The Kenosha telegraph. [volume] (Kenosha, Wis.) 1860-1888, 1879-01-09
1S61--1S7S.
A Brief Resume of Our Financial Legislation
for Seventeen Years.

for Seventeen Years.
On Dec. %, 1861, the banks OF New
York, whose example was promptly fol-
lowed by all the other banks in. this
country except those in California, sus-
pended specie payments. Practically
the Government had already 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 seventeen years possess pc
culiar interest, the more so because the
history of the finances of this country
during and after the war is not SO famil-
lar as it might be.
At the beginning of the late war the
Government obtained funds through
the associated banks of New York, Bos-
ton and Philadelphia. The banks Of
these cities agreed to lend the Govern
ment three sums of $4,000, 000-a total
of 000000-of which sum New
York undertook to advance $105,000,-
900. The banks advanced $5,000,O00
every six days. They were to receive
therefor 730 notes, which they were to
sell to the people, and thus obtain
money to advance to the Government.
Owing to the delays IN the preparation
of these notes the banks for months re-
ceived only non-negotiable certificates
of Indebtedness.
Although the Government was scatter
ing 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 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 a
week. After the associated banks had
taken the third loan of $50, 1000, 900, and
the banks of New York city alone had
advanced to the Government $80,000,-
600, the latter banks found that their
aggre gate specie reserve had been
reduced between August and Dec. 7
only from $49,000,00O to $42,000,O00.
In spite of the delay in printing the
730 notes the people had already sub
scribed to the banks for $50,000,000 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 subscri ptions
for 730 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 re-
ceive paper and pay out coin for any
length of time. To do the latter was
to discredit the Government to which
nearly all their means had been given,
and whose securities they were trying
the question, and the old demand notes
were received by the banks. AS a
result the specie reserve of the New
York banks was reduced between Dec.
7 and Dec. % about $13,00000O, nearly
double the loss in the preceding four
months. 1t was only a question Of
few days when the banks would find
themselves without any gold at all, and
they concluded to save what was left.
On Dec, % they suspended specie
payments About this period the orig
inal Legal-Tender act was introduced in
Congress by Representative E. G..
Spaulding, of Buffalo, and became
law Feb. 25, 1862, It authorized the
issue of $150,000,O00 in notes which
were to be 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 6 per cent. twenty-year
gold bonds. In less than d
month after the passage of the
Legal Tender act the demand notes of
July, 1861, and February, 1862, amount
ing to $6000000O, were declared legal
tender. Only five months passed and a
second issue of $150O00,0OO in legal
tenders was made, July, 1862. In March,
1868, third issue of $15O,000,OO0 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 $780,
100000, 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 $100,000,000 of notes authorized
by, the resolution of Jan. II, 1868, so
that the increase of currency by the act
of March, 1868, was only $50,000,000.
The gold premium fell somewhat after
the act of March, 1868, wascpassed, but
the greater part of the increase of the
currency authorized by that act had al
ready taken place, and the gold premi-
UNI, which was 45.1 in January, rose to
6O.5 per cent, in February.
The disbandment of the armies rem
dered vast immediate disbursements by
the Government necessary, and Hugh
McCulloch, Secretary of the Treasury,
issued more than $500, 100000 of three
years 7.30 notes for this purpose. The
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