New-York tribune., 1875-11-13
THE LEGAL-TENDER ACT.

the "t1naucial History OF INC war; ny III, i''''' "
G. Spaulding of Buffalo. Y Mr.. Spaulding was
the writer Of the famous LccalTender act passed III
February. 1862:
Tho sus,usion OF spccle paymcuts by the banks and
the Treasury OF the United States occurred on the 2oth
OF December 1851 and two days later on the 3Oth OF e
same month. prepared and introduced the LcgaiIehuet
act into te House Of Representatives IL passed Dolh
Houses and received the approval OF PRESIDENT IAeom
Feb. 25, 1862.
In tbe orc3ng specch which made soon after pre-
sened the liu to the House (s,e History, page 29l
said:
The bill before ia war measure measure OF neces ~
sity aud not OF choice presence & py % ,e demands
upon the Treasury to sustain the army ana nav u d
they make vigorous advance upon the I'.oIs au
acush out the Rebellion These are extraordinary umes'
and extraordinary measures must be resO 10 ~ U
10 save Government and preserve our natlohaH'!
Tho FIR. lceoltender notes issued under the act bore
date March TO- 1862 and had printed on the back OF
them these words:
This mole j. a legal tender for all debts public and pr
yat excru duties ON imports and interest on the pubic
dht aNd . cvcbanpeaMe for United states six per cent
bonds, rcdccnabe al the pleasure oi the Ohi''" o'S
after tiyc years.
rbs Great nisiaLe-greater than all other mistakes in
the management OF the war-was the abrogaton oil the
right TO fund the grecnback currency III gold DohGS us
proyided for in the two preceding acts All the oher
mistakes civil and military, which occurred uurlhg
the war were of slight consequence when compared WIN
the mschie yous and grave consequences resulting from
paper money the right to have redeemed on demand III
gold bonds besides being maniietly unjust TO the mold
ers let the Government and the whole eG1ntly
and peoplc-lown into the slough OF an lrlcdcemapie
paper currency where we have remained of over ccNeh
wears From 1864 to 1879 it has been dead weight on
the bnsinc, and industry of the country without eas
tcity and without any provision whatever being made
for its rcdcmption payment Its redundancy ana con
seouen depreciation have operated very uiousY otne
lie climate business Of the country II was an
of expenditure representing the waste OF war; ana not
possessing the essential clements OF comnercai cur
rencv majority of the people however have been de-
Iuded into the belief that those broken promises repre-
senting tbe waste OF war; money, ana proper
standard OF value as basis for doing business ana nave
ulupged hadong into all sorts Of speculatOns unproa-
be enterprises extravaganza in living, general abuse OF
credit idlcncss and consequent demoralzation
the right to fund the grceubackS into the SIX per cent
cold bonds had not been abrogated nancer or prc-
tcal business whose opinion is worth qu0lhg can
doubt that We would have gone tOspece payment "hin
two or three years after the close oi the Wal Ill Se ol
ourselves The individual indebtedness AT tAc close Oh
tle war in 1865 was small. Every one was compara-
lively free from debt The six cent gold bonds were
sought for as an investment They soon appreciated TO
mar in gold and if the right to fund had been continued
the ccenhack currency would have appreciated 10 par
I'm gold along with bonds. The Legal Tender act
would have served s purpose rs war measure ana We
yonld have returned the specie standard without ma
In this way we would have avoided large part OF the
extravaganza and decentralization that has been so recA-
less since the close OF the war.
The circumstances leading to this mistake arc iuy set
forth In the Financial History OF the War, pages 1SS 10
1913 but I will briefly Iecapitu!ate the facis'
the SqOOOOOOOO Loan act WAS passed ana ap-
proved by tho President March 3, 1868. At the
urgent request of Secretary Chase clause was inserted
I'm the act taking away the absolute right OF the holders
of rrecnbacks to fund them into six cent gold bonds
after July 1863 and leaving it discretionary with the
Secretary 10 allow them to be funded or not as ne might
deem best the public interest Under this discretion
AIRY power the Secretary allowed them to be funded Up to
Inn o. 1854 The Legal Tender act had worked well,
and all OF the $500 six per cent bonds authorized
by the first act had been taken up at par The Secretary
then decided that he would not allow any more fundins
in the six per cent bonds but would allow the holders OF
the greenbaeks to fund them in five per cent bOhd'
This mistake Of Secretary arrested the funding OF the
creeubacks into bonds and materially deprecated ana
lowered the standard Of this currency.
SECRETARY MCUILOCHs MANAGEMENT.
Secretary McCullOch one Of the best placucal
Anancers in the country and managed the Treasury De
pariment with marked prudence ana ability Hlsahhu
Ieports were based upon correct principles and were
very clear and able cXpostons OF the financial situation
II Congress had continued TO give him proper support
instead of repeating the law for retiring greenbacks 1t
my firm belief that he would have conducted us back TO
the specie standard during the four years Of lis admin
stration Of the Treasury Department, ana without ma
terially affecting in an unfayorabe manner, the legti
mate business OF the country. The controlling majority
in Congress was weak and vacilang in its course ana
utterly failed to make any provision for redeeming the
srcenbacE currency.
After the surrender OF the Rebel armies to Cen Grant
and Gen sherman the volunteer army was mustered out
., tbe service and had to he paid in full Secretary Ne
Cullocl obtained the TO pay them chiefly by the
OF 750 Treasury notes Ihe amount rf4ot@q @ ioa
that purpose very large, and the amount OF tCs
which Wcrc by law expressly fundablc within three years
into six per gold bonds The right TO iund tIen was
not ahogated. and within three years they were an taken
on the market and funded IN those bonds Ills SHOWS
ooncusiyey how Treasury notes may tG i5,icu iT TI
rccuuacFs would have been funded IN the same way
The iual contract funding thcm had not been apO-
safrd Inon lie Inauguration o. President Graut on
me 4tl of March. 1863. the Hon. George :. Bout
wen was made Secretary OF the clIed,sinISi ana ana
qne first oct of Congress approved by fItslue Htanl
after is Inauguration contained an tApIts' oIls' IA ~
fhe,e words: "1he United states solemny pledges lts
faith to make provision at NE .diie i;
FOR the redemption OF the United states hIles III Z CON
This prOu.o the pant Of Congress 10 make provision
bas bee, aboni ms badly broken the promise made
in the first legal Tender Act FtD - Iet u .cItthl
rts the reycnucs derived from customs duties ana M
tcrua taxes were ample ia 1869, TO pay the annual e1
penscs Of the Government aHd interest on tLe , a. W,
and leave surplus ana Soi'' i,% pa a., 5 m t t.,[
OF gold iu ,lie 4It4sDy Wluth Io,n ~ u4e
notes In coin In accordance with ue above
promise. Here commenced the thlId MislaAe on
ihe pau OF The Treasury Department IN the
,,n.o,,odd.,r,,t Of thc finances Secretary Bout
well did no, regard this surplus at all necessary TO the
eupport credit of the ertcnpacAs, OF as reserve
by Which they could ultimately De redeemed M c"u iiy
therefore pr0cc sded TO pay cn and take up thysohued
dct not vet due for 10 tJ - year., leaving te past
Guc erac,il9cls baty broken promises s.il IN the
sou sh OF irrcdecmahle currency, without any provision
whatever for cir payment. IN TINS way hc reduced te
,uhic de- including per cent notes, about Tj6SoV-
600 durug the four years OF bis administration, Dut ud
redeem any OF ne greenOaCA or Keep any resetnd
for that purpose. He also went 1ufbeI ana Cohitlcd
an aCt which have always REGARDED AZ violation ol
the spirit and intent OF the ORIGINAL Legal Tender %c IN
procuring new engraved piatCs To he maze, dlO the
printing and paying out oi a new emission 1I its4l
fender notes in time Of peace, fO wears AFTER e close
of the war. when the public interests dd not require at
that time any such forced loan 10 be- made lhe clause