RESUMPTION OF SPECIE PAYMENTS. 



767 



resumption act $340,681,016. The cash in tho 

 Tr. :i>ury was of course lessened in the amount 

 <>f this redemption, and the loss was made up 

 by the surplus revenues, which would other- 

 wise have been applicable to the redemption 

 of some other kind of indebtedness. 



Toward the redemption of the notes in coin 

 on the 1st of January, 1879, as further pro- 

 vided in the resumption act, no steps were 

 taken before the administration of President 

 Hayes, commencing March 4, 1877. On April 

 6, 1877, Secretary Sherman addressed a letter 

 to a prominent banking firm, in which he an- 

 nounced his purpose to sell bonds to secure 

 coin with which to meet the redemptions re- 

 quired, provided the surplus revenues proved 

 insufficient to enable him to redeem the notes 

 as required by law. He also announced that 

 whenever the sales of 4J- per cent, bonds 

 (funded loan of 1891) then being made for 

 refunding purposes reached two hundred mil- 

 lions, he proposed to withdraw from the mar- 

 ket the remaining one hundred millions author- 

 ized to be issued for refunding purposes, and 

 to issue thereafter only four per cents (funded 

 loan of 1907). Before the 1st of July ensuing 

 the limit of two hundred millions was reached, 

 and of the amount sold fifteen millions were 

 applied to resumption purposes. On the 9th 

 of June a contract was made by the Secretary 

 for the sale of said 4 per cent, bonds, under 

 which also twenty-five millions were reserved 

 for resumption purposes. 



This amount of forty millions was received 

 in gold coin before October, 1877. In that 

 month Congress convened in special session. 

 Among its first measures was the introduction 

 on one day of thirteen bills for the repeal of 

 the resumption act. One of these bills passed 

 the House on the 23d of the following month. 

 This extraordinary change of sentiment had 

 been brought about by various causes. The 

 depression in business, which had existed since 

 1873, was attributed by many to the effects of 

 the resumption act. A continually increasing 

 value of the dollar in use rendered it more 

 difficult for debtors to meet their obligations, 

 and the passage of this bill in the House re- 

 flected with considerable truthfulness the feel- 

 ing throughout the country. The bill was 

 amended by the Senate, but in its amended 

 form failed to receive the concurrence of the 

 House. In this session was also agitated tho 

 policy of restoring to the currency of the 

 country the old silver dollar of 412^ grains, 

 tho coinage of which was discontinued under 

 the coinage act of 1873. The price of sil- 

 ver had so depreciated that, as compared with 

 gold, a dollar of this kind was worth only about 

 85 cents ; and if authority had been given for 

 its unlimited coinage upon the deposit of bul- 

 lion at the mints by private parties, as in tho 

 case of gold, the parties depositing it would, 

 for a while at least, have profited to the extent 

 of about 15 per cent, in the transaction. To 

 prevent this advantage accruing to the holders 



of silver bullion, and at the came time to re- 

 store the old silver dollar to its place in the 

 currency of the country, Congress passed an 

 act, which was approved February 28, 1878, di- 

 recting the dollar to be coined at the rate of 

 not less than two million dollars nor more 

 than four million dollars per month, the bul- 

 lion for such coinage to be purchased by the 

 Treasury at current market rates, and the prof- 

 it arising in the coinage to be retained by the 

 Government. The act further provided that 

 any holder of this coin might deposit it with 

 the Treasurer in sums of not less than ten 

 dollars, and receive therefor certificates cor- 

 responding to the denominations of United 

 States notes, the coin representing such cer- 

 tificates to be retained in the Treasury for their 

 payment on demand, and the certificates to be 

 received for customs, taxes, and all public 

 dues, and when so received to be reissued. 



During the winter of 1877-'78 no further 

 action was taken by the executive officers of 

 the Government concerning resumption. On 

 April 1, 1878, in an interview with the House 

 Committee on Banking and Currency, Secre- 

 tary Sherman announced his purpose to in- 

 crease the coin reserve by the sale of bonds 

 to the amount of fifty millions. "With this 

 additional amount the total coin reserve in 

 the Treasury applicable to resumption would 

 be about forty per centum of the amount of 

 legal-tender notes outstanding; and with this 

 reserve the Secretary thought it would be prac- 

 ticable and prudent to commence the redemption 

 of the notes on the appointed day as required by 

 law. Four days later negotiations were begun 

 in New York between the Treasury Depart- 

 ment and the banks for the sale of 4 per cent, 

 bonds (funded loan of 1891) for this purpose ; 

 and after a little delay a sale was effected to 

 the amount of $50,000,000 at a premium of 1$ 

 per cent. The ability of the contracting par- 

 ties to place the coin in the Treasury as pro- 

 posed could not be doubted, and from that 

 date there was but little fear of the success of 

 resumption. Further efforts to repeal the law 

 were abandoned, and the business of the coun- 

 try began to adjust itself to the basis of tho 

 approaching resumption of specie payments. 

 Tho payments for the fifty millions of bond* 

 were promptly met, and in addition thereto the 

 Treasury reserved of the proceeds of sales of 4 

 percent, bonds (funded loan of 1907), then being 

 made, an additional amount of $5,500,000 in 

 gold coin necessary for the extraordinary pay- 

 ment of that amount on account of the so- 

 called " Halifax award." 



In addition to providing the necessary coin 

 reserve, every step was taken by the Trea- 

 sury which the law would permit to maintain 

 the reserve intact. On the 1st of January, 

 1879, about twenty-five millions of interest on 

 the public debt, payable in coin, was to fall 

 due ; and, as tho law required the redemption- 

 reserve fund to be kept in New York, Sec- 

 retary Sherman determined that tho payment 



