Page:The American Cyclopædia (1879) Volume XI.djvu/761

MONEY 743 in distress, or commissaries, quartermasters, navy agents, acting as it were officially, seemed willing to accept them." Indeed, they were at a heavy discount compared with bank notes, which were not redeemable in coin; but by Jan. 10, 1815, they sold at par. The govern- ment has repeatedly since been obliged to issue treasury notes bearing interest and payable at a fixed period after date, but not a legal tender, and not generally used as currency. On April 3, 1816, a bill for the incorporation of the second bank of the United States was passed, and this institution remained in existence until the expiration of its charter in 1836. From the inauguration of the present government under the constitution, March 4, 1789, until the civil war, 1861-'5, with the exception of the circulation of the two banks of the United States, the treasury notes already mentioned, and the banks of the District of Columbia, the paper money of the country was generally fur- nished by banks chartered by the several states. The commencement of the secession movement in November, 1860, soon caused a financial crisis and a total paralysis of business, under the effects of which the revenues of the gov- ernment rapidly declined; and by Dec. 17 it became necessary to pass a law for the issue of $10,000,000 one-year treasury notes bearing 6 and 12 per cent, interest, and which were authorized to be paid to the public creditors. By act of March 2, 1861, $22,468,000 two- year and $12,896,350 sixty-day notes were provided for ; and by acts of July 17 and Aug. 5, 1861, $139,999,750 three-year 7'30 notes, and $50,000,000 treasury notes payable on demand, the latter being by act of Feb. 12, 1862, to meet a most pressing emergency, increased by $10,- 000,000. The preparations for war from March 4, 1861, and its subsequent prosecution, called for immense expenditures ; and by December, 1861, the secretary of the treasury had bor- rowed from the banks and capitalists of New York, Philadelphia, and Boston $144,000,000, which he had required them to pay in coin ; and in the course of this month these banks found themselves under the necessity of suspending specie payments. The demand treasury notes, not being a legal tender, did not enter freely into circulation, and there were instances of soldiers having to submit to the loss of a dis- count on those received for pay of from 4 to 20 per cent, in the District of Columbia. These notes were kept at par with the banks and re- ceived by them so long as they had to pay the government for loans; but by Feb. 5, 1862, the last of these loans was paid for, and the banks refused to receive the notes. The trea- sury was by this time nearly empty, and the secretary was unable to negotiate any further loans, while there were the most pressing de- mands upon him. The floating liabilities then due were $100,000,000, and not less than $150,- 000,000 more would be wanted before July 1 following. The committee of ways and means of the house of representatives had about this time perfected a bill for the issue of $150,- 000,000 in notes, to be a legal tender for the payment of all debts, public and private. The secretary early in February strenuously urged the passage of this act, to the support of which he had however come with great reluc- tance. He said : " Immediate action is of great importance. The treasury is nearly empty. I have been obliged to draw for the last instal- ment of the November loan ; so soon as it is paid, I fear the banks generally will refuse to receive United States notes. You will see the necessity of urging it through without more delay." It passed the house of representatives Feb. 6, 1862, and the senate with important amendments on the 13th; and after being re- ferred to a conference committee, it was passed in an amended form by the house on the 24th and by the senate on the 25th. The same day it received the signature of the president and became a law. These notes were made re- ceivable in payment of "all taxes, internal du- ties, excises, debts, and demands of any kind due to the United States, except duties on im- ports, and of all claims and demands against the United States of any 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 aforesaid." They were also receivable "the same as coin at the par value, in payment for any loans that may be hereafter sold or nego- tiated." By act of July 11, 1862, $150,000,- 000 more of these notes were authorized, $50,- 000,000 to be held as a reserve for the pay- ment of temporary loans. In all, by these acts and those of Jan. 17 and March 3, 1863, $450,- 000,000 were authorized, and $400,619,206 were actually issued, besides compound interest and 7-30 notes. In addition to these, $50,000,- 000 of fractional currency was authorized, of which $48,151,000 had been issued to Nov. 1, 1874. Subsequent to the close of the war, in addition to other notes, $44,000,000 of the le- gal-tender notes were retired, thus reducing their amount to $356,000,000 ; while by act of June 22, 1874, the volume of these notes was fixed at $382,000,000, which amount had been issued on Nov. 1, 1874. By act of congress approved Feb. 28, 1863, the national banking system was established. Under this system, to Nov. 1, 1874, circulation had been issued and was then outstanding to the amount of $351,- 927,246. Under act approved July 12, 1870, providing, for banks whose issues should be redeemable in gold on demand, $2,150,000 of notes have been issued. In 1873 the direc- tor of the mint estimated, from the most trustworthy data, the gold coin in the coun- try at $135,000,000, and the subsidiary silver coin at $5,000,000, total $140,000,000; thus making the grand total of money of all kinds $924,228,246. A careful estimate of the circu- lating medium of the United Kingdom of Great