Fayette County herald. [volume] (Washington [Washington Court House], Fayette County, O. [Ohio]) 1860-1???, 1879-01-30
1aR1-1a7s.
A Brief Resume Of Oar Financial Leg
isIaEion for seventeen Years.


On Dec. %, 1851, the banks of New |
York, whose course was promptly fol- /
owed bv all the other banks in this cOun- |
.rv except those in California, suspended
specie payments. Practically the Gov
ernment had already suspended. On Jan.
/, 1879, the government and the banks re-
sumed specie payments. Atthis moment,
above all others, does the financial history
Of the United States for seventeen years
possess peculiar interest, the more so be-
cause the history Of the finances of this
country during and after the war is not
so familiar as itmight be.
At the beginning of the late war the
Government obtained funds through the
associated banks Of New York, Boston and
Philadelphia. The banks of these cities
agreed to lend the Government three
sums Of $50, 900, ,OOO-a total of $15O,O00,-
OOO-of which sum New York undertook
to advance $IO5, 200, 900. The banks adj
vanced s., 600, 900 every sixty days. They
were to receive therefor 7.30 notes, which
they were to sell to the people, and thus
obtain money to advance to the Govern
ment. Owing to tie delays in the prepa-
ration of these notes the banks for months
received only non-negotiable certificates
of Indebtedness.
Although the Government was scatter
ing thisnoney all the way from the Mer-
-rimac to the Rio Grande, and only the
banks in the Eastern cities were in the
association helping the Government. yet
the internal-trade movement was so in
tense that the coin advanced by the banks
came back TO them in the ordinary course
of trade In about a week. After the asso-
ciated banks had taken the third loan OF
$50 900 900, and the banks of New York
city alone had advanced to the Govern
ment $50, 900 900, the latter banks found
that their aggregate specie reserve had
been reduced between August and De-
cember only from $40, ,OOO, 900 to $42,-
OOO, 900. In spite of the delay in printing
the 7.30 notes the people had already sub
scribed to the banks for $50, 900, 900 of the
notes.
About this time, the Government CON-
menced issuing the old demand notes.
These notes passed readily into circula-
ton and were offered at the banks on de.
posIt and in subscriptions for 7.30 notes
The banks we.e advancing gold coin tt
the Government, and they were com
pelled to take their choice between receiy
ing Government notes and rejecting them
To do the former was to render it impos
slble for them to continue advancing coli
to the Government. They could not re
ceive paper and pay out coin FOR an!
length of time. To do the latter was t.
discredit the Government to which nearl!
all their means had been given, and who's
securities they were trying to sell. Th'
latter course was out of the question, ant
| the old demand notes were received by
the banks. AS a result the specie reserv,
of the New York banks was reduced be
tween Dec and Dee. 28 about $l3,OO0,.
900, nearly double the loss in the prece
ding four months. 1t was only a ques
tion of few days when the banks woult
find themselves without any gold at all
and they concluded to save what was left
On Dec. % they suspended specie pay
ments. About this period the origina
Legal Tender act was introduced in Con
gress by Representative E. G.. Spauling
of Buffalo, and became law Feb. 25, 1862
1t authorized the issue of $3.50, 100000 il
notes which were to be legal tender 70
all purposes except the payment of dutie
on imports, and interest on the publi
debt. These notes were fundable at pa
in per cent. twenty-year gold bonds. Il
less than month after the passage of th
Legal-Tender act the demand notes o
July, 1861, and February, 1862, amount
ing to $50, 900 900, were declared lega
tender. Only five months passed and
second issue of $50, 600 in legal ten
ders was made, July, 1862. In March
1868, third issue of $50, ,oOO, 900 was au
torized, but only a part of the notes wer
issued,
The act making the demand notes lega
tender provided they should be deducted
at least to the amount of $50, 900 900, fron
the legal tenders whose issue had bee
authorized, so that by this act the amoun
of legal tenders was very slightly aug
nented. Of the third issue of the legs
tenders two-thirds were in lieu of 800
OO0, 900 of notes authorized by the resolu
tion of Jan. II, 1868, so that the increas
of currency by the act of March, 1876;
was only $4,000, 900. The gold premium
fell somewhat after the act of Maret
1868, was passed, but the greater part
the increase of the currency authorize
by that act had already taken place, an
the gold premium, which was 42.1 In Jan
uarv, rose to sos per cent. In February
The disbandment of the armies rer
lered vast immediate disbursements b
the Government necessary, and Hug
McCulloch, Secretary of the Treasury
! issued more than $500, ,OOO, 900 of thre
years z 80 notes for this purpose, tn
soldiers were paid in part with the note
themselves.
81 The amount of the 7.30 three year
notes outstanding was in 1864, $1O9, 358
1850; In 1855, $672, ,57s $50; in 1866, $sO6,
300, ,750; in 1867, $4ss, ,647, ,140; in 1855
$S7, ,7l7, $50. Since tl1atyear the anloun
has been trivial.
The average gold premium for Janu
ary, 1852, was 20 per cent, and for Eel
ruary 3.5 per cent. The passage of tn
Legal-Tender act was followed by a fal
of the premium to 8 per cent. in Marcel
and is in April. The Legal-Tender &C
promised the people a currency whfc
would be OF uniform value in all parts {
the country while the $202, ,205. 900 {
State-bank notes current in 1861 range
all the way from par to heavy discount
In May, 1862, the gold premium wa
3.3 per cent. and from that time
began long ascent. In June the pre-
MUM was SO per cent. In Julygthe sec
ond issue ofgreenbacks was made,. an
the premium went up to 1876 per cen