454 



FINANCES OF THE UNITED STATES. 



amination and verification at least three full business 

 days before payment. 



S. P. CHASE. Secretary of the Treasury. 



The bonds were 1 per cent, discount for bank 

 money, which still continued to be the cur- 

 rency, although it was depreciated 2 per cent, 

 as compared with gold. A portion of the last 

 instalment paid in by the banks on the stock 

 was appropriated to the payment of the in- 

 terest. 



The currency was now in a peculiar posi- 

 tion. The banks had ceased to pay specie, 

 and the channels of circulation were filled with 

 Government notes that the banks declined to 

 receive on deposit, for the reason that they ac- 

 cumulated with them to an embarrassing ex- 

 tent. The notes were indeed receivable for 

 customs, but the amounts required for that pur- 

 pose were small, and if they accumulated with 

 the banks it was the same as a loan to the 

 Government without interest, and as the banks 

 had already $100,000,000 of Government stock 

 it became burdensome. In this position of 

 affairs the following notice was issued by the 

 department : 



OFFICK or THE ASSISTANT TREASURER OF THE 1 

 UNITED STATES, NEW YORK, Feb. 8, 1862. ) 



The undersigned is authorized by the Secretary of the 

 Treasury to receive on deposit United States notes as 

 a temporary loan, for which interest at the rate of five 

 (5) per cent, per annum will be paid, together with 

 the principal, in like currency, on demand after ten 

 days notice. 



JOHN J. CISCO, Ass't Treas'r U. S. 



The following is a copy of the certificate 

 which the Assistant Treasurer issued to de- 

 positors : 



OFFICE OF THE ASSISTANT TREASURER OF THE I 

 UNITED STATES, NEW YORK, , 186 . f 



I certify that this day deposited to the 



credit of the Treasurer of the United States 



dollars, in United States notes, as a temporary loan, for 

 which interest at the rate of five per cent, per annum 

 will be paid, together with the principal, in like cur- 

 rency, on demand after ten days' notice, for which I 

 have signed duplicated receipts. 

 $ . , Ass't Trea'r. 



The effect of this was to induce the banks to 

 receive the notes from the public on deposit, 

 and to place them to a certain extent with the 

 Government for these certificates, which cer- 

 tificates were subsequently used for the set- 

 tlement of balances at the bank clearing 

 house. The deposits then made by the banks 

 supplied some of the pressing wants of the 

 Treasury. The money so received on being 

 paid out to the contractors and other creditors, 

 was by them redeposited in bank or used in 

 the discharge of loans previously made. Thus 

 the notes moved in a circle between the Treas- 

 ury and the banks. The institutions, however, 

 objected to allowing the public to make depos- 

 its with the Treasury on the ground that it 

 would cause a withdrawal of deposits from the 

 banks, when they were earning nothing, to the 

 Treasury. This objection was, however, over- 

 ruled, and deposits were received from the 

 public at 4 per cent. Meanwhile the hesita- 



tion of Congress to pass the bill authorizing a 

 new issue of notes, and making them a legal 

 tender, had induced action on the part of pub- 

 lic bodies to urge its passage. The Chamber 

 of Commerce, under the influence of the Secre- 

 tary of Treasury, Feb. 8, passed resolutions, 

 with very few dissentient voices, indorsing 

 the legal tender clause of the currency bill, 

 and urging immediate action. Some action 

 was indeed imperatively necessary. The pub- 

 lic creditors were clamorous and in great dis- 

 tress. In addition to creditors for small 

 amounts, who were embarrassed by the ex- 

 haustion of the Treasury, one firm claimed two 

 million one hundred thousand dollars for cloth- 

 ing, cloths, &c. Another five hundred thou- 

 sand dollars for tent duck, and still others to 

 almost an equal extent. There were, never- 

 theless, great difficulties to contend with. A 

 great number of the members were unprepar- 

 ed to enter upon the perilous course of paper 

 money, which was essentially revolutionary. A 

 resolution to strike out a clause making notes 

 a legal tender was. however, on the 8th of 

 February defeated, 93 to 53. "While this bill 

 was pending Congress, on the 12th of February, 

 authorized an additional issue of $10,000,000 

 of notes similar to the $50,000,000 authorized 

 by the act of August. This amount, with the 

 sums received on deposits, and the 3 year Tpj 

 bonds, which were paid out to creditors, al- 

 though selling at 1 per cent, discount, enabled 

 the Secretary to meet the most pressing de- 

 mands upon the Treasury until the 25th of 

 February, when the currency bill finally passed 

 in the following shape : 



An Act to authorize the issue of United States notes 

 and for the redemption or funding thereof, and for 

 funding the floating debt of the United States. 

 Be it enacted by_the Senate and House of Represent- 

 atives of the United States of America in Congress 

 assembled, that the Secretary of the Treasury is hereby 

 authorized to issue on the credit of the United States 

 one hundred and fifty millions of dollars of the United 

 States notes, not bearing interest, payable to bearer, at 

 the Treasury of the United States, and of such denomi- 

 nations as he may deem expedient, not less than five 

 dollars each. 



Provided, however, that fifty millions of said notes 

 shall be in lieu of the Demand Treasury Notes author- 

 ized to be issued by the act of July 17, 1861, which said 

 Demand Notes shall be taken up as rapidly as prac- 

 ticable, and the notes herein provided for substi- 

 tuted for them : and provided further, that the amount 

 of the two thirds of notes together shall at no time 

 exceed the sum of one hundred and fifty million 

 dollars; and such notes herein authorized, shall be 

 receivable in payment of all taxes, internal duties, 

 excises, debts, except duties on imports, and demands 

 of every kind due to the United States, and of all 

 claims and demands against the United States of every 

 kind whatsoever, except for interest upon bonds and 

 notes, which shall be paid in coin, and shall also be 

 lawful money and a legal tender in payment of all 

 debts, public and private within the United States, 

 except duties on imports and interest as aforesaid; 

 and any holders of said United States Notes deposit- 

 ing any sum not less than fifty dollars, or some mul- 

 tiple of fifty dollars, with the Treasurer of the United 

 States or either of the Assistant Treasurers, shall re- 

 ceive in exchange therefor duplicate certificates of de- 

 posit, one of which may be transmitted to the Secre- 



