upon this plan, would be equivalent to a loan to the Government without interest, except on the fund to be kept in coin, and without expense, except the cost of preparation, issue and redemption; while the people would gain the additional advantage of a uniform currency, and relief from a considerable burden in the form of interest on debt. These advantages are, doubtless, considerable; and if a scheme can be devised by which such a circulation will be certainly and strictly confined to the real needs of the people, and kept constantly equivalent to specie by prompt and certain redemption in coin, it will hardly fail of legislative sanction.

The plan, however, is not without serious inconveniences and hazards. The temptation, especially great in times of pressure and danger, to issue notes without adequate provision for redemption; the ever-present liability to be called on for redemption beyond means, however carefully provided and managed; the hazard of panics, precipitating demands for coin, concentrated on a few points and a single fund; the risk of a depreciated, and depreciating, and finally worthless paper money; the immeasurable evils of dishonored public faith and national bankruptcy; all these are possible consequences of the adoption of a system of Government circulation. It may be said, and perhaps truly, that they are less deplorable than those of an irredeemable bank circulation. Without entering into that comparison, the Secretary contents himself with observing that, in his judgment, those possible disasters so far outweigh the probable benefits of the plan, that he feels himself constrained to forbear recommending its adoption.

2. The second plan suggested remains for examination. Its principal features are: first, a circulation of notes bearing a common impression, and authenticated by a common authority; second, the redemption of these notes by the associations and institutions to which they may be delivered for issue; and, third, the security of that redemption by the pledge of United States stocks, and an adequate provision of specie.

In this plan the people, in their ordinary business, would find the advantages of uniformity in currency; of uniformity in security; of effectual safe-guard, if effectual safe-guard is possible, against depreciation; and of protection from losses in discounts and exchanges; while in the operations of the Government, the people would find the further advantages of a large demand for Government securities, of increased facilities for obtaining the loans required by the war, and of some alleviation of the burdens on industry through a diminution in the rate of interest, or a participation in the profit of circulation, without risking the perils of a great money monopoly,

A further and important advantage to the people may be reasonably expected in the increased security of the Union, springing from the common interest in its preservation, created by the distribution of its stocks to associations throughout the country, as the basis of their circulation.

The Secretary entertains the opinion that if a credit circulation in any form be desirable, it is most desirable in this. The notes thus issued and secured would, in his judgment, form the safest currency which this country has ever enjoyed; while their receivability for all Government dues, except customs, would make them, wherever payable, of equal value as a currency in every part of the Union. The large amount of specie now in the United States, reaching a total of not less than $275,000,000, will easily support payments of duties in coin, while these payments and ordinary demands will aid in retaining this specie in the country as a solid basis, both of circulation and loans.

The whole circulation of the country, except a limited amount of foreign coin, would, after the lapse of two or three years, bear the impress of the nation, whether in coin or notes; while the amount of the latter, always easily ascertainable, and, of course, always generally known, would not be likely to be increased beyond the real wants of business.

He expresses an opinion in favor of this plan with the greatest confidence, because it has the advantage of recommendation from experience. It is not an untried theory. In the State of New York, and in one or more of the other States, it has been subjected, in its most essential parts, to the test of experiment, and has been found practicable and useful. The probabilities of success will not be diminished, but increased by its adoption under national sanction, and for the whole country.

It only remains to add that the plan is recommended by one other consideration, which, in the judgment of the Secretary, is entitled to much influence. It avoids almost, if not altogether, the evils of a great and sudden change in the currency, by offering inducements to solvent existing institutions to withdraw the circulation issued under State authority and substitute that provided by the authority of the Union. Thus, through the voluntary action of the existing institutions, aided by wise legislation, the great transition from a currency heterogeneous, unequal, and unsafe, to one uniform, equal, and safe, may be speedily and almost imperceptibly accomplished.

If the Secretary has omitted the discussion of the question of the Constitutional, power of Congress to put this plan into operation, it is because no argument is necessary to establish the proposition that the power to regulate commerce and the value of coin includes the power to regulate the currency of the country, or the collateral proposition that the power to affect the end includes the power to adopt the necessary and expedient means.

The Secretary entertains the hope that the plan now submitted, if adopted with the limitations and safe-guards which the experience and wisdom of Senators and Representatives will, doubtless, suggest, may impart such value and stability to Government securities that it will not be difficult to obtain the additional loans required for the service of the current and the succeeding year at fair and reasonable rates; especially if the public credit be supported by sufficient and certain provision for the payment of interest and. ultimate redemption of the principal."

Finding from the above extracts from the report of Secretary Chase that he forbore to recommend the issue of United States Treasury notes to circulate as money, and that he did recommend the National Currency bank bill, Mr. Spaulding, as chairman of the Sub-committee, addressed a note to the Secretary requesting him to furnish the draft of a bank bill for a national currency based on a pledge of public stocks, as recommended in his report, and received the following reply:

TREASURY DEPARTMENT,
Dec. 18th, 1861.

SIR: I have the honor to acknowledge the note of the Committee of Ways and Means of this date, covering the note of yourself as chairman of the Sub-committee, requesting him to furnish the draft of a bill for a

national currency based on the pledge of public stocks. The: Secretary of the Treasury, who is now in New York, will give to your request his prompt attention on his return.

With great respect,

To HON. E. G. SPAULDING,

GEO. HARRINGTON, Acting Secretary of the Treasury.

Ch. of Sub-Com. of Ways and Means, H. R.

On the return of the Secretary from New York, it was ascertained that no National Currency bank bill had been prepared. The Secretary then requested Mr. Spaulding to prepare a bill at as early a day as possible. Mr. Spaulding, as chairman of the Subcommittee, immediately set to work at his rooms at the National Hotel in preparing the first draft of the bill, which was there copied by Mr. George Bassett, clerk of the Committee of Ways and Means. This was during the Christmas holidays; Congress adjourning over two or three days at a time, without doing much business, no quorum being present.

On the 24th inst. Mr. Spaulding wrote a letter to Mr. Corning, then at Albany, informing him that he was making a draft of the National Currency bank bill, and requesting that he would forward a copy of the New York Free Banking Law, passed in 1838, and amendments thereto, for the use of the Committee. Mr. Corning promptly complied with this request, and returned the following reply:

ALBANY, Dec. 26, 1861.

MY DEAR SIR-I am this morning in receipt of your favor of the 24th inst. I send you by this day's mail a copy of our Bank Laws, with amendments passed since 1856. This matter, as recommended by Secretary Chase, will not, in my judgment, meet the approval of our State, hence I think much care should be had in drawing up the bill.

Yours, very truly,

Hon. E. G. SPAULDING, Washington.

ERASTUS CORNING.

When the frame work of the bill was nearly completed, it was submitted to Mr. Hooper, the only other member of the Subcommittee then in Washington, Mr. Corning having gone to Albany. Mr. Hooper rendered valuable assistance in perfecting the bill. He incorporated into it some provisions which experience in his own State had shown to be valuable. The bill was finally completed soon after Christmas. A few days thereafter the National Currency bank bill, thus hastily prepared, was sent by Mr. Spaulding to the public printer, and two hundred copies printed for the use of the Committee of Ways and Means and

UNIVER

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the Secretary of the Treasury, with a view of having it more maturely considered in the General Committee, amended and corrected, and finally to be reported to the House. Copies of this printed bill are still in the possession of Mr. Spaulding, the chairman of the Sub-committee, which formed the basis of the bank bill which was finally adopted more than a year afterwards. Mr. Spaulding, while preparing the national currency bank bill, upon mature reflection came to the conclusion, that it could not be passed and made available quick enough to meet the crisis then pressing upon the Government for money to sustain the Army and Navy. He therefore drafted a legal tender Treasury note section to be added to the bank bill, hoping, at first, that it might be made available by issuing legal tender notes direct from the Treasury, while the bank bill was put in operation throughout the country. In order to bring the subject of issuing legal tender fundable notes before the country, the section thus prepared by Mr. Spaulding was furnished to the New York Tribune, and published in the issue of the 31st December, 1861, and is as follows:

"That for temporary purposes, and until the circulating notes authorized by this act shall be issued and put in circulation by corporations and associations to the aggregate amount of $100,000,000, the Secretary of the Treasury be, and he is hereby authorized to issue $50,000,000 of Treasury notes on the faith of the United States, payable on demand, without specifying any place of payment, and of such denominations as he may deem expedient, not less than $5 each, which shall be receivable for all debts and demands due to the United States, and for all salaries, dues, debts and demands, owing by the United States to individuals, corporations and associations within the United States; and such Treasury notes shall also be a legal tender in payment of all debts, public or private, within the United States, and shall be exchanged at any time at their par value, the same as coin, at the Treasury of the United States, and the offices of Assistant Treasurers in New York, Boston, Philadelphia, St. Louis and Cincinnati, for any of the coupon or registered bonds which the Secretary of the Treasury is now, or may hereafter be authorized to issue; and such Treasury notes may be re-issued from time to time, as the exigencies of the public service may require. Such Treasury notes shall be signed by the Treasurer of the United States, or by some officer of the Treasury Department designated by the Secretary of the Treasury, and shall be countersigned by the Register of the Treasury, or by some officer of the Treasury Department designated by the Secretary of the Treasury for the Register. And all the provisions of an act entitled "An act to authorize the issue of Treasury notes, approved the 23d day of December, 1857," so far as the same can be applied to the provisions of this section, and not inconsistent therewith, are hereby revived and re-enacted."

Upon more mature consideration and further examination, Mr. Spaulding came to the conclusion that the bank bill, containing

sixty sections, could not, with the State banks opposed to it, be passed through both Houses of Congress for several months, and that so long a delay would be fatal to the Union cause. The banks in New York, Boston and Philadelphia, had just suspended specie payments, which compelled a general suspension of coin payments by the Government, and all the other banks throughout the country. No more gold could be loaned to the Government, except in small and wholly inadequate amounts, because it was not to be had. State bank bills could still be obtained, but the banks having suspended specie payments, this currency was depreciated, and had only a local character and credit-not being much known out of the States where the banks were located. Hesitancy and delay, with the expenses of the war running on at an average of $2,000,000 per day, would have been fatal. Mr. Spaulding, therefore, changed the legal tender section, intended originally to accompany the bank bill, into a separate bill, with alterations and additions, and on his own motion introduced it into the House by unanimous consent on the 30th of December, 1861. It was read twice, and referred to the Committee of Ways and Means, and ordered printed (House Bill, No. 182), and is as follows:

Mr. Spaulding, on leave, introduced the following bill:

A BILL

To authorize the issue of treasury notes payable on demand. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That, for temporary purposes, the Secretary of the Treasury be, and he is hereby authorized to issue fifty millions of dollars of treasury notes, on the faith of the United States, payable on demand, without specifying any place of payment, and of such denominations as he may deem expedient, not less than five dollars each, which shall be receivable for all debts and demands due to the United States, and for all salaries, dues, debts, and demands owing by the United States to individuals, corporations, and associations within the United States; and such treasury notes shall also be a legal tender in payment of all debts, public and private, within the United States, and shall be exchangeable at any time at their par value, the same as coin, at the Treasury of the United States, and the offices of the assistant treasurers in New York, Boston, Philadelphia, St. Louis, and Cincinnati, for any of the coupon or registered bonds which the Secretary of the Treasury is now or may hereafter be authorized to issue, and such treasury notes may be re-issued from time to time as the exigencies of the public service may require. Such treasury notes shall be signed by the Treasurer of the United States, or by some officer of the Treasury Department designated by the Secretary of the Treasury, and shall be countersigned by the Register of the Treasury, or some officer of the Treasury Department designated by the