The state rights democrat. [volume] (Albany, Linn County, Oregon) 1865-1900, 1879-02-21
lS6I---IS7S.
A Rrler Resume OF Our Financial LrGisla.
tIOn for seventeen Years.

Practically the Government had al
ready suspended. On Jan. |, 1879
the Government and the banks resumed
specie payments. At this moment
above all others, does the financial
history Of the United States for seven
teen years possesse peculiar interest,
the more so because the history Of thS
finances of this country during and
after the war is not so familiar as il
might DO. ~
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 tho Gov.
ernment three sums of $40, 200, ,000-a
total of $4,000, 0,O00-of which sum
New York undertook to advance $l05,,
100000. The banks advanced $5, ,000,.
900 every six days. They were to re.
eeive therefore 7.3O notes, which they
were to sell to the people, and thus oh.
tain money to advance to the Govern.
ment. Owing to the delays in the
preparation Of these notes the banks
for months received only non-negotiable
certificates of Indebtedness.
Although the Government was scat
tering this money all the way from the
Merrimac to the Rio Grande, and only
the banks in three Eastern cities were
in the association helping the Govern
ment, yet the inteFnAl-trade movement
was so intense that the coin advanced
by the banks came back to them in tho
ordinary course of trade in about a
week. After the associated banks had
taken the third loan of $4,000, 900,
and the banks of New York city alone
had advanced to the Government $780,
1000, the latter banks found that
their aggregate specie reserve had been
reduced between August and Dec. Z
only from $40, ,OOO, 900 to S4z, z,OOO,O 900.
In spite Of the delay in printing the
7.30 notes the people had already sub
scribed to the banks for e50, ,000, 900 of
the notes.
About this time, the Government
commenced issuing the old demand
notes. These notes passed readily into
circulation and were offered at the
banks on deposit and in subscriptions
for 7.30 notes. The banks were ad-
vancing gold coin to the government,
and they were compelled TO take their
choice between receiving government
notes and rejecting them. TO do the
former was to render it impossible for
them to continue advancing coin to the
government. They could not receive
paper and pay out coin for any length
Of time. TO do tha latter was to dis,
credit the government TO which nearly
all their means had been given, and
whose securities they were trying TO
sell. The latter course was cut of the
question, and the old demand notes
were received by the banks. As a re-
suit the specie reserve of the New York
banks was reduced between Dec. and
Dec. % about sl3,OO0,oOO, nearly
double the loss in the preceding four
months. 1t was only = question Of a
few days when the banks would find
themselves without any gold at al, and
they concluded to save what was left.
On Dec. 90 they suspended specie
payments. About this period the ORR
ginal Legal Tender act was introduced
in Congress by Representive l.. g..
Spaulding, Of Buffalo, and became u
law Feb. 25, 1862. 1t authorized the
issue Of $3.50, 100000 in notes which
were to DO legAl-tender for all purposes
except the payment of duties on i'm
ports, and interest on the public debt.
These notes were fundable at par in
per cent. twenty year gold bonds. In
less than month after the passage Of
the Legal Tender act the demand notes
of July, 1861 and February, 1862,
amounting to 500, 900, were de-
clarded legal-tender. Only five months
passed and second issue of $3.50, ,000,-
600 in legal tenders was made, July,
1862. In March, 1868, third issue
of $l50,000,000 was authorized, but
only part Of the notes were issued.
The act making the demand notes
legal tender provided they should be
deducted, at least to the amount of
$50, 100000, from the legal tenders
whose issue had been authorized. 80
that by this act the amount of legal
tenders was very slightly aug mented.
OF the third issue of legal tenders two
thirds were in lieu Of 100000, 900 Of
notes authorized by the resolution OF
Jan. II, 1868, SO that the issue of
currency by the act of March, 1868,
was only $50,0o0,0OO. The gold premi.
um fell somewhat after the act Of
March, 1854, was passed, but the
greater part u the increase Of the cur
rency authorized by that act had al
ready taken place, and the gold premi
um, which was As. in Jan. rose to 60.E
per cent. in February. ID
The disbandment of the armies rem.
dered vast immediate disbursements by
the government necessary, and Hugh
McOullech, Secretary of the Treasury
issued more than $500, 600, 900 of three
years 7.30 notes for this purpose. The
soldiers were paid in part with the notes
themselves.
The amount of the 7.30, three years
notes outstanding was in 1864, $109,
$50, 100; in 1866, ,$672, ,578, $50; in 1856
$500, 900, $50; in 1867, $4ss,6 lao
in 1858, $37,7l7,550. Since that yea
the amount has been trivial.
The average gold premium for Jan
1862, was 2.5 per cent. and for Feb
3.5 per cent. The passage of the lie
galTender act was followed by a fal
Of the premium to l.S per cent. il
March, and l5 in April. The Legal
Tender act promised the people cur
repcy which would be of uniform val