upon them in the ordinary course of business, and allowing them to pay his drafts in whatever manner their holders might designate. The Banks assumed that, as the ordinary operations of the public had no tendency to withdraw their coin, those of government, if conducted in a similar manner, would exert no such tendency; that in this way the war might be carried on by the use of their paper, symbolizing merchandise at the value of coin. To a request and to reasons so pertinent and judicious, Mr. Chase turned a deaf ear. He would take nothing in payment of his loans but coin. The result is the present condition of the country. Had he taken the course pressed upon him, the specie in the Banks must have constantly increased, not only from the products of our mines, but from importations which were being made in very large amounts. The exports of specie from the country the year preceding the war, exceeded the imports by $57,996,154. During the first year of the war, and before the Banks had suspended, the imports over exports equalled $22,558,791; making in a single year a change in favor of the country of $80,554,945. No sooner was trouble with the South apprehended, than the Northern Banks began instinctively to strengthen themselves. On the 1st of January, 1860, before any suspicion or distrust was excited, and when the country was in an eminently sound and prosperous condition, the coin reserves of the Banks of the three great cities, New York, Boston, and Philadelphia, equalled $29,822,320; of which the Banks of New York held $20,119,779; those of Boston, $4,796,000; those of Philadelphia, $4,906,541. On the 1st of January, 1861, when the disruption of the country seemed imminent, they had increased their reserves to $43,849,628; and on the 9th of August, 1861, when they undertook to aid the government, to $63,165,039. There was no concert or method in all this; only ordinary prudence. Even so late as 1862, after the Banks had suspended, and Mr. Chase had drawn from them $150,000,000, they held $44,887,093 in coin ; a sum greater, by $15,000,000, than that held on the 1st of January, 1860. Had he acceded to their request at the outset, he might have availed himself, at the value of coin, of every dollar of capital in the country which could have been spared for the war. No sooner did the Banks enter upon their undertaking, than they brought into action the most efficient

method ever devised for its object. They employed all the Banks in the loyal States, numbering some twelve hundred, to become their brokers; and to peddle out, over their own counters, the obligations of the government, which were of denominations to suit every class of purchasers, - the capitalist with his millions, and the day-laborer who had accumulated a few months' wages. Such was the intense spirit of patriotism aroused at the North that every man was prepared to lay down his last dollar for the cause. Starting with ample reserves, the Banks were certain of having these re-enforced from the mines of the country, at the rate of a million dollars each week, in addition to the receipts from abroad. With their constantly increasing strength, the public securities would steadily have advanced in demand and price, so as to have commanded at least their par value in coin; and at the close of the war, when the debts incurred in its prosecution came to be paid, they would be paid in a currency of the same value as that in which they were contracted, instead of one twice as valuable. As it was, the National Debt was more than doubled, the war prolonged to twice its necessary length, the public service thoroughly demoralized, the morals of the country debauched, and innumerable and valuable lives sacrificed, merely to gratify the whim or selfish purpose of a man ignorant as a Hottentot upon the matters in reference to which he acted with such reckless levity. More than fifteen years have elapsed since his scheme for the "reformation of the currency" was set on foot, during which the people have hardly handled or seen a dollar of gold; while they have now a far more difficult task before them, in the restoration of the currency from the condition in which he placed it, than they had in providing the means of putting down the Rebellion.

While the Banks were supplying the government with money (coin) at the rate of more than a million dollars daily, a potent element of mischief-one which caused and precipitated their suspension, and at the same time that of the government, and led to the issue of legal-tender notes-was an issue by Mr. Chase of demand notes, payable in coin (authority having been given him therefor, to the extent of $50,000,000, afterwards increased to $60,000,000). Against their issue the Banks earnestly remonstrated. The government had not a dollar for their payment but what these supplied.

It was, in effect, the exhaustion of their means to an equal amount. For the loans made directly by the Banks they received government securities, by means of the sale of which they were speedily reimbursed their advances. The process was perfectly natural and healthy. They had nothing to fear so long as they could sell securities as fast as they contracted to supply money. The result showed that they could do this, at the outset, at the rate of more than a million dollars in coin daily, and, when confidence was at its lowest ebb, without seriously impairing their reserves. Every sale they made prepared the way for new ones. For 1863 their advances could have equalled, if necessary, a million and a half a day, if such an amount had been required, — certainly if they had been made in their own paper, having the value of coin. It is well known that the customs revenues have been collected in gold to the amount of two hundred millions annually, by the use of less than one-fifth of that sum, by the constant return of that collected into circulation. When Mr. Chase came into the field, it was not to sell bonds; not to get that in hand for which he had years to pay; but to issue his own promises payable on demand, and which were to be paid by some one almost as soon as issued. For their payment he did not attempt to provide a dollar. He threw them upon the market as money. The Banks were compelled to receive them, in order to protect the credit of the government. By receiving them on deposit, they contracted and were speedily compelled to discharge them in coin. For these notes they received no bonds. Their only mode of providing the means therefor was to call in their loans. To do this would create a disturbance in the money market, which, equally with the discredit of the government, would defeat altogether their great undertaking. They appealed to Mr. Chase to desist; but he refused. As the notes he had authority to issue nearly equalled their reserves, and had to be paid out of them, they were quite enough to break the Banks, into which they constantly tended to flow; although, with the methods employed and the equivalents received, the latter had been enabled to advance to the government nearly three times the amount of such notes, without seriously reducing their reserves. As he persisted in his course, and as the event sooner or later was inevitable, the Banks thought it wise to anticipate it by suspending with

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comparatively full coffers. They held at the time the extraor dinarily large sum of $44,887,893. In their relation to the government, they should have acted simply as brokers, to turn its securities, if possible, with sufficient rapidity to supply its necessities, - at least as fast as customers could be found for their purchase. Mr. Chase's chief care should have been not to have drawn a dollar in coin from them; and not, permanently, a dollar of their capital. All he wanted was that which would purchase articles necessary for the support of His object was accomplished so long as the paper of the Banks would do this as cheaply as coin. The stronger their position, the better could they dispose of his securities. Their aggregate share capital was far less than the amount with which they supplied him, in the short period of five months. In order to sell his securities, the money market was to be kept in an easy condition. For such purpose, the whole capital of the Banks with which' he dealt should have been held. In ordinary times Banks cannot, nor should they, part with a dollar of their reserves. To part with them is always a sign of weakness, that losses or bad debts have been made. At the time of the suspension of the Banks, Dec. 30, 1861, the amount of demand notes outstanding equalled $33,460,000, mostly held by the Banks, and for which they had been compelled to part with a corresponding, or at least with a large amount of gold. The process seemed a perfectly simple, but proved to be a thoroughly fatal one. Mr. Chase undertook to become an issuer of a convertible currency, without the provision of any means for its redemption. His defeat was only another, but a crowning example of an undertaking which can have but one issue. From it should have been learned a lesson which, if well heeded, would have helped to unlock all the mysteries of paper money. The government, for the time, was wholly without means. The coin which the Banks had paid it had been expended. It had no bank-notes, nor could it get any. Its wants in money equalled a million and a quarter daily. Its revenues did not equal one-tenth that amount. Now, if the doctrine of every writer upon the subject of money, that worthless bits of paper, by calling them money, may, from the necessity of their use, be maintained at the par value of coin; or that of most writers, that they may, by limiting their amount, be raised to any possible pitch of

value; or that of Mr. Fawcett, of the most moderate school of the Economists, that a government engaged in war may issue its own inconvertible paper, equal to its increased expenditures, which will be maintained at the par of coin from the necessity of its use, be true, why was it that the United States notes, issued to meet the expenditures of the War of the Rebellion, and equalling the paltry sum of only $33,460,000, should, at the moment that five times that amount was required, fall to a discount so soon as government suspended; selling in the market, like all other kinds of property or securities, only at their estimated value? Till this question be answered, how absurd for writers to repeat stale assertions, as impossible in realization as that heavy bodies should fly from instead of to the earth! and how ridiculous for our present Secretary of the Treasury to prate about the ease with which some four hundred millions of government notes may be maintained at the par value of coin, without any adequate provision for their conversion into coin or merchandise, at the very time that the commercial currency of the country is probably inflated to the extent of $300,000,000!

The position of the demand notes was indeed most anomalous. Government could not pay them. They bore no interest. The Treasury notes, bearing interest at the rate of 6 per cent and receivable in payment of the revenues, were at a discount of about 1 and one-half per cent. These could be absorbed taken out of the market from the interest they bore. No one wanted non-interest-bearing notes, when interest-bearing ones could be had. The Banks were no longer willing to receive them, and got rid of them as fast as possible by paying them out over their counters to such of their customers as were willing to take them. In all business and monetary circles they were unwelcome intruders, - an incongruous element, the nature of which no one understood, and which all wished to avoid.. No one could be compelled to receive them. They would not have been taken on any terms, but for the fact that they were receivable for the revenues. In every transaction in which they were used, they were the unpleasant reminders of the poverty and broken faith of the government. It was as if the dishonored check of a merchant were hawked about the streets till it found a purchaser, at a discount, in some one indebted to the drawer, and who could.