The New Student's Reference Work/Specie Payments in the U. S., Suspension and Resumption of

The New Student's Reference Work
Specie Payments in the U. S., Suspension and Resumption of

Spe′cie Payments in the U. S., Suspension and Resumption of (1861-79). In consequence of the Civil War and the beginning of the drain on the United States government to meet its current obligations in metallic money, the nation, following the action of the banks, suspended specie payments at the close of 1861 and resorted to the issue, in large sums, of legal-tender paper-money (“greenbacks” the notes were called) in lieu of gold and silver in the payment of debts and taxes. The suspension, which lasted until Jan. 1, 1879, had the effect of depreciating the national paper-currency to half its face-value in gold; though, when the war closed, the government, in pursuance of an honest financial policy, began to redeem its obligations with coin and stopped the issue of the U. S. legal-tender notes. This had its effect on the national currency, which began steadily to rise in value. The government finally grappled with the financial problem and solved it by announcing that on Jan. 1, 1879, the resumption of specie payments would take place. The government kept faith with its creditors and the nation on the day specified, when, through the sale of bonds and the accumulation of surplus revenue etc., gold and silver were once more paid out.  The result proved the wisdom of the government and banished all misgiving, for, when 1879 opened, only about 11 or 12 million dollars’ worth of notes were offered for redemption, while the treasury at Washington had in its possession about ten or twelve times the amount in gold in its vaults.