FINANCES OF THE UNITED STATES. 



463 



Assistant Treasurers to disregard the law direct- 

 ing them to redeem the postage stamps used as 

 a currency. This order did not absolve the 

 Assistant Treasurers from obedience to the law 

 which they violated. They not only refused to 

 redeem the stamps, but the Postmaster repudi- 

 ated them also. This inflicted a grievous wrong 

 upon the people, who held millions of the worn 

 and dilapidated stamps. The popular will ulti- 

 mately compelled the Postmaster to issue a 

 notice that they would be redeemed under 

 certain regulations. Under this notice large 

 amounts were redeemed. 



The amount of small currency issued by the 

 Treasury department to December 1st, was 

 $3,884,800, and the Secretary proposed to 

 push it to $40,000,000. 



Meanwhile the resources of the Treasury 

 were exhausted, and however fully these tax 

 bills might come up to the estimates, it was 

 evident that they could afford no immediate 

 supply. Hence a new loan bill was matured 

 in Congress. It provided that the limit on the 

 amount of deposits that might be received at 

 the Treasury should be raised from 50 to 100 

 millions, and that $150,000,000 more of legal 

 tender notes might be issued. Of these $35,000,- 

 000 might be of a denomination less than $5, but 

 not less than $1. Of the whole amount $50,- 

 000.000 should be reserved to pay the deposits 

 when demanded. This was inserted in the 

 Senate on the passage of the bill at $75,000,000, 

 but was finally fixed at $50,000,000 by a com- 

 mittee of conference. This singular provision 

 was in effect paying 4 per cent, for money to 

 keep on hand idle. Since the demand notes 

 being created and only applicable to the pay- 

 ment of that amount of deposits held by the 

 Government, the mere act of paying them out 

 would not only save $2,000,000 paid for inter- 

 est on those deposits, but would so increase the 

 supply of money in the market as to promote 

 the general rise of values. The act also per- 

 mitted the deposits to be funded in 5-20 year 

 bonds. The following is a synopsis of the act 

 passed July llth, 1862: 



1. That the Secretary may issue, in addition to 

 amounts before authorized, no'tes to the value of $150,- 

 000,000. 



2. That no notes for a fractional part of a dollar 

 shall be issued, but that of the above named sum $35,- 

 000,000 shall be of lower dominations than $5. 



3. That such notes shall be receivable for all debts 

 due to or from the United States, with the exception 

 of duties on imports and interest on bonds, notes, &c., 

 and shall be a legal tender. 



4. That certificates of deposit may be issued, bearing 

 interest at the rate of six per cent, payable semian- 

 nuallv. 



5. The Secretary may exchange for such notes, on 

 terms deemed by him most beneficial, United States 

 bonds bearing six per cent, interest, redeemable after 

 five and payable in twenty years ; may issue notes so 

 received in exchange ; may receive and cancel notes 

 issued under former acts, "issuing in lieu thereof an 

 equal amount in notes authorized oy this act, and may 

 purchase, at rates not exceeding that of the cur- 

 rent market, and cost of purchase not exceeding one 

 eighth of one per centum, any bonds or certificates 

 of debt of the United States he may deem desirable. 



6. That the engraving, &c., may be executed at the 

 Treasury Department. 



7. That the limit of receipts of temporary deposits 

 be extended from $50,000,000 to $100,000,000, the in- 

 terest, as heretofore, not to exceed five per cent. 



8. That no less than $50,000,000 of the notes to be 

 issued shall be reserved for payment of such deposits. 



9. That certificates of deposit and indebtedness may 

 be received on the same terms as United States notes 

 for bonds redeemable after five and payable in twenty 

 years. 



10. That the Secretary may, until otherwise ordered 

 by Congress, borrow such part of the sum of $250,000,- 

 000 (which he was authorized to borrow by the " Act 

 to authorize a national loan, and for other purposes") 

 as may not have been borrowed within twelve months 

 of the time of its passage, 



Under these various laws the resources of the 

 Secretary were now apparently as follows: 

 additional deposits, 50 millions ; notes, 100 mil- 

 lions ; 1 year 6 per cent, certificates, unlimited 

 probable issue, 50 millions ; small currency, no 

 limit, probable issue, 30 millions ; 7fV three 

 year bonds still on hand, 30 millions; 5-20 

 year 6 per cent, bonds, 500 millions, probable 

 issue 30 millions. These together gave around 

 sum of $290,000,000, which added to the esti- 

 mate of the taxes, 210 millions, made $500,- 

 000,000 for the resources of the Treasury until 

 Congress should again meet. These resources 

 were voted, however, on the estimate of expen- 

 diture, based upon the then state of military af- 

 fairs, which soon changed in a manner to com- 

 pel the Government to call out 600,000 new 

 troops at a heavy cost of bounty, equipments, 

 transportation, <fcc.. in addition to the vast sup- 

 plies lost to the enemy, and which required to 

 be promptly replaced. In other words, the ex- 

 penses were increased 150 per cent., and the 

 pressure for money to move the troops greater 

 than ever. The time required to print the new 

 notes caused much delay, and the Secretary 

 could serve himself only with deposits, the 1 

 year certificates and the 7fV bonds, while the 

 pay of the army and contractors went heavily 

 in arrears. He was compelled to economize 

 the legal tender notes as much as possible, since 

 the small balance on hand, and those which 

 came in through deposits, were the only money 

 means at his disposal. He, therefore, paid out 

 7nf bonds and 1 year certificates to creditors, 

 giving them a proportion in notes. Generally 

 disbursing officers' checks were paid 25 per 

 cent, in notes, and 75 per cent, in 1 year cer- 

 tificates. The latter being put upon the market 

 by those who received them, sank below par. 

 When they were originally issued the interest 

 was intended to be paid on them at the end of 

 the year. As they fell in price, however, under 

 the amounts put in the market by the Govern- 

 ment creditors, it was necessary to do some- 

 thing to sustain them, and notice was issued 

 that the interest would be paid at the end of 

 six months in gold. This for a while supported 

 the price, but the Secretary was compelled soon 

 to cease paying out notes altogether. They 

 became then the only medium for the discharge 

 of claims, and fell "in price. Meantime there 

 was some disposition on the part of the public 



