St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1884-07-13
UNITED STATES NOTES.
When and How They Have Been Used
History of the Paper Money of
the Republic-The Circum-
stances Under Which Is

WASHINGTON, July 8.-John Jay Knox,
late Comptroller of the currency, has pub
lished a volume whose value will be recog-
nized from the title 'sUnited States Notes !;
a History of the Various Issues of Paper
Money of the United States" The book
gives an account of the gradual rise and de-
velopment of doctrine which has at length
been embodied in q recent decision of the
United States supreme court, namely: That
1t is in the power of congress to issue United
States legal tender notes in any amount at
any time that may be deemed advisable.
'At the date of the adoption of the consti-
tuition" writes Mr.. Knox, 1.-THE issue of pa
per money in any form was popularity re-
garded with aversion. The experience of
the colonists with bills of credit as paper
money was then called, had been fraught
with loss and political disturbance, and the
experience with like issues by the continent
tai congress had so affected the minds of
the wisest and best men of that time in the
Federal convention the general feeling was
one of almost bitter opposition to granting
the power to emit bills of credit to the gov
ernment." The author further adduces the
fact that from 1871 until 1912 ''the method
OF raising funds for the government by the
| issue of bills of credit was not even sug-
gested."
Before the revolutionary war paper money
was issued to greater or less extent by each
one OF the thirteen colonies, Massachusetts
taking the lead in 1890, to aid in fitting out
the expedition against Canada. Similar is
sues had been made by New Hampshire,
Rhode Island Connecticut New York and
New Jersey previous to the year I'LL. South
4 Carolina haroD tO I1oi in d.,
nsylvania not until 1928. Delaware followed
the example in 1884, Virginia in 1855 and
Georgia in 1850. Thus it appears that a
privilege, somewhat grudgingly accorded, it
is true. to the colonies by the mother coun-
try, was withheld from them as individual
states; ''and wisely, too" said Alexander
Hamilton, by the Federal Constitution.
But the English Government did not view
this independent inancfering Of the various
colonies with complacency. In 1T40 Parlia-
ment passed bill to extend the act of 1920
significantly know as ''the bubble act" to
the American colonies, with the intention of
breaking up all companies formed for the
purpose of issuing paper money. Under this
law the Land Bank and the Specie Bank of
Massachusetts were compelled to close their
business, to the great dissatisfaction of the
colonists. The action of parliament was not
altogether unreasonable, since in 174S e100
in gold was worth 81, 100 of the deprecated
paper money of the Massachusetts banks
The first issue of continental money was
made in June, IT'S, and maintained its value
for u whole year. In two years these notes
had fallen to so per cent of their nominal
value, to % per cent OF 1t in three years, and
in nine months more to 10 per cent of their
par value. In September, 1779, paper mon
| ay We cotQ q
congress had determined that the total issues
should not exceed 5000, 900, 600, the value of
gold as compared to paper money in 1850
was as 40 to 1. The proportion finally reached
1000 to in Virginia, shortly after which
continental paper money ceased to have any
value whatsoever.
The eighth clause of the first section of the
seventh article ofthe constitution, as pre-
sented for consideration of the convention
held in Philadelphia on May IA, 1887, read
origininally as follows: sThe legislature or
the United States shall have power to borrow
money and emit bills on the credit of the
United States" 1t now reads, as amended :
The congress shall have power to borrow
money on the credit of the United States
Then and there the question of making bills
of credit issued by the government legal
tender was for the first time brought under
discussion and was not again brought up in
congress until the legal tender acts of 1862
During the debate in 1887 Governor Nor
ris, Of New York, moved to strike out the
words in the original clause: ''and emit bills
on the credit of the United States'' His ar
gument was: IF the United States has credit
such bills would be unnecessary, if they had
not, unjust and useless Madison asked
whether it would not be sufficient to prohibit
the making them a tender; but Morris, in
reply, urged that striking out the words
would still leave room for the notes of re-
sponsble minister, which would do all the
good without the mischief. The words were
finally stricken out, nine states voting yea;
two-Maryland and New Jersey-voted in
the negative.
The enactments Of the Conscript Fathers
of America lost th cir force the moment they
were confronted with a real emergency in
the shape of foreign war. Interest-bearing
treaary notes were issued in the years 1912,
1913, 1914 and 1915 They were not, how
ever, intended to circulate as money, and
were retired as soon as possible when the
emergency was passed. The crash of 1887
aud the Mexican war ALTO gave occasion for
temporary issues of treasury notes, but it was
not until the war of the rebellion that the
subject became of first Importance, and then
for the first time the legal tender quality was
suggested, and with the rapidly succeeding
issues the last constitutional scruples were
swept away.
The amount Of Treasury notes issued dur
ing the war of ISl2-15, under six different
acts CT Congress, including the So, 1872, 1894 OF
of small Treasury notes issued undes the act
of Feb. "a, 1915, was s39, $50, 1874 In Jan
uary, 1S47, the Treasury was again in need,
on account Of the expenses of the war with
Mexico, and bill was introduced authoriz-
ing the issue OF So, 900, 600 of Treasury
notes, supplemented by an additional issue
of s., 200, 000 under the previous act Of July
%, 1916. The whole amount ever actually
issued was s26, 122, 100. The rate of inter-
est was 6-2-5 and per cent, secured by
S2s, 2S0, $50, Of United States per cent
bonds. The Treasury notes issued under the
act of January, 1547. were all retired before
July l, 1850, with the exception of $500, 900
and no more were issued until, under the
pressure Of a panic. an act was passed on
Dec. %, 1857. authorizing an issue of Treas
ury notes not exceeding $40, 600, 900. The
whole amount was issued During President
Buchanan's administration 1851, 1854, $50 in
all of Treasury notes were issued, under the
act of Feb. 8, 1851.
| Inc puOllc EeDt Oh Tue united STATES reach
ed its maximum on Aug. 81 1865. when il
amounted to 81, s45, 907, 626. SO. OF this
amounted 81. JOG, 56s, 1911 was in funded
debt, 81, 503, 020 was debt which had ma
tured, and 81, Ill, 900 was in suspended re-
QUESTIONS, The remainder was as follows
United stated legal tender notes. S4s3, 1870, 5s9 90
Compound interest legal tender
notes Observation-Disclosures. 2f7.024, 100 90
Five per cent legal tender notes 90, 954. 230 90
seYen-thirty notes. $4,000, 600 90
Fractional currency .-.-.... 2e,344,742 81
Temporary loans-......s. 1G7, f4s,7f3 1s
Certificates Of indeptedness..... S., G92, 600 90
Total ,732, 725, 4f4 81
More thrn 6s4 millions Of these obligations