462 



FINANCES OF THE UNITED STATES. 



"When the Government paper began to depre- 

 ciate as compared with gold, silver also de- 

 teriorated, but in a lesser degree. The appar- 

 ent premium on silver caused it to flow into 

 the hands of the brokers, who were the reser- 

 voirs whence the exporters drew it to send out 

 of the country. The express companies alone 

 carried to Canada nearly $4,000,000 within 

 the year, and the people of Canada were sorely 

 oppressed with the superabundance of this coin. 

 The banks would not take it on deposit, nor 

 would dealers receive it except at a discount 

 of 2| to 3 per cent. Thus south of the St. Law- 

 rence a dollar bill was 20 per cent, discount for 

 silver, and north of it a paper dollar bore 3 per 

 cent, premium for silver. The swelling flood 

 of paper in the States gave an increased impulse 

 to the premium on silver. The profit so pro- 

 duced at once stopped the circulation of the 

 coin. No one that received it paid it away, but 

 hoarded it until a sufficient sum was accumu- 

 lated to sell for the profit. The inconvenience 

 was very great, and induced numbers of per- 

 sons to buy change as high as 12 to 16 per 

 cent, to pay out. This for a time retarded 

 the depreciation of paper. Very many per- 

 sons, however, availed themselves of the op- 

 portunity to issue small notes or " shinplas- 

 ters," as they were popularly called. This cus- 

 tom had been very prevalent during the bank 

 suspension of the years 1837-'8, when the same 

 cause depreciated paper and drove out the spe- 

 cie. The manifold evils that flowed from that 

 custom had caused in New York an enactment 

 of which the following are sections, page 118, 

 Revised Statutes, fourth edition, volume 2 : 



SEC. 6. No person, association of persons, or body 

 corporate, except such bodies corporate as are ex- 

 pressly authorized by law, shall keep any office for the 

 purpose of issuing any evidences of debt to be loaned 

 or put in circulation as money ; nor shall they issue 

 anv bills or promissory notes, or other evidences of 

 debt as private bankers, for the purpose of loaning 

 them or putting them in circulation as money, unless 

 thereto specially authorized by law. 



SEC. T. Every person, and every corporation, and 

 every member of a corporation, who shall contravene 

 either of the provisions in the last section, or directly 

 or indirectly assent to such violation, shall forfeit 

 $1,000. 



Section 11, on page 119 of the same volume, 

 forbids any person to pay, give, or receive in 

 payment any bank notes issued by any bank- 

 ing company in this State of a less denomina- 

 tion than one dollar ; and section 12 provides 

 that the penalty for the violation of this pro- 

 vision shall be the forfeiture of the nominal 

 amount of the note so received or paid. 



This law being called to mind stopped the 

 new issues of individual fractional notes, and 

 there was a prospect that silver would be re- 

 called. 



In an evil hour, however, it was suggested 

 that postage stamps might be used as a cur- 

 rency. The suggestion was promptly acted 

 upon to the extent of many millions, and silver 

 entirely disappeared. Those who had occasion 

 purchased the stamps of the Post Office depart- 



ment, and paid them out as change. An effort 

 was made to restrain the use of them by sell- 

 ing only limited amounts to each individual. 

 Congress then passed a law, in which stamps 

 were prescribed as a medium of exchange in a 

 great variety of transactions. 



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 be, and 

 he is hereby directed to furnish to the Assistant Treas- 

 urers, and such designated depositories of the United 

 States as may be by him selected, in such sums as he 

 may deem expedient, the postage and other stamps of 

 the United States, to be exchanged by them, on appli- 

 cation, for United States notes ; and from and after 

 the first day of August next, such stamps shall be re- 

 ceivable in payment of all dues to the United States 

 less than five dollars, and shall be received in ex- 

 change for United States notes when presented to any 

 Assistant Treasurer or any designated depository se- 

 lected as aforesaid, in sums not less than five dollars. 



SEC. 2. And be it further enacted, That from and af- 

 ter the first day of August, eighteen hundred and sixty- 

 two, no private corporation, Banking association, firm 

 or individual, shall make, issue, circulate, or pay any 

 note, check, memoradum, token, or other obligation, 

 for a less sum than one dollar, intended to circulate as 

 money, or to receive or use in lieu of lawful money of 

 the United States; and every person so offending 

 shall, on conviction thereof in any district or circuit 

 court of the United States, be punished by fine not ex- 

 ceeding five hundred dollars, or by imprisonment not 

 exceeding six months, or by both, at the option of the 

 court. 



Approved July 17, 1862. 



In order to extend the small currency, which 

 was popular for the moment, on the passage 

 of this act, the following notice was issued : 



The undersigned respectfully inform the public that 

 after the 1st of August, motives of commercial expe- 

 diency, as well as of official duty, will compel prompt 

 prosecutions for any issue of paper commonly called 

 " Shinplasters" should such an issue exist, after the 

 recent Act of Congress shall have afforded an uniform 

 substitute for "small change." 



"The collection of the State penalties or the Federal 

 fines can be rigidly enforced by due process of arrest. 



E. DELAFIELD SMITH, 

 United States District Attorney. 



A. OAKEY HALL, 

 District Attorney City and County of New York. 



The Supreme Court of the State of New 

 Tork, however, in the month of October, pro- 

 nounced this law of Congress in relation to 

 " shinplasters," unconstitutional. 



This act of Congress simply allowed the 

 stamps, both internal tax and those for postage, 

 to be used as a currency, directing the Secretary 

 of the Treasury to furnish them for that pur- 

 pose, and directing the " Assistant Treasurer," 

 irrespective of the Secretary, to redeem them 

 in sums of $5 when presented, after August 1, 

 1862. The stamp currency is not a legal ten- 

 der between individuals, but only for Govern- 

 ment-dues, and is convertible into legal tender 

 money. On the 1st of December $3,884,800 

 of this new currency had been issued. Instead 

 of following the law, the Secretary of the 

 Treasury caused to be prepared a new small 

 currency, in no way like the stamps authorized, 

 and caused them to be issued without any limit 

 as to amount, at the same time directing the 



