Financial Catechism

NATIONAL BANKING LAWS.

The following sections of law constitutes all the legislation of the United States (and the original confederation States) from 1781 to 1882, relative to the coinage, weight, fineness and legal-tender quality of United States and foreign coins :

ARTICLES OF CONFEDERATION ADOPTED BETWEEN THE STATES, MARCH 1, 1781 :

1.  The United States in Congress assembled shall also have the exclusive right of regulating the alloy and value of coin struck by their own authority or by that of the respective states, fixing the standard of weights throughout the United States.

(A silver dollar containing 375.64 grains of pure silver was established as the unit of account by act of Congress of the Confederation passed August 8, 1786, and by the ordinance of October 16, 1786.  (At this time the confederation had not established a mint, and the dollar specified by the act was nowhere coined.  It was intended to be the equivalent in value of four shillings and six-pence sterling, but lacked about two per cent.)

The Constitution of the United States, adopted September 17, 1787, provides that :

The Congress shall have power :

2.  To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures.

No State shall coin money ;  emit bills of credit ;  make any thing but gold and silver coin a tender in payment of debts ;  pass any ex post facto law, or law impairing the obligation of contracts.

(The Act of April 2, 1792.)

That the money of account of the United States shall be expressed in dollars or units, dimes or tenths, cents or hundredths, and mills or thousandths, a dime being the tenth part of a dollar, a cent the hundredth part of a dollar, a mill the thousandth part of a dollar, and that all accounts in the public offices and all proceedings in the Courts of the United States shall be kept and had in conformity to this regulation.

3.  That a mint for the purpose of a national coinage be and the same is established, to be situated and carried on at the seat of government of the United States for the time being.

4.  There shall be, from time to time, struck and coined at said mint, coins of gold, silver, and copper, of the following denominations, values and descriptions, viz.:  Eagles—Each to be of the value of ten dollars or units, and to contain 247½ grains of pure, or 270 grains of standard gold.  Half Eagles—Each to be of the value of five dollars, or units, and to contain 123¾ grains of pure, or 135 grains of standard gold.  Quarter Eagles—Each to be of the value of two dollars and half dollar, and to contain 61¹/₃ grains of pure, or 67½ grains standard gold.  Dollars or Units—Each to be of the value of a Spanish milled dollar, as the same is now current, and to contain 371¼ grains of pure, or 416 grains of standard silver.  Half Dollars—Each to be of half the value of the dollar or unit, and to contain 185⁵/₈ grains of pure, or 208 grains of standard silver.  Quarter Dollars—Each to be of one-fourth the value of the dollar or unit, and to contain 92 13-16 grains of pure, or 104 grains of standard silver.  Dimes—Each to be one-tenth of the value of a dollar or unit, and to contain 87¹/₈ grains of pure, or 41¾ grains of standard silver.  Half Dimes—Each to be of the value of one-twentieth of a dollar, and to contain 18 9-10 grains of pure, or 20 4-5 grains of standard silver.  Cents—Each to be of the value of one hundredth part of a dollar, and to contain 11 penny-weights of copper.  Half Cents—Each to be of the value of half a cent, and to contain 5½ pennyweights of copper.

5.  The proportional value of gold to silver in all coins which shall, by law, be current as money within the United States shall be as fifteen to one, according to weight of pure gold and pure silver ;  that is to say, every fifteen pounds weight of pure silver shall be of equal value in all payments with one pound weight of pure gold, and so in proportion as to greater or less quantities, of the respective metals.

(Act of February 9, 1793.)

6.  At the expiration of three years next ensuing from the time when the coinage of gold and silver, agreeably to an act entitled “An act establishing a mint and regulating the coins of the United States,” shall commence at the mint of the United States (which shall be announced by proclamation of the President of the United States) all foreign gold coins, except Spanish milled dollars and parts of such dollars, shall cease to be legal tender as aforesaid :

7.  All foreign gold and silver coins, except Spanish milled dollars and parts of such dollars, which shall be received in payment for moneys due to the United States after the said time when the coinage of gold and silver coins shall begin at the mint of the United States, shall, previously to their being issued in circulation, be coined anew, in conformity to the act entitled “An act establishing a mint and regulating the coins of the United States.”

(The Act of March 2, 1799.)

7.  All foreign coins and currencies shall be estimated at the following rates, viz.:  Each pound sterling of Great Britain at four dollars and forty-four cents ($4.44) ;  each lirve tournois of France at eighteen and a half cents (18½);  each florin or guilder of the union Netherlands at forty cents (40) ;  each marc-banco of Hamburg at thirty-three and one-third cents (33.33); each rix dollar of Denmark at one hundred cents (100) ;  each real of plate and each rial of ullon of Spain, the former at ten cents and the latter at five cents each ;  each noilree of Portugal at one dollar and twenty-four cents ;  each pound sterling of Ireland at four dollars and ten cents ;  each tale of China at one dollar and forty-eight cents ;  each pagoda of India at one dollar and ninety-four cents ;  each rupee of Bengal at fifty-five and one half cents ;  and all other denominations of money, as nearly as may be to the said rates or the intrinsic value thereof, compared with money of the United States.

9.  All duties and fees to be collected shall be payable in money of the United States, or in foreign gold and silver coins at the following rates, that is to say :  The gold coins of Great Britain and Portugal of the standard prior to the year 1792 at the rate of one hundred cents for every twenty-seven grains of the actual weight thereof ;  the gold coins of France, Spain and the dominions of Spain of the standard prior to the year 1792, a the rate of one hundred cents for every twenty-seven grains and two-fifths of a grain of the actual weight thereof ;  Spanish milled dollars at the rate of one hundred cents for each dollar, the weight whereof shall not be less than seventeen (17) penny weights and seven (7) grains—and in (the same) proportion for the parts of dollar ;  crowns of France at the rate of one hundred and ten cents for each crown, the actual weight whereof shall not be less than eighteen (18) pennyweights and seventeen (17) grains—and in proportion for parts of a crown ;  provided, that no foreign coins shall be receivable which and not by law a legal-tender for the payment of debt—except in consequence of a proclamation by the President of the United States authorizing such foreign coins to be received in payment of duties and fees aforesaid.

(The Act of March 3, 1801.)

10.  The foreign coins and currencies hereinafter mentioned shall be estimated in the computation of duties at the following rates :  Each sicca rupee of Bengal and each rupee of Bombay at fifty cents, and each star pagoda of Madras at one hundred and eighty-four cents.

(The Act of April 10, 1806.)

11.  Foreign gold and silver coins shall pass current as money within the United States, and be a legal-tender for the payment of all debts and demands at the several and respective rates following, and not otherwise, to-wit :  The gold coins of Great Britain and Portugal, at their present standard at the rate of one hundred cents for every twenty-seven grains of the standard weight thereof ;  the gold coins of France, Spain and the dominions of Spain, of their present standard, at the rate of one hundred cents for every twenty-seven grains and two-fifths of a grain of the actual weight thereof ;  Spanish milled dollars at one hundred cents for each, the actual weight whereof shall not be less than seventeen (17) pennyweights and seven (7) grains, and in proportion for parts of a dollar.  Crowns of France, at the rate of one hundred and ten cents for each crown, the actual weight whereof shall not be less than eighteen (18) pennyweights and seventeen (17) grains, and in proportion for the parts of a crown.  And it shall be the duty of the Secretary of the Treasury to cause, assays of the gold and silver coins of the description made current by this act, and which shall issue subsequently to the passage of this act, and shall circulate in the United States, at the mint aforesaid, at least once in every year, and to make report of the result thereof to Congress, for the purpose of enabling Congress to make such coins current, if they shall deem the same to he proper, at their real standard value.

12.  That the first section of the act entitled “An act regulating foreign coins and for other purposes,” passed the 9th day of February, 1793, be and the same is hereby repealed, and the operation of the second section of the same act is hereby suspended during the space of three years from the passage of this act.

(The Act of March 3, 1823.)

13.  The following gold coins shall be received in payments on account of all public lands at the several and respective rates following, and not otherwise, viz.:  The gold coins of Great Britain and Portugal, of their present standard, at the rate of one hundred cents for every twenty-seven grains, or eighty-eight cents and eight-ninths (88 8-9) per pennyweight ;  the gold coins of France, of their present standard, at the rate of one hundred cents for every twenty-seven and one-half grains, or eighty-seven and a quarter (87¼) cents per pennyweight, and the gold coins of Spain of their present standard, at the rate of one hundred cents for every twenty-eight and a half grains, or eighty-four cents per pennyweight.

14.  It shall be the duty of the Secretary of the Treasury to cause assays of the foregoing coins to be made at the mint of the United States at least once in every year, and make report of the result thereof to Congress.

(The Act of June 25, 1834.)

The following silver coins shall be of legal value, and shall pass current as money within the United States by tale for the payment of all debts and demands at the rate of one hundred cents to the dollar ;  that is to say, the dollars of Mexico, Peru, Chili, and Central America, of not less weight than four hundred and fifteen grains each, and those restamped in Brazil of like weight, of not less fineness than ten ounces fifteen pennyweights of pure silver in the troy pound of twelve ounces of standard silver, and the five-franc pieces of France, when of not less fineness than ten (10) ounces and sixteen (16) pennyweights in twelve ounces troy weight in standard silver, and weighing not less than three hundred and eighty-four grains each at the rate of ninety-three (93) cents.

16.  The following gold coins shall pass current as money in the United States, and be receivable in all payments by weight for the payment of all debts and demands at the rates following ;  that is to say, the gold coins of Great Britain, Portugal mid Brazil of not less than twenty-two (22) carats fine at the rate of ninety-four cents and eight-tenths of a cent (94 8-10) per pennyweight ;  the gold coins of France, nine-tenths fine, at the rate of ninety-three cents and one-tenth of a cent (93 1-10) per pennyweight, and the gold coins of Spain, Mexico and Columbia, of the fineness of twenty (20) carats three grains and seven-sixteenths (3 7-16) of a grain, at the rate of eighty-nine cents and nine-tenths of a cent (89 9-10) per pennyweight.

(The Act of January 18, 1837.)

17.  The standard for both gold and silver coins of the United States shall hereafter be such that of one thousand parts by weight nine hundred shall be of pure metal and one hundred of alloy, and the alloy of silver coins shall be of copper and the alloy of the gold coins shall be of copper and silver, provided that the silver do not exceed one-half of the alloy.

18.  Of the silver coins the dollar shall be of the weight of 412½ grains ;  the half-dollar of the weight of 206¼ grains, the quarter-dollar of the weight of 103¹/₈ grains, the dime or tenth part of a dollar of the weight of 41¼ grains, and the half dime or twentieth part of a dollar of the weight of 26⁵/₈ grains.

19.  And that dollars, half-dollars, quarter-dollars, dimes and half-dimes shall be legal-tenders of payment according to their nominal value for any sums whatever.

20.  Of the gold coins, the weight of the eagle shall be 258 grains, that of the half-eagle 129 grains and of the quarter eagle 64½ grains.

21.  And that for all sums whatever the eagle shall be a legal-tender of payment for ten dollars, the half-eagle for five dollars, and the quarter-eagle for two and a half dollars.

(The Act of July 27, 1842.)

22.  In all payments by or to the Treasury, whether made here or in foreign countries where it becomes necessary to compute the value of the pound sterling, it shall be deemed equal to four dollars and eighty-four cents ($4.84).

(The Act of March 3, 1843.)

23.  The following gold coins shall pass current as money in the United States and be receivable by weight for payment for all debts and demands at the rates following, that is to say, the gold coins of Great Britain of not less than nine hundred and fifteen and a half thousandths (915 ½-1,000) in fineness, at ninety-four cents and six-tenths (94 6-10) of a cent per pennyweight, and the gold coins of France of not less than eight hundred and ninety-nine thousandths (899-1,000) in fineness, at ninety-two cents and nine-tenths of a cent (92 9-10) per pennyweight.

The following silver coins shall pass current as money within the United States, and be receivable by tale for the payment for all debts and demands at the following rates, that is to say ;  the Spanish pillar dollars, and the dollars of Mexico, Peru and Bolivia of not less than eight hundred and ninety-seven thousandths (897-1,000) in fineness, and four hundred and fifteen (415) grains in weight at one hundred cents each, and the five franc piece of France of not less than nine hundred thousandths (900-1,000) in fineness, and three hundred and eighty-four (384) grains in weight at ninety-three (93) cents each.

(The Act of March 3, 1849.)

24.  There shall be from time to time struck and coined at the mint of the United States and the branches thereof—conformably in all respects to law, and conformably in all respects to the standard for gold coins now established by law—coins of gold of the following denominations and value, viz.:  Double eagles, each to be of the value of twenty dollars or units, and gold dollars, each to be of the value of one dollar or unit.

25.  For all sums whatever the double eagle shall be a legal-tender for twenty dollars, and the gold dollar shall be a legal-tender for one dollar.

26.  In adjusting the weights of gold coins henceforward the following deviations from the standard weights shall not be exceeded in any of the single pieces, namely :  In the double eagles, the eagle and the half-eagle, one-half of a grain ;  and in the quarter-eagle and gold dollar, one quarter of a grain ;  and that in weighing a large number of pieces together, when delivered from the chief coiner to the Treasurer, and from the Treasurer to depositors, the deviation from the standard weight shall not exceed three pennyweights in one thousand double eagles, two pennyweights in one thousand eagles, one and one-half pennyweights in one thousand half-eagles, one pennyweight in one thousand quarter-eagles, and on of a pennyweight in one thousand gold dollars.

(The Act of March 3, 1851.)

27.  It shall be lawful to coin at the mint of the United States and its branches a piece of the denomination and legal value of three cents, or three-hundredths of a dollar, to be composed of three-fourths silver and one-fourth copper, and to weigh twelve 12 grains and three-eighths (³/₈) of a grain ;  that it shall be legal-tender in payment of debts for all sums of thirty cents and under.

(The Act of February 21, 1853.)

28.  That the weight of the half-dollar, or piece of fifty cents, shall be one hundred and ninety-two (192) grains, and the quarter-dollar, dime and half-dime shall be respectively one-half, one-fifth and one-tenth of the weight of the half-dollar.

29.  The silver coins issued in conformity with the above section shall be legal-tenders in the payment of debts for all sums not exceeding five dollars.

30.  From time to time there shall be struck and coined at the mint of the United States and the branches thereof conformably in all respects to the standard of old coins now established by law, a coin of gold of the value of three dollars or units.

31.  And that hereafter the three-cent piece now authorized by law shall be made of the weight of three-fiftieths of the weight of the half-dollar, as provided in said act, and of the same standard of fineness.  And said act, entitled “An act amendatory of existing laws relative to the half-dollar, quarter-dollar, dime and half-dime,” shall take effect and be in force from and after the first day of April, 1853, anything to the contrary notwithstanding.

(The Act of February 21, 1857.)

32.  The standard weight of the cent coined at the mint shall be seventy-two (72) grains, or three-twentieths of an ounce troy, with no greater deviation than four grains in each piece, and said cent shall be composed of eighty-eight (88) per centum of copper and twelve (12) per centum of nickel.  And the coinage of the half-cent shall cease.

(The Act of February 21, 1859.)

33.  The pieces commonly known as the quarter, eighth and sixteenth of the Spanish pillar dollar and the Mexican dollar shall be receivable at the Treasury of the United States and its several offices and the several post-offices and land-offices at the rates of valuation following, viz.:  The fourth of a dollar, or piece of two reals, at twenty cents ;  the eighth of a dollar, or piece of one real, at ten cents, and the sixteenth of a dollar, or half real, at five cents.

34.  All former acts authorizing the currency of foreign gold or silver coins, and declaring the same a legal-tender in the payment debts are hereby repealed ;  but it shall be the duty of the erector of the mint to cause assays to be made from time to time of such foreign coins as may be known to commerce to determine their average weight, fineness and value, and to embrace in his annual report a statement of the results thereof.

(The Act of April 22, 1864.)

35.  The standard weight of the cent coined at the mint of the United States shall be forty-eight grains, or one-tenth of one ounce troy, and said cent shall be composed of ninety-five per centum of copper and five per centum of tin and zinc in such proportion as shall be determined by the director of the mint, and there shall be, from time to time, struck and coined at the mint a two-cent piece of the same composition, the standard weight of which shall be ninety-six grains, or one-fifth of an ounce troy, with no greater deviation than four grains to each piece.

36.  The said coins shall be a legal-tender in any payment, the one-cent coin to the amount of ten cents, and the two-cent coins to the amount of twenty cents, and it shall be lawful to pay out said coins in exchange for the lawful currency of the United States (except cents or half cents issued under former acts of Congress) in suitable sums by the treasurer of the mint, and by such other depositories as the Secretary of the Treasury, may designate.

(The Act of March 3, 1865.)

37.  There shall be coined at the mint of the United States a three-cent piece composed of copper and nickel in such proportion—not exceeding twenty-five (25) per centum of nickel—as shall be determined by the director of the mint, the standard weight of which shall be thirty grains, with no greater deviation than four grains to each piece.

38.  The said coin shall be legal-tender in any payment to the amount of sixty cents, and it shall be lawful to pay out said coins in exchange for the lawful currency of the United States (except cents or half-cents or two-cent pieces coined under former acts of Congress) in suitable sums by the treasurer of the mint, and by such other depositories as the Secretary of the Treasury may designate ;  provided, that from and after the passage of this act no issues of fractional notes of the United States shall be of less denomination than five cents.

39.  The one and two cent coins of the United States shall not be a legal-tender for any payment exceeding four cents in amount (all previous laws to the contrary repealed).

(The Act of May 16, 1866.)

40.  There shall be coined at the mint of the United States a five-cent piece, composed of copper and nickel in such proportion—not exceeding twenty-five per centum of nickel—as shall be determined by the director of the mint, the standard weight of which shall be seventy-seven and sixteen-hundredths grains, with no greater variation than two grains to each piece.

41.  Said coins shall be a legal tender in any payment to the amount of one dollar ;  and it shall be lawful to pay out said coins for lawful currency of the United States, in suitable sums, by the Treasurer of the mint, and by such other depositories as the Secretary of the Treasury may designate.

42.  That from and after the passage of this act no issue of fractional notes of the United States shall be of less denomination than ten cents.

43.  It shall be lawful for the Treasurer and the several Assistant Treasurers of the United States to redeem in national currency, under such rules and regulations as may be prescribed by the Secretary of the Treasury, the coins herein authorized to be issued when presented in sums of not less than one hundred dollars.

(The Act of March 3, 1871.)

44.  That the Secretary of the Treasury is required to redeem in lawful money all copper, bronze, copper-nickel and base metal coinage of every kind hitherto authorized by law, when presented in sums of not less than twenty dollars.

(The Act of Feb. 12, 1873.)

45.  That the gold coins of the United States shall be a one-dollar piece, which, at the standard weight of twenty-five and eight-tenths (25 8-10) grains shall be the unit of value ;  a quarter eagle, or two and a had dollar piece ;  a three dollar piece ;  a half eagle or five dollar piece.  And the standard weight of the gold dollar shall be twenty-five and eight-tenths (25 8-10) grains ;  of the quarter eagle sixty-four and one-half grains ;  of the three dollar piece seventy-five and four-tenths grains ;  of the half eagle one hundred and twenty-nine grains ;  of the eagle two hundred and fifty-eight grains ;  of the double eagle five hundred and sixteen grains, which coins shall be a legal-tender at their nominal value when not below the standard weight and limit of tolerance provided in this act, and that when reduced in weight below said standard and tolerance shall be a legal-tender in proportion to their actual weight.

Any gold coins of the United States, if reduced by natural abrasion not more than a half of 1 per cent. below the standard weight after twenty years’ circulation, and at a ratable proportion for any less period, shall be received at their nominal value at the United States Treasury.

46.  The silver coins of the United States shall be a Trade Dollar, a half dollar, a quarter dollar, a dime.  And the weight of the Trade Dollar shall be four hundred and twenty (420) grains troy ;  the weight of the half dollar shall be twelve grains and one-half of a grain ;  the quarter dollar and the dime shall be respectively one-half and one-fifth the weight of said half dollar and said coins shall be a legal-tender at their nominal value for any amount not exceeding five dollars in any one payment.

47.  The standard for both gold and silver coins of the United States shall be such that of one thousand parts by weight nine hundred shall be of pure metal, and one hundred of alloy.  The alloy of the silver coins shall be of copper.  The alloy of gold coins shall be of copper, or of copper and silver, but the silver shall in no case exceed one-tenth of the whole alloy.

48.  The minor coins of the United States shall be a five cent piece, a three cent piece and a one cent piece.  The alloy for the five and three cent pieces shall be of copper and nickel, to be composed of three-fourths copper and one-fourth nickel.  The alloy of the one-cent piece shall be ninety-five per centum copper and five per centum of tin and zinc, in such proportion as shall be determined by the director of the mint.  The weight of the five cent pieces shall be seventy-seven and sixteen-hundredth grains troy ;  of the three cent piece thirty grains, and of the one cent piece forty-eight grains.

49.  No coins, either of gold, silver or minor coinage, shall hereafter be issued from the mint other than those of the denominations, standards and weights set forth in this title.

50.  Silver coins, other than the trade dollars, shall be paid out at the several mints and at the assay office in New York city in exchange for gold coins at par, in sums of less than one hundred dollars.

51.  Nothing herein contained shall, however, prevent the payment of silver coins at their nominal values for silver parted from gold, as provided in this title, or for change less than one dollar in settlement of gold deposits.

In adjusting the weights of the gold coins the following directions shall not be exceeded in any single piece :  In the double eagle and the eagle one-half or a grain ;  in the half-eagle, the three-dollar piece, the quarter eagle and the one dollar piece, one-fourth of a grain ;  and in weighing a number of pieces together, when delivered by the coiner to the superintendent, and by the superintendent to the depositor, the deviations from the standard weight shall not exceed one hundredth of an ounce in five thousand dollars in double eagles, eagles, half eagles, or quarter eagles, or in one thousand dollars in three dollar pieces or one dollar pieces.

53.  In adjusting the weight of the silver coins the following deviations shall not be exceeded in any single piece :  In the dollar the half dollar, the quarter dollar, and the dime, one and one-half grains ;  and in weighing a large number of pieces the deviations shall not exceed two-hundredths of an an ounce in one thousand dollars, half dollars, or quarter dollars, and one hundredth of an ounce in one thousand dimes.

54.  In adjusting the weight of the minor coins provided by this title, there shall be no greater deviation allowed than three grains for the five cent piece, and two grains for the three and one cent pieces.

55.  That all other acts and parts of acts pertaining to the mints, assay offices and coinage of the United States, inconsistent with the provisions of this act are hereby repealed :  Provided, that this act shall not be construed to affect any act done, right accrued, or penalty incurred under former acts, but every which right is hereby saved.

(The Act of March 3, 1873.)

56.  The value of the sovereign, or pound sterling shall be deemed equal to four dollars eighty-six cents and six and one-half mills ;  and all contracts made after the first day of January, 1874, based on the assumed par of exchange with Great Britain, of fifty-four pence to the dollar, of four dollars forty-four cents and four-ninths cents to the sovereign or pound sterling shall be null and void.

(The Act of March 5, 1875.)

57.  There shall be coined from time to time at the mint of the United States, conformably in all respects to the coinage act of 1878, a coin of silver of the denomination of twenty cents, and of the weight of five grams.  That the twenty cent piece shall, be a legal-tender at its nominal value for any amount not exceeding five dollars in any one payment.  That in adjusting the weight of the twenty cent piece, the deviation from the standard weight shall not exceed one and one-half grains.

(Joint resolution of Congress providing for the coinage of subsidiary silver coins, enacted July 13, 1876.)

58.  That the Secretary of the Treasury, under such limits and regulations as will best secure a dust and fair distribution of the same through the country, may issue the silver coin at any time in the Treasury to an amount not exceeding $10,000,000, in exchange for an equal amount of legal-tender notes, and so received in exchange shall be kept as a special fund, separate and apart from all other money in the Treasury, and be issued only on the retirement and destruction of a like sum of fractional currency received at the Treasury in payment of dues to the United States, and said fractional currency when so substituted, shall be destroyed and held as part of the sinking fund, as provided in the act of April 17, 1876.

59.  That the trade dollar shall not hereafter be a legal tender, and the Secretary of the Treasury is hereby authorized to limit, from time to time, the coinage thereof to such an amount as he may deem sufficient to meet the export demand for the same.

60.  That in addition to the amount of subsidiary silver coin authorized by law to be issued in redemption of the fractional currency, it shall be lawful to manufacture at the several mints, and issue through its several offices, such coin to an amount that, including the amount of subsidiary silver coin and of fractional currency outstanding, shall, in the aggregate, not exceed $50,000,000.

61.  That the silver bullion required for the purposes of this act shall be purchased from time to time at the market rate by the Secretary of the Treasury with any money in the Treasury not otherwise appropriated, but no purchase of bullion shall be made under this resolution when the market rate for the same shall be such as will not admit of the coinage and issue as herein provided without loss to the Treasury, and any gain or signiorage arising from this coinage shall be accounted for and paid into the Treasury as provided under existing laws relative to subsidiary coinage, provided that the amount of money at any time invested in such silver bullion, exclusive of such resulting coin, shall not exceed $200.000.

(The Act of February 28, 1878)

62.  That there shall be coined at the several mints of the United States, silver dollars of the weight of 412½ grains troy of standard silver, as provided in the act of January 18, 1837, on which shall be the devices and inscriptions provided for in said act ;  which coins, together with all silver dollars heretofore coined by the United States of like weight and fineness, shall be a legal-tender, at their nominal value for all debts and dues, public and private, except where otherwise expressly stipulated in the contract.  And the Secretary of the Treasury is authorized and directed to purchase, from time to time, at the market price thereof, not less than two million dollars’ worth per month, nor more than four million dollars’ worth per month, and cause the same to be coined monthly, as fast as purchased, into such dollars.

THE FINANCIAL LEGISLATION OF THE UNITED STATES
RELATING TO BONDS AND CURRENCY FROM 1860 TO 1868.

In order to give the greatest amount of history pertaining to this subject in the smallest possible space, in copying the acts of Congress, only the sections of these acts that bear directly on the subject are recorded :

(The Act of December 17, 1860.)

1.  That the President of the United States be authorized to, cause treasury notes to be issued for such sums as the exigencies of the public service may require, but not to exceed at any time the amount of ten millions ($10,000,000).  That such notes shall be redeemed after the expiration of one year.  They shall bear interest at 6 per cent. per annum.

(The Act of February 8, 1861.)

2.  That the President of the United States be authorized to borrow on the credit of the United States a sum not exceeding twenty-five millions ($25,000,000);  that stock shall be issued for the amount so borrowed, bearing interest not exceeding 6 per cent. per annum, and to be reimbursed within a period not beyond twenty years and not less than ten years.

(The Act of March 2, 1861.)

3.  That the President of the United States be and hereby is authorized at any time within twelve months from the passage of this act to borrow on the credit of the United States, a sum not exceeding ten millions of dollars ;  provided that no stipulation or contract shall be made to prevent the United States from reimbursing any sum borrowed under the authority of this act at any time after the expiration of ten years from the first day of July next, by the United States giving three months’ notice, to be published in some newspaper published at the seat of government of their readiness to do so, and no contract shall be made to prevent the redemption of the same at any time after the expiration of twenty years from the said 1st day of July next, without notice.  That stock shall be issued for the amount so borrowed bearing interest not exceeding 6 per cent. per annum.

(The Act of July 17, 1861.)

(This act authorizes the issue of bonds and treasury notes to the amount of $250,000,000.)

4.  That the Secretary of the Treasury be authorized to borrow, on the credit of the United States within twelve months, a sum not exceeding $250,000,000, for which he is authorized to issue coupon bonds, or registered bonds or treasury notes, in such proportions as he may deem advisable, the bonds to bear interest at not exceeding 7 per cent per annum, payable semi-annually, irredeemable for twenty years, and after that at the pleasure of the United States, and the treasury notes to be of denominations not less than $50, payable three years after date, with interest at the rate of seven and three-tenths per cent. per annum.  And the Secretary may also issue, in exchange for coin, treasury notes of a less denomination than $50, not bearing interest, but payable on demand at the Assistant Treasurer’s of the United States, or treasury notes bearing interest at the rate of 3.65 per cent. per annum, payable in one year from date, and exchangeable at any time for treasury notes (7:30’s) for $50 and upward.

5.  That the Secretary is authorized, whenever he shall deem it expedient, to issue, in exchange for coin or in payment of public dues, treasury notes of any of the denominations hereinbefore specified, bearing interest not exceeding 6 per cent. per annum, and payable at any time not exceeding twelve months from date ;  that the amount of notes so issued shall at no time exceed $20,000,000.

(The Act of August 5, 1861.)

(This act was intended to enable the Secretary to convert the one-year treasury notes into twenty years 6 per cent bonds.)

6.  That the Secretary of the Treasury is authorized to issue bonds of the United States, bearing interest at 6 per cent. per annum and payable at the pleasure of the United States after twenty years from date.  If any holder of treasury notes bearing interest at the rate of seven and three-tenths per cent. per annum desire to exchange the same for said bonds, the Secretary may, at any time before the maturity of said treasury notes, issue to said holders, in payment thereof, an amount of said bonds equal to the amount due on said treasury notes, nor shall the whole amount of such bonds exceed the whole amount of treasury notes bearing seven and three-tenths per cent. interest, issued under said act of July 17,1861.

(The Act of Feb. 12, 1862.)

7.  That the Secretary of the Treasury, in addition to the $50,000,000 of notes payable on demand, of denominations not less than five dollars, authorized by the acts of July 17 and August 5, 1861, is authorized to issue like notes to the amount of $10,000,000, said notes shall be deemed part of the loan of $250,000,000 authorized by said acts.

(This act also gave the $60,000,000 demand notes issued by this and former acts the legal-tender property which has always held them on a par with gold.)

(The Act of February 25, 1862.)

(This is the first act providing for the issue of the treasury note known as the greenback, and for robbing it of the most important features of its legal-tender quality.)

8.  That the Secretary of the Treasury is hereby authorized to issue, on the credit of the United States, one hundred and fifty millions of dollars of United States notes not bearing interest, payable to bearer at the Treasury of the United States, and of such denominations as he may deem expedient, not less than five dollars each ;  provided, That fifty millions of said notes shall be in lieu of the demand treasury notes authorized to be issued by the act of July seventeen, eighteen hundred and sixty-one, which said demand notes shall be taken up as rapidly as possible and the notes herein provided for substituted for them ;  And provided, further, That the amount of the two kinds of notes together shall at no time exceed the sum of one hundred and fifty millions of dollars, and such notes herein authorized shall be receivable in payment of taxes, internal duties, excises, debts and demands of every kind due to the United States, except duties on imports, and of all claims and demands against the United States of every kind whatsoever, except for interest upon bonds and notes, which shall be paid in coin, and shall also be lawful money and a legal-tender in the payment of all debts, public and private, within the United States, except duties on imports and interest as aforesaid.  And any holders of said United States notes depositing any sum not less than fifty dollars with the Treasurer of the United States, or either of the Assistant Treasurers, shall receive in exchange therefor, duplicate certificates of deposit, one of which may be transmitted to the Secretary of the Treasury, who shall thereupon issue to the holder an equal amount of bonds of the United States, coupon or registered, as may by said holder be desired, bearing interest at the rate of 6 per centum per annum, payable semi-annually, and redeemable at the pleasure of the United States after five years, and payable twenty years from the date thereof.  And such United States notes shall be received the same as coin at their par value in payment for any loans that may be hereafter sold or negotiated by the Secretary of the Treasury, and may be reissued from time to time, as the exigencies of the public interest shall require.

8.  That to enable the Secretary to fund the floating debt of the United States, he be authorized to issue, on the credit of the United States, bonds to an amount not exceeding $500,000,000, redeemable at the pleasure of the United States after five years, and payable in twenty years after date, bearing interest at the rate of 6 percent. per annum.

(The Act of February 25, 1862.)

(This act provides for a sinking fund to liquidate the national debt.)

9.  That all duties on imported goods shall be paid in coin, or in notes payable on demand, heretofore authorized to be issued, and by law receivable in payment of public dues, and the coin so paid shall be set apart as a special fund, and shall be applied as follows :

First.  To the payment in coin of the interest on the bonds and notes of the United States.

Second.  To the purchase or payment of one per centum of the entire debt of the United States, to be made within each fiscal year after the first day of July, 1862, which is to be set apart as a sinking fund, and the interest of which shall in like manner be applied to the purchase or payment of the public debt, as the Secretary of the Treasury shall from time to time direct.

Third.  The residue thereof to be paid into the Treasury.

(The Act of March 17, 1862.)

10.  That the Secretary may purchase coin with any of the bonds or notes of the United States authorized by law at such rates and upon such terms as he may deem most advantageous to the public interest.

(The Act of July 1, 1862.)

(Providing for the issue of bonds to the Pacific Railroad.)

11.  That for the purposes herein mentioned the Secretary of the Treasury shall, upon the certificate in writing of said commissioners of the completion and equipment of forty consecutive miles of said railroad and telegraph, in accordance with the provisions of this act, issue to said company bonds of the United States of one thousand dollars each, payable in thirty years after date, bearing six per centum per annum interest, said interest payable semi-annually, which interest may be paid in United States treasury notes, or all other money or currency which the United States have or shall declare lawful money and a legal-tender, to the amount of sixteen of said bonds per mile for such section of forty miles, and to secure the repayment to the United States, as hereinafter provided, of the amount of said bonds so issued and delivered to said company, together with all interests therein which shall have been paid by the United States, the issue of said bonds and delivery to the company shall, ipso facto, constitute a first mortgage on the whole line of the railroad and telegraph, together with the rolling stock, fixtures and property of every kind and description, and in consideration of which said bonds may be issued, and on the refusal or failure of said company to redeem said bonds, or any part of them, when required so to do by the Secretary of the Treasury, in accordance with the provisions of this act, the said road, with all the rights, functions, immunities and appurtenances thereunto belonging, and also all lands granted to the said company by the United States, which at the time of said default shall remain in the ownership of said company, may be taken possession of by the Secretary of the Treasury for the use and benefit of the United States ;  provided, this section shall not apply to that part of any road now constructed.

12.  That the grants aforesaid are made on condition that said company shall pay said bonds at maturity, and shall keep said railroad and telegraph in repair and use, and shall at all times transmit dispatches over said telegraph line, and transport mails, troops and munitions of war, supplies and public stores upon said railroad for the government whenever required to do so by any department thereof, and that the government shall at all times have the preference in the use of the same for all the purposes aforesaid at fair and reasonable rates of compensation, not to exceed the amounts paid by private parties for the same kind of service, and all compensation for services rendered for the government shall be applied to the payment of said bonds and interest until the whole amount is fully paid.  Said company may also pay the United States, wholly or in part, in the same or other bonds, treasury notes, or other evidences of debt against the United States, to be allowed at par, and after said road is completed, until said bonds and interest are paid, at least five per centum of the net earnings shall also be annually applied to the payment thereof.

(The Act of July 11, 1862.)

(This act provides for the issue of the second $150,000,000 legal-tender notes.)

13.  That the Secretary of the Treasury is hereby authorized to issue, in addition to the amounts heretofore authorized, on the credit of the United States, one hundred and fifty millions of dollars of United States notes not bearing interest, payable to bearer at the Treasury of the United States, and of such denominations as he may deem expedient.  Provided, That no note shall be issued for the fractional part of a dollar, and not more than thirty-five millions shall be of lower denominations than five dollars, and such notes shall be receivable in payment of all loans made to the United States, and of all taxes, internal duties, excises, debts and demands of every kind due to the United States, except duties on imports and interest, and of all claims and demands against the United States, except for interest on bonds, notes and certificates of debt and deposit, and shall also be lawful money and a legal-tender in payment of all debts, public and private, within the United States, except duties on imports and interest, as aforesaid.  And any holder of said United States notes depositing any sum not less than fifty dollars, or some multiple of fifty dollars, with the Treasurer of the United States or either of the Assistant Treasurers, shall receive, in exchange therefor, duplicate certificates of deposit, one of which may be transmitted to the Secretary of the Treasury, who shall thereupon issue to the holder an equal amount of bonds of the United States, coupon or registered, as may by said holder be desired, bearing interest at the rate of 6 per centum per annum, payable semi-annually, and redeemable at the pleasure of the United States after five years, and payable twenty years from the date thereof.  Provided, however, That any notes issued under this act may be paid in coin, instead of being received for certificates of deposit, as above specified, at the discretion of the Secretary of the Treasury.  And the Secretary of the Treasury may exchange for such notes, on such terms as he shall think most beneficial to the public interest, any bonds of the United States, bearing 6 per centum interest, and redeemable after five and payable in twenty years, which have been or may be lawfully issued under the provisions of any existing act, may reissue the notes so received in exchange, may receive and cancel any notes heretofore lawfully issued under Congress, and in lieu thereof issue an equal amount in notes such as are authorized by this act, and may purchase, at rates not exceeding one-eighth of one per centum, any bonds or certificates of debt of the United States as he may deem advisable.

(The Joint Resolution of January 17, 1863.)

14.  That the Secretary of the Treasury is hereby authorized, if required by the exigencies of the public service, to issue, on the credit of the United States, the sum of one hundred millions of dollars of United States notes, in such form as he may deem expedient, not bearing interest, payable to bearer on demand, and of such denominations, not less than one dollar, as he may prescribe, which notes so issued shall be lawful money and a legal-tender, like the similar notes heretofore authorized in payment of all debts, public and private, within the United States, except duties on imports and interest on the public debt.

(The important provisions of the National Banking Law enacted February 25, 1863,
copied from the Revised United States Statutes.)

15.  Sec. 5,133.  Associations for carrying on the business of banking under this title may be formed by any number of natural persons, not less in any case than five.  They shall enter into articles of association, which shall specify, in general terms, the object for which the association is formed, and may contain any other provisions, not inconsistent with law, which the association may see fit to adopt for the regulation of its business and the conduct of its affairs.  These articles shall be signed by the persons uniting to form the association, and a copy of them shall be forwarded the Comptroller of the currency, to be filed and preserved in his office.

Sec. 5,138.  No association shall be organized under this title with a less capital than one hundred-thousand dollars ;  except that banks with a capital of not less than fifty thousand dollars may, with the approval of the Secretary of the Treasury, be organized in any place the population of which does not exceed six thousand inhabitants.  No association shall be organized in a city, the population of which exceeds fifty thousand persons, with a less capital than two hundred thousand dollars.

Sec. 5,171.  Upon a deposit of bonds as prescribed by sections fifty-one hundred and fifty-nine, and fifty-one hundred and sixty, the association making the same shall be entitled to receive from the Comptroller of the Currency Circulating notes of different denominations, in blank, registered or countersigned as hereafter provided, equal in amount to ninety per centum of the amount of the current market-value of the United States bonds so transferred and delivered, but not exceeding ninety per centum of the bonds at the par value thereof, if bearing interest at a rate not less than five per cent. per annum ;  provided, that the amount of circulating notes to be furnished to each association shall be in proportion to its paid up capital, as follows, and no more :

First.  To each association whose capital does not exceed five hundred thousand dollars, ninety per centum of such capital.

Second.  To each association whose capital exceeds five hundred thousand dollars, but does not exceed one million of dollars of eighty per centum of such capital.

Third.  To each association whose capital exceeds one million of dollars, but does not exceed three millions of dollars, 75 per centum of such capital.

Fourth.  To each association whose capital exceeds three millions of dollars, 60 per centum on such capital.

Sec. 5,182.  After any association, receiving circulating notes under this title, has caused its promise to pay such notes on demand to be signed by the President or Vice-President and Cashier thereof, in such manner as makes them obligatory promissory notes, payable on demand, at its place of business, such association may issue and circulate the same as money.  And the same shall be received at par in all parts of the United States in payment of taxes, excises, public lands, and all other dues to the United States, except duties on imports, and also for all salaries and other debts and demands owing by the United States to individuals, corporations and associations within the United States, except interest on the public debt, and in redemption of the national currency.

Sec. 5,214.  In lieu of all existing taxes, every association shall pay to the Treasurer of the United States, in the months of January and July, a duty of one-half of 1 per centum each half year upon the average amount of its notes in circulation, and a duty of one-quarter of one per centum each half year upon the average amount of its deposts, and a duty of one-quarter of one per centum each half year on the average amount of its capital stock, beyond the amount invested in United States bonds.

Sec. 5,230.  Whenever the Comptroller has become satisfied, by the protest of the cashier and admission specified in section fifty-two hundred and twenty-six, or by the report provided for in section fifty-two hundred and twenty-seven, that any association has refused to pay its circulating notes, he may, instead of cancelling its bonds, cause so much of them as may be necessary to redeem the outstanding notes to be sold at public auction in the city of New York, after giving thirty-days’ notice of such sale to the association.  For any deficiency in the proceeds of all the bonds of the association, when thus sold, to reimburse to the United States the amount expended in paying the circulating notes of the association, the United States shall have a permanent lien upon all its assets ;  and such deficiency shall be made good out of such assets in preference to any and all other claims whatsoever, except the necessary costs and expenses of administering the same.

(The Act of March 3, 1863.)

16.  That the Secretary of the Treasury be, and he is hereby authorized, to borrow, from time to time, on the credit of the United States, a sum not exceeding three hundred millions of dollars for the current fiscal year, and six hundred millions for the next fiscal year, and to issue therefor coupon or registered bonds, payable at the pleasure of the government after such periods as may be fixed by the Secretary, not less than ten nor more than forty years from date, in coin, and of such denominations, not less than fifty dollars, as he may deem expedient, bearing interest at a rate not exceeding 6 per centum per annum, payable on bonds not, exceeding one hundred dollars, annually, and on all others semi-annually, in coin ;  and he may, in his discretion, dispose of such bonds at any time, upon such terms as he may deem most advisable, for lawful money of the United States, or for any of the certificates of indebtedness or deposit that may at any time be unpaid, or for any of the treasury, notes heretofore issued, or which may be issued, under the provisions of this act, and all the bonds and treasury notes issued under the provisions of this act shall be exempt from taxation by or under the State or municipal authority ;  Provided, That there shall be outstanding of bonds, treasury notes, and United States notes, at any time, issued under the provisions of this act, no greater amount altogether than the sum of nine hundred millions of dollars.

16.  That the Secretary of the Treasury be, and he is hereby authorized, to issue, on the credit of the United States, four hundred millions of dollars in treasury notes, payable at the pleasure of the United States, or at such time or times not exceeding three years from date, as may be found most beneficial to the public interest, and bearing interest at a rate not exceeding 6 per centum per annum, payable at periods expressed on the face of said treasury notes ;  and the interest on the said treasury notes and certificates of indebtedness and deposits hereafter issued shall be paid in lawful money.  The treasury notes thus issued shall be of such denominations as the Secretary may direct, not less than ten dollars, and may be disposed of on the best terms that can be obtained, or may be paid to any creditor of the United States willing to receive them at par.  And said treasury notes may be made a legal-tender to the same extent as the United States notes, for their face value excluding interest ;  or they may be exchangeable under regulations prescribed by the Secretary of the Treasury, by the holder thereof, at the Treasury in the city of Washington, or at the office of any Assistant Treasurer or depository designated for that purpose, for United States notes equal in amount to the treasury notes offered for exchange, together with the interest accrued and due thereon at the date of interest payment next preceding such exchange.  And in lieu of any amount of said treasury notes thus exchanged, redeemed or paid at maturity, the Secretary may issue an equal amount of other treasury notes ;  and the treasury notes so exchanged, redeemed or paid shall be cancelled and destroyed as the Secretary may direct.  In order to secure certain and prompt exchanges of the United States notes for treasury notes when required as above provided, the Secretary shall have power to issue United States notes to the amount of one hundred and fifty millions of dollars, which may be used if necessary for such exchanges ;  but no part of the United States notes authorized by this section shall be issued for, or applied to any other purposes than said exchanges ;  and whenever any amount shall have been so issued and applied, the same shall be replaced as soon as practicable from the sales of treasury notes for United States notes.

17.  That the Secretary of the Treasury be, and he is hereby authorized, if required by the exigencies of the public service, for the payment of the army and navy, and other creditors of the government to issue, on the credit of the United States, the sum of one hundred and fifty millions of dollars of United States notes, including the amount of such notes heretofore authorized by the joint resolution approved January seventeen, eighteen hundred and sixty-three, in such form as he may deem expedient, not bearing interest, payable to bearer, and of such denominations, not less than one dollar, as he may prescribe, which notes so issued shall be lawful money and a legal-tender in the payment of all debts public and private, within the United States, except for duties on imports and interest on the public debt;  and any of the said notes when returned to the Treasury may be reissued from time to time as the exigencies of the public service may require.  And in lieu of any of said notes, or other United States notes, returned to the Treasury, and cancelled or destroyed, there may be issued equal amounts of United States notes such as are authorized by the act.  And so much of the act to authorize the issue of United States notes, and for other purposes, approved February 25, 1862, and the act to authorize an additional issue of United States notes, and for other purposes, approved July 11, 1862, as restricts the negotiation of bonds to market value is hereby repealed.  And the holders of United States notes, issued under and by virtue of said acts, shall present the same for the purpose of exchanging the same for bonds, as therein provided, on or before the first day of July, 1863, and thereafter the right to so exchange the same shall cease and determine.

18.  That in lieu of postage and revenue stamps for fractional currency, and of fractional notes commonly called postage currency, issued or to be issued, the Secretary of the Treasury may issue fractional notes of like amounts in such form as he may deem expedient, and may provide for the engraving, preparation and issue thereof in the Treasury Department building.  And all such notes issued shall be exchangeable by the Assistant Treasurers and designated depositories for United States notes in sums not less than three dollars, and shall be receivable for postage and revenue stamps, and also in payment of any dues to the United States less than five dollars, except dues on imports, and shall be redeemed on presentation at the Treasury of the United States in such sums and under such regulations as the Secretary of the Treasury shall prescribe.  Provided, That the whole amount of fractional currency issued including postage and revenue stamps issued as currency, shall not exceed fifty millions of dollars.

19.  That the Secretary of the Treasury is hereby authorized to receive deposits of gold coin and bullion with the Treasurer or any Assistant Treasurer of the United States in sums not less than twenty dollars, and to issue certificates therefor in denominations of not less than twenty dollars each, corresponding with the denominations of the United States notes.  The coin and bullion deposited for or representing the certificates of deposit shall be retained in the Treasury for the payment of the same on demand.  And certificates representing coin in, the Treasury maybe issued in payment of interest on the public debt, which certificates, together with those issued for coin and bullion deposited, shall not at any time exceed 25 per centum beyond the amount of coin and bullion in the Treasury ;  and the certificates for coin or bullion in the Treasury shall be received at par in payments for duties on imports.

(The Act of March 3, 1864.)

20.  That in lieu of so much of the loan authorized by the act of March 3, 1863, the Secretary of the Treasury be, and he is hereby authorized to borrow, on the credit of the United States, not exceeding two hundred millions of dollars during the current fiscal year, bearing date March first, eighteen hundred and sixty-four, or any subsequent period, redeemable at the pleasure of the government after any period not less than five years, and payable at any period not more than forty years from date, in coin, bearing interest not exceeding 6 per centum a year—and he may dispose of such bonds at any time, on such terms as he may deem most advisable, for lawful money of the United States, or, at his discretion, for treasury notes, certificates of indebtedness or certificates of deposit issued under any act of Congress.

(The Joint Resolution of March 17, 1864.)

21.  That the Secretary of the Treasury be authorized to anticipate the payment of interest on the public debt, by any period not exceeding one year, from time to time, either with or without a rebate of interest upon the coupons, as to him may seem expedient, and he is hereby authorized to dispose of any gold in the Treasury of the United States not necessary for the payment of interest on the public debt.

(The Act of June 30, 1864.)

22.  That the Secretary of the Treasury be authorized to borrow four hundred millions of dollars, and to issue bonds of the United States, redeemable at the pleasure of the government after a period of not less than five nor more than forty years from date, and bear an annual interest not exceeding 6 per centum, payable semi-annually in coin.

The Secretary of the Treasury may issue, on the credit of the United States, and in lieu of an equal amount of bonds authorized by the preceding section, and as a part of said loan, not exceeding two hundred millions of dollars in treasury notes of any denomination not less than ten dollars, payable at anytime not exceeding three years from date, or, if thought more expedient, redeemable at any time after three years from date, and bearing interest not exceeding the rate of 7 3-10 per centum, payable in lawful money at maturity.  And such of them as shall be made payable, principal and interest at maturity, shall be a legal-tender to the same extent as United States notes, for their face value, excluding interest, and may be paid to any creditor of the United States at their face value, excluding interest, or to any creditor willing to receive them at par, including interest.

23.  That the total amount of bonds and treasury notes authorized by the first and second sections of this act shall not exceed four hundred millions of dollars, in addition to the amount heretofore issued ;  nor shall the total amounts of United States notes, issued, or to be issued, ever exceed four hundred millions of dollars, and such additional sums not exceeding fifty millions of dollars, as may be temporarily required for the redemption of temporary loan ;  nor shall any treasury note bearing interest, issued under this act, be a legal tender in payment or redemption of any notes issued by any bank, banking association or banker, calculated or intended to circulate as money.

24.  The Secretary of the Treasury may issue notes of the fractions of a dollar as now used for currency, in such form, with such inscriptions and with such safeguards against counterfeiting, as he may judge best ;  but the whole amount of all descriptions of notes or stamps less than one dollar issued as a currency, shall not exceed fifty millions of dollars.

(The Amendment to the Pacific Railroad Act of July 2, 1864.)

25.  That section 5 of the said act be so modified and amended that the Union Pacific Railroad Company, the Central Pacific Railroad Company and any other company authorized to participate in the construction of said road, may, on the completion of each section of said road, as provided in this act, and the act to which this act is an amendment, issue their first mortgage bonds on their respective railroad and telegraph lines to an amount not exceeding the amount of the bonds of the United States, and of even tenor and date, time of maturity, rate and character of interest, with the bonds authorized to be issued to said railroad companies respectively.  And the lien of the United States bonds shall be subordinate to that of the bonds of any or either of said companies hereby authorized to be issued on their respective roads, property and equipments, except as to the provisions of the sixth section of the act to which this act is an amendment, relating to the transmission of dispatches and the transportation of mails, troops, munitions of war, supplies and public stores for the government of the United States.

(The Act of Jan. 28, 1865.)

26.  That in lieu of any bonds authorized to be issued by the first section of the act entitled “An act to supply ways and means for the support of the government” approved June 30, 1884, that may remain unsold at the date of this act, the Secretary of the Treasury may issue, under the authority of said act, treasury notes of the description and character authorized by the second section of said act ;  provided, that the whole amount of bonds authorized as aforesaid and treasury notes issued and to be issued in lieu thereof shall not exceed the sum of four hundred millions of dollars ;  and such treasury notes maybe disposed of for lawful money, or for other treasury notes or certificates of indebtedness or certificates of deposit issued under any previous act of Congress ;  and such notes shall be exempt from taxation by or under State or municipal authority.

(The Act of March 3, 1865.)

That the Secretary of the Treasury be, and he is hereby, authorized to borrow, from time to time, on the credit of the United States, in addition to the amounts heretofore authorized, any sums not exceeding in the aggregate six hundred millions of dollars, and to issue therefor bonds or treasury notes of the United States in such form as he may prescribe, and so much thereof as may be issued in bonds shall be of denominations of not less than fifty dollars, and may be made payable at any period not more than forty years from date of issue, or may be made redeemable at the pleasure of the government at or after any period not less than five years nor more than forty years from date, or may be made redeemable and payable as aforesaid as may be expressed upon their face, and so much thereof as may be issued in treasury notes may be made convertible into any bonds authorized by this act.

Provided, That the rate of interest on any such bonds or treasury notes, when payable in coin, shall not exceed 6 per centum per annum, and when not payable in coin shall not exceed seven and three-tenths per centum per annum.

Provided, That nothing herein contained shall be construed as authorizing the issue of legal-tender notes in any form.

(The Act of April 12, 1866.)

28.  That the act approved March 3, 1885, shall be intended and construed to authorize the Secretary of the Treasury, at his discretion, to receive any treasury notes or other obligations issued under any act of Congress, whether bearing interest or not, in exchange for any description of bonds authorized by the act to which this is an amendment, and also to dispose of any description of bonds authorized by said act, either in the United States or elsewhere, to such an amount, in such manner and at such rates as he may think advisable, for lawful money of the United States or for any treasury notes, certificates of indebtedness or certificates of deposit or other representatives of value which have been or which may be issued under any act of Connotes or other obligations issued under any act of Congress but nothing herein contained shall be construed to authorize increase in the public debt.  Provided, That of the United States notes not more than ten millions of dollars may be retired and cancelled within six months from the passage of this act, and thereafter not more than four millions of dollars in any one month.

(The Act of March 2, 1867.)

29.  That for the purpose of redeeming and retiring any compound interest notes outstanding, the Secretary of the Treasury is hereby authorized and directed to issue temporary loan certificates in the manner prescribed by Section 4 of the act entitled “An act to authorize the issue of United States notes and for the redemption or funding thereof, and for funding the floating debt of the United States,” approved February 25,1862, bearing interest at a rate not exceeding 3 per cent. per annum, principal and interest payable in lawful money on demand, and said certificates of temporary loan may constitute and be held by any national bank holding or owning the same, as apart of the reserve provided for in Sections 31 and 32 of the act entitled, “An act to provide a national currency, secured by a pledge of United States bonds, and to provide for the circulation and redemption thereof;”  Provided, That the amount of such certificates outstanding at any time shall not exceed fifty millions of dollars.

(The Act of July 25, 1868.)

30.  That for the sole purpose of redeeming and retiring the remainder of the compound-interest notes outstanding, the Secretary of the Treasury is authorized to issue an additional amount of temporary loan certificates not exceeding twenty-five millions of dollars, said certificates to bear 3 per cent. interest, payable in lawful money.

An Act to Strengthen the Public Credit (and rob the People of $500,000,000 for the Benefit of Bondholders), approved March 18, 1869.

31.  Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled :  That in order to remove any doubt as to the purpose of the government to discharge all just obligations to the public creditors, and to settle conflicting questions and interpretations of the law by virtue of which such obligations have been contracted, it is hereby provided and declared that the faith of the United States is solemnly pledged to the payment in coin or its equivalent of all the obligations of the United States not bearing interest, known as the United States notes, and of all the interest-bearing obligations of the United States, except where the law authorizing the issue of such obligations has expressly provided that the same may be paid in lawful money, or other currency than gold and silver.  But none of said interest-bearing obligations not already due shall be redeemed or paid before maturity, unless at such time the United States notes shall be convertible into coin at the option of the holder, or unless at such time bonds of the United States bearing a lower rate of interest than the bonds to be redeemed can be sold at par in coin.  And the United States also solemnly pledges its faith to make provisions at the earliest practicable period for the redemption of the United States notes in coin.

(The Funding Act of July 14, 1870.)

(This act is supplementary to the act of March 18, 1869, carrying out the pledge given in that act to pay all government obligations in coin or its equivalent, except such as the law under which they were contracted provided that they should be paid in currency, and goes one step further and provides for funding this very class of excepted obligations—the 5-20 bonds—into bonds payable in coin.)

32.  That the Secretary of the Treasury is hereby authorized to issue in a sum or sums not exceeding in the aggregate two hundred millions of dollars, coupon or registered bonds of the United States, in such forms as he may prescribe, and of denominations of fifty dollars, or some multiple of that sum, redeemable in coin of the present standard value, at the pleasure of the United States, after ten years from the date of their issue, and bearing interest, payable semi-annually in coin, at the rate of 5 per cent. per annum ;  also a sum or sums not exceeding in the aggregate three hundred millions of dollars of like bonds, the same in all respects, but payable at the pleasure of the United States, after fifteen years from their issue, and bearing interest at the rate of 4½ per centum per annum ;  also a sum or sums not exceeding in the aggregate one thousand millions of dollars of like bonds, the same in all respects, but payable at the pleasure of the United States after thirty years from the date of their issue, and bearing interest at the rate of 4 per centum per annum ;  all of which said several classes of bonds and the interest thereon shall be exempt from the payment of all taxes or duties of the United States, as well as from taxation in any form by or under state, municipal or local authority ;  and the said bonds shall have set forth and expressed on their face the above specified conditions, and shall, with their coupons, be made payable at the treasury of the United States.  But nothing in this act, or in any other law now in force, shall be construed to authorize any increase whatever of the bonded debt of the United States.

33.  That the Secretary of the Treasury is hereby authorized to sell and dispose of any of the bonds issued under this act, at not less than their par value for coin, and to apply the proceeds thereof to the redemption of any of the bonds of the United States outstanding, and known as the five-twenty bonds, at their par value ;  or he may exchange the same for such five-twenty bonds, par for par ;  but the bonds hereby authorized shall be used for no other purpose whatsoever.  And a sum not exceeding one-half of 1 per cent. of the bonds herein authorized is hereby appropriated to pay the expense of preparing, issuing, advertising and disposing of the same.

34.  That the payment of any of the bonds hereby authorized after the expiration of the said several terms of ten, fifteen and thirty years, shall be made in amounts to be determined from time to time by the Secretary of the Treasury at his discretion, the bonds so to be paid to be distinguished and described by the dates and numbers, beginning for each successive payment with the bonds of each class last dated and numbered, of the time of which intended payment or redemption the Secretary of the Treasury shall give public notice, and the interest on the particular bonds so selected at any time to be paid shall cease at the expiration of three months from the date of such notice.

35.  That the Secretary of the Treasury is hereby authorized, with an coin in the Treasury of the United States, which he may lawfully apply to such purpose, or which may be derived from the sale of any of the bonds, the issue of which is provided for in this act to pay at par and cancel any six per cent. bonds of the United States of the kind known as the five-twenty bonds, which have become or shall hereafter become redeemable by the terms of their issue.  But the particular bonds so to be paid and cancelled, shall in all cases be indicated and specified by class, date, and number, in the order of their numbers and issue, beginning with the first numbered and issued, in public notice to be given by the Secretary of the Treasury, and in three months after the date of such public notice, the interest on the bonds so selected and advertised to be paid shall cease.

36.  That the Secretary of the Treasury is hereby authorized, at any time within two years from the passage of this act, to receive gold coin of the United States on deposit for not less than thirty days, in sums of not less than one hundred dollars, with the Treasurer or any Assistant Treasurer of the United States, authorized by the Secretary of the Treasury to receive the same, who shall issue therefor certificates of deposit, made in such form as the Secretary of the Treasury shall prescribe, and said certificates of deposit shall bear interest at a rate not exceeding two and a half per cent. per annum ;  and any amount of gold coin so deposited may be withdrawn from deposit at any time after thirty days from the date of deposit, and after ten days’ notice and on the return of said certificate.  Provided, That the interest on all such deposits shall cease and determine at the pleasure of the Secretary of the Treasury.  And not less than twenty-five per cent. of the coin deposited for or represented by said certificates of deposit, shall be retained in the Treasury for the payment of said certificates ;  and the excess beyond twenty-five per cent. may be applied, at the discretion of the Secretary of the Treasury, to the payment or redemption of such outstanding bonds of the United States heretofore issued and known as the five-twenty bonds, as he may designate under the provisions of the fourth section of this act ;  and any certificate of deposit issued may be received at par with the interest accrued thereon, in payment of bonds authorized to be issued by this act.

(The Act of January 20, 1871.)

37.  That the amount of bonds authorized by the act approved July 14, 1870, entitled “An act to authorize the refunding of the national debt,” to be issued bearing five per centum interest per annum, be, and the same is, increased to five hundred millions of dollars, and the interest of any portion of the bonds issued under said act, or this act, may, at the discretion of the Secretary of the Treasury, be made payable quarter-yearly.  Provided, however, that this act shall not be construed to authorize any increase of the total amount of bonds provided for by the act to which this act is an amendment.

(The Act of June 2, 1872.)

38.  That the Secretary of the Treasury is hereby authorized to receive United States notes on deposit without interest from bank associations, and to issue certificates therefor.  The certificates issued may be held and counted by national banks as part of their reserve.

39.  That nothing contained in this act shall be construed to authorize any expansion or contraction of the currency ;  and the United States notes for which such certificates are issued, or other United States notes of like amount, shall be held as special deposits in the Treasury, and used only for the redemption of such certificates.

(The Act of December 17, 1873.)

40.  That for the purpose of redeeming the bonds called the loan of 1858, it is hereby declared to be the pleasure of the United States to pay all the coupon bonds of said loan on the first day of January, 1874.  That the Secretary of the Treasury may issue an equal amount at par of principal and interest of 5 per cent. bonds of the funded loan under the act for refunding the national debt approved January 20, 1871, for any of the bonds of the loan of 1898, which the holders thereof may, on or before the first of February, 1874, elect to exchange.

(The so-called Specie Resumption Act of January, 14, 1875.)

41.  That the Secretary of the Treasury is hereby authorized and required, as rapidly as practicable, to cause to be coined at the mints of the United States, silver coins of the denominations of ten, twenty-five and fifty cents, of standard value, and to issue them in redemption of an equal number and amount of fractional currency of similar denominations, or, at his discretion, he may issue such silver coins through the mints, the Sub-Treasuries, public depositories and post offices of the United States, and upon such issue he is hereby authorized and required to redeem an equal amount of such fractional currency until the whole amount of such fractional currency outstanding shall be redeemed.

42.  That so much of Section 3,524 of the Revised Statutes of the United States as provides for a charge of one-sixth of 1 per centum for converting standard gold bullion into coin is hereby repealed, and hereafter no charge shall be made for that service.

43.  That Section 5,777 of the Revised Statutes of the United States, limiting the aggregate amount of the circulating notes of the national banking associations, be, and is hereby repealed, and each existing banking association may increase its circulating notes in accordance with the existing law, without respect to said aggregate limit ;  and new banking associations may be organized in accordance with the existing law without respect to the aggregate limit ;  and the provisions of the law for the withdrawal and re-distribution of national bank currency among the several states and territories are hereby repealed ;  and whenever and so often as circulating notes shall be issued to any such banking association, so increasing its capital or circulating notes, or so newly organized as aforesaid, it shall be the duty of the Secretary of the Treasury to redeem the legal-tender United States notes in excess of only $300,000,000 to the amount of 80 per centum of the sum of national bank notes so issued to any such banking association as aforesaid, and to continue such redemption as such circulating notes are issued until there shall be outstanding the sum of $300,000,000 of such legal-tender United States notes, and no more.  And on and after the first day of January, A.D. 1879, the Secretary of the Treasury shall redeem in coin the United States notes then outstanding on their presentation for redemption at the office of the Assistant Treasurer of the United States, in the city of New York, in sums of not less than $50.  And to enable the Secretary of the Treasury to prepare and provide for the redemption in this act authorized or required, he is authorized to use any surplus revenues from time to time in the Treasury not otherwise appropriated, and to issue, sell, and dispose of, at not less than par in coin, either of the description of bonds of the United States described in the act of Congress approved July 14, 1870, entitled, “An act to authorize the refunding of the national debt,” with like privileges and exemptions, to the extent necessary to carry this act into effect, and to use the proceeds thereof for the purposes aforesaid.  And all provisions of law inconsistent with the provisions of this act are hereby repealed.

THE POWER OF CONGRESS TO COIN MONEY.

An extract from the work of Judge Tiffany, entitled “ Tiffany on Government and Constitutional Law.”

This work was published and used extensively by the bar of the United States for years before the organization of the greenback party, and is therefore entitled to candid consideration.  His discussion of this subject runs from section 400 to section 407 of this work, which we quote :

SECTION 400.  To coin money and regulate the value thereof as an act of sovereignty involves the right to determine what shall be taken and received as money ;  at what measure or price it shall be taken, and what shall be its effects when passed or tendered in payment or satisfaction of legal obligations.  The act of coining money consists in affixing to that which is to constitute money, the stamp or seal of sovereign authority by which it may be recognized and known in market as authoritatively entitled to be received at the price or value stamped thereon.  The authority which coins or stamps itself upon the article can select what substance it deems suitable to receive the stamp and pass as money ;  and it can affix what value it deems proper, independent of the intrinsic value. * * * * * * The currency value is in the stamp when used as money, and not in the metal or material, independent of the stamp.  In other words, the money quality is the authority which makes it current and gives it power to accomplish the purpose for which it was created—the power to pay debts.  To coin or stamp money , and regulate its value, includes the whole power of sovereignty in respect to currency.  It includes the authority to select the substance to receive the impression, to determine what impression shall be stamped thereon, what shall be its office as a medium of exchange, at what price it shall be received, and what shall be the penalty to be inflicted for discrediting, counterfeiting, or in any manner interfering with its legal or authoritative value.

Because gold and silver have usually been selected as the basis of currency, the popular idea of value attaches to the metal rather than to the royal or sovereign authority stamped upon it ;  and while they recognize the authority of the government to exchange the relations between the intrinsic value of the metal and the current value of coin, they are slow to understand that such relation is arbitrary, and depends solely upon the will of the sovereign.

SEC. 401.  By keeping constantly in mind that the quality of money or legal currency consists is the unstamped authority of the government upon that which is used as such, and that the authority to coin money, and affix its value, involves the whole power of sovereignty over the subject of legal currency, to select what substance, to affix what stamp, ordain what value it pleases the whole law upon the subject of money, as a currency and as, a commodity, becomes comprehensible.  But to confound the legal quality of money with the commercial value of that which is used to receive the royal impression, begets infinite difficulty, because there is no necessary relation between the two Government, like the Spartan law giver, may put its stamp upon leather, and make that currency ;  and so long as it can provide against the counterfeiting of the same, and thus can regulate the quantity in use, it can give its stamp upon leather the same money value as if put upon gold or silver, or any other substance.  Thus, government may put its royal or sovereign stamp upon paper, affixing its money value, and if it limit the quantity and provide fully against the counterfeiting of it, it will have the same currency value as any other substance.  It must be remembered that, legally speaking, money is not a commodity, and commerce can make it such only by dealing with that upon which the money quality is impressed.

SEC. 402.  Much has been said about paper money, and gold and silver and copper money ;  but, after all, such language is deceptive.  There is no such thing, legally, as gold and silver and paper money.  Money is the measure of price or value, is the sovereign authority impressed upon and attached to that which is capable of taking and retaining the impress of authority.  It is the recognized presence of sovereignty in the market, and in the court, applying the measure and determining the quality of exchanges of commodities between subject and subject, between peasant and prince, between crown and people.  As a medium of exchange, as a means to an end, it has no value but the sovereign will recorded upon its face, and in respect to its use, its value is unchangeable as the authority which created it.  It measures all values by its own, and can know no other measure of value.  Its value being fixed by the will of the sovereign, and not by the intrinsic qualities of that upon which it is impressed legally, it cannot vary.  Its relative proportion to other things may disturb their relative values, but its legal value is fixed and immutable, while the price of commodities, measured by it, rises and falls.  The philosopher can explain the reason, but he cannot change the law.

SEC. 403.  The art of coining money consists in imparting to any substance this legal currency quality, by which it legally can be used as a medium of exchange without permitting its value as authority to be questioned in the market.  That upon which the stamp is placed is called coin ;  the art of stamping is called coining, and, as the practice of all governments using currency has been generally to place its money stamp upon metals of some kind, the common idea of coin is, that it must be a metal, as a substance distinguished from all other substances.  But this rests solely in the discretion of the sovereign or sovereignty ;  whether this coin shall be metal, parchment, paper, or any other substance, is a question of expediency, of public economy, and not of authority.  The authority selecting the substance to coin, if wise, will consider the fitness, the adaptation, the economy, and the necessity for the public use.  There is need in every society for a medium of exchange—for money.  Hitherto no nation or state has discovered the means of dispensing with it.  It is a public necessity as well as private ;  and it should be provided in such a way as to subserve the public as well as the private use.  There are times when large expenditures are required to be made, beyond the ordinary capacity of the currency to represent them.  There must, necessarily, exist the authority to adapt the currency as money to the public exigencies.  The necessity which requires that it should be used at all, requires that it should be made adequate to any public emergency.  The sovereignty or sovereign is then authorized by sovereign necessity to coin the necessary amount of money to answer as a means of making the purchases or exchanges demanded.  If that be neglected, the responsibility of a State or nation ruined will attach.  The necessity which requires money as a medium of exchange at all, requires that the public authority should make the supply at least equal to the imperative demand of the public welfare, and the government would be as derelict in omitting this, as any other duty to the public.

SEC. 404.  The United States, as a nation, has the same authority to coin money and regulate its value as other nations.  It is subject to the necessities, and can adopt the same facilities for adapting the currency to the needs of the nation, and there is no earthly authority to call it to account for so doing.  In instituting the general government for administering its authority with respect to all subjects in the Constitution, and for the purposes therein named, it conferred upon Congress the unlimited authority to coin money and regulate its value.  That is, it committed the whole subject of creating and regulating the legal currency to Congress, as the national legislature is vested with plenary this upon this subject.  It was the intention of the people that this power should be exercised in such a manner as to make the currency of the nation adequate to an emergency which could arise.  The government was institute and the powers conferred, that they might be used in such a manner as to make every department of the administration to contribute to the declared end the people had in view, to-wit :  to the establishment of justice, to provide for the common defense, and promoting the general welfare.  For these, among other purposes, Congress was empowered to coin money and regulate its value, and was further authorized to make all laws necessary and proper for carrying into execution this power.  The pretense of attempting to restrict the powers of Congress over subjects committed to its jurisdiction, based upon the assumption that Congress is a body separate from the people, is without foundation.  The people are essentially and potentially potent in Congress to administer their own authority by legislation, as they were in the conventions that framed their government and established this mode of administration.  Therefore, they may be as safely intrusted with the exercise of their authority to coin money and regulate its value, as they were to institute the government, and ordain by whom that power to coin money, etc., should be exercised.

SEC. 405.  As the people of the United States conferred upon Congress the plenary authority to coin money and regulate its value, and denied to the states the exercise of such powers, they thereby made it the duty of Congress to make all necessary provisions for supplying the nation with money as a medium of exchange.  This proposition admits of no denial.  As a sovereign nation, the people had a right to provide for the creation of a legal-tender currency which show be of equal value as currency throughout the United States.  It was necessary that this authority should be exercised by some one, to provide this currency.  It should be exercised by no power that is not sovereign and not co-extensive with the United States.  It could be exercised by no other than the government of the United States.  In the distribution of jurisdiction between the general and state governments, that of coining money and fixing its value, that is, of providing a legal measure of value or currency, was committed to Congress, not by limited or restricted terms, but the most liberal and unqualified ;  so that Congress is vested with all the authority of the nation in this respect.  Congress is the only body authorized to provide for this individual, state and national necessity ;  the whole duty and responsibility to supply, under all circumstances, so much money or currency, or to provide for the same as the exigencies of the public or nation may require.  It is no excuse that there is not gold enough or silver enough in the country to furnish or supply the amount.

The authority of the nation to supply itself with the amount of money necessary for any emergency is not confined to any particular metal, or to any metals.  The quality of money is neither gold nor silver nor any other precious metal.  It is simply the sovereign authority of the nation so impressed upon any substance as by its presence to represent such authority in determining at what price or value it shall be received in discharging legal obligations.

SEC. 406.  The object of the grant of the power to Congress is to give uniformity of value as a standard of price throughout the union.

The power of coining money is uniformly exercised by the sovereign authority, for the purpose of supplying a uniform currency to the home market.  The necessity for such currency, denominated money, is imperative.  This duty requires it to supply a currency of such quality and in such amount as to answer the imperative demands of the public exigencies.  It should also provide against the discrediting, debasing or counterfeiting of the currency, or with interfering in any manner with its authoritative value.

SEC. 407.  Legal obligations are such as are created by positive law, and can only arise in accordance with the requirements of law.  When the law declares contracts made for the loan of money, reserving for its use an amount greater than 7 per cent. usurious and void, no legal obligation arises from the making of such contract.  When it declares that all contracts by which one man undertakes to answer for the debt, default or miscarriage of another, to be valid and obligatory, shall be in writing and signed by the parties, a contract of that character by parol merely, raises no legal obligation.  And thus with every condition which the law-making power sees fit to impose.  Inasmuch as the obligation is created by law it can also be discharged by law.  For it is a principle of general application that the power which creates an obligation can also discharge it.

HOW NATIONAL BANKS EVADE THE LAW.

Extract from United States Treasurer Gilfillin’s report for 1880, pages 19, 20, 21 and 22, showing the manner in which the national banks evade the law.  He says :

Attention is invited to the practical bearing on the question of bank note redemption of the construction heretofore placed by the Department on the various provisions of law authorizing the reduction and increase of the circulation of national banks.  The fourth section of the act, approved June 20, 1874 (18 Statutes, 124), authorizes any national bank desiring to withdraw its circulating notes to take up the bonds for the security of such notes, upon the deposit of lawful money with the Treasurer of the United States, and provides that an equal amount of the outstanding notes shall be redeemed at the Treasury of the United States.  The banks have availed themselves of the privilege accorded by this provision to a very large extent, more than eighty-five million dollars of circulation having been surrendered in the manner prescribed, and nearly seventy-one million dollars having been redeemed at this office.  The notes are received at the Treasury mixed with other bank notes, and if they come, from Assistant Treasurers, or in packages marked “unfit,” the express charges on them are defrayed out of the 5 per cent. redemption fund.  They necessarily pass through the various stages of counting and assorting before they can be separated from the other notes, so that almost the entire cost of redemption of the whole $71,000,000 has been borne by other national banks, there being no means of charging the “reducing” banks with the expenses of redeeming their notes until their deposits of legal-tender notes are exhausted.  This provision was adopted in the expectation that it would act as a regulator of the bank circulation.  It was expected that when the circulation became redundant the surplus would be retired, and that when a demand for more circulation should spring up, the banks would increase their issues to meet it.  This expectation has not been realized.  The almost invariable answer to inquiries made of officers of banks which have reduced their circulation has been that the reduction was made solely to enable the bank to avail itself of the ruling premium on the bonds withdrawn, either because the bonds wore exceptionally high, or because the bank needed the premium to enable it to meet losses sustained, or to reduce its premium account.

It is plain that the action of the banks would not be affected by the fact that the volume of the circulation was redundant, for the simple reason that a bank has more money at its disposal after reducing its circulation than before.  A bank which deposits $45,000 to reduce its circulation and takes up $50,000 of its bonds, which it sells for 10 per cent, premium, has $10,000 more to lend than it had before.  While, therefore, the bank circulation diminishes the aggregate volume of the circulation, it increases the loanable funds of the particular bank whose circulation is reduced.

Under the construction placed upon the law, banks which have thus reduced their circulation have been permitted to increase it again as often and as largely as they chose, whether their legal-tender deposits were exhausted or not.

Although the exact amount cannot be ascertained, it is safe to say that many millions of dollars of additional circulation have been issued under the general provisions of the national currency act to banks which were still reducing their circulation under the act of June 20, 1874.  The consequence has been that the new notes thus issued have, to a large extent, speedily been presented to the Treasury for redemption out of the legal-tender deposit.  Banks which have applied in vain to the Treasurer for the surrender of their legal tender deposits have accomplished the same object by obtaining new circulation.

The cost of printing the new notes thus issued is borne by the United States, so the government, though not deriving the remotest benefit from the transaction, has been obliged to bear the whole expense of their issue and a part of the expense of their redemption, simply to enable a bank to do by indirection what it was not permitted to do directly.  In several instances banks have repeated the operation of reducing and increasing their circulation several times within a brief period, taking up their bonds and selling them, it would appear, whenever the premium constituted a sufficient inducement, and increasing their circulation again whenever bonds could be bought at better rates, the United States all the while redeeming their notes at its own expense or that of the other banks, and issuing others, also at its own expense, whenever called upon by them.

An example will better illustrate these operations.  In January and February, 1875, a certain bank reduced its circulation from $308,490 to $45,000 by deposits of legal-tender notes.  Between September 26, 1876, and May 26, 1877, and before that deposit was exhausted it increased its circulation to $450,000.  Between August 14 and September 10, 1877, it again reduced its circulation to $45,000, On September 19, 1877, nine days after completing the deposits for its reduction, it again began to take out additional circulation, although $402,560 of prior deposits remained in the Treasury, and by the 26th of that month its circulation had again been increased to $450,000.  July 22, 1878, it, for the third time, reduced its circulation to $45,000, and in August and September, 1879, again increased it to $450,000, at which it now remains, the balance of its former legal-tender deposit in the Treasury being $112,615.  From January 13, 1875, to the date of this report, $778,275 of its notes have been redeemed, of which only $40,700 were redeemed at the expense of the bank, although during more than one-third of that period it had outstanding and was deriving the benefit from the full amount of circulation which its capital authorized.  The only assessments which have been made on the bank for the expenses of redeeming its notes were $24.74 in 1875 and $1.39 in 1878.  At one time there were in actual circulation $852,550 of its notes, although the highest amount ever borne on its books was $450,000.

Other banks have reduced and forthwith increased their circulation to its former amount with the avowed object of relieving themselves from the trouble and expense of redeeming their notes through the 5 per cent. redemption fund.  For example, a bank deposited $45,000 in legal-tender notes for the redemption of its circulation on April 3, 1878, and on April 5, 1878, two days afterward, without having touched the bonds deposited as security, took out $45,000 additional circulation.  In like manner, on July 11, 1879, it deposited $9,000 for the same purpose, and, on the very same day, without disturbing its bonds, it took out $9,000 of additional circulation.

It is plain that such transactions as these are not within the spirit of the act of June 20, 1874.  That act authorizes the deposit of legal-tender notes by any national bank “desiring to withdraw its circulation in whole or in part.”  A wish to surrender circulation with the reserved intention of taking out more at once, or as soon as the price of bonds shall make the transaction profitable, is not, it is submitted, such a desire to withdraw circulation as the law contemplates.

The reduction of circulation therein authorized is a bona fide reduction, based on a well settled intention of the bank to curtail its note issues.  It could neither have been intended nor expected that the law would become the means of enabling banks to operate in the securities of the government deposited to secure the redemption of their notes, or to throw upon the United States or upon other banks of the country the expense of redeeming their notes while maintaining and enjoying the full circulation to which the law entitles them.

Such a construction utterly perverts the original intention of the act.  Instead of the volume of the currency being regulated by the business needs of the country, it is governed by the price of the United States bonds.  The price bonds may be such as to induce bankers to surrender their circulation at the very time when there is a legitimate demand for more circulation.  The profit to be derived from taking up and selling their bonds may be greater than that derivable from their circulation.  Within the last year a large reduction of bank circulation has taken place in the face of an active demand for money, simply because a good profit could be made by withdrawing and selling the four per cents deposited as security for circulation.  Nearly twenty-five million dollars 4 per cent. bonds were thus withdrawn within the last fiscal year.

Banks can afford to forego the profit on their circulation for a few months, in order to realize more from the premium on their bonds.  Such operations should not, in the Treasurers opinion, be permitted.  A bank having signified its intention to reduce its circulation, and having acted on that intention by depositing legal-tenders for the purpose, should be held to its determination until the deposit is exhausted.

It should not be permitted to increase its circulation until it had disappeared from the category of “reducing” banks on the books of the department or to extend its note issues through one branch of the department at the same time that they are being redeemed and destroyed in another.  The adoption of this construction, while it would work no injustice to any legitimate interest, would confine the operations of the fourth section of the act of June 20, 1874, to cases where banks had formed a well-considered intention to permanently curtail their circulation, and would relieve the United States from the expense of issuing notes to banks, only to have them forthwith returned for destruction.

It is equally clear that where additional circulation has been issued to reducing banks the new notes ought not to be redeemed out of the legal-tender deposits previously made.  The law provides for the redemption out of those deposits of the “outstanding notes” of the association, plainly meaning the notes that was out standing at the time the deposit was made.  The deposit has relation only to the notes then outstanding.  It would be absurd to suppose that the law intended to permit a bank to deposit legal-tenders to-day to redeem new notes issued to it to-morrow on a fresh deposit of bonds, or on the self-same bonds.  The additional notes issued stand by themselves.  They are properly subject to the same provisions as to their redeemability as the notes of a bank which has made no legal-tender deposit.  The United States has no concern with them, and should, if practicable, refuse to redeem them when presented for redemption out of the bank’s legal-tender deposit.  All “reducing” banks are required to maintain a 5 per cent. deposit under Section 3 of the act of June 20, 1874, on the circulation borne on their books—that is, the circulation for which no legal-tender deposit has been made.  Any part of the additional circulation of such a bank presented for redemption should be charged to its 5 per cent. account ;  and be reimbursed for and disposed of in the same manner as the notes of banks not reducing their circulation.

(Act of July 12, 1882.)

AN ACT TO ENABLE NATIONAL BANKING ASSOCIATIONS TO EXTEND THEIR CORPORATE EXISTENCE, AND FOR OTHER PURPOSES.

Be it enacted by the Senate and House of Representatives of the United States in Congress assembled :  That any national banking association organized under the acts of February 25, 1883, June 4, 1884, and February 14, 1880, or under sections 5133, 5134, 5135, 5138 and 5154 of the Revised Statutes of the United States, may, at any time within the two years next previous to the date of the expiration of its corporate existence under present law, and with the approval of the Comptroller of the Currency, to be granted as hereinafter provided, extend its period of succession by amending its articles of association, for a term of not more than twenty years from the expiration of the period of succession named in such articles of association, and shall have succession for such extended period, unless sooner dissolved by the act of shareholders owning two-thirds of its stock, or unless its franchise becomes forfeited by some violation of law, or unless hereafter modified or repealed.

SECTION 2.  That such amendment of said articles of association shall be authorized by the consent, in writing, of shareholders owning not less than two-thirds of the capital stock of the association ;  and the board of directors shall cause such consent to be certified under the seal of the association, by its president or cashier, to the Comptroller of the Currency, accompanied by an application made by the president or cashier, for the approval of the amended articles of association by the Comptroller ;  and such amended articles of association shall not be valid until the Comptroller shall give such association a certificate under his hand and seal that the association has complied with all the provisions required to be complied with, and is authorized to have succession for the extended period named in the amended articles of association.

SEC. 3.  That upon the receipt of the application and certificate of the association, provided for in the preceding section, the Comptroller of the Currency shall cause a special examination to be made, at the expense of the association, to determine its condition ;  and if, after such examination or otherwise, it appears to him that said association is in a satisfactory condition, he shall grant his certificate of approval provided for in the preceding section, or if it appears that the condition of said association is not satisfactory he shall withhold such certificate of approval.

SEC. 4.  That any association so extending the period of its succession shall continue to enjoy all the rights and privileges and immunities granted, and shall continue to be subject to all the duties, liabilities and restrictions imposed by the Revised Statutes of the United States, and other acts having reference to national banking associations, and it shall continue to be in all respects the identical association it was before the extension of its period of succession.  Provided, however, That the jurisdiction for suits hereafter brought by or against any association established under any law providing for national banking associations, except suits between them and the United States, or its officers or agents, shall be the same as, and not other than, the jurisdiction for suits by or against banks not organized under any law of the United States which do or might do banking business when such national banking associations may be doing business where such suits may be begun.  And all laws and parts of laws of the United States inconsistent with this provision be, and the same are hereby repealed.

SEC. 5.  That when any national banking association has amended its articles of association as provided in this act, and the Comptroller has granted his certificate of approval, any shareholder not assenting to such amendment may give notice in writing to the directors, within thirty days from the date of the certificate of approval, of his desire to withdraw from said association, in which case he shall be entitled to receive from said banking association the value of the shares so held by him, to be ascertained by an appraisal made by a committee of by persons, one to be selected by such shareholder, one by the directors, and the third by the first two ;  and, in case the value so fixed shall not be satisfactory to any such shareholder, he may appeal to the Comptroller of the Currency, who shall cause a re-appraisal to be made, which shall be final and binding ;  and if said re-appraisal shall exceed the value fixed by said committee, the bank shall pay the expenses of said re-appraisal, and otherwise the appellant shall pay said expenses ;  and the value so ascertained and determined shall be deemed to be a debt due and be forthwith paid to said shareholder from said bank ;  and the shares so surrendered and appraised shall, after due notice, be sold at public sale, within thirty days after the final appraisal provided in this section :  Provided, That in the organization of any banking association intended to replace any existing banking association, and retain the name thereof, the holders of stock in the expiring association shall be entitled to preference in the allotment of the shares of the new association in proportion to the number of shares held by them respectively in the expiring association.

SEC. 6.  That the circulating notes of any association so extending the period of its succession which shall have been issued to it prior to such extension shall be redeemed at the Treasury of the United States, as provided in Section 3 of the act of June 20, 1874, entitled “An act fixing the amount of United States notes, providing for a re-distribution of national bank currency, and for other purposes,” and such notes when redeemed shall be forwarded to the Comptroller of the Currency, and destroyed, as now provided by law ;  and at the end of tree years from the date of the extension of the corporate existence of each bank the association so extended shall deposit lawful money with the Treasurer of the United States sufficient to redeem the remainder of the circulation which was outstanding at the date of its extension as provided in sections 5222, 5224 and 5225 of the Revised Statutes, and any gain that may arise from the failure to present such circulating notes for redemption shall inure to the benefit of the United States ;  and from time to time, as such notes are redeemed or lawful money deposited therefor, as provided herein, new circulating notes shall be used as provided by this act, bearing such devices, to be approved by the Secretary of the Treasury, as shall make them readily distinguishable from the circulating notes heretofore issued.  Provided, however, That each banking association which shall obtain the benefit of this act shall reimburse the Treasury the cost of preparing the plate or plates for such new circulating notes as shall be issued to it.

SEC. 7.  That national banking associations whose corporate existence has expired or shall hereafter expire, and which do not avail themselves of the provisions of this act, shall be required to comply with the provisions of sections 5221 and 5222 of the Revised Statutes in the same manner as if the shareholders had voted to go into liquidation, as provided in section 5220, of the Revised Statutes ;  and the provisions of sections 5224 and 5225 of the Revised Statutes shall also be applicable to such associations, except as modified by this act ;  and the franchise of such association is hereby extended for the sole purpose of liquidating their affairs until such affairs are finally closed.

SEC. 8.  That national banks now organized, or hereafter organized, having a capital of $150,000 or less, shall not be required to keep on deposit with the Treasurer of the United States, United States bonds in excess of one-fourth of their capital stock as security for their circulating notes ;  and such banks shall keep on deposit or deposit with the Treasurer of the United States the amount of bonds as herein required ;  and such of those banks having on deposit bonds in excess of that amount are authorized to reduce their circulation by the deposit of lawful money as provided by law.  Provided, That the amount of such circulating notes shall not exceed in any case 90 per cent. of the par value of the bonds deposited as herein provided ;  Provided further, That all national banks which shall hereafter make deposits of lawful money for the retirement in full of their circulation shall, at the time of their deposit, be assessed for the cost of transporting and redeeming their notes then outstanding, a sum equal to the average cost of the redemption of national-bank notes during the preceding year, and shall thereupon pay such assessment ;  and all national banks which have heretofore made or shall hereafter make deposits of lawful money for the reduction of their circulation shall be assessed and shall pay an assessment in the manner specified in section 3, of the act approved June 20, 1874, for the cost of transporting and redeeming their notes redeemed from such deposits subsequently to June 30, 1881.

SEC. 9.  That any national banking association now organized ;  or hereafter organized desiring to withdraw its circulating notes upon a deposit of lawful money with the Treasurer of the United States, as provided in section 4 of the act of June 20, 1874, entitled, “An act fixing the amount of United States notes providing for a redistribution of national-bank currency, and for other purposes,” or as provided in this act, is authorized to deposit lawful money and withdraw a proportionate amount of the bonds held as security for its circulating notes in the order of such deposits ;  and no national bank which makes any deposit of lawful money in order to withdraw its circulating notes shall be entitled to receive any increase of its circulation for a period of six months from the time it made such deposit of lawful money for the purpose aforesaid.  Provided, That not more than three millions of dollars of lawful money shall be deposited during any calendar month.  And, Provided further, That the provisions of this section shall not apply to bonds called for redemption by the Secretary of the Treasury, nor the withdrawal of circulating notes in consequence thereof.

SEC. 10.  That upon a deposit of bonds as described by Sections 5159 and 5180, except as modified by Section 4 of an act entitled, “An act fixing the amount of United States notes, providing for a redistribution of the national bank currency, and for other purposes,” approved June 20, 1874, and as modified by Section 8 of this act, the association making the same shall be entitled to receive from the Comptroller of the Currency circulating notes of different denominations, in blank, registered and countersigned as hereinafter provided, equal in amount to 90 per cent. of the current market value of the United States bonds so transferred and delivered, and at no time shall the total amount of such notes issued to any association exceed 90 per cent. of the amount at such time actually paid in of its capital stock ;  and the provisions of sections 5171 and 5178 of the Revised Statutes are hereby repealed.

SEC. 11.  That the Secretary of the Treasury is hereby authorized to receive at the Treasury any bonds of the United States bearing 3½ per cent. interest, and to issue in exchange therefor an equal amount of registered bonds of the United States of the denominations of fifty, one hundred, five hundred, one thousand, and ten thousand dollars, of such form as he may prescribe, bearing interest at the rate of 3 per cent. per annum, payable quarterly at the Treasury of the United States.  Such bonds shall be exempt from all taxation by or under state authority, and be payable at the pleasure of the United States.  Provided, That the bonds herein authorized shall not be called in and paid so long as any bonds of the United States heretofore issued bearing a higher rate of interest than 3 per cent. and which shall be redeemable at the pleasure of the United States shall be outstanding and uncalled.  The last of the said bonds originally issued under this act, and their substitutes, shall be first called in, and this order of payment shall be followed until all shall have been paid.

SEC. 12.  That the Secretary of the Treasury is authorized and directed to receive deposits of gold coin with the Treasurer or Assistant Treasurers of the United States, in sums not less than $20, and to issue certificates therefor in denominations of not less than $20 each, corresponding with the denominations of United States notes.  The coin deposited for or representing the certificates of deposits shall be retained in the treasury for the payment of the same on demand, Said certificates shall be receivable for customs, taxes and all public dues, and when so received may be reissued ;  and such certificates, as also silver certificates, when held by any national banking association shall be counted as part of its lawful reserve ;  and no national banking association shall be a member of any clearing house in which such certificates shall not be receivable in the settlement of clearing house balances.  Provided, That the Secretary of the Treasury shall suspend the issue of such gold certificates whenever the amount of gold coin and gold bullion in the treasury reserved for the redemption of United States notes falls below $100,000,000 ;  and the provisions of section 5207 of the Revised Statutes shall be applicable to the certificates herein authorized and directed to be issued.

SEC. 13.  That any officer, clerk or agent of any national banking association who shall willfully violate the provisions of an act entitled “An act in reference to certifying checks by national banks,” approved March 3, 1869, being Section 5208 of the Revised Statutes of the United States, or who shall resort to any device, or receive any fictitious obligation, director collateral, in order to evade the provisions thereof, or who shall certify checks before the amount thereof shall have been regularly entered to the credit of the dealer upon the books of the banking association, shall be deemed guilty of a misdemeanor, and shall, on conviction thereof in any circuit or district court of the United States, be fined not more than $5,000 or shall be imprisoned not more than five years, or both, in the discretion of the court.

SEC. 14.  That Congress may at any time amend, alter or repeal this act and the acts to which this is amendatory.