FIVE

DOLLARS.

The United States promise to receive this note for Five Dollars

TOTAL NOTES ISSUED DURING WAR OF 1812. 37

the news reached Washington a few days only before the passage of the bill, which, although a war measure, was carried through, inasmuch as it was considered necessary to the regulation of the disordered finances of the country. The whole amount of treasury notes, absolute and contingent, which was authorized by these five acts, was $60,500,000, of which amount $36,680,794 was issued. The following table exhibits the amount issued under each act:

Under act of June 30, 1812..

Under act of February 25, 1813.

Under act of March 4, 1814...

Under act of December 26, 1814..

Under act of February 24, 1815-$100 notes..$4,969,400
Under act of February 24, 1815-small treas-

ury notes.

Total amount issued....

$5,000,000

5,000,000

10,000,000

8,318,400

3,392,994

8,362,394

$36,680,794

Although the treasury notes of 1815 of small denominations, originally issued, amounted to only $3,392,994, the law made them fundable into 7 per cent. stock, payable after December 31st; and as the notes were reissuable, they were, under various exigencies, again and again paid out, until the whole amount of the 7 per cent. stock issued for the purpose of funding them, amounted to $9,070,386. On account of the high rate of interest of these bonds, the small treasury notes were in demand, and a small amount was sold at a premium of 4 per cent., and $1,365,000 at a premium of $32,107.64, or about 21 per cent. The Secretary, in his annual report for 1815, says: "The treasury notes,

which were issued under act passed previous to February 24, 1815, were, for the most part, of a denomination too high to serve as a current medium of exchange; and it was soon ascertained that the small treasury notes, fundable at an interest of 7 per cent., though of a convenient denomination for common use, would be converted into stock almost as soon as they were issued.' The notes of $100 and upward, though fundable into 6 per cent. bonds, were depreciated from 8 to 10 per cent. below bank notes, which bore no interest, but were redeemable in specie.

99 1

In recapitulation, it may be stated that the treasury notes of the period of the war of 1812 were issued under five acts of Congress, as stated in the table. The notes of the first three acts were made chargeable to the sinking fund-those of the last two, not; those of the first two acts were in denominations of not less than $100; those of the next two were not less than $20; and those of the last act were in denominations of $3, $5, $10, $20, $50, $100 and upward. Those of the first three acts were not originally fundable into stock, but were made so by the act of November 15, 1814, and by the subsequent act of February 24, 1815. The notes of the acts of December 26, 1814, became fundable by the act of February 24, 1815, but those of the last-named act were fundable by the terms of their authorization. The notes of all the acts but the last were made payable one year from the date of their issue; those of the last act were payable at no fixed date. All of these notes (with the exception of the small treasury notes, which were with

1 1 Report of the Secretary of the Treasury, 1815, p. 26.

DEPRECIATION OF GOVERNMENT LOANS, 1812-1815. 39

out interest) bore interest at the rate of 5 per cent. None were in the form of a promise to pay coin on demand, but all in the form of a receipt for all dues payable to the Government. None of these notes had any legal tender quality, and Congress, without debate, rejected the only proposition made to give them this quality. The denominations, except in the case of the small notes of 1815, were too large for general circulation, and the inducements for funding the latter were so great that they were speedily funded into seven per cent. bonds. As long as the banks redeemed their notes in specie, treasury notes appear to have been kept at par, but when specie payments were suspended, they began to depreciate, but were kept from great discount by the funding acts of November 25, 1814, and February 24, 1815. It is said, "that of eighty millions of loans negotiated by the Government during this period, the avails were only thirty-four millions, after deducting discounts and depreciations." After the close of the war, in December, 1814, these notes were rapidly funded.

Report of Committee of Ways and Means, April 13, 1830,

CHAPTER VI.

TREASURY NOTES OF THE PERIOD OF THE FINANCIAL CRISIS OF 1837.

IN anticipation of a large surplus, Congress, by act of June 23, 1836, provided for the distribution of a large amount of Government money among the States in proportion to their representation in the Senate and House of Representatives, and three instalments, amounting in all to $27,063,430, were so distributed.' In the meantime, about May 1, 1837, specie payments were suspended, owing to the great depression in commercial circles. An extra session of the 25th Congress was called in September of the same year. The charter of the second Bank

of the United States had expired on March 4, 1836, and on June 23, 1836, Congress had passed an act authorizing and regulating the deposit of public moneys in State banks. No action was taken during the extra session toward rechartering the Bank of the United States. The distribution of the fourth instalment to the States was, however, postponed, but the Secretary was prohibited from calling for any of the money already distributed without special authority from Congress, which has not, up to the present date, been given.

The revenues for the year (1837) were from six to ten

1 See page 180.