The Manitowoc pilot. [volume] (Manitowoc, Wis.) 1859-1932, 1879-03-13

Tn December -, lcOls TIE banks OF
New Y ork, whose example was prompt
" followed by all the other banks in
this country except those in California.
suspended specie payments. Practically
the Government had already suspended.
On January /, 1879, the Government
and the banks resumed specie payments.
At this moment, above al others, does
the financial history Of the United States
for seventeen years possess peculiar In
terest. the more so because the history
of the finances Of this country during
and after the war is not so familiar as
it might be-
At the beginning Of the late war the
Government obtained funds through the
associated banks Of New Y ork, Boston
aud Philadelphia. The banks of these
cities agreed to lend the Government
three sums of $40, 600, 000--a total Of
$50, 600, 000-of which sum Newly ork
undertook to advance S105, 600, 900.
The banks advanced $4,000, 600 every
six days. They were to receive there
for 100 notes, which they were to sell
to the people, and thus to obtain money
to lyance TO the Government. Owing
to the delays in the preparation of these
notes the banks for months received
only negotiable certificates Of in
debtedness.
Although the Government was scat
tering this money all the way from the
Mcrrimac to the Rio Grande, and only
the banks in three Eastern cities were
in the association helping the Govern
ment, yet the internal-trade movement
was so intense that the coin advanced
by the banks came back to them In the
ordinary course of trade in about
week After the associated banks had
taken the third loan Of $50, 900, 600 and
the banks Of New \ ork city alone had
advanced to the Government SS0,000,-
0O0 the latter banks found that their
aggregate specie reserve had been re
duccd between August and December
only from so, 600, 600 to S42, GEO, 600.
In spite Of the Gelay in printing the
80 notes the people had already sub
scrlbed to the banks for 500, 900, 600
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 Tor so
notes. The banks were advancing goll
coin to the Government and they were
compelled to take their choice between
receiving Government notes and reject
ing 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 Tor any length Of time. To do
the latter was to dlscredit the Govern
ment to which nearly all their means
had been given, and whose securities
they were trying to sell. The latter
course was out Of the question, and the
old demand notes were received by the
banks As result the specie reserve
Of the New York banks was reduced
between December J and December IS
about thirteen millions, nearly double
the loss in the preceding four months
Ii was only a question of a few days
when the banks would find themselves
without any gold at all, aud they CON
Guided to save what was left. On De
cember IS they suspended specie pay
ments. About this period the original
Legal-Tendcr act was introduced in
Congress by Representative 4. G.
Spaulding, of Buffalo, and became a
law February -, 1862 1t authorized
the issue Of one hundred and fifty mil
lions in notes which were to be legal
tender Tor al purposes except the pay
lncnt Of duties on imports, and interest
on the public debt These notes were
.undabia 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, amounted to sixty
millions, were declare legal tender
Only five months passed and second
issue Of one hundred and fifty millions
i'll legal tenders were made July, 1862
In March. 1868, third issue of one
hundred and fifty millions was author
ized, but only part of the notes were
issued.
The act making the demand notes
legel tender provided they should be
deducted, at least to the amount of fifty
millions, from the legal tenders whose
issue had been authorized, so that by
this act the amount of legal tenders was
very slightly augmented. OF the third
issue Of legal tenders two-thirds were IN
lieu Of one hundred millions of notes
authorized By the resolution of January
Il, 1868, so that the increase Of eur
rcncy BY the act Of March, 1868, was
only fifty millions. The gold premium
Sell somewhat after the act Of March
1868. was passed but the greater part
Of the increase Of the currency author
ized by that act had already taken place
and the gold premium, which was Is /
IN January, rose to 60.5 per cent in
February.
The disbandmcnt of the armies rem
dered vast immediate disbursements By
the Government necessary. and Hugh
McCulloeh, Secretary of the Treasury,
issued more than five hundred millions
OF three years 80 notes for this pur-
pose. The soldiers were paid in part
with the notes themselves.
The amount Of the 80 three years
notes outstanding was in 1864, $780,
500. $50; in 1865. S672, as. $50: in
1866. SSo6, 500. 100; in 1867, S46S,-
647 10; in 1865, S37,71 $50. Since
that year the amount has been trivial
The average gold premium for Janu-
airy, 1862, was >. . per cent, and for
February, 3 5 per cent. The passage
Of the Legal Tender act was followed
by fall Of the premium to l. s per cent. ,
in March, and l. 5 in April The Legal
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