broke out, the necessity of funds was so imperative, that the Administration and Congress felt themselves forced, the one to recommend, and the other to authorize, the issue of interest-bearing Treasury notes. They were regarded as a measure of necessity. Loans in the ordinary form had failed, and these notes were regarded as a convenient form of loan. They were not intended to circulate as money; they were fundable into public stock, and, as a matter of fact, were retired as soon as possible after the close of the war. These issues were, however, a fatal precedent out of which has grown a latitude of constitutional construction not then anticipated.

From 1815 to 1837, a period of twenty-two years, there was no resort to this remedy for the relief of the Government finances. In 1836, the charter of the second Bank of the United States expired, and again party spirit prevented a recharter. Soon after came the financial disasters of 1837, and again the Administration recommended, and Congress authorized, the issue of interest-bearing Treasury notes as forms of short loans. These issues extended from 1837 to 1844, and during that period the views of many, as to the constitutionality of their use, considerably expanded. The discussions in Congress, and the executive documents of that day, show how severe was the struggle between the strict constructionists and those who

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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 These notes were at first fundable in United States bonds, and had not this provision been afterward repealed by Congress, they would, like previous issues of Treasury notes, have soon disappeared from circulation.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,

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, or 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 form.

In addition to the authorities quoted, the following have been consulted: American State Papers; Annals of Congress; Madison Papers; Elliot's Debates; Con

gressional 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.

WASHINGTON, April 30, 1884.

J. J. K.