CHAP. LXIII.] SUSPENSION OF SPECIE PAYMENTS. 567 to convertibility into coin by United States bonds deposited in the treasury. rendered inade delays, etc. But unexpected military delays increased expenditures, diminished confidence in public securities, quate by military and made it impossible for the banks and capitalists who had taken the previous loans to dispose of the bonds held by them except at ruinous loss, and impossible for the government to negotiate new loans except at like or greater loss. A suspension of spe occurred. These conditions made a suspension of specie payments inevitable. The banks of New York suscie payments had pended on the 30th of December, 1861. Their example was followed by most of the banks throughout the country, and the government yield. ed to the same necessity in respect to the United States notes then in circulation. expenditures risen. These changed circumstances required a change of measures. The expenditures had already Point to which daily reached an average of nearly a million and a quarter of dollars each secular day, while the revenue from all sources hardly exceeded one tenth of that sum. Difficulty in obtain loans. Careful inquiries had satisfied the secretary that successive loans could only be had on increas ing corresponding ingly disadvantageous terms. The first sixty millions would require an issue of bonds to the amount of seventy-five millions, and the third sixty millions, if attainable at all, would require one hundred and twenty millions. It was easy to see that, on this road, utter discredit and paralysis would soon be reached. There remained but one way of raising money by the negotiation of bonds in the usual mode. It was to receive in payment of loans the notes or credits of the banks in suspension. The secretary set forth the reasons that led him to discountenance and reject this method. 568 A NATIONAL CIRCULATION. [SECT. XIII. No other mode seemed likely to accomplish the ob A national circula- ject in view so well as the issue of United tion recommended. States notes adapted to circulation as money, and available therefor immediately in government payments. Things were now in that condition that a choice would have to be made between a currency furnished by numerous and unconnected banks in various states and a currency furnished by the government. The secretary had already declared his unhesitating preference for a circulation authorized and issued by national authority. The finance committees of the two houses saw clearly the necessities created by the suspension, and at once adopted the measures required by them. had been tried. An emission of fifty millions had been authorized by Congress at the July session, 1861, not with How far that system the design of furnishing a general currency, but for the purpose of making good any dif ferences between the amounts obtained by loans and the sums required by the public service. Of these notes thir ty-three and a half millions ($33,460,000) were in circulation at the time of the suspension. Up to that date every note presented for payment had been promptly redeemed in coin. After the suspension an additional emission of ten millions was authorized on the 12th of the previous February. Both these issues, amounting altogether to sixty millions, were made receivable for all public dues, including customs. It now became the duty of Congress not merely to provide the means of meeting the vast demands on the treasury, but to create a currency with which, until after the close of the war at least, loans and taxes might be paid to the government, debts to individuals discharged, and the business of the country transacted. This duty Congress partially performed by authorizing an emission of ninety millions in United States notes, in CHAP. LXIII.] CONGRESSIONAL FINANCIAL ACTS. 569 Successive acts of Congress. addition to the sixty millions previously issued, making one hundred and fifty millions in all. The ninety millions last issued were made receiv able for all national loans and dues, except customs, payment of which was required in specie or in notes of the two first issues. At a later period of the session Congress authorized a farther issue of one hundred and fifty millions, of which, however, fifty millions were to be reserved from issue until actually required for payment of deposits. Still later Congress authorized the use of postage and revenue stamps as a fractional currency. These various acts, taken together, authorized the emis Aggregate emission sion of two hundred and fifty millions in under those acts. United States notes, and a farther emission, if needed, of fifty millions for the payment of deposits. Of these emissions, the sixty millions receivable for customs were not available as circulation, but might be replaced, as paid in, by notes of the new issues, which were thus available; so that, in the end, a total circulation of two hundred and fifty millions might be reached, and, in an improbable contingency, increased by fifty millions more. An emission of fractional currency, as just stated, was also authorized. In aid of these provisions for public payments the sec retary recommended, and Congress by different enactments authorized, the receipt on temporary deposit, at an interest not exceeding five per cent., of such sums as might be offered, not exceeding, in the whole, one hundred millions, and the payment, to such creditors as might choose to receive them, of certificates of indebtedness payable in one year, and bearing six per cent. interest. Congress also authorized the issue of national bonds to the amount of five hundred millions of dollars, into which the United States notes issued might be converted at the will of the holder. It was provided Issue of fivetwenties. 570 RESULTS OF THOSE ACTS. [SECT. XIII. per cent. that these bonds should carry an interest of six in specie, and be redeemable after five and payable in twenty years. They have received the name of five-twenties, or five-twenty sixes. Experience showed that all these measures worked well. A short statement will exhibit the practical workings of the laws enacted. Resumé of the finances. Up to the 1st day of July, 1862, $57,926,116 57 had been received and were remaining on depos it. United States notes to the amount of $158,591,230 had been issued and were in circulation; $49,881,979 73 had been paid in certificates of indebted ness, and $208,345,291 86 had been paid in cash. Not a single requisition from any department upon the treasury All demands on the remained unanswered. Every audited and government paid. settled claim on the government, and every quartermaster's check for supplies furnished, which had reached the treasury, had been met. And there remained in the treasury a balance of $13,043,546 81. The reverses of June, July, and August affected, of course injuriously, this financial condition. military reverses The vast expenditures required by the large increase of the army authorized by Congress and directed by the President made exhausting demands on all available resources. The measures of Congress, however, enabled the secretary to provide, if not fully, yet almost fully, for the constantly increasing disbursements. The actual payments, other than for princivisions thus far ad- pal of public debt, during the quarter ending on the 30th day of September, were $111,084,446 75; during the month of October they were $49,243,846 '04; and during the month of November, $59,847,077 34; while the accumulation of requisi tions beyond resources amounted to less than the fourth of the aggregate of these sums, namely, to $48,354,701 22. The effect of the in Virginia. Congressional pro equate. CHAP. LXIII.] RECEIPTS AND DEFICIENCY FOR THE YEAR. 571 It remains says the secretary in his report-to consider what farther resources for satisfying the debt now existing in the form of requisitions, and meeting other present and prospective demands upon the treasury may be provided under existing legislation, and what addi tional measures may be most beneficially adopted. The whole power to borrow money under the act of Those of the extra July, 1861, is now (December, 1862) exhausted. The only available laws are those session exhausted. of the last session. These are of two classes: (1.) Those providing revenue by duties and taxes; (2.) Those providing it by loans. The laws of the first class are, (1), the several acts Character of those imposing duties on imports; (2), the act to provide internal revenue. now available. The actual and estimated receipts under these laws for the current fiscal year, including the balance of last year, and receipts from all other sources, will amount to $180,495,345 60, leaving, therefore, to be provided by loans in some form, $608,063,432 02. The laws of the second class are, (1), the act authorizing the issue of United States notes and of six per cent. bonds of the United States, redeemable after five, and payable in twenty years, to the amount of five hundred millions of dollars; (2), the two acts authorizing the is sue of certificates of indebtedness and the purchase of coin; (3), the act authorizing an additional issue of United States notes; and, (4), the act authorizing payments in stamps. Receipts and defi rent year. The secretary then shows in detail that the ciency for the cur- total of resources available for the current year, under existing laws, is $131,021,197 35. These credit resources, with the actual receipts from like sources added to the revenue in all forms, may supply the treasury with more than five hundred and eleven |