768 



RESUMPTION OF SPECIE PAYMENTS. 



of coin on account of interest should there- 

 after be made only in that city, but gave per- 

 mission to other Sub-Treasury officers to pay 

 interest to all persons who might be willing 

 to accept legal-tender notes. Arrangements 

 were also made with the several assay offices 

 by which gold could be purchased for legal- 

 tender notes, whereby the Treasury was replen- 

 ished to that extent for the probable coin pay- 

 ments in redemption of notes. Steps were also 

 taken by which the Government, to a certain 

 extent and for certain purposes, became a 

 member of Jhe Clearing-House Association of 

 New York. Under this arrangement, in con- 

 sideration of the Government's receiving and 

 collecting its checks through the Clearing- 

 House, that body agreed to receive all balances 

 due it upon such checks at the counter of the 

 Sub-Treasury in that city, and to accept legal- 

 tender notes in payment of Government checks 

 and drafts of all descriptions. As all interest- 

 checks as well as checks issued in payment of 

 called bonds were by law payable in coin, this 

 agreement on the part of the Clearing-House, 

 through which institution nearly all of the 

 checks passed, relieved the Treasury almost 

 entirely from the necessity of making actual 

 coin payments after resumption took place. 

 This necessity being removed, there was no 

 longer any reason for requiring duties on im- 

 ports to be paid in coin as provided by law ; 

 and the Secretary of the Treasury, in his an- 

 nual report of December 2, 1878, announced 

 to Congress his purpose to receive notes in 

 payment of such duties. Congress adjourned 

 for the holidays without expressing any opin- 

 ion as to the legality or advisability of the 

 action proposed, whereupon instructions were 

 given to the Government officers to receive 

 such notes in payment of duties, the notes 

 to be redeemed in coin at New York on Gov- 

 ernment account whenever it became neces- 

 sary. Instructions were also given to the 

 Treasurer and other officers of the Depart- 

 ment to close up in their accounts all distinc- 

 tions between coin and currency, and after 

 January 1, 1879, to recognize, in the accounts 

 as well as in the money, that the Government 

 had resumed specie payments, and that the 

 several kinds of money in circulation were of 

 equal value. 



The preparations were so complete that on 

 January 1, 1879, the date when resumption 

 took effect, the Treasurer held of gold coin 

 and bullion $135,382,639.42; of standard sil- 

 ver dollars coined under the act of February 

 28, 1878, $16,704,829; and of fractional silver 

 coin, including silver bullion, $15,471,265.27. 

 The amount of coin held by the Treasury as 

 available for resumption purposes on that day, 

 after deducting all matured coin liabilities, 

 was about $135,000,000, or about 40 per cent, 

 of the amount of notes to be redeemed. The 

 thoroughness of preparation for resumption 

 had quieted all apprehensions as to the success 

 of the policy, and on the first day of resump- 



tion only straggling demands for coin were 

 made, the amount aggregating less than the 

 amount of notes preferred by the holders of 

 coin obligations. And during the entire year 

 there were redeemed of the legal-tender notes 

 only the amount of $11,456,536 ; while for the 

 same period there were paid out of such notes 

 on account of coin obligations more than $250,- 

 000,000. There were also received of such 

 notes in payment of customs-dues in the year 

 ending December 31, 1879, $109,467,456. 



Thus, after much labor and sacrifice, the 

 country was lifted out of the financial bog of 

 depreciated paper currency, and with the re- 

 sumption thus happily secured came a revival 

 of business, an extraordinary demand for la- 

 bor of all kinds, and a confirmation of that con- 

 fidence which was so necessary for all business 

 enterprises, and which had grown step by step 

 with every movement made toward a specie 

 basis. 



The following table shows the market price, 

 in coin, of $100 of the legal-tender notes of the 

 United States for January and July of each 

 year from 1862 to 1879 inclusive mean of 

 highest and lowest in each month specified: 



During the year 1879 coin flowed into the 

 Treasury, while but little demand was made 

 for its payment therefrom ; so little, indeed, 

 that the Treasury became drained of its notes, 

 and in December it was obliged to require its 

 creditors to receive in part payment of their 

 dues 20 per cent, in coin one half in gold coin, 

 the other half in the new silver dollars. 



Though resumption has been thus far firmly 

 maintained, and there appears to be ample pow- 

 er, as far as human foresight can divine, to con- 

 tinue its maintenance, yet the question of con- 

 tinuing these notes in circulation, especially 

 with their present legal-tender quality, is likely 

 to be a vexed one in future politics. 



A case involving the constitutionality of the 

 legal-tender clause, as relating to contracts made 

 prior to its adoption, was decided in the Su- 

 preme Court of the United States, December 

 term, 1869, Chief Justice Chase presiding. 

 The question presented for determination was 

 whether the payee or assignee of a note made 

 before the 25th of February, 1862, the date of 

 the approval of the legal-tender act, should be 

 obliged by law to accept in payment United 

 States notes equal in nominal amount to the 

 sum due according to its terms, when tendered 

 by the maker or other party bound to pay it. 

 The Court held that the defendant in error was 



