400 INDEBTEDNESS OF THE UNITED STATES, OF THE STATES, ETC. 



menced in the following year, and the wants of 

 the Government were so great that it was 

 obliged to resort to almost every conceivable 

 form of loan to obtain money. The first loans 

 were on Treasury notes of various denomina- 

 tions, and at various rates of interest, with 

 seven per cent thirty-year and five per cent 

 twenty-year bonds, which were known as 

 " seven-thirties " and " five-twenties." The 

 demand for money, however, was so great that 

 as early as January 22, 1862, a bill was intro- 

 duced into the Lower House of Congress for 

 the issue of a hundred million Treasury notes, 

 with the proviso that there should be printed 

 on the back of the notes the following words : 

 ''The within note is a legal tender in payment 

 of all debts, public and private, and is exchange- 

 able for bonds of the United States bearing six 

 per cent interest." With some amendments, 

 the bill was passed by Congress, and approved 

 February 25, 1862. It authorized the Secre- 

 tary of the Treasury to issue, on the credit of 

 the United States, Treasury notes to the amount 

 of $150,000,000, bearing no interest, and pay- 

 able to bearer, of such denominations as he 

 might deem expedient, not less than five dol- 

 lars each. These notes were to be " receiva- 

 ble in payment of all taxes, internal duties, ex- 

 cises, debts, and demands of every kind due to 

 the United States, except duties on imports, 

 and of all claims and demands against the 

 United States, of every kind whatsoever, ex- 

 cept for interest upon bonds and notes, which 

 shall be paid in coin, and shall also be lawful 

 money and a legal tender in payment of all 

 debts, public and private, within the United 

 States, except duties on imports and interest as 

 aforesaid." 



They were to be exchangeable in sums of 

 $50, or any multiple thereof, for bonds of the 

 United States, bearing interest at the rate of 

 six per cent, payable semi-annually, the bonds 

 to be redeemable at the pleasure of the United 

 States after five years, and payable twenty 

 years after date. The notes were made re- 

 ceivable the same as coin, at their par value, 

 for any loans that might thereafter be sold or 

 negotiated by the Secretary of the Treasury, 

 and when received for such loans, or for public 

 dues, might be reissued from time to time, as 

 the exigencies of the Government might re- 

 quire. 



An act of July 11, 1862, authorized an ad- 

 ditional issue of $150,000,000 in legal-tender 

 notes, of such denominations as the Secretary 

 of the Treasury might deem expedient ; but no 

 note was to be for the fractional part of a dol- 

 lar, and not more than $35,000,000 of lower 

 denominations than five dollars. An act of 

 March 3, 1863, authorized another issue of 

 $150,000,000 in legal-tender notes, including 

 the amount authorized by resolution of Janu- 

 ary 17, 1863, of such denominations not less 

 than one dollar as the Secretary might pre- 

 scribe. 



Under these acts legal-tender notes have been 



issued amounting, in the aggregate, to $1,640,- 

 559,947. The difference between the amount 

 authorized and the amount issued is accounted 

 for by reissues from time to time, as author- 

 ized by law. Thus originated, under the form 

 and effect of a loan, the "greenback" cur- 

 rency, so called from the color of back of the 

 notes. It continues in circulation to this day, 

 and is exchangeable for gold, in ordinary trans- 

 actions, at dollar for dollar. 



On July 9, 1864, gold was quoted at 266| and 

 267, as compared with legal-tender notes. The 

 question of the constitutionality of these notes 

 has an interesting history, which may be found 

 in earlier volumes of this " Cyclopedia." The 

 Secretary of the Treasury (Chase), who issued 

 the notes, relied entirely for their justification 

 on the ever-serviceable doctrine of necessity. 

 He said : " It is not unknown to the commit- 

 tee that I have felt nor do I wish to conceal 

 that I now feel a great aversion to making 

 anything but coin a legal tender in payment of 

 debts. It has been my anxious wish to avoid 

 the necessity of such legislation. It is, how- 

 ever, at present impossible, in consequence of 

 the large expenditures entailed by the war, and 

 the suspension of the banks, to procure suffi- 

 cient coin for disbursements ; and it has, there- 

 fore, become indispensably necessary that we 

 should resort to the issue of United States 

 notes." 



Certificates of indebtedness were another 

 form of loan, issued, in satisfaction of audited 

 accounts, in amounts not less than $1,000, at 6 

 per cent interest, payable in one year, or sooner 

 at the option of the Government. The amount 

 issued of these certificates was $561,753,241. 



Still another and a novel form of loan was 

 the fractional currency. A bill "to authorize 

 payments in stamps, and to prohibit the circu- 

 lation of notes of less denomination than one 

 dollar," was introduced in the Lower House of 

 Congress on July 17, 1862, and was passed and 

 approved on the same day. A letter from the 

 Secretary of the Treasury urged the following 

 reasons for the passage of the bill : " The de- 

 preciation of the currency, resulting, in great 

 measure, from the unrestricted issues of non- 

 specie-paying banks and unauthorized associa- 

 tions and persons, causes the rapid disappear- 

 ance from circulation of small coins. To sup- 

 ply the want of these coins, tokens and checks 

 for sums less than one dollar are being issued 

 by hotels, business houses, and dealers gener- 

 ally ; and the most serious inconveniences and 

 evils, are apprehended unless these issues can be 

 checked and the small coins of the Govern- 

 ment kept in circulation, or a substitute pro- 

 vided." The amount issued of this currency 

 was $368,720,079. 



STATE BANKS. In his report of December 

 4, 1862, the Secretary advanced the idea that 

 banking associations should be formed for the 

 improvement of the public credit, and to sup- 

 ply a safe and uniform currency to the people. 

 This was approved by Congress, and resulted 



