FINANCES OF THE UNITED STATES. 



459 



the market ; an exchange was made of 3 year 

 YyV bonds for the gold, both gold and bonds 

 bearing the same price in the market. This 

 operation was the same as compounding the 

 interest at 7.30 per cent. 



A considerable portion of the $50,000,000 

 deposits on hand, and for which 5 per cent, cer- 

 tificates were outstanding, was payable in the 

 old issue of demand notes, which bore a premi- 

 um in the market proportionate to that of gold, 

 for which they were substitutes at the custom 

 house. Thus there were two kinds of certifi- 

 cates out : one payable in legal tender notes not 

 receivable for customs, and one payable in the 

 old or " gold notes." On the 5th of May the 

 Sub-Treasurer issued the annexed circular : 



USITED STATES TRBASCRT, NEW YORK, Jffay 5, 1S62. 

 Under instructions from the Secretary of the Treas- 

 ury, I hereby give notice to all holders of certificates 

 of deposit bearing interest, issued prior to the 14th day 

 of March ultimo, and payable in " United States notes 

 issued under acts prior to February 25, 1862," that 

 they are required to present such certificates within 

 ten days from the date hereof for payment of principal 

 and interest, or for exchange for certificates payable in 

 " lawful money of the United States." Any such cer- 

 tificates not so presented, will, after said ten days, be 

 payable in such lawful money as the Government may 

 be usually paying out to the public creditors. 



JOHN J. CISCO, Assist. Treas. United States. 



This had a twofold operation ; it cleared 

 the Treasury of the obligation of paying 

 out the gold notes, and it enabled it to take 

 new deposits payable in " lawful currency" at 4 

 per cent, instead of 5 percent. The notes were 

 withdrawn, and by the 22d of May the limit 

 of deposits was again full. A new difficulty 

 now presented itself. On the entry of goods 

 at the custom house the complications of the 

 new tariff had made it requisite that the mer- 

 chant should deposit an estimate of "gold 

 notes" to cover the duties. "When these were 

 accurately adjusted the amount, if any, over- 

 paid, was returned to him. The Secretary di- 

 rected that these amounts should be returned in 

 new notes, which were less valuable than those 

 which had been deposited. The merchants 

 demurred to this, claiming that they had a 

 right to receive back the same kind of money 

 that they deposited, since that money was not 

 currency but a special medium, which they 

 were obliged to buy at a premium for custom 

 house purposes. In answer to these complaints 

 the Secretary issued the following order : 



TREASCRT DEPARTMENT, May 21, 1S62. 



SIR : I am in receipt of your letter of the 19th in- 

 stant, inclosing a petition from the prominent import- 

 ing merchants ot the city of New York, asking that 

 your instructions relative to the payment of all dues 

 except interest and duties be so far modified as to per- 

 mit the payment of all checks drawn by the Collector 

 of Customs for "excess of unascertained duties" in 

 notes of the first issue or coin. 



Their request is deemed reasonable and just, and 

 vou are hereby authorized to pay all checks drawn 

 by the Collector which shall contain the words " for 

 excess of deposits for unascertained duties" in such 

 money as is receivable for duties at the custom-house. 

 I am very respectfully, 



S. P. CHASE, "Sec. of the Treasury. 



JOHN J. Cisco, Esq., Assistant Treasurer, New York. 



The trouble of paper money seemed to mul- 

 tiply at every turn. It was discovered that a 

 very ingenious fraud was perpetrated to a con- 

 siderable extent on the Government notes. It 

 was found that nine $10 notes might be so 

 mutilated and rejoined that 10 complete notes 

 could be formed to the great profit of the oper- 

 ator. As a consequence of the discovery, all 

 mutilated notes, and they had become very 

 numerous, were refused ; but the evil was very 

 great, subjecting innocent holders to loss, and 

 the following circular was issued as a cor- 

 rective : 



EPARTMENT, "WASHIKGTOS, May 13, 1S62. 

 To guard against frauds upon the Government, and 

 to secure the just rights of holders, the following rules, 

 for the redemption of mutilated United States, are 

 hereby established : 



ECI.E3. 



First. Mutilated notes, which have been torn, no 

 matter how much, but of which it is evident that all 

 the fragments are returned ; or defaced, no matter how 

 badly, out certainly satisfactorily genuine, will be re- 

 deemed at their full face value on presentation. 



Second. Fragments of notes will be redeemed in full 

 only when accompanied by an affidavit, stating the 

 cause and manner of the mutilation, and that the miss- 

 ing part of the note is totally destroyed. The good 

 character of the affiant must also be fully vouched by 

 the officer before whom the affidavit is taken. 



Third. In the absence of such affidavit, fragments 

 of notes will not be paid in full, but the parts repre- 

 sented will be redeemed in their proportion to the 

 whole note ; reckoning, as a general rule, by twen- 

 tieths. 



Fourth. Less than half of a note will not be redeem- 

 ed, except by payment of the full value of the note 

 under the second rule ; or by payment of the propor- 

 tional value of the missing part, when presented under 

 the fifth rule. 



Fifth. Fragments of notes, for which less than the 

 full face value has been paid, will be retained for a 

 year, to the end that the owners, who have received 

 less than the value of a full note, may have opportunity 

 to return the missing part, and receive the amount 

 previously withheld. 



Sixth. Until further order, mutilated notes and frag- 

 ments will be redeemed only at the Treasury of the 

 United States, at Washington ; whither thev" can be 

 sent, addressed to the " Treasurer of the United States," 

 by mail, free of postage. A draft on the Assistant 

 Treasurer, at New York, for the amount allowed, will 

 be returned in the same way, to the address of the per- 

 son remitting the same. S. P. CHASE, 



Secretary of the Treasury. 



An extraordinary negotiation was now en- 

 tered into by the Secretary of the Treasury, 

 and one which produced much feeling among 

 capitalists. The limit of demand notes, old 

 and new, that might be issued under the loan 

 was $150,000,000. Of these $60,000.000 were 

 the old notes, receivable for customs, and 

 which could not be reissued. There remained 

 then authority to issue $90,000,000 of new le- 

 gal tender notes. As fast, however, as the old 

 notes were paid in for customs, new ones might 

 be issued in their place, and when the old notes 

 should all be paid in the customs would be paid 

 in gold only. These custom house notes were 

 at 1-^ per cent, premium, and the 3 year 

 bonds, of which there remained $29,000,000"still 

 to issue, were at 3 per cent, premium. Under 



