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were in favor of a view of the Constitution giving wider powers to Congress.

During the Mexican war, 1846-1847, the plea of necessity secured congressional authority for another issue of interest-bearing Treasury notes. The financial panic of 1857 again caused Congress to consider such notes as the only remedy for the existing distress.

It remained for the Civil war, however, to bring such pressure that all remaining constitutional scruples were swept away. Until 1862 no notes had been issued with the legal-tender quality. All propositions to make Government paper a legal tender had been rejected almost with contempt by Congress. In 1862, however, the first Legal-tender Act was passed, and for the first time, notes having the quality of legal tender, and intended to circulate as money, were issued by the United States Treasury. These notes were at first fundable in United States bonds, and had not this provision been afterward repealed by Congress, they would, like previous issues of Treasury notes, have soon disappeared from circulation. By this repeal they were made a permanent circulation. Then came the decision of the United States Supreme Court, reversing a former decision and making them a legal tender for all debts—for those contracted before the passage of the Legal-tender Act as well as for those contracted after that date. This decision, however,

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PREFACE. based the constitutionality of legal-tender notes upon the war powers of Congress. This still left open the question whether such notes issued in time of peace were constitutional, and the Supreme Court has now settled that, under the Constitution, Congress has power, if it deems it expedient, to issue legal-tender money to any amount, either in time of peace or war.

The chapter upon the distribution of the surplus money of the United States is, it is believed, the first complete history of that subject. It serves to illustrate the subject of United States notes. The crisis of 1837, which at that time was deemed sufficient cause for the issue of the latter, can be readily traced to the withdrawal of the surplus from the banks to distribute it among the States.

The late decision of the Supreme Court on the legaltender question, and the dissenting opinion, on account of their importance, are given in an Appendix.

A considerable portion of the material in the present volume was contained in the third volume of the “Cyclopædia of Political Science and Political Economy,” recently published by M. B. Cary & Co., of Chicago; and by their courtesy, and with their consent, it is given to the public in this convenient forin.

In addition to the authorities quoted, the following have been consulted: American State Papers; Annals of Congress; Madison Papers; Elliot's Debates ; Congressional Globe; Bolles' Financial History of the United States; National Loans of the United States, by R. A. Bayley; Annual Cyclopædia ; Hunt's Merchants' Magazine ; Bankers' Magazine; Schucker's Life of Chase; Spaulding's Legal-tender Paper Money; Newspapers, 1861, 1862, 1863.

J. J. K.

WASHINGTON, April 30, 1884.

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