable ; they
were in the Western and Southwestern banlcs, and expe-
rience had already shown that the drafts of tl.e Treas-
urer upon these banks would not be received in payment
by the public creditors, neither would the States other
than those in which the banks were located take these
drafts, and give their obligations for a repayment of the
amount in money in pursuance of the provisions of the
deposit law. The transfer to the States, therefore, could
not be made, even to the amount of the funds in the
treasury subject to draft, by reason of the character of
the funds to be drawn upon.
The whole means in the treasury on the first day of
October next would be from three and a half to four
millions less than the transfer required. If Congress
should insist upon this transfer, it must authorize a loan
of money upon the public credit in order that that
money, when loaned, may be deposited with the States
ISO UNITED STATES NOTES.
for safe-keeping. Mr. Webster thoufrht that it was a
mere question of convenience, the distributed money
would go to all the people, and any deficiency in the
treasury must be supplied by all the people. lie
thought the most convenient way was to pay the instal-
ment, and provide for the necessities of the treasury by
other means. Mr. Preston opposed the bill on the
ground that many States had already appropriated the
money, and had undertaken public works on the strength
of it, etc. Mr. Crittenden, of Kentucky, opposed it on
the same ground. By other Senators the deposit act
was treated as a contract which the Uuited States M'as
bound to carry out.
Mr. Buchanan proposed an amendment, the effect of
which was to change the character of the deposit act
and make it a distribution measure. By the act it was
tlie du.ty of the Secretary of the Treasur}" to call for a
return of the deposit when needed by the Federal
Treasury. The amendment superseded this, and enacted
that the deposits should remain until called for by Con-
gress. Mr. JSt^iles pointed out the eifect of this amend-
ment. He said the majority of those who voted for the
deposit act did so because it was a deposit and not a
distribution, and merely withdrew the public moneys
from the banks and deposited them with the States.
' The amendment would change the deposit to a loan, or,
more properly, a grant, to the States. Mr. Buchanan's
amendment, however, passed by a vote of 32 to 12, and
thus the recall of the deposits already made was taken
from the hands of the States and placed with Congress.
In the House of Representatives the disposition to re-
gard the deposit act as a contract was even stronger than
DEBATE IN THE HOUSE. 187
in tlie Senate. Mr. Caleb Gushing argued that it had
all the features of a contract, that it was a " contract of
deposit." It was a contract in lionor, and, as far as
there could be a contract between the United States and
the States, a contract in law.
On the other hand, it was argued very forcibly that
neither in honor nor in law was there any reason for
paying the fourth instalment M'hen there was no surplus
in the treasury. Mr. Halsted, on the same side, said :
"In reference to the deposit act, if a contract, it was a
contract based alone upon the distribution of an existing
surplus, not wanted for the ordinary or extraordinary
expenditures of the Government. The sti-ucture was
reared upon that rock, and was so understood at the
time the statute was enacted. The money to be dis-
tributed M^as out of a surplus fund. Where was there
a surplus fund ? There was none."
The opponents of the bill, apart from the argument
of contract, mainly founded their arguments on the fact
that the States had been induced to undertake public
works and other engagements by the promise of the
money, and the inconvenience to which they would be
put by withholding the fourth instalment. It was justly
observed by their opponents that the States should have
regulated their action by tlie actual terms of the law of
Gongress, to which they agreed when they accepted the
deposits. The opposition to the bill was persistent, the
debate was long, and many members were participants,
among whom was Adams, of Massachusetts, Fillmore and
Sibley, of Kew York, Bell, of Tennessee, and Wise, of
Vii'ginia. It finally passed the House by the close vote
of 119 to 117. A motion to reconsider was made by
188 UNITED STATES NOTES.
Mr. Piclvcns, and carrieil. On reconsidei-ation, Mr. Pick,
ens niove<l to amend so that, instead of postponing the
payment indefinitely until further action by Congi-e.ss,
it be postponed to January 1, 1830, a day certain. This
amendment was agreed to and concurred in by the Sen-
ate, and the bill finally passed in that form.
The effect of the postponement of the payment to a
fixed day has been held by some to bind the United
States to such a payment; and the making the with-
drawal of the first three instalments received by the
States dependent on an act of Congress has, by the
same kind of construction, been regarded by some as
altering what was originally a deposit to a gift.
As January 1, 1839, approached, it became apparent
that there would be no funds in the treasury available
for the deposit of the postponed instalment. The Sec-
retary of the Treasury, in his report for December,
1838, stated that the available balance on January 1,
1839, would be $2,765,342 only, and at the date of the
report the treasury notes outstanding amounted to over
$7,751:,560. He said : " It will be perceived by these
statements that no surplus balance will probably exist,
either on January 1, 1839, or during that year, to be
deposited with the several States for safe-keeping as a
fourth instalment under the deposit act of June 23,
1836."
Since January 1, 1839, there has never been a time
when the United States had in its treasury a surplus
over and above all its debts and estimated expenditures.
The amount deposited in the first three instalments with
the States has always been carried as funds of the treas-
ury unavailable ; and under the terms of the acts rela-
LETTER OF SECRETARY DIX. tS9
tivG to its deposit, it coiild now be recalled at any time
by an act of Congress.
General John A. Dix, Seci-etary of the Treasury,
in a letter to the Chairman of the Committee of Ways
and Means, of January 18, 1861, called attention to
the fact that " there ai'e deposited with twenty-six of
the States, for safe-keeping, over twenty-eight mil-
lions of dollars belonging to the United States, for
the payment of which the promise of these States is
pledged by written instruments on file in this depart-
ment. The annual statement of receipts and expendi-
tures for the year ending Juile 30, 1860, represents this
amount as part of ' the balance in the treasury ' on that
day. ■""■ * I refer to this final I'esource as an avail-
able one, should the public exigencies 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 safety.
If, instead of calling 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 such a basis of security, su-
peradding to the plighted faith of the United States
that of the individual States, could hardly fail to be ac-
ceptable to the capitalists."
It is easy to see that there can be no constitutional
authority for the claim that this money, already in the
possession of the States, irrevocably belongs to them,
since, according to the Constitution, it is still in the
treasury of the United States. The only method of tak-
ing money out of the treasury is by an appropriation by
Congress, upon which the Secretary of the Treasury ia
190 UNITED STATES NOTES.
authorized to issue liis warraut, and no such method was
ever adopted in relation to this money. The whole ob-
ject and intention of tlie act was to deposit the surplus,
not distribute it, as it has been seen that a distribution
act was known at the time to be unconstitutional. Upon
the delivery of the money the Treasurer of each State
gave to the United States, not a receipt, but a cei't^ficate
of deposit., subject to the future requisition of the Gov-
ernment. The amount of the deposit has always been
held among the "unavailable funds of the treasury,"
and is annually so i-eported among other like funds, as
may be seen by reference to page 3S3, Finance Report,
1882, and previous reports. But whether a deposit or a
distribution, no constitutional method has been taken to
authorize the payment of the money out of the treasury.
Moreover, it was a deposit of surplus and surplus only,
and when the surplus did not exist was suspended by
act of Congress until a cei'tain date ; and when at that
date there was still no surplus, the deposit was again
withheld by the Executive, and, on the same principle,
has been withheld ever since. Congress at any time
can authorize the withdrawal of the whole amount from
the States, and it doubtless could authorize the perpet-
ual withholding of the fourth instalment in view of the
fact that at some time in the future, after the national
debt is paid, there may be a surplus similar to that
which existed January 1, 1877.
Benton, in his " Tliirty Years' Yiew," tlius refers to
the use made of the deposits by the different States :
" All sorts of plans were proposed for the employment
of the money ; and combinations, more or less interested
or designing, generally carried the point in the universal
THE SURPLUS NOT SQUANDERED. 191
scramble. In some States a pro rata division of the
luonej per capita was made ; and the distribntive share
of eacli individual, being but a few shillings, was re-
ceived with contempt by some, and rejected with scorn
bj others. In other States it Avas divided among the
counties, and gave rise to disjointed undertakings of no
general benefit. Others, again, were stimulated, by the
unexpected acquisition of a large sum, to engage in large
and premature works of internal impi'ovement, embar-
rassing the State with debt, and commencing works
which could not be finished."
This paragraph conveys a wrong impression. It is
generally believed that the moneys deposited b}^ the
Government with the different States were, for the most
part, wasted or employed in works of internal improve-
ment which were unnecessary. The data for a full in-
vestigation of this subject are not at hand, but it is
known that the States of Massachusetts, Connecticut,
]^ew York, New Jersey, Pennsylvania, Delaware, Mary-
land, Is^orth Carolina, Illinois, Indiana, Kentucky, Ohio,
and Missouri appropriated a considerable portion of the
income from this fund to the support of public schools ;
and that in some of these States the income from the
whole fund has been from the connnencement, and still
is, devoted to the education of the people. In some in-
stances the States used the funds for internal improve-
ments, but provided by legislation for the appropi-iation
of an amount equal to the interest for the support of
public schools, wdiich was similar to an investment in
the bonds of the State.
A claim has been made within a few months (1SS4)
upon the Secretary of the Treasury, under authority of
192 UNITED STATES NOTES.
an act passed bj the Legislature of the State of Vir-
giiiia, for the deposit of the amount of the fourtli in-
stalment (§732,809.33) under the act of June 23, 1830.
A similar claim has also been made by the Treasurer of
the State of Arkansas, through Senator Garland, of
that State, to which the Secretary replied, on October
8, 1883: "I find that the tradition of this department
for over a dozen years has been to consider that act as
obsolete, or at least not imperatively effective during a
season of large public federal indebtedness. I can for
the present follow in the path of my predecessors in the
office of the Secretary of the Treasury."
A petition was subsequently made to the Supreme
Court of the United States, by the State of Virginia,
through its properly authorized agent, for a writ of
mandamus upon the Secretary of the Treasury, to com-
pel him to pay to that State the amount of the fourth
instalment of surplus alleged to be due under the
provisions of the act of June 23, 1836. The court, on
March 17, 1884, held that there was no case for a man-
damus, and that the Secretary of the Treasury has no
authority under existing legislation, and without further
direction from Congress, to use the surplus revenue in
the treasury, from whatever source derived, or wlien-
ever, since January 1, 1839, it may have accrued, for
the purpose of making the fourth instalment of deposit
required by the act of 1836.
APPENDIX.
STIPEEIHE COURT OF THE UNITED STATES.
No. 9.— October Term, 1883.
Augustus D. JutLLiARD, plaintiff in error, vs. Thomas S.
Greenman. In error to the Circuit Court of the United States
for the Southern District of New York
Congress has the constitutional power to make the treasury
notes of the United States a legal tender in payment of private
debts in time of peace as well as in time of war.
Under the act of May 31, 1878, chai^ter 146, which enacts
that notes of the United States issued during the war of the
rebellion under acts of Congress declaring them to be a legal
tender in payment of private debts, and since the close of that
■war redeemed and paid in gold coin at the treasury, shall be
reissued and kept in circulation, notes so reissued are a legal
tender.
[March 3, 1884.]
Mr. Justice Gray delivered the opinion of the couri.
Juilliard, a citizen of New York, brought an action against
Greenman, a citizen of Connecticut, in the Circuit Court of the
United States for the Southern District of New York, alleging
that the i^laintiff sold and delivered to the defendant, at his
special instance and request, one hundred bales of cotton, of
the value and for the agreed price of $5,122.90, and that the
defendant agreed to jsay that sum in cash on the delivei-y of
the cotton, and had not paid the same, or any jiart thereof,
except that he had paid the sum of $22.90 on account, and was
now justly indebted to the plaintiff therefor in the sum of
d
194 ArPENDIX.
$5,100, and demantling judgment for this sum witli interest and
costs.
The defendant in his answer admitted the citizenship of the
imrties, the purchase and delivery of the cotton, and the agree-
mant to pay therefor, as alleged ; and averred that after the
delivery of the cotton he ofi'ered and tendered to the plaintiff,
in full payment, ^22.50 in gold coin of the United States, forty
cents in silver coin of the United States, and two United States
notes, one of the denomination of if 5, 000 and the other of the
denomination of $100, of the description known as United
States legal-tender notes, purporting by recital thereon to be
legal tender, at their respective face values, for all debts, public
and private, except duties on imports and interest on the
public debt, and which, after ha\dng been presented for jmy-
ment, and redeemed and paid in gold coin, since January 1,
1879, at the United States sub-Treasury in New York, had been
reissued and kept in circulation under and in pursuance of
the act of Congress of May 31, 1878, chapter 146 ; that at the
time of ofifering and tendering these notes and coin to the
plaintiif the sum of $5,122.90 was the entire amount due and
owing in payment for the cotton, but the plaintiff declined to
receive the notes in payment of S5, 100 thereof ; and that the
defendant had ever since remained, and still was, ready and
willing to pay to the plaintiff the sum of $5,100 in these notes,
and brought these notes into court, ready to be paid to the
j)laiutiff if he would accept them.
The plaintiff demurred to the answer ui^on the grounds that
the defence, consisting of new matter, was insufficient in law
upon its face, and that the facts stated in the answer did not
constitute any defence to the cause of action alleged.
The Circuit Court overruled the demurrer and gave judgment
for the defendant, and the plaintiff sued out his writ of error.
The amount which the plaintiff seeks to recover, and which,
if the tender pleaded is insufficient in law, he is entitled to
recover, is $5,100. There can, therefore, be no doubt of the
jurisdiction of this court to revise the judgment of the Circuit
Court (act of February 16, 1875, ch. 77, sec. 3 ; 18 Stat., 315).
APPENDIX. 105
The notes of tlie United States, tendered in payment of the
defendant's debt to the plaintiH", were originally issued under
the acts of Congress of February 25, 1862, ch. 33, July 11, 1862,
ch. 142, and March 3, 1863, ch. 73, passed during the war of
the rebellion, and enacting that these notes should " be lawful
money and a legal tender in payment of all debts, public and
l^rivate, within the United States," except for duties on imports
and interest on the public debt (12 Stat., 345, 532, 709).
The provisions of the earlier acts of Congress, so far as it is
necessary for the understanding of the recent statutes to quote
them, are re-enacted in the following provisions of the Revised
Statutes :
"Sec. 3579. When any United States notes are returned to
the treasury, they may be reissued, from time to time, as the
exigencies of the public interest may require.
" Sec. 3580. When any United States notes returned to the
treasury are so mutilated or otherwise injured as to be unfit
for use, the Secretaiy of the Treasury is authorized to replace
the same with others of the same character and amounts.
" Sec. 3581. Mutilated United States notes, when replaced
according to law, and all other notes which by law are required
to be taken up and not reissued, when taken up shall be de-
stroyed in such manner and under such regulations as the
Secretary of the Treasury may j^rescribe.
' ' Sec. 3582. The authority given to the Secretary of the
Treasury to make any reduction of the currency, by retiring
and cancelling United States notes, is suspended."
"Sec. 3588. United States notes shall be lawful money and
a legal tender in payment of all debts, public and private, with-
in the United States, except for duties on imports and interest
on the public debt."
The act of January 14, 1875, chapter 15, ' ' To provide for
the resumption of specie payments," enacted, that on and after
January 1, 1879, " the Secretary of the Treasury shall redeem
in coin the United States legal-tender notes then outstanding,
on their isresentation for redemption at the office of the Assist-
ant Treasurer of the United States in the city of New York, in
106 APPENDIX.
sums of not less than fifty clollars ; " and antliorized bim to use
for that inu'iiose any surphis revemies in the treasnry and the
proceeds of the sales of certain bonds of the United States (18
Stat., 29G).
The act of May 31, 1878, chapter 146, under which the notes
in question were reissued, is entitled "An act to forbid the
fvu-ther retirement of United States legal-tender notes," and
enacts as follows :
"From and after the passage of this act it shall not be lawful
for the Secretaiy of the Treasury or other officer under him to
cancel or retire any more of the United States legal-tender
notes. And when any of said notes may be redeemed or be
received into the treasuiy under any law, from any source
whatever, and shall belong to the United States, they shall not
be retired, cancelled, or destroyed, but they shall be reissued
and paid out again and kej)t in circulation : Provided, that
nothing herein shall prohibit the cancellation and destruction
of mutilated notes, and the issue of other notes of like denomi-
nation in their stead, as now provided by law. All acts and
parts of acts in conflict here-nith are hereby repealed '•' (20
Stat., 87).
The manifest intention of this act is that the notes which it
directs, after having been redeemed, to be reissued and kept in
circulation, shall retain their original quality of being a legal
tender.
The single question, therefore, to be considered, and upon
the answer to which the judgment to be rendered between
these parties depends, is whether notes of the United States,
issued in time of wai-, under acts of Congress declaring them to
be a legal tender in payment of private debts, and afterward in
time of peace redeemed and i)aid in gold coin at the treasuiy,
and then reissued under the act of 1878, can, under the Consti-
tution of the United States, be a legal tender in payment of
such debts.
Upon full consideration of the case, the court is unanimously
of opinion that it cannot be distinguished in principle from the
cases heretofore determined, reported under the names of the
APPENDIX. 197
Legal-tender Cases, 12 Wall., 457 ; Dooly vs. Smith, 13 Wall.,
604 ; Railroad Company vs. Johnson, 15 AVall., 195 ; and Maiy-
land vs. Railroad Company, 22 Wall., 105; and all the Judges,
except Mr. Justice Field, who adheres to the views expressed
in his dissenting opinions in those cases, are of opinion that
they were rightly decided.
The elaborate printed briefs sxibmitted by counsel in this
case, and the oj)inions delivered in the Legal-tender Cases, and
in the earlier case of Hepburn vs. Griswold, 8 Wall., 603, which
those cases overruled, forcibly present the arguments on either
side of the question of the power of Congress to make the
notes of tlie United States a legal tender in payment of private
debts. Without undertakiug to deal with all those arguments,
the court has thoi;ghfc it fit that the grounds of its judgment in
the case at bar should be fully stated.
No question of the scope and extent of the implied powers of
Congress under the Constitution can be satisfactorily discussed
without repeating much of the reasoning of Chief Justice Mar-
shall in the great judgment in McCullocli vs. Maryland, 4
Wheat., 316, by which the power of Congress to incorporate a
bank was demonstrated and affirmed, notwithstanding the
Constitution does not enumerate, among the powers gi-anted,
that of establishing a bank or creating a coiijoration.
The jieople of the United States by the Constitution estab-
lished a National Government, with sovereign powers, legis-
lative, executive, and judicial. " The Government of the
Union," said Chief Justice Marshall, "though limited in its
powers, is supreme within its sphere of action ; " " and its laws,
when made in pursuance of the Constitution, form the supreme
law of the land." " Among the enumerated powers of Govern-
ment we find the great powers to lay and collect taxes ; to
borrow money ; to regulate commerce ; to declare and conduct
a war ; and to raise and support armies and navies. The sword
and the purse, all the external relations, and no inconsiderable
portion of the industry of the nation are entrusted to its govern-
ment" (4 Wheat., 405, 406, 407).
A constitution establishing a frame of government, declarinfj
lOS APPENDIX.
fundamental principles, and creating a nationrJ sovereignty,
and intended to endure for ages, and to be adapted to tlie
vaidous crises of human aifairs, is not to be interpreted with
the strictness of a private contract. The Constitution of tha
United States, by apt words of designation or general descrip-
tion, marks the outlines of the jjowers granted to the National
Legislature, but it does not undertake with the precision and
detail of a code of laws to enumerate the subdivisions of those
powers or to specify all the means by which they may be
carried into execution. Chief Justice Marshall, after dwelling
upon this view, as required by the veiT nature of the Consti-
tution, by the language in which it is framed, by the limita-
tions ui^on the general powers of Congress introduced in the
ninth section of the first article, and by the omission to use any
restrictive term which might prevent its receiving a fair and
just intei-pretation, added these emjihatic words : " In consider-
ing this question, then, we must never forget that it is a con-
stitution we are expounding" (-i Wheat., 407. See also page
415).
The breadth and comprehensiveness of the words of the
Constitution are nowhere more stidkingly exhibited than in re-
gard to the powers over the subjects of revenue, finance, and
currency, of which there is no other exi)ress grant than may be
found in these few brief clauses :
' ' The Congi-ess shall have power to lay and collect taxes,
duties, imjjosts, and excises, to pay the debts and provide for
the common defence and general welfare of the United States ;
but all duties, imposts, and excises shall be uniform through-
out the United States ;
* ' To borrow money on the credit of the United States ;
' ' To regiilate commerce Avith foreign nations, and among the
sevei'al States, and with the Indian tribes ;
" To coin money, regulate the vakie thereof, and of foi'eigu
coin, and fix the standard of weights and measures."
The section which contains the grant of these and other
principal legislative powers concludes by declaring that the
Congress shall have power " to malie all laws which shall be
APPENDIX. 199
riecGssary and i^roper for carrying into execution the foregoing
l^owers, and all other jiowers vested by this Constitution in the
Government of the United States, or in any department or
o£icer thereof."
By the settled construction and tlie only reasonable inter-
pretation of this clause the words " necessary and proper" are
not limited to such measures as are absolutely and indispen-
sably necessaiy, without which the powers granted must fail of
execution ; but they include all ajipropriate means which are
conducive or adapted to the end to be accomplished, and
which in the judgment of Congress will most advantageously
effect it.
That clause of the Constitution which declares that ' ' the Con-
gress shall have jjower to lay and collect taxes, duties, imposts,
and excises, to pay the debts and provide for the common
defence and general welfare of the United States " either em-
bodies a grant of jjower to jaay the debts of the United States,
or presupposes and assumes that power as inherent in the
United States as a sovereign government. But in whichever
aspect it be considered, neither tliis nor any other clause of the
Constitution makes any mention of priority or preference of
the United States as a creditor over other creditors of an indi-
vidual debtor. Yet this court, in the early case of United
States Ts. Fisher (2 Cranch, 358), held that under the power to
pay the debts of the United States, Congress had the i^ower
to enact that debts due to the United States should have that
priority of payment out of the estate of an insolvent debtor
which the law of England gave to debts due to the crown.
In delivering judgment in that case Chief Justice Marshall
expounded the clause giving Congress power to make all neces-
sary and proper laws as follows : "In constraing this clause it
would be incorrect and would produce endless difficulties if the
opinion should be maintained that no law was authorized which
was not indispensably necessary to give effect to a specified
Ijower. Where vai-ious systems might be adopted for that pur-
pose it might be said with resj^ect to each that it was not
necessary because the end might be obtained by other means.
200 APPENDIX.
Cong-ress must possess the clioice of means, nnd mnst bo em.
poAvored to use auy moans wliicli are, in facit, conducive to tho
exercise of a power granted by the Constitution. The Govern-
ment is to pay the debt of the Union, and must be authorized
to use the means which appear to itself the most eligible ta
effect that object " (2 Cranch, 39G).
In McCulloch vs. Maryland he more fully developed the same
view, concluding thus: "We admit, as all must admit, that
the powers of the Government are limited, and that its limits
are not to be transcended. But we think the sound constnic-
tion of the Constitution must allow to the National Legislature
that discretion with respect to the means by which the powers
it confers are to be carried into execution, which will enable
that body to perform the high duties assigned to it in the
manner most beneficial to the people. Let the end be legiti-
mate, let it be within the scope of the Constitution, and all
means which are appropriate, which are plainly adapted to
that end, which are not prohibited, but consist with tho letter
and spirit of the Constitution, are constitutional " (4 Wheat.,
421).
The rule of interpretation thus laid down has been con-
stantly adhered to and acted on by this court, and was ac-
cepted as expressing the tme test by all the judges who took
part in the former discussions of the jsower of Congress to make
the treasury notes of the United States a legal tender in pay-
ment of private debts.
The other judgments delivered by Chief Justice Marshall
contain nothing adverse to the power of Congress to issue
legal-tender notes.
By the articles of confederation of 1777, the United States in
Congress assembled were authorized "to borrow money or
emit bills on the credit of the United States ; " but it was
declared that " each State retains its sovereignty, freedom, and
independence, and every power, jurisdiction, and right which
is not by this confederation expressly delegated to the United
States in Congress assembled " (Art, 2 ; Art. 9, Sec. 5; 1 Stat.,
4, 7). Yet, upon the question whether, under those articles,
APPENDIX. 201
Congress, by virtiio of tlio power to emit bills on the credit of
the United States, had the power to make bills so emitted a
legal tender, Chief Justice ]Marshall spoke very guardedly, say-
ing : " Congress emitted bills of credit to a large amount, and
did not, perhaps could not, make them a legal tender. This
jiower resided iu the States " (Craig vs. Missouri, 4 Pet., 410,
435). But in the Constitution, as he had before observed in
McCulloch vs. Maryland, ' ' there is no phrase which, like the
articles of confederation, excludes incidental or implied powers,
and which requires that everything granted shall be expressly
and minutely described. Even the tenth amendment, which
was framed for the purjDOse of quieting the excessive jealousies
which had been excited, omits the word * expressly,' and de-
clares only that the powers ' not delegated to the United States,
nor prohibited to the States, are reserved to the States or to tho
jsGople ; ' thus leaving the question whether the particular power
which may become the subject of contest has been delegated to
the one government or prohibited to the other to depend on a
fair construction of the whole instrument. The men who drew
and adopted this amendment had experienced the embarrass-
ments resulting from the insertion of this word in the articles
of confederation, and probably omitted it to avoid those em-
barrassments " (4 "Wheat., 405, 406).
The sentence sometimes quoted from his opinion in Sttn-ges
vs. Crowninsliield had exclusive relation to the restrictions
imposed by the Constitixtion on the powers of the States, and
especial reference to the effect of the clause prohibiting the
States from passing laws impairing the obligation of contracts,
as will clearly appear by quoting the whole j)aragraph : "Was
this general prohibition intended to prevent paper money?
We are not allowed to say so, because it is expressly provided
that no State shall ' emit bills of credit ; ' neither could these
words be intended to restrain the States from enabling debtors
to discharge their debts by the tender of property of no real
value to the creditor, because for that subject also particular
provision is made. Nothing but gold and silver coin can be
made a tender in payment of debts" (4 Wheat., 122, 204).
9*
202 APPENDIX.
Such roiiorts as have come down to ns of the flebates in the
couveution that framed the Constitution afford no proof of any
general concurrence of opinion upon the subject before us.
The adoption of the motion to strike out the words " and emit
bills " from the clause " to borrow money and emit bills on the
credit of the United States " is quite inconclusive. The philip-
jjic delivered before the Assembly of IMaryland by Mr. Martin,
one of the delegates from that State, who voted against the
motion, and who declined to sign the Constitution, can hardly
be accepted as satisfactory evidence of the reasons or the
motives of the majority of the convention (see 1 Elliot's
Debates, 345, 370, 376). Some of the members of the conven-
tion, indeed, as appears by Mr. Madison's minutes of the de-
bates, expressed the strongest opposition to paper money.
And Mr. Madison has disclosed the grounds of his own action
by recording that " this vote in the affirmative by Virginia was
occasioned by the acquiescence of Mr. Madison, who became
satisfied that striking out the words would not disable the
Government from the use of public notes, so far as they could
be safe and proper ; and would only cut off the pretext for a
paper currency, and particularly for making the bills a tender
either for public or private debts."
But he has not explained why he thought that striking out
the words "and emit bills " would leave the power to emit bills,
and deny the power to make them a tender in payment of
debts. And it cannot be known how many of the other dele-
gates, by whose vote the motion was adopted, intended neither
to proclaim nor to deny the power to emit paper money,
and were influenced by the argument of Mr. Gorham, who
" was for striking out, without inserting any prohibition," and
who said : " If the words stand, they may suggest and load to
the emission. " ' ' The power, so far as it will be necessaiy or
safe, will be involved in that of borrowing " (5 Elliot's De-
bates, 434, 435, and note). And after the first clause of the
tenth section of the first article had been reported in the form
in which it now stands, forbidtling the States to make anything
but gold or silver coin a tender in payment of debts, or to pass
APPENDIX. 203
rtny law impairing the obligation of contracts, when Mr. Gerry,
as reported by Mr. Madison, " entered into obsei'vations incnl'
eating the importance of public faith, and the propriety of the
restraint put on the States from impairing the obligation of
contracts, alleging that Congress ought to be laid under the
like prohibitions," and made a motion to that effect, he was
not seconded (ib., 546). As an illustration of the danger of
giving too much weight upon such a question to the debates
and the votes in the convention, it may also be observed that
propositions to authorize Congress to grant charters of incor-
poration for national objects were strongly opposed, esiDecially
as regarded banks, and defeated (ib., 440, 543, 544). The
power of Congress to emit bills of credit, as well as to incor-
porate national banks, is now clearly established by decisions
to which we shall presently refer.
The words "to borrow money," as used in the Constitution,
to designate a power vested in the National Government, for
the safety and welfare of the whole peojile, are not to receive
that limited and restricted interpretation and meaning which
they would have in a penal statute, or in an authority coufeiTed,
by law or by contract, upon trustees or agents for private pur-
poses.
The power ' ' to boiTow money on the credit of the United
States " is the power to raise money for the public use on a
pledge of the public credit, and may be exercised to meet
either present or anticipated exj)enses and liabilities of the
Government. It includes the power to issue, in return for the
money boiTowed, the obligations of the United States in any
api^ropriate form, of stock, bonds, bills, or notes ; and in what-
ever form they are issued, being instruments of the National
Government, they are exempt from taxation by the governments
of the several States (Western vs. Charleston City Council, 2
Pet., 449 ; Banks rs. Mayor, 7 Wall., 16 ; Bank vs. Supervisors,
7 Wall., 26). Congress has authority to issue these obligations
in a form adapted to circulation from hand to hand in the
ordinary transactions of commerce and business. In order to
promote and facilitate such circulation, to adapt them to use as
204 APPENDIX.
cniToncr, and to make ihom moro cnn-ent in f lio market, it may
I^roviilo for thoir rodomption in coin or bonds, and may mako
tlieiu receivable in jjayment of debts to the Government. So
much is settled beyond doubt, and was asserted or distinctly
admitted by the judges who dissented from the decision in the
Legal-tender Cases, as well as by those who concun-ed in that
decision (Veazie Bank vs. Fcnuo, 8 Wall., 533, 548 ; Hejibum
rs. Griswold, 8 Wall., GIG, 63G ; Legal-tender Cases, 12 Wall.,
543, 544, 5G0, 582, GIO, G13, G37).
It is equally well settled that Congress has the power to in-
corporate national banks, with the capacity, for their own profit
as well as for the use of the Govei-nment in its money trans-
actions, of issuing bills which under ordinaiy circumstances
jiass from hand to hand as money at their nominal value, and
which, when so cun-eut, the law has always recognized as a
good tender in payment of money debts, unless specifically
objected to at the time of the tender (United States Bank vs.
Bank of Georgia, 10 Wheat., 333, 347; Ward vs. Smith, 7WaU.,
447, 451). The power of Congi'ess to charter a bank was main-
tained in McCuUoch vs. Maiyland, 4 Wheat., 316, and in Os-
bom zs. United States Bank, 9 Wheat., 738, chiefly ujion the
ground that it was an ai:)propriate means for canying on the
money transactions of the Government. But Chief Justice
Marshall said : ' ' The currency which it circulates, by means of
its trade with indi^iduals, is believed to make it a more fit
instniment for the purposes of government than ib could other-
wise he ; and, if this be true, the capacity to carry on this trade
is a faculty indispensable to the character and ol»jccts of the
institution " (9 Wheat., 8G4). And Mr. Justice Johnson, who
conciu'red with the rest of the court in upholding the power to
incoii^orate a bank, gave the further reason that it tended to
give eflfect to ' ' that j^ower over the currency of the country
which the framers of the Constitution evidently intended to give
to Congress alone " (ib., 873).
The constitutional authority of Congress to provide a cur-
rency for the whole country is now fii'mly established. In
Yeazie Bank vs. Fenno, 8 Wall. , 533, 548, Chief Justice Chase,
APPENBIX. 205
in delivering the opinion of tlio court, said : '* It cannot bo
doubted that under the Constitution the power to provide a
circulation of coin is given to Congress. And it is settled by
the uniform practice of the Government, and by repeated deci-
sions, that Congress may constitutionally authorize the emission
of bills of credit." Congress, having undei-taken to supply a
national currency, consisting of coin, of treasury notes of tho
United States, and of bills of national banks, is authorized to
impose on all State banks, or national banks, or private bankers',
paying out the notes of individuals or of State banks, a tax of
ten per cent, upon the amount of such notes so paid out
(Veazie Bank vs. Fenno, above cited ; National Bank vs. United
States, 101 U. S., 1). The reason for this conclusion was stated
by Chief Justice Chase, and repeated by the present Chief
Justice, in these words : ' ' Having thus, in the exercise of un-
disputed constitutional powers, undertaken to provide a cur-
rency for the whole country, it cannot be questioned that
Congress may, constitutionally, secure the benefit of it to the
people by appropriate legislation. To this end. Congress has
denied the quality of legal tender to foreign coins, and has
l^rovided by law against the imposition of counterfeit and base
coin on the community. To the same end, Congress may re-
strain, by suitable enactments, the circulation as money of any
notes not issued under its own authority. Without this power,
indeed, its attempts to secure a sound and uniform currency for
the country must be futile " (8 Wall., 549 ; 101 U. S., G).
By the Constitution of the United States the several States
are prohibited from coining money, emitting bills of credit, or
making anything but gold and silver coin a tender in payment
of debts. But no intention can be inferred from this to deny
to Congress either of these powers. Most of the powers granted
to Congress are described in the eighth section of the first
article ; the limitations intended to be set to its powers, so as
to exclude certain things which might otherwise be taken to be
included in the general grant, are defined in the ninth section ;
the tenth section is addressed to the States only. This section
prohibits the States from doing some things which the United
-H^G APPENDIX.
States are expressly prohibited from doing, aa well as from
doing some things which the United States are exjiressly au-
thorized to do, aud from doing some things which are neither
expressly granted nor ex^n-essly denied to the United States.
Congress and the States equally are expressly prohibited from
l)assing any bill of attainder or ex j^ost facto law, or granting
any title of uobility. The States are forbidden, while the Pres-
ident and Senate are expressly aiithorized, to make treaties. The
States are forbidden, but Congress is expressly authorized, to
coin money. The States are prohibited from emitting bills of
credit ; but Congress, which is neither expressly authorized nor
expressly forbidden to do so, has, as we have already seen, been
held to have the power of emitting bills of credit, and of
making every pro\dsion for their circulation as currency, short
of giving them the quality of legal tender for private debts-
even by those who have denied its authority to give them this
quality.
It appears to us to follow, as a logical and necessary conse-
quence, that Congress has the power to issue the obligations of
the United States in such form, and to impress ujion them such
qualities as currency for the jjurchase of merchandise and the
payment of debts, as accord with the usage of sovereign gov-
ernments. The power, as incident to the power of borrowing
money and issuing bills or notes of the Government for money
borrowed, of impressing uj^on those bills or notes the quality of
being a legal tender for the payment of private debts, was a
power universally understood to belong to sovereignty, in
Eurojie and America, at the time of the framing and adoption
of the Constitution of the United States. The governments of
Europe, acting through the monarch or the legislature, accord-
ing to the distribution of powers under their respective consti-
tutions, had and have as sovereign a jiower of issuing jaaper
money as of stamping coin. This power has been distinctly
recognized in an important modern case, ably argued and fully
considered, in which the Emperor of Austria, as King of Hun-
gary, obtained from the English Court of Chanceiy an injunc-
tion against the issue in England, without his license, of notes
APPENDIX. 207
purporting to be puhlic paper money of Hungary (Austria ?'.<?.
Day, 2 Gitf., 628, and 3 D. F. & J., 217). The power of issuing
bills of credit, and making them, at the discretion of the legis-
lature, a tender in j^ayment of private debts, had long been
exercised in this counti-y by the several Colonies and States ;
and during the Eevolutionary War the States, upon the recom-
mendation of the Congress of the Confederation, had made the
bills issued by Congress a legal tender (see Craig vs. Missouri,
4 Pet., 435, 453 ; Briscoe vs. Bank of Kentucky, 11 Pet., 257,
313, 334-336; Legal-tender Cases, 12 Wall., 557, 558, 622;
Phillips on American Paper Currency, j)(7ssMn). The exercise of
this i^ower not being prohibited to Congress by the Constitu-
tion, it is included in the power expressly gi-anted to borrow
money on the credit of the United States.
This position is fortified by the fact that Congress is vested
■with the exclusive exercise of the analogous power of coining
money and regulating the value of domestic and foreign coin,
and also with the i3aramount power of regulating foreign and
interstate commerce. Under the i3ower to borrow money on
the credit of the United States, and to issue circulating notes
for the money borrowed, its jDower to define the quality and
force of those notes as currency is as broad as the like power
over a metallic currency under the power to coin money and to
regulate the value thereof. Under the two jjowers, taken to-
gether, Congress is aiithorized to establish a national currency,
either in coin or in paper, and to make that currency lawful
money for all purposes, as regards the National Government or
private individuals.
The j)ower of making the notes of the United States a legal
tender in payment of private debts being included in the
jDOwer to borrow money and to provide a national currency, is
not defeated or restricted by the fact that its exercise may
affect the value of private contracts. If, upon a just and fair
interpretation of the whole Constitution, a particular power or
authority appears to be vested in Congress, it is no constitu-
tional objection to its existence, or to its exercise, that the prop-
erty or the contracts of individuals may be incidentally afi'ectcd.
208 APPENDIX.
Tho decisions of tins court, nlrcady cited, affortl severa.1 eX'
ami)los of this.
Upon tlie issue of stock, bonds, bills, or notes of the United
States, the States are deprived of their power of taxation to the
extent of the property invested by individuals in such obliga-
tions, and the burden of State taxation upon other private prop-
erty is correspondingly increased. The ten per cent, tax im-
posed by Congress on notes of State banks and of private
bankers not only lessens tho value of such notes, but tends
to drive them, and all State banks of issue, out of existence.
The priority given to debts due to the United States over the
private debts of an insolvent debtor diminishes the value of
these debts, and the amount which their holders may receive
out of the debtor's estate.
So, under the jiower to coin money and to regulate its value,
Congress may (as it did with regard to gold by the act of June
28, 1834, eh. 95, and with regard to silver by the act of
FebiiTary 28, 1878, ch. 20) issue coins of the same denomina-
tion as those already current by law, but of less intrinsic value
than those by reason of containing a less weight of the precious
metals, and thereby enable debtors to discharge their debts
by the jiayment of coins of the less real value. A contract to
pay a certain sum in money, without any stii^ulation as to the
kind of money in which it shall be paid, may always be satis-
fied by payment of that sum in any currency which is lawful
money at the place and time at which payment is to be made
(I Hale, P. C, 192-194 ; Bac. Al\ Tender, B. 2 ; Pothier, Con-
tract of Sale, No. 41G ; Pardessus, Droit Commercial, Nos. 204,
205 ; Searight vs. Calbraith, 4 Dall., 324). As observed by Mr.
Justice Strong, in delivering the opinion of the court in the
Legal-tender Cases, " Every contract for the payment of money,
simply, is necessarily subject to the constitutional power of the
Government over the currency, whatever that power may be,
and the obligation of the jiarties is, therefore, assumed with
reference to that j)ower" (12 "Wall., 549).
Congress, as the legislature of a sovereign nation, being ex-
pressly empowered by the Constitution " to lay and collect
APPENDIX. 209
taxes, to pay the debts and provide for tlie common defence
and general welfare of the United States," and " to borrow
money on the credit of the United States," and " to coin money
and regulate the value thereof and of foreign coin ;" and being
clearly authorized, as incidental to the exercise of those great
powers, to emit bills of credit, to -charter national banks, and
to i^rovide a national cuiTency for the whole people, in the
form of coin, treasury notes, and national bank bills ; and the
power to make the notes of the Government a legal tender in
payment of private debts being one of the powers belonging to
sovereignty in other civilized nations, and not expressly with-
held from Congress by the Constitution ; we are irresistibly
impelled to the conclusion that the impressing upon the treas-
ury notes of the United States the quality of being a legal
tender in payment of private debts is an appropriate means,
conducive and plainly adapted to the execution of the un-
doubted powers of Congress, consistent with the letter and
spirit of the Constitution, and thex'efore, within the meaning of
that instrument, "necessary and proper for carrying into execu-
tion the powers vested by this Constitution in the Government
of the United States."
Such being our conclusion in matter of law, the question
whether at any particular time, in war or in peace, the exigency
is such, by reason of unusual and pressing demands on the
resources of the Government, or of the inadequacy of the
supply of gold and silver coin to furnish the currency needed
for the uses of the Government and of the people, that it is, as
matter of fact, wise and expedient to resort to this means, is a
political question, to be determined by Congress when the
question of exigency arises, and not a judicial question, to be
afterward x^assed upon by the courts. To quote once more
from the judgment in McCulloch vs. Maryland: "Where the
law is not prohibited, and is really calculated to effect any of
the objects entrusted to the Government, to undertake here to
inquire into the degree of its necessity would be to pass the
line which circumscribes the judicial department, and to tread
on legislative ground " (4 Wheat., 423).
210 APPENDIX.
It follows that tho act of May 31, 1878, cli. 146, is constitu^
tional and valid ; and that tho Circuit Court rightly held that
tho louder iu treasury notes, reissued and kept in circalation
under that act, was a tender of lawful money iu payment of the
defendant's debt to the plaintiff.
Judgment affirmed.
Mr. Justice Field wrote a dissenting opinion, as follows :
From the judgment of the court in this case, and from all
the positions advanced in its support, I dissent. The question
of the power of Congress to impart the quality of legal tender
to the notes of the United States, and thus make them money
and a standard of .value, is not new here. Unfortunately, it
has been too frequently before the court, and its latest decision,
previous to this one, has never been entirely accepted and ap-
proved by the country. Nor should this excite surprise ; for
whenever it is declared that this Government, ordained to
establish jiistice, has the power to alter the condition of con-
tracts between private parties, and authorize their payment or
discharge in something different from that which the parties
stii^ulated, thus disturbing the relations of commerce and the
business of the community generally, the doctrine will not and
ought not to be readily accepted. There will be many who
will adhere to the teachings and abide by the faith of their
fathers. So the question has come again, and will continue to
come until it is settled so as to uphold aud not impair the con-
tracts of parties, to promote aud not defeat justice.
If there be anything in the history of the Constitution which
can be established with moral certainty, it is that the framers
of that instrument intended to prohibit the issue of legal-tender
notes both by the general Government and by the States ; and
thus prevent interference with the contracts of private j^arties.
During the Eevolution and the period of the old Confederation,
the Continental Congress issued bills of credit, and upon its
recommendation the States made them a legal tender, and the
refusal to receive them an extinguishment of the debts for
which they were offered. They also enacted severe penalties
APPENDIX. 211
against those who refused to accept them at their nominal
vahie, as equal to coin, in exchange for commodities. And
previously, as early as January, 1776, Congress had declared
that, if any jjerson should be "so lost to all virtue and regard
for his country " as to refuse to receive in payment the bills
then issued, he shoiild, on conviction thereof, be "deemed,
published, and treated as an enemy of his country, and j)re-
cluded from all trade and intercourse with the inhabitants of
the colonies."
Yet, this legislation ^Droved ineffectual ; the universal law of
cuiTency ijrevailed, which makes promises of money valuable
only as they are convertible into coin. The notes depreciated
until they became valueless in the hands of their i^ossessors.
So it always will be ; legislative declaration cannot make the
promise of a thing the equivalent of the thing itself.
The legislation to which the States were thus indiiced to re-
sort was not confined to the attem^it to make i^aper money a
legal tender for debts ; but the principle that private contracts
could be legally impaired, and their obligation disregarded,
being once established, other measu.res equally dishonest and
destructive of good faith between parties were adopted. What
followed is thus stated by Mr. Justice Story, in his ' ' Commen-
taries : "
" The history, indeed," he says, " of the various laws which
were passed by the States, in their colonial and independent
character, upon this subject, is startling at once to our morals,
to our patriotism, and to our sense of justice. Not only was
paper money issued and declared to be a tender in payment of
debts, but laws of another character, well known under the
appellation of tender laws, appraisement laws, instalment laws,
and suspension laws, were from time to time enacted, which
prostrated all private credit and all private morals. By some
of these laws the due payment of debts was suspended ; debts
were, in violation of the very terms of the contract, authorized
to be paid by instalments at different periods ; property of any
sort, however worthless, either real or jjersonal, might be ten-
dered by the debtor in payment of his debts ; and tho creditor
212 APPENDIX.
was compelled to take tlie iiroperty of the debtor, -wliicli lie
might seize ou execution, at au appraisement wholly dispro-
portionate to its known value. Such grievances and oppres-
sions, and others of a like nature, were the ordinary results of
legislation during the Revolutionary War and the intermediate
period down to the formation of the Constitution. They en-
tailed the most enormous evils on the country, and introduced
a system of fraud, chicanery, and profligacy which destroyed
all ijrivate confidence and all industry and enterprise " (2
Story on the Constitution, § 1371).
To put an end to this vicious system of legislation which
only encouraged fraud, thus graphically desci-ibed by Story,
the clauses which forbid the States from emitting bills of credit
or making anything but gold and silver a tender in payment of
debts, or passing any law impairing the obligation of contracts,
were inserted in the Constitution.
" The attention of the convention, therefore," says Chief
Justice Marshall, ' ' was jjarticularly directed to paper money
and to acts which enabled the debtor to discharge his debt
otherwise than was stipulated in the contract. Had nothing
more been intended, nothing moi'e would have been expressed,
but in the opinion of the convention much more remained to
be done. The same mischief might be effected by other means.
To restore i^ublic confidence completely, it was necessary, not
only to prohibit the use of particular means by which it might
be effected, but to ijrohibit the use of any means by which the
same mischief might be produced. The convention appears
to have intended to establish a great principle, that contracts
should be in\iolable " (Sturges vs. Crowuinshield, 4 Wheat.,
122, 206).
It would be difficult to believe, even in the absence of the
historical e\T.dence we have on the subject, that the framers of
the Constitution, profoundly impressed by the e\dls resulting
from this kind of legislation, ever intended that the new Gov-
ernment, ordained to establish justice, should possess the power
of making its bills a legal tender, which they were unwilling
should remain with the States, and which in the past had
APPENDIX. 213
liroved so clangerons to the peace of tlio community, so dis-
turbing to the business of the people, and so destructive of
their morality.
The great historian of our country has recently given to tho
world a history of the convention, the result of years of labor
in the examination of all jjublic documents relating to its for-
mation, and of the recorded opinions of its framers ; and thus
ho writes :
"With the full recollection of the need or seeming need of
paper money in the Revolution, with the menace of danger in
future time of war from its prohibition, authority to issue bills
of credit that should be legal tender was refused to the gen-
eral Government by the vote of nine States against New Jersey
and Maryland. It was Madison who decided the vote of Vir-
ginia, and he has left his testimony that ' the pretext for a
jiaper currency, and particulai'ly for making the bills a tender,
either for public or private debts, was cut off.' This is the in-
terpretation of the clause made at the time of its adoption, alike
by its authors and by its opponents, acceijted by all the states-
men of that age, not open to dispute because too clear for
argument, and never disputed so long as any one man who took
part in framing the Constitution remained alive. History can-
not name a man who has gained enduring honor by causing
the issue of paper money. Wherever such paper has been em-
ployed it has in every case thrown upon its authors the burden
of exculpation under the plea of pressing necessity" (Ban-
croft's History of the Formation of the Constitution, vol. 2,
134).
And when the convention came to the prohibition upon the
States, the historian says that the clause, "No State shall make
anything but gold and silver a tender in payment of debts,"
was accepted without a dissentient State. * * So the adoption of
the Constitution," he adds, "is to be the end forever of pajier
money, whether issued by the several States or by the United
States, if the Constitution shall be rightly interpreted and
honestly obeyed" (id., 137).
For nearly three-fourths of a century after the adoption of
214 APPENDIX.
tho Constiiution, find until tlio lop;islation diiring the recent
civil war, no jurist and no statesman of any position in the
countiy ever pretended that a power to impart the quality of
legal tender to its notes was vested in the general Govei'nment.
There is no recorded word of even one in favor of its })ossessing
the })ower. All conceded, as an axiom of constitutional law,
that the power did not exist.
]Mr. Webstei-, from his first entrance into public life in 1812,
gave great consideration to the subject of tho currency, and in
an elaborate speech on that subject, made in the Senate in
1S3G, then sitting in this room, he said : " Currency, in a largo
and perhaps just sense, includes not only gold and silver and
bank bills, but bills of exchange also. It may include all that
adjusts exchanges and settles balances in the operations of
trade and business ; but if we understand by currency the legal
money of the country, and that which constitutes a legal tender
for debts, and is the standard measure of value, then undoubt-
edly nothing is included but gokl and silver. Most unques-
tionably there is no legal tender, and there can be no legal
tender in this country, iinder the authority 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 constitutional principle, j^erfectly plain and of the highest
importance. The States are expressly prohibited from making
anything but gold and silver a legal tender inpayment of debts,
and although no such ex^jress prohibition is api^Hcd to Con-
gress, yet, as Congress has no power granted to it in this respect
but to coin money and to regulate the valire of foreign coins, it
clearly has no power to substitute pai^er or anything else for
coin as a tender in jjayment of debts and in discharge of con-
tracts. Congress has exercised this power fully in both its
branches ; it has coined money, and still coins it ; it has regu-
lated the value of foreign coins, and still regulates their value.
The legal tender, therefore, the constitutional standard of
value, is established and cannot be overthrown. To overthrow
it would shake tho whole system " (4 Webster's Works, 271).
When the idea of imparting the legal tender quality to tha
APPENDIX. 215
notes of the United States issued under the first act of 1862
was first broached, the advocates of the measure rested their
sn2)port of it on the ground that it was a war measure, to
which the country was compelled to resort by the exigencies of
its condition, being then sorely pressed by the Confederate
forces, and requiring the daily expenditure of enormous sums
to maintain its army and navy and to carry on the Govern-
ment. The Eepresentative who introduced the bill in the
House declared that it was a measure of that natui'e, " one of
necessity and not of choice ; " that the times were extraordi-
nary and that extraordinary measures must be resorted to iu
order to save our Government and preserve our nationality
(speech of Spaulding, of New York, Cong. Globe, 1861-62, Part
1, 523). O.her members of the House frankly confessed their
doubt as to its constitutionality, but yielded their support of it
under the pressure of this supposed necessity.
In the Senate also the measure was i^ressed for the same
reasons. When the act was reported by the Committee on
Finance, its chairman, while opposing the legal tender provi-
sion, said: "It is put on the ground of absolute, overwhelming
necessity ; that the Government has now arrived at that point
when it must have funds, and those funds are not to be ob-
tained from ordinary sources, or from any of the expedients to
which we have heretofore had recourse, and therefore, this new,
anomalous, and remarkable provision must be resorted to in
order to enable the Government to pay off the debt that it now
owes and afford circulation which will be available for other
purposes" [Cong. Globe, 1861-62, Part 1, 764).
And ui^on that ground the provision was ado2ited, some of
the Senators stating that iu the exigency then existing money
must be had, and they, therefore, sustained the measure, al-
though they apju-ehended danger from the exiieriment. " The
medicine of the Constitution," said Senator Sumner, "must
not become its daily food " (id., 800). A similar necessity was
urged upon the State tribunals and this court iu justification
of the measure, when its validity was questioned. The dissent-
ing opinion iu Hepburn vs. Griswold referred to the pressure
216 APPENDIX.
that was upon the Government at the time to enable il to raise
and support an army and to provide and maintain a navy.
Chief Justice Chase, who gave the prevailing opinion in that
case, also spoke of the existence of the feeling when the bill
was passed that the i)ro\'i.sion was necessary. He favored the
provision on that ground when Secretary of the Treasuiy, al-
though he had come to that conclusion with reluctance, and
recommended its adoption by Congress. When the question as
to its validity reached this couii, this expression of favor was
referred to, and by many it was supposed that it would control
his judicial action. But after long pondering upon the sub-
ject, after listening to repeated arguments by able counsel, ha
decided against the constitutionality of the provision ; and,
holding in his hands the casting vote, he determined the judg-
ment of the court. He prefeiTed to ^jreserve his integrity as a
judicial officer rather than his consistency as a statesman. In
his oj^iuion he thus referred to his previous Adews :
"It is not surprising that amid the tumult of the late civil
war, and under the influence of apprehensions for the safety
of the Republic almost universal, different views, never before
entertained by American statesmen or jurists, were adopted
by many. The time was not favorable to considerate reflec-
tion upon the constitutional limits of legislative or executive
authority. If power was assumed from patriotic motives, the
assumption found ready justification in patriotic hearts. Many
who doubted yielded their doubts ; many who did not doubt
were silent. Some who were strongly averse to making gov-
ernment notes a legal tender felt themselves constrained to
acquiesce in the views of the advocates of the measure. Not a
few who then insisted upon its necessity, or acquiesced in that
view, have, since the return of peace, and under the influence
of the calmer time, reconsidered their conclusions, and nov/
concur in those which we have just announced. These conclu-
sions seem to us to be fully sanctioned by the letter and spirit
of the Constitution " (8 Wall., 625).
It must be evident, however, ui:)on reflection, that if there
were any power in the Government of the United States to
APPENDIX. 217
impart the quality of legal tender to its promissory notes, it
Mius I'or Congress to determine wlien ilic necessity for its exer-
cise existed ; that war merely increased the urgency for money ;
it did not add to the powers of the Government nor change
their nature ; that if the power existed it might be equally
exercised when a loan was made to meet ordinary expenses in
time of peace as when vast sums were needed to support an
army or a navy in time of war. The wants of the Government
could never be the measure of its powers. But in the excite-
ment and apprehensions of the war these considerations were
unheeded ; the measure was passed as one of overruling neces-
sity in a perilous crisis of the country. Now, it is no longer
advocated as one of necessity, but as one that may be adopted
at any time. Never before was it contended by any jui'ist or
commentator on the Constitution that the Government, in full
receipt of ample income, with a treasury overflowing, with
more money on hand than it knows what to do with, covild
issue paper money as a legal tender. What was, in 1862, called
the "medicine of the Constitution," has now become its daily
bread. So it always hajjpens that whenever a wrong principle
of conduct, political or personal, is adopted on a plea of neces-
sity, it will be afterward followed on a plea of convenience.
The advocates of the measure have not been consistent in
the designation of the power upon which they have supported
its validity, some placing it on the power to borrow money,
some on the coining power, and some have claimed it as an
incident to the general powers of the Government. In the
present case it is jilaced by the court upon the power to bor-
row money, and the alleged sovereignty of the United States
over the currency. It is assumed that this power, when exer-
cised by the Government, is something different from what it
is when exercised by corjiorations or individuals, and that the
Government has, by the legal tender provision, the power to
enforce loans of money because the sovereign governments of
European countries have claimed and exercised such power.
" The words to borrow money," says the court, " are not to
receive that limited and restricted interpretation and meaning
10
218 APPENDIX.
•which they would have in a penal statute or in an authority
coufeired by law or by contract uijon trustees or agents foi
private purposes." And it adds that " the power, as incident
to the power of borrowing money and issuing bills or notes of
the Government for money borrowed, of impressing upon those
bills or notes the quality of being a legal tender for the pay-
ment of private debts, was a power universally understood to
belong to sovereignty, in Em-ope and America, at the time of
the framing and adoption of the Constitution of the United
States. The governments of Europe, acting through the mon-
arch or the legislature, according to the distribution of powers
under their respective constitiitions, had and have as sovereign
a jjower of issuing paper money as of stamping coin," and that
" the exercise of this power not being prohibited to Congress
by the Constitution, it is included in the power expressly
granted to borrow money on the credit of the United States."
As to the terms to hoi-roio money, where, I would ask, does
the court find any authority for giving to them a different in-
terpretation in the Constitution from what they receive when
used in other instruments, as in the charters of municijDal bod-
ies or of private corporations, or in the contracts of individuals?
They are not ambiguous ; they have a well-settled meaning in
other instiTiments. If the court may change that in the Con-
stitution, so it may the meaning of all other clauses, and the
powers which the Government may exercise will be found de-
clared, not by plain words in the organic law, but by words
of a new significance resting in the minds of the judges. Until
some authority beyond the alleged claim and practice of the
sovereign governments of Euroj^e be jsroduced, I must believe
that the terms have the same meaning in all instniments wher-
ever they are used ; that they mean a power only to contract
for a loan of money, upon considerations to be agreed between
the i^arties. The conditions of the loan, or whether any particu-
lar security shall be given to the lender, are matters of arrange-
ment between the parties ; they do not concern any one else.
They do not imply that the borrower can give to his jjromise to
refund the money any security to the lender outside of property
APPENDIX: 219
or rights which he possesses. The transaction is completed
when the lender parts with his money and the borrower gives
his promise to pay at the time, and in the manner, and with the
securities agreed upon. Whatever stipulations may be made
to add to the value of the jjromise or to seci;re its fulfilment,
must necessarily be limited to the jjroperty, rights, and priv-
ileges which the borrower possesses. Whether he can add to
his jjromises any element which will induce others to receive
them beyond the security which he gives for their payment,
depends upon his power to control sitcli element. If he has a
right to put a limitation upon the use of other jiersons' prop-
erty, or to enforce an exaction of some benefit from them, he
may give such pri^'ilege to the lender ; but if he has no right
thus to interfere with the projierty or possessions of others, of
course he can give none. It will hardly be pretended that the
Government of the United States has any power to enter into
an engagement that, as security for its notes, the lender shall
have special i^rivileges with respect to the visible property of
others, shall be able to occupy a portion of their lands or their
houses, and thus interfere with the possession and use of their
property. If the Government cannot do that, how can it step
in and say, as a condition of loaning money, that the lender
shall have a right to interfere with contracts between private
parties ? A large proj^ortion of the property of the world ex-
ists in contracts, and the Government has no more right to de-
prive one of their value by legislation operating directly upon
them, than it has a right to deprive one of the value of any
visible and tangible property. No one, I think, will pretend
that individuals or corporations possess the power to impart to
their evidences of indebtedness any quality by which the holder
will be able to affect the contracts of other jjarties, strangers to
the loan ; nor would any one pretend that Congress possesses
the power to impart any such quality to the notes of the
United States, except from the clause authorizing it to make
laws necessary and proper to the execution of its powers. That
clause, however, does not enlarge the expressly designated
powers ; it merely states what Congress could have done with-
220 APPENDIX.
out its insertion in the Constitntion. Without it Oongivps
could have adoptotl any apprdpriate moans to borrow ; but tliat
can only be apiuopriate lor that purpose which has some rela-
tion of fitness to the end, ■which has respect to the terms essen-
tial to the contract, or to the securities which the borrower
may furnish for the repayment of the loan. The quality of
legal tender does not touch the terms of the contract ; that is
complete without it ; nor does it stand as a security for the loan,
for a security is a thing jjledged over which the borrower has
some control, or in which he holds some interest.
The argument presented by the advocates of legal tender is,
in substance, this : The object of borrowing is to raise funds ;
the addition of the qiiality of legal tender to the notes of the
Government will induce parties to take them, and funds will
thereby be more readily loaned. But the same thing may be
said of the addition of any other quality which would give to
the holder of the notes some advantage over the property of
others, as, for instance, that the notes should serve as a pass on
the public conveyances of the country, or as a ticket to jilaces
of amusement, or should exempt his property from State and
municipal taxation, or entitle him to the free use of the tele-
gTaph lines, or to a percentage from the revenues of private
coii^orations. The same consequence, a ready acceptance of
the notes, would follow ; and yet no one would pretend that the
addition of pri-vileges of this kind with respect to the jn-operty
of others, over which the borrower has no control, would be in
any sense an appropriate measiu'e to the execution of the power
to borrow.
Undoubtedly the power to borrow includes the power to give
e^^dences of the loan in bonds, treasury notes, or in such other
form as may be agi'eed between the parties. These may be issued
in such amounts as will fit them for cii'culation, and lor that
pui-pose may be made payable to bearer, and transferable by
delivery. Experience has shown that the form best fitted to
secure their ready acceptance is that of notes jjayable to bearer
in such amounts as may suit the ability of the lender. The
Government, in substance, says to j^arties with whom it deals ;
APPENDIX. 221
Lend lis jonr money, or fnrnisli ns with your products or your
liil^or, and we will ultiuuitely pay you, and as evidence of it -vve
will give you our notes, in such form and amount as may suit
your convenience, and enable you to transfer them ; we will
also receive them for certain demands due to us. In all this
matter there is only a dealing between the Government and tha
individuals who trust it. The transaction concerns no others.
The power which authorizes it is a very different one from a
power to deal between parties to i^rivate contracts in which the
Government is not interested, and to compel the receipt of these
promises to pay in place of the money for which the contracts
stipiilated. This latter power is not an incident to the former ;
it is a distinct and fai' greater power. There is no legal con-
nection between the two ; between the power to borrow from
those willing to lend and the power to interfere with the inde-
pendent contracts of others. The possession of this latter
power would justify the interference of the Government with
any rights of property of other parties, under the pretence
that its allowance to the holders of the notes would lead to
their more ready acceptance, and thus fiu-nish the needed
means.
The i^ower vested in Congress to coin money does not in my
judgment fortify the j)osition of the court as its opinion affirms.
So far from deducing from that power any authority to impress
the notes of the Government with the quality of legal tender,
its existence seems to me inconsistent with a power to make
anything but coin a legal tender. The meaning of the terms
" to coin money " is not at all doubtful. It is to mould metallic
substances into forms convenient for circulation and to stamp
them with the impress of the Government authority indicating
their value with reference to the unit of value established by
law. Coins are pieces of metal of definite weight and value,
stamped such by the authority of the Government. If any
doubt could exist that the power has reference to metallic sub-
stances only it would be removed by the language which im-
mediately follows, authorizing Congress to regulate the value
of money thus coined and of foreign coin, and also by clauses
222 APPENDIX.
making a distinction between coin and the obligations of the
general Govornnient and of the States. Thus, in the t-lause
authorizing Congress "to provide for the punishment of coun-
terfeiting the securities and current coin of the United States,"
a distinction is made between the obligations and the coin of
th3 Government.
Money is not only a medium of exchange, but it is a standard
of value. Nothing can be such standard which has not intrin-
sic value, or which is subject to frequent changes in value.
From the earliest period in the histoiy of civilized nations, we
find pieces of gold and silver used as money. These metals are
scattered over the world in small quantities ; they are siiscepti-
ble of di\'ision, capable of easy impression, have more value in
l^roportion to weight and size, and are less subject to loss by
wear and abrasion than ^any other material possessing these
qualities. It requires labor to obtain them ; they are not de-
pendent upon legislation or the cai:>rices 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<j, Caleb, Massachusetts, ar-
gument of, against Treasury notes
in 18J8, 44 ; opposes postpcnonient
of payment of foiu-th instalment,
187.
Dallas, Alexander J., Secretary of
Treasury, 31 ; succeeds Crawford
in 1814, 31 ; report to Committee
on Ways and Means, 31 ; recom-
mends establishment of National
bank, 31 ; mentions Treasury
notes, 32 ; reports in regard to, 37.
Danger of increasing Executive
power, 175.
Dates of maturity of Treasury notes,
37; of first issues of paper money
in Colonies, 1 ; of issue and re-
demption of notes of 1812, 26.
Davis, Mr. Justice, dissents from
Chief Justice in first legal-tender
decision, 1(50.
Death of President Harrison, 49.
Debates, on striking out "emit
bills," 14 ; on Treasury notes in
1812, 22 ; on Treasury notes, 1813,
29; on Treasury notes, 1814, 29;
on Treasury notes, 1837, 41; on
Treasury notes, 1838, 43 ; on
Treasury notes, 1840, 40 ; on con-
duct of Mexican War, 04 ; on
legal-tender bill, 124-136; on de-
posit of surplus, 177; on post-
ponement of fourth instalment,
184-187.
Debt, national, highest amount, 85 ;
proportion consisting of Treasury
nott s, 85 ; in 1813, 21 ; in 1840, 50 ;
extinguished in 1835, 170.
Debts and dues, what notes receiv-
able for (see Treasury J^otes and
Legal Tender).
Decisions, Bank ws. Supervisors, 157;
Hepburn vs. Griswold, 100; Park-
er vs. Davis, 102, 1G3; Juilliard z^s.
Orc^nman, 106, T.)3; as to claim
of N'irginia for fourth instalment
of siu'iilus, 192; Briscoe r.s. Bank of
Kentucky, and other decisions, see
note page 44.
Declaration of war with England,
22; with Mexico, 63; civil war, 83.
Deficiency in revenues, of Continen-
tal Congress. 9; in 1812, 21; in
1813, 29 ; in 1837, 41 ; from 1837 to
1841, 49; in 1840, C3 ; during civil
war, 84, 85.
Demand notes, limitation of amount,
89 ; first issue of, 89 ; amount is-
sued, 90 ; difficulty of redemption
in gold coin, 90 ; retirement of,
90 ; action of New York banks
in regard to, 90; Secretary's cir-
cular as to, 89 ; General Scott's
circular, 89 ; refused by many, 89 ;
at a premium, 93 ; denominations
of, 89.
Denominations, of notes from 1812 to
1815, 38 ; of notes of period of
1837,42; Benton moves to make
lowest $100, 41 ; of 7-30 notes, 89;
of demand notes, b9 ; of frac-
tional cuiTency, U 3 ; of compound
interest notes, 110; of 5 per cent.
Treasury notes, 1(9; of gold cer-
tificates 11.5-155; of legal-tender
certificates, 110; of 4 per cent,
certificate.?, 117 ; of silver certifi-
cates, 152.
Deposit Act (see Deposit of Sui'plus,
also page 40) regarded as contract,
187.
Deposit of public money with State
banks, 40, 182.
Depository banks, regulation of, 40 ;
amounts due from, 43 ; number of,
182; all but six suspend specie
pavment, 183 ; losses on account
of,' 183.
Deposits of surplus with States, pro-
josition for, in l.'^27, 107; Pre.'i-
dent Jackson's message regarding
constitutionality of, 168 ; Jack-
son's message of 1830, 170; change
of Jackson's views in 183(5, 172 ;
act of June 23, 18:^6, authoiizi-ig
178 ; Secretary Woodbury disap-
proves of, 171 ; approved by Presi-
dent with reluctance, 17S; pro-
visions of law regulating, 179;
amounts to be deposited, 180;
INDEX.
237.
postponement of fourth instal-
ment of, 187 ; Mr. Buchanan's
amendment relative to, 186 ;
favorably re;j;arded by opponents
of the administration, 175 ; propo-
sitions for. made througti j)ress,
177; suggested by Secretary Di.'c
that it be withdrawn, 189 ; with-
drawal dependent on future act of
Congress, 1 92 ; use of, by States,
190.
Deposits, U. S. change from Bank of
the United States, 175.
Depreciation of Colonial paper
money, 45 ; of Continental paper
money, 9 ; loss from, 10 ; of notes
from 1812-1815, o95 ; oO notes of
18o7, 44.
Description, of notes of ISI'3, 25 ; of
notes of 1813,30; of notes of 1814,
30 ; of notes of 1815, 34 ; of notes
of 1837, 42 ; of notes of 1838-1840,
45, 4(i ; of endor.semcnt on spurious
notes, 52; of notes of 1840, (i4 ; of
notes of 1857-.58, 71, 72 ; of 7-30
notes, 87; of fractional currency,
103 ; of compound interest notes,
110; of 5 per cent, notes, 109; of
demand notes, 9L) ; of: 3 per cent,
certihcates, 114; of gold certifi-
cates, 115, 1.55; of legal-tender
certificates, 116; of 4 per cer.t.
certificates, tl7; of silver certih-
cates, 1.52, 155.
De.^ter, Samuel, regarded the emis-
sion of bil s by banks chartered by
States as unconstit itional, 12.
Dickerson, Mahlon, New Jersey, au-
thor of bill to distribute surplus,
introduced and discussed in 1827,
167.
Diflerences betw.^en coloni.xl gover-
nors and legislatiu'es, 3.
Difficulties in transfjrring public
funds, 32 ; in paying fourth in-
stalment of surplus, 185; in efFeci-
ing loins, 23, 39, .50, 72, 78.
Disappearance of silver change, 100.
Discount on U. S. loans, 39, "iS.
Discussion, general, of the legal-
tender question, 144; of the coin-
age act of 1873, 151.
Dissenting opinions of Justices
Miller, Davis, and Swayne in hrst
legal-tender case, 16 ; of Chief-
Justice Chase, Nelson, Field, and
Clifford in second legal-tender
case, 164; of Justice Field in
third legal-tender case, 106, 210.
Distribution of revenues from public
lands, 175; of all revenues, 175;
annual, recommended, 176 ; op-
posed by Benton, 17(; ; paragraph
in Philadelphia Natioiud Gazette
advocathig, 177 ; bill for, intro-
duced in Senate, 177 ; regarded
as unconstitutifjnal, 177 ; changed
to a deposit with States, 178.
Dix, John A., Secretary of the
Treasury, 76 ; opens bids for
Treasury notes, 76 ; letter to
Cliairman of Ways and Means
Connnittee, 77 ; recommends with-
drawal of deposits made with
States, 78, 189; succeeded by
Chase, 80.
Eagerness of people to obtain
postal currency, 104 ; to obtain.
4 per cent, certificates, 117.
Eft'ect of amendment of Mr. Bu-
chanan's to postponement bill,
186.
Ellsworth, Oliver, against paper
money in the Federal Convention,
1.5.
Emissions of paper money, colonial,
in the colony of Massachusetts, 1 ;
ill other colonies, 1 ; by means of
banks, 2-5 ; attitude of mother
country toward, 5 ; Gov. Belcher's
proclamation, 5 ; Parliament for-
bids, 7 ; It'gal tender prohibited, 8 ;
by C!ontinental Congress, author-
ized, 9 ; depreciation of, 9 ; amount
of, 10 ; loss to people from, 10 ; ef-
fect of on Federal Constitution,
10-12 (see Trsasury Notes).
England, declaration of war with,
22 ; treaty of peace w.th, 34,
Enterprises, private banking, re-
stricted by act of Parliament, 7.
Eppes, John W., Virginia., Chair-
man of Committee of Ways and
Means. 32 ; report on Treasuiy
notes in 1814, 32.
Estimates, of amounts of Conti-
nental currency, 10 ; of deficiency
for year Ibl.J, 29; of balance in
Treasury, 1838, 43 ; of revenue
under tariff of 1842, 63 ; of re-
ceipts and expenditures in Ibi)'/,
238
INDEX.
70 ; of Secretary Chase of require-
ments for year IStil, ;3, S(> ; 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<etch. By THEODORE D. WOOLSEY, D.D., LL.D.,
late President of Yale College. 12mo, SI. 50.
This book is the only comprehensive review of its subject, withiu
small compass, yet exactly meeting the needs of the reader, that is ac-
cessible in English. The candor of the discussion is remarkable ; the
book is the argument of a perfectly fair reasoner, painting nothing in
too dark colors, but taking his opponents at their best.
THE N. Y. COMMERCIAL ADVERTISER.— "The work is an epitome of thg
history of the socialistic and communistic movement, and will prove a most valw
Ible text book to all wlio have not made themselves familiar with this giecl
iQbjeot."
HISTORY AND BIOGRAPHY.
THE DAWN OF HISTORY. An Introduction to Pie-Historic
Stuclyo New and revised edition. Edited by C. F. KEARY.
12mo, SI. 25.
This work treats successively of the earliest traces of man in the
remains discovered in caves or elsewhere in different parts of Europe ;
of language, its growth, and the story it tells of the pre-historic users
of it ; of the races of mankind, earlj' social life, the religions, mythol-
ogies, and folk-tales of mankind, and of the history of writing. The
present edition contains more than a hundred pages of new matter, in
which are embodied the results of the latest researches,
BOSTON SAT. EVE. GAZETTE.— "A fascinating manual, without a vestige
of the dullness usually charged against scientific works. In Its way, the work la
a model of what a popular scientlflc work should be."
THE ORIGIN OF NATIONS. By Professor GEORGE RAWLI^i-
SON, M.A. 12mo, with maps, SI. 00.
The first part of this book, Early Civilizations, discusses the an-
tiquity of civilization in Egypt and the other early nations of the East.
The second part. Ethnic Affinities in the Ancient World, is an examin-
ation of the ethnology of Genesis, showing its accordance with the
latest results of modem ethnographical science.
CONGREGATIONALIST.— "A work of genuine scholarly excellence, and a
useful offset to a great deal of the superficial current literature on such subjects."
WANUAL OF MYTHOLOGY. For the Use of Schools, Art Stu-
dents, and General Readers. Founded on the Works of
Petiscus, Preiier, and V/elcker. By ALEXANDER S. MUR-
RAY, Department of Greek and Roman Antiquities, British
Museum. With 45 Plates on tinted paper, representing
more than 90 Mythological Subjects. Reprinted from the
Second Revised London Edition. Crown 8vo, SI. 75.
THE CLEVELAND HERALD.— "It has been acknowledged the best work on
the subject to be found in a concise form, and as it embodies the results of the
latest researches and discoveries in ancient mythologies, it is superior for school
und general purijoses as a hanJ book to any of the so-called standard works."
THE BOSTON JOURNAL.— "Whether as a manual for reference, a text bcolf
for school use, or for the general reader, the book will be found very valuable &a4
to'^erestuyt."
STANDARD TEXT BOOKS.
THE REFORMATION. By Prof. GEORGE P. FISHER, D.D.,
Professor of Ecclesiastical History in Yale College. Crown
8vo, S2.50.
THE CHRISTIAN UNION.— "Tlie book is a remarkable instance of that
power of lucid condensation which its author possesses in a high degree. » » *
The quality of condensedness renders it worthy to be studied, not merely read ;
and it would be excellent as a text book in college."
PROF. CHARLES A. AIKEN, D.D., Princeton Theological Seminary.— "Vro-
fessor Fisher's History of the Reformation presents the results of prolonged,
extended, and exact study, with those excellent qualities of style which are so
characteristic of him— clearness, smoothness, judicial fairness, vividness, felicity
in arranging material, as well as In grouping and deUneating characters."
THE ANCIENT EMPIRES OF THE EAST. By Prof. A. H.
SAYCE, of Oxford. 12mo, 81.50.
THE s. S. TIMES.—" Prof. Sayce's history is the best popular book inlts field.
It is abreast of modern research ; its point of view is broad and comprehensive,
and its style is such as to commend it to the wide public to which it is addressed."
THE JOURNAL OF EDUCATION.— "Mr. Sayce is recognized as the leading
Assyriologist of our day, and has given in this valuable book the latest
results of the latest researches into the mysterious antiquity of the ancient Orien-
tal civiUzations. He gives us Information not to be found elsewhere, and much
which lies dispersed in periodicals of only limited circulation. It Is indlspensabla
for every student of history."
THE UNITED STATES : Its History and Constitution. By ALEX-
ANDER JOHNSTON, late Professor in Princeton College.
12mo, SI. 00.
Professor Johnston's work is unique in that it presents in a single
voUime of about three hundred pages, a hicid, scholarly, well-ordered
narrative of the history of the United States, from the earliest
discoveries down to the present time. As a compact manual for class
use it will be found invaluable.
SCHOOL JOURNAL.— "A masterly statement of the constitutional and
political history of the country. It is comprehensive and adequate, yet wonder-
fully clear and compact. Its value is equally great for general reading, or for
reference."
HISTORICAL OUTLINE OF THE ENGLISH CONSTITUTION
FOR BEGINNERS. By D. W. RANNIE. 12mo, $1.00.
THE N. Y. SUN.— "As a compendium of the cardinal events and accepted
principles of constitutional history it may be cordially recommended to those
who are beginning the study of a political system."
THE BOSTON COURIER.— "The book is a very valuable manual for young
people. The manner Is clear and simple, and the outlines are clear and accurate."
CnARLES SCEIBNER'S SONS'
EPOCHS OF HISTORY.
CHARLES KENDALL ADAMS, President Of Cornell University.— "A Series
of concise and carefully prepared volumes on special eras of history. Eacti i%
"levoted to a group of events of sucti iaiportance as to entitle it to be regarded as
an epoch. Eacli is also complete in itself, and lias no especial connection with
the other members of the series. The works are all written by authors selected
by the editor on account of some especial quallflcations for a portrayal of the
period they respectively describe. The volumes form an excellent collection^
especially adapted to the wants of a general reader."
NOAH PORTER, President of Tale College.— "The • Epochs of History ' seem
to me to have been prepared with knowledge and artistic skill to meet the wants
Oi a large number of readers. To the young they furnish an outline or compen-
dium which may serve as an introduction to mere extended study. To those
who are older they present a convenient sketch of the heads of the knowledge
which they have already acquired. The outlines are by no means destitute of
Bpirit, and may be used with great profit for family reading, and in select classes
or reading clubs."
BISHOP JOHN F. HURST, Ex-PresiOent Of Drew TTieological Seminary.—
" It appears to me that the idea of Morris in liis Epochs is strictly in harmony
with the philosophy of history— namely, that great movements should be treated
not according to narrow geographical and national Umits and distinction, but
universally, according to their place in the general life of the world. The histor-
ical Maps and the copious Indices are welcome additions to the volumes."
THE NATION. — " The volumes contain the ripe results of the studies of men
who are authorities in their respective fields."
EPOCHS OF ANCIENT HISTORY. A series of books narrating
the History of Greece and Rome, and of their relations to
other countries at successive epochs. Edited by Rev. G. Wt
COX, and CHARLES SANKEY, M.A. Eleven volumes,
16mo, writh 41 Maps and Plans. Sold separately. Price pe^
vol., SI. 00. The set, Roxburgh style, gilt top, in box, Sll.OO,
TROY— ITS LEGEXD, HISTORY, AXD LITERATURE. By S. G. W. Benjamd^
THE GREEKS A:^^D THE PERSL\^yS. By G. W. Cox.
THE ATHE^TA^T EJIPIRE. By G. W. Cox.
THE SPARTAN AXD THEBAN SUPREMACIES. By Charles Sankey.
THE MACEDONIAN EMPIRE. By A. M. Cubteis.
EARLY ROME. By W. Ihne.
ROME AND CARTHAGE. The Punic Wars. By R. Bosworth Smitu.
THE GRACCHI, MARIUS AND SULLA. By A. H. Beesley.
THE ROMAN TPJTMrVTRATES. By Charles Meritale.
THE EARLY EMPIRE. By W. Wolfe Capes.
tHE AGE OF THE ANTONINES. By W. Wolfe Capes.
STANDARD TEXT BOOKS.
EPOCHS OF MODERN HISTORY. A series of books narrating
the History of England and Europe at successive epochs
subsequent to the Christian era. Edited by EDWARD E,
MORRIS. Eighteen volumes, 16mo, with 77 Maps, Plans,
and Tables. Sold separately. Price per vol., SI. 00. The
set, Roxburgh style, gilt top, in box, S18.00.
l-HE BEGINNING OF THE MIDDLE AGEf. By R. W. Crubch.
THE NORMANS IN EUROPE. By A. H. Johnson.
THE CRUSADES. By G. W. Cox, M.A.
THE EARLY PLANTAGENETS. By Wm. Stubbs.
EDWARD HI. By W. Warburton.
THE HOUSES OF LANCASTER AND YORK. By James Gairdner.
THE ERA OF THE PROTESTANT REVOLUTION. By Frederic Seiibohm
With Notes on Books in Englisli relating to the Reformation. By Prol
George P. Fisher, D.D.
THE EARLY TUDORS. Henry VIL; Hem-y Vin. ByC. E. Moberly.
THE AGE OF ELIZABETH. By M. Creighton.
THE THIRTY YEARS' WAR, 161S-1648. By Samuel Rawson G-Uidineb.
THE PURITAN REVOLUTION. By Samuel Rawson Gardiner.
THE FALL OF THE STUARTS. By Edward Hale.
THE AGE OF ANNE. By Edward E. Morris.
THE EARLY HANOVERIANS. By Edward E. Mokeis.
FREDERICK THE GREAT. By F. W. Longman.
THE FRENCH REVOLUTION AND FIRST EMPIRE. By William O'Connor
Morris. With Appendix by Andrew D. White, LL.D.
THE EPOCH OP REFORM, 1830-1850. By JuSTIN MCCARTHY.
THE ENGLISH RESTORATION AND LOUIS XIV. By Osmund Airy, M.A.
THE HISTORY OF ROME, from the Earliest Time to the Period
of its Decline. By Dr. THEODOR MOMMSEN. Translated,
with the author's sanction and additions, by W. P. Dickson,
D.D,, LL.D. With an Introduction by Dr. Leonhard Schmitz.
Reprinted from the Revised London Edition. Four volumes
crown 8vo, gilt top. Price per set, S8.00.
LONDON TIMES.— "A work of the lery highest merit; its learning is exact
and profound ; its narrative full of genius and skill ; its descriptions of men are
liumirably vivid. We wish to place on record our opinion that Br. Mommsen's la
by far the best history of the Decline and Fall of the Roman Commonwealth."
DR. SCHMITZ.— "Since the days of Niebnhr, no work on Roman History has
lippeared that combines so much to attract, instruct, and charm the reader. Its
Ityle— a rare quality in a Germar author— ia %'lgorous, spirited, and animated
Professor Mommsew's wort ca»i stap^' a compaj;afla with the noblest productions
If modern history,"
CHAELES SCnrnNER'S SONS'
AX ADDITTOiV TO THEODOR MOMMSEN'S HTSTORT OF ROMS.
THE PROVINCES OF THE ROMAN EMPIRE. From Caesar t«
Diocletian. By THEODOR MOMMSEN. Translated witK
the author's sanction and additions, by William P. Dickson^
D.D., LL.D. With ten maps, by Professor Kiepert. 2 vols.,
8vo, S6.00.
COKTENTS: The Northern Frontier of Italy— Spain— The Gallio
Provinces — Roman Germany and the Free Germans — Britain — The
Danubian Lands and the Wars on the Danube — Greek Europe — Asia
Minor— The Euphrates Frontier and the Parthi an s— Syria and the
Land of the Nabatseans — Judea and the Jews — Egypt — The African
Provinces.
N. Y. SUN.—" Professor Mommsen's work goes further ;than any other ex-
tant, or now lookecl for, to provide us with a key to the mediseval history of the
Mediterranean world."
PROF. w. A. PACKARD, in Freshyterian Review.—" ThQ author draws the
wonderfully rich and varied picture of the conquest and administration of that
great circle of peoples and lands which formed the empire of Rome outside of
Italy, their agriculture, trade, and mantifactures, their artistic and scientific Ufe,
through all degrees of civilization, with such detail and completeness as could
have come from no other hand than that of this great master of historical research
ta all its departments, guided by that gift of historical imagination, for which ha
js equally eminent."
THE HISTORY OF GREECE. By Prof. Dr. ERNST CURTIUS.
Translated by Adolphus William Ward, M. A., Fellow of St.
Peter's College, Cambridge, Prof, of History in Owen's Col*
lege, Manchester. Uniform with Mommsen's History of
Rome. Five volumes, crown 8vo, gilt top. Price per set,
S10.00.
LONDON ATHEN^UR/I.— "Professor Curtlus' eminent scholarship Is a suffl-
Bient guarantee for the trustworthiness of his history, while the skUl with whicb
We groups his facts, and his effective mode of narrating them, combine to render
It no less readable than sound. Prof. Curtlus everywhere maintains the true
tignity and impartiality of history, and It Is evident his sympathies are on the
lide of justice, humanity, and progress."
LONDON SPECTATOR.— "We cannot express our opinion of Dr. Curtlus'
book better than by saying that it may be fitly ranked with Theodor Mommsen's
freat work."
N. Y. DAILY TRIBUNE.— "As an introduction to the study of Grecian history,
to previous work is comparable to the present for vivacity and picturesque
beauty, while in sound learning and accuracy of statement it is not Inferior la
^e elaborate productions which enrich the Uterature of the age.'?
/
DATE DUE
1 ij / •' ( '• 1 -- -
7
'rtl 5/:f
i 2 7.QP..
■ t
f^ ^. ^^ 199
IfC'CJAN
SO 1990
U U U'JKJ
CAYLORD
PRINTED IN U.S.A.
UC SOUTHERN REGIONAL LIBRARY FACILITY
AA 001 274161 7
3 1970 00735 0652