They were not prejudiced against bank notes, and the proposed notes bearing interest had many advantages over bank paper. The proposed notes would be in no way inferior to exchequer bills; in fact, it was only want of credit that compelled the English Government to set aside certain revenues to meet the latter. The treasury notes would have two advantages over exchequer bills one, the superior credit of the United States, and the other, that they were receivable for taxes and public dues. They were also superior to public stocks, in that, while bearing interest, they also can serve as currency, the same as gold and silver, thus enhancing the medium of circulation. There was no resemblance between them and continental money. When the latter was issued, the Government was dependent on the pledges of the several States for its revenues, but now its credit was above suspicion, its power to raise revenue complete, and its ability to pay its debts undoubted. War was unavoidable. Both loans and taxes would have to be resorted to. The proposed notes were nothing but a loan with extraordinary advantages, taking, however, but little from the circulating medium of the country. In many transactions they would have all the effect of money. While not secured by any specific fund set apart for their redemption, the entire duties and taxes of the year are indirectly pledged for this purpose, since they are receivable in payment of such duties and taxes. The revenues of the year were estimated at eight millions, and the proposed issue of notes was five millions only. The faith of the Government was pledged for their redemption. That faith had never been violated. The resources of the Govern

FIRST ISSUES UNDER CONSTITUTION, 1812.

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ment were ample beyond those of any other nation. Its sources of revenue were unimproved land, a productive agriculture, an extensive commerce, an enterprising people, and an unlimited right of taxation. The anticipated abuse of a privilege was no argument against its legitimate use.

The bill passed the House June 17, 1812, yeas 85, nays 41. It passed the Senate June 26, and became a law June 30, 1812. By it the President was authorized to issue treasury notes to an amount not exceeding $5,000,000. Section two of the first "Act to authorize the issuing of treasury notes," read as follows: "That the said treasury notes shall be reimbursed by the United States, at such places, respectively, as may be expressed on the face of the said notes, one year, respectively, after the day on which the same shall have been issued; from which day of issue they shall bear interest at the rate of five and two-fifths per centum a year, payable to the owner and owners of such notes, at the treasury, or by the proper commissioner of loans, at the places and times respectively designated on the face of said notes for the payment of principal."

They were signed by persons designated by the President, and the compensation of these persons was fixed at one dollar and twenty-five cents each for one hundred notes signed. They were countersigned by the Commissioners of Loans for the State in which the notes were respectively made payable. With the approval of the President, the Secretary of the Treasury was authorized to borrow money upon the security of the notes, and to pay them to such banks as would give the Government credit for them at par. When the notes were paid to

collectors of revenue and receivers of public money, the interest ceased on the day of payment. The Commissioners of the Sinking Fund were authorized to cause the principal and interest to be paid when due, and to purchase them at not more than par, in the same way as they purchased other public securities, with a view of reducing the debt. They were made payable to order, transferable by delivery and assignment on indorsement by persons to whose order they were made payable. The notes were made everywhere receivable for duties, taxes, and in payment of public land, at their par value with accrued interest on the day paid in. Penalties were imposed for counterfeiting them, and an appropriation made for the expense of printing and preparing the notes.

There was nothing in the law regulating the denominations in which they should be issued, but, as a matter of fact, none were issued of a denomination of less than one hundred dollars. The largest amount authorized under this act, outstanding at any one time, was five millions. The notes authorized were all issued before the end of the year 1813, and were all redeemed during the year 1814. Niles' Register for July 4, 1812, in an editorial, thus refers to the issue of these notes. The arguments used in favor of their issue were almost precisely the same as those afterward urged by Chase and Fessenden in favor of the issue of seven-thirty and compound-interest notes:

"To meet any possible exigency from a transient failure of adequate supplies to carry on the war against an unprincipled and inveterate enemy, it has been resolved to issue certain notes from the treasury depart

NILES' REGISTER FAVORS TREASURY NOTES. 27

ment, to the amount of about five million dollars, bearing interest of five and two-fifths per cent. per annum, equal to one and one-half cents per day on every note of $100-which notes are to become payable at the treasury one year after the date of their respective issues, and in the meantime are receivable (with interest that may have accumulated upon them) in all payments to be made to the United States.

"This plan appears the most eligible that could possibly have been adopted, as it will mutually accommodate the Government and the people, and be advantageous to both. Yet attempts are making (what will not the enemy attempt ?) to depreciate the value of this intended emission, by comparing it with the old continental money. The pitiful design will not avail, for though treasury notes to the value of five millions may issue, the probability is that a ten thousandth part of the population of the United States will never see one of them. The whole will be locked in the vaults of the bank, or snugly put away by individuals as soon as they appear; because they will be convertible into current money (specie or bank notes) at a moment's notice, and have constantly increasing value. The sum to be issued is so completely within the means of the Government, that these notes will always bear a premium equal to the interest that may have accumulated on them. The city of New York itself, in the course of one year would consume the whole emission. The proposed operation of these notes is so perfectly understood by the trading part of the community, particularly on the seaboard, that an explanation of it may well be thought superfluous; but as bad men may seize upon them to

alarm the ignorant and unsuspecting, it appears right we should offer a few propositions to show their folly and wickedness. A person receives of the United States $10,000 in treasury notes; if he has no use for the money for ten days, he lays them in his desk for that time-the interest in the interim amounts to $15. He then carries them to a bank and deposits them with other monies, for $10,015, or exchanges them with a friend or neighbor (and in our seaports he can always find such) who has duties to pay for that amount. Thus the money is never idle, it works night and day, in the language of money lenders, and is constantly accumulating. The banks will be glad to receive these notes in exchange for their own; the advantage is on their side, as the treasury notes bear a daily interest, and their own bear none at all. If the stock should rise to a greater amount than the bank may think it advisable to keep, which can hardly be possible, they are immediately convertible into any kind of money desired, for the banks always have customers who will use them in payment of bonds due the United States for duties. They are better as deposits than specie, gold, and silver, for gold and silver lie dormant in the vaults, whereas the treasury notes will be an active capital, every hour becoming more and more valuable, and as fully competent to all the purposes of the banks as specie, because they will produce it.

"From these brief remarks it will appear evident that treasury notes, the moment they are issued, will be hoarded up by the banks, if they can get them; and very few of us will be alarmed at the sight of one unless we seek it as a matter of curiosity."