764 



RESUMPTION OF SPECIE PAYMENTS. 



a supply of fractional currency. These issues, 

 together with the issues of bonds, relieved the 

 Treasury from its embarrassment, and on the 

 1st of July, 1862, not a requisition upon the 

 Treasury from any department remained un- 

 honored. The military reverses of June, July, 

 and August of that year, however, injuriously 

 affected the financial condition of the coun- 

 try, and Congress, by act of March 3, 1863, au- 

 thorized, among other measures, an additional 

 issue of $150,000,000 of notes having substan- 

 tially the same qualities and restrictions as 

 those theretofore issued, and provided that in 

 lieu of any other United States notes returned 

 to the Treasury and destroyed there might be 

 issued an equal amount of notes authorized by 

 this act. It also provided that holders of United 

 States notes, issued under and by virtue of the 

 several acts heretofore cited, must present them 

 for the purpose of exchanging them for bonds 

 on or before the 1st day of July, 1863, and 

 that thereafter the right to thus exchange them 

 should cease and determine. The same act 

 also provided that in lieu of the postage and 

 revenue stamps authorized for use as fractional 

 currency, commonly called postal currency, 

 there might be issued fractional notes of like 

 amounts and in such form as might be deemed 

 expedient; the whole amount of fractional cur- 

 rency issued, including postage and revenue 

 stamps, not to exceed $50,000,000. Under these 

 several acts there could be issued of legal-ten- 

 der notes $450,000,000, and of fractional cur- 

 rency $50,000,000. No additional issue of notes 

 was thereafter authorized. 



The issue of Treasury notes by the Govern- 

 ment was no new departure, but the notes 

 issued under the several acts above stated bore 

 certain qualities not given to any issued prior 

 to 1861. They were declared by law to be 

 lawful money and a legal tender for all debts, 

 public and private, except for duties on im- 

 ports and interest on the public debt, and they 

 were convertible into interest- bearing bonds. 

 Their convertible property, however, ceased to 

 exist on the first of July, 1863, and since that 

 date the Government has had for the first time 

 in its history a national currency of its own 

 notes notes not convertible into other obliga- 

 tions and not redeemable at any specified time 

 or place. These notes were both a loan to the 

 Government and a national currency. The 

 only justification attempted for their issue 

 was that it was a war measure, one of neces- 

 sity, not choice; and the notes were not ex- 

 pected to survive the exigencies which caused 

 their issue. It proved, however, a most im- 

 portant measure. For, right or wrong, the 

 employment of these notes as a legal-tender 

 currency has exerted a most powerful and de- 

 cisive influence over the property and material 

 interests of every individual in the United 

 States, and has become a tremendous factor in 

 every problem, political, social, or economical. 



The notes were first issued April 1, 1862, and 

 their issue gradually increased in amount un- 



til January 30, 1864, on which day there were 

 outstanding $449,338,902, the highest point 

 reached. By act approved June 30, 1864, Con- 

 gress directed that the total amount of United 

 States notes issued or to be issued should never 

 exceed $400,000,000, and such additional sum, 

 not exceeding $50,000,000, as might be tempora- 

 rily required for the redemption of temporary 

 loans. Despite this restriction as to the amount 

 of the notes which could be issued, and the ex- 

 traordinary properties with which they were 

 endowed, their value depreciated until on July 

 11, 1864, they were worth but 35 cents on a 

 dollar, and their value fluctuated from day to 

 day, unsettling prices of commodities, stimu- 

 lating speculation, and creating distrust and 

 apprehension in all business circles. A retire- 

 ment of the amount in excess of four hundred 

 millions was gradually made, in conformity 

 with the law and a generally approved policy 

 of retiring the notes as rapidly as practicable. 



Secretary McCulloch, in his annual report 

 for 1865, expressed his opinion that the legal- 

 tender acts were war measures passed in a great 

 emergency ; that they should be regarded only 

 as temporary; that they ought not to remain 

 in force a day longer than was necessary to 

 enable the people to prepare for a return to 

 the gold standard ; and that the work of retir- 

 ing the notes which had been issued should 

 be commenced without delay, and carefully 

 and persistently continued until all were re- 

 tired. The House of Representatives on De- 

 cember 18, 1865, under a suspension of the 

 rules by a vote of 144 yeas to 6 nays, resolved, 

 "That this House cordially concurs in the 

 views of the Secretary in relation to the neces- 

 sity of a contraction of the currency, with a 

 view to as early a resumption of specie pay- 

 ments as the business interests of the country 

 will permit ; and we hereby pledge cooperative 

 action to this end as speedily as possible." To 

 carry out this policy, Congress, by an act ap- 

 proved April 12, 1866, directed that, of United 

 States notes outstanding, not more than ten 

 millions might be retired and canceled within 

 six months from the passage of this act, and 

 thereafter not more than four millions in any 

 one month. Under the authority of that act 

 notes were retired until the amount outstand- 

 ing December 31, 1867, had been reduced to 

 $356,000,000 ; but a stringent money market, 

 a decline in values, and the remonstrances of 

 business men somewhat alarmed the country, 

 and no further withdrawals were made. On 

 February 4, 1868, the authority to reduce the 

 volume of legal-tender notes below $356,000,- 

 000 was suspended by Congress, leaving that 

 amount of notes outstanding. 



There was, however, a general feeling 

 throughout the country that specie resump- 

 tion should be kept in view, and on March 18, 

 1869, an act of Congress "to strengthen the 

 public credit" was approved. In this act the 

 faith of the United States was solemnly pledged 

 to make provision at the earliest practicable 



