Extra sheets to Spaulding's
history of legal tender paper money issued during the great rebellion.

In the publication of a further edition of the Financial History of the War, prepared by me in the winter of 1869, I may be indulged in a few words in vindication of the Legal Tender act as originally passed, and some criticisms on the general management of the Finances, especially the mistakes of the Treasury department in its administration of that act, and of other laws authorizing the issue of bonds and treasury notes.

As chairman of the sub-committee of ways and means, having charge of this subject, I became very much identified with this legislation, as well as with the bank bill passed during the second year of the war.

The first material mistake in the management of the finances, occurred when Secretary Chase discarded the use of the bank check, and the clearing house, in the fall of 1861.  The Secretary of War might, with the same propriety, have rejected the rail-road, the locomotive, and the telegraph.  The modern invention of the bank check and the clearing house for the transaction of large financial operations with facility, are quite as useful as are railroads and telegraphs in carrying on military operations with success.  The Secretary of War did not fail to make use of the railroads and the telegraph, but the Secretary of the Treasury, by sticking to the sub-treasury, and rejecting the bank check and clearing house, committed a great blunder at the commencement of the war.  This mistake occurred under the following circumstances:

Two important loan acts were passed at the extra session of Congress in July and August, 1861. The first act was approved July 17th, and the second August 5th.  By section six of the last mentioned act, the independent treasury act passed in 1846, was so far suspended as to allow the Secretary of the Treasury

"To deposit any of the moneys obtained on any of the loans now authorized by law, to the credit of the Treasurer of the United States, in such solvent specie paying banks as he may select;  and the said moneys, so deposited, may be withdrawn from such deposit, for deposit with the regular authorized depositories, or for the payment of public dues, or paid in the redemption of the notes authorized to be issued under this act, or the act to which this is supplementary, payable on demand, as may seem expedient to, or be directed by the Secretary of the Treasury."

The primary object, which Mr. Appleton and myself had in view, in preparing this section, was to relax the rigid requirements of the sub-treasury act, in regard to the receipt and disbursement of coin, and instead of paying solely from coin deposits in the treasury, to allow all the money obtained on these loans to be deposited in solvent banks;  the United States Treasurer to draw his checks directly on such deposit banks in payment of war expenses, which checks would be paid in state bank notes then redeemable on demand in gold, or in the ordinary course of business, to a large extent, they would pass through the New York clearing house, and the clearing houses of other cities, and be settled and cancelled by offset, without drawing large amounts of specie.  This mode of payment would have enabled the Secretary more easily to effect such loans, and make his large disbursements, without materially disturbing the coin reserves held by the banks, which were then well protected by these reserves in their vaults.

This mode of making the disbursements for the large war expenses was regarded by me at that early period of the war as of vital consequence to the stability of the finances of both government and people;  hence the preparation and adoption of the sixth section of the act of August 5, 1861, giving the Secretary of the Treasury discretionary power to suspend the sub-treasury law in respect to these loans.

After the battle of Bull Run, which occurred on the twenty-first of July, of that year, the necessities of the government in clothing, arming and feeding troops ---in providing munitions of war and building a navy--- became so urgent that the banks in New York, Boston and Philadelphia most patriotically came forward and made arrangements in several negotiations with Secretary Chase, to loan to the government $150,000,000 under the provisions of the two loan acts passed at the extra session.  Of this sum $105,000,000 was apportioned to the associated banks in the city of New York payable by instalments.  The banks were then in good condition, transacting their business on a specie basis, and paid coin for all balances at the clearing house, and redeemed their circulating notes in coin, and the loan to the government was made with the expectation that the money would be deposited in the banks, and be checked out under the direction of the Secretary, in pursuance of the sixth section above referred to.  The Secretary of the Treasury refused to use the discretionary power conferred upon him by that section, and would not check on the banks for the expenses of the war, so that current bank notes could be paid or balances settled through the clearing house, but insisted that the banks should pay the money loaned into the sub-treasury in gold or gold treasury notes, and from thence it was distributed for war purposes and scattered in different parts of the country.  By far the greater part of this loan was paid in gold coin, taken from the reserves of the banks commencing on the nineteenth of August, 1861.  This unnecessary mode of requiring the payment of the loans, so weakened the banks, that it brought on a general suspension of specie payments, during the last days of December, 1861.  Notwithstanding the banks commenced making advances to the government about the nineteenth of August, 1861, yet none of the securities to be issued by the government for the loans were turned over to them until the fourteenth of January, 1862.

The banks having been committed to making the loans, and having made partial advances on account of the same, were obliged to complete the loan notwithstanding the Secretary of the Treasury deemed it incompatible with his views of duty, and the traditions of the independent treasury law, to use such banks as disbursing agents of the government, even under the extraordinary exigency under which the loans were made.  The call upon the banks for payment into the government depository of the remaining instalments of the loan, either in coin or gold treasury notes, was persistently urged by the Secretary until the final closing of the transaction on the third of February, 1862.

This was the first material mistake of the Secretary of the Treasury, and was the first step in the wrong direction, which, combined with other important events, led to the necessity of passing the legal tender act.

The Secretary in breaking the banks, at the same time broke the sub-treasury, and both were discredited together.  Under the policy pursued, the state bank bills which were local in character and credit, became uncurrent money, and the available gold in the country was wholly inadequate to meet the gigantic expenses of the war.

"A meeting of bank officers was held at the American Exchange Bank in the city of New York, December 28, 1861.  One of the bank Presidents in a well considered speech delivered on that occasion, criticising the course of Secretary Chase in regard to those loans, said that

" 'He [Secretary Chase] was urged to draw directly on the banks.  Coin being the basis of credits, it was only in that way the increased financial operations of the government could be conducted;  for it is impossible to maintain the superstructure of credit when the basis is withdrawn, for in destroying the basis the superstructure is also swept away.  He refused to draw directly upon the banks for the proceeds of the loan taken by each.  We are informed that the act of Congress was passed expressly for the purpose of authorizing him to do so, but be gave it a different interpretation which may be the correct one, although I do not think so.' "

---[the up-side-down pyramid, credit bubble pops
why not name that bank president ?
this is from a letter from Spaulding to Gibbons, on March 29, 1870, published in the New York Times]

The failure of the Secretary to recognize the suspension of the sub-treasury law, fully demonstrates the truthfulness of the remark made by Disraeli, that "upon a perfect knowledge and right appreciation of details, the settlement of great questions mainly depends."  The Secretary was intent upon having the gold for disbursement, without fully comprehending the effect this large drain was to have upon the banks and the general finances of the country.

The suspension of specie payments by the banks and the treasury of the United States occurred on the twenty-eighth of December, 1861, and two days later, on the thirtieth of the same month, I prepared and introduced the legal tender act into the House of Representatives.  The history of this measure in its passage through both houses is fully set forth in the text.  The speeches and votes of members on both sides of the question are given in detail in this book, commencing at page six.  The measure was prominently discussed before the people and in Congress for more than six weeks.  It passed both houses and received the approval of President Lincoln February 25, 1862.

It is a fundamental principle, which I think I fully comprehended when I introduced this act into Congress, that not one dollar of paper money ought ever to be issued by the government, or by any bank, without at the same time, making ample provision for its prompt redemption, on demand.  The best redemption, and the best attainable standard of value, is gold coin, and the only admissible standard in time of peace.  It was an utter impossibility for our government at that time to redeem the legal tender notes in gold, because it could not be had on any terms; it was not in the country in sufficient amount to meet the great emergency;  but the government could redeem (fund) the legal tender notes in six per cent. twenty years gold bonds.  And here I may say, most emphatically, that if these six per cent. bonds could then have been negotiated for any funds available, and in adequate amount, for war expenses, not one dollar of legal tender notes would have been issued.  This could not be done, and the act was framed with the express agreement that the legal tender notes issued under it should be redeemed in the six per cent. gold bonds.  The second section of the act authorized the issue of $500,000,000 bonds for that purpose.

The leading object of the legal tender act was to create a currency national in character, which could be used for liquidating war expenses, and, to prevent any plethora or redundancy of such currency, provide at the same time for funding it in the six per cent. bonds.  The leading object was to fund the debt.  This provision for funding, also, in a great measure, relieved the act of the apparent injustice of compelling people, by the legal tender clause, to receive this currency on ordinary debts and invested securities when they could immediately upon its receipt, convert it into six per cent. gold bonds at par.

In the opening speech which I made soon after I presented the bill to the House, I said:

"The bill before us is a war measure, a measure of necessity, and not of choice, presented by the committee of Ways and Means to meet the most pressing demands upon the treasury to sustain the army and navy until they can make a vigorous advance upon the traitors and crush out the rebellion.  These are extraordinary times and extraordinary measures must be resorted to, in order to save our Government and preserve our nationality."
---[those "traitors" were, of course, firm believers in the independent treasury, segregation of bank and state, coin as currency, no national indebtedness, no central government, no central bank;  standing firmly in the way of banker Spaulding's and his friends' scientific banking system....]

After a full presentation of the scope and object of the bill, and an argument in favor of its constitutionality as a war measure, and as a means of carrying into full effect the war power, granted in the constitution, substantially as has since been decided by the U.S. Supreme Court, I closed my first presentation of the bill to the House as follows:

It is plainly within the scope of the Constitution that the Government should maintain itself;  that the army should be supported;  that the navy should be maintained.  The ways and means of doing this are left to Congress to provide.  Congress may do this entirely by taxation.  It may provide by law to levy and collect taxes enough every year to pay the whole expenses of the war during each current year, and so “ pay as we go.”  It may issue six per cent. bonds and sell them on the market for what they will bring—even if they will not sell for over fifty cents on the dollar—to raise money to carry on the war.  It may issue Treasury notes payable on demand, and make them a legal tender in payment of debts.  Either one or all of these modes of paying the expenses of the Government is left to the discretion of Congress.  Either mode is constitutional;  and it is left to the sound discretion of Congress to decide which mode it will adopt, or whether it will adopt a part of each, as being the best in the present crisis.

My own impression is, that it will be best for us to adopt, in part, all of these modes for providing the means.

1.  Raise by taxation the current year, over and above the amount received from duties on imports, the sum of $150,000,000.

2.  Issue $100,000,000 of demand Treasury notes in addition to the $50,000,000 authorized in July, making them a legal tender in payment of debts, and exchangeable at any time for 6 per cent. twenty years’ bonds;  with a further issue of demand notes if Congress shall hereafter deem it necessary.

3.  Provide for the issue of all the twenty years’ 6 per cent. bonds that may be necessary to fund the demand Treasury notes, and other fundable Treasury notes that may be issued, (say $500,000,000 six per cent. twenty years’ coupon bonds,) and pledge $30,000,000 of the annual taxes to pay the interest half-yearly thereon, and pledge $25,600,000 more, as a sinking fund to redeem the principal in twenty years.

4.  This tax of $150,000,000 would afford an ample basis on which to rest the credit of the Government for this large issue of Treasury notes and bonds, and would insure the punctual payment of the interest to the capitalists who might hold them.

5.  The demand notes put in circulation would meet the present exigencies of the Government, in the discharge of its existing liabilities to the army, navy, and contractors, and for supplies, materials, and munitions of war.  These notes would find their way into all the channels of trade among the people;  and as they accumulate in the hands of capitalists, they would exchange them for the six per cent. twenty years’ bonds.

These circulating notes in the hands of the people would enable them to pay the taxes imposed, and would facilitate all business operations between farmers, mechanics, commercial business men, and banks, and be equally as good as, and in most cases better, than the present irredeemable circulation issued by the banks.

6.  The $500,000,000 six per cent. twenty years’ bonds in the hands of the Secretary of the Treasury, ready to be issued, would afford ample opportunity for funding the Treasury notes as fast as capitalists might desire to exchange Treasury notes not bearing interest for coupon bonds of the United States bearing six per cent. interest, and amply secured by a tax upon the people and all their property.

In this way the Government will be able to get along with its immediate and pressing necessities without being obliged to force its bonds on the market at ruinous rates of discount;  the people, under heavy taxation, will be shielded against high rates of interest;  and this capitalists will be afforded a fair compensation for the use of their money during the pending struggle of the country for national existence.

---[even in this addendum, banker Spaulding left out below paragraph from his address, because in 1862 he spoke a slightly different language and he was trying to impart a slightly different impression;  because in 1862 a 20-year suspension of payment wasn't such a bad thing as "they" implied in 1875;  it could even be beneficial]

A suspension of specie payment is greatly to be deplored, but it is not a fatal step in an exigency like the present.  The British Government and the Bank of England remained under suspension from 1797 to 1821–’2 —a period of twenty-five years.  During this time England successfully resisted the imperial power of the Emperor Napoleon, and preserved her own imperilled existence.  During all this time the people of Great Britain advanced in wealth, population, and resources.  Gold is not as valuable as the productions of the farmer and mechanic, for it is not as indispensable as are food and raiment.  Our army and navy must have what is far more valuable to them than gold and silver.  They must have food, clothing, and the material of war.  Treasury notes issued by the Government, on the faith of the whole people, will purchase these indispensable articles, and the war can be prosecuted until we can enforce obedience to the Constitution and laws, and an honorable peace be thereby secured.  This being accomplished, I will be among the first to advocate a speedy return to specie payments, and all measures that are calculated to preserve the honor and dignity of the Government in time of peace, and which I regret are not practicable in the prosecution of this war.

From this brief statement of the inception of the legal tender act, it will be seen that it was a temporary war measure;  that this greenback currency was receiveable for internal taxes and all other dues, except customs duties and interest on the funded debt;  that a sinking fund was provided of one per cent. each year of the entire debt of the United States after July 1, 1862, and the whole of this temporary currency and all the floating debt of the United States was, by the second section of the act, fundable (redeemable) in six per cent. gold bonds.  The title of the act was very expressive.  "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."  The government could not redeem in gold, but could redeem in bonds issued on its credit.  These legal tender notes were in substance and effect, certificates of debt given for war expenses redeemable on demand in these bonds.  Thus, the fundamental principal, that no paper currency should ever be issued, without providing at the same time, for its prompt redemption, was provided for in the best mode in which, under the unparalled emergency, the government was able to provide for it.

The first legal tender notes issued under the act bore date March 10, 1862, and had printed on the back of them these words:

"This note is a legal tender for all debts, public and private, except duties on imports and interest on the public debt, and is exchangeable for U.S. six per cent. bonds redeemable at the pleasure of the United States, after five years."

These notes in the form of greenback currency were immediately issued by Secretary Chase and disbursed for war expenses, and the treasury of the United States was very soon relieved of the pressing demands that were made upon it.  The army and navy were paid, and supplies and materials of war obtained on these paper promises in sufficient quantity to prosecute the war with vigor.

The first edition of legal tender notes were by the gigantic war expenses very soon exhausted.  On the seventh of June, 1862, Secretary Chase sent an official communication to the Committee of Ways and Means asking for a further issue of $150,000,000 of legal tender notes, and that a part of this emission should be in one dollar notes, the previous emission having all been issued in notes of five dollars and upwards.  In this communication Mr. Chase urged in favor of small bills, and said "it may further be properly observed that since the United States notes are made a legal tender and maintained at near the par of gold by the provision for their conversion into bonds bearing six per cent. interest payable in coin, it is not easy to see why small notes may not be issued as wisely as large ones."

This quotation is made for the purpose of showing how important it was deemed at that time, that all the greenback currency should be redeemable in gold bonds.

I made the opening speech on the bill in favor of this further issue of the legal tender notes.  In the course of my remarks I said [June 17.]:

United States notes, without interest, made a legal tender, and circulated as money among the people in all parts of the United States.  This is the people’s loan to the Government, and the most popular mode of borrowing ever adopted by any Government.  It has given the country a sound national currency, in which the people have had entire confidence.  Every man, woman and child having a five dollar legal tender greenback note in possession, has directly or indirectly loaned to the Government that amount, and becoming thereby interested in the perpetuity of the Government, is a strong advocate for a vigorous prosecution of the war.  A fair test of the loyalty of all such holders of notes may be seen in their manifestation of confidence that they are perfectly good.  The soldiers and sailors give their services, risk their lives, and endure all the hardships, sickness, and privations of the campaign, and cheerfully take these notes in payment.  Supplies, subsistence, and material of war of every kind is eagerly furnished, and these greenbacks taken in exchange for the same.  This kind of loan is so popular with the people, and being without interest, is so advantageous to the Government, it is desirable that it should be extended as far as it can be done safely, and without unduly stimulating speculations to such an extent as to cause an unfavorable reaction to the legitimate business of the country.  But when bonds can be negotiated at par, I think it will be safer to have bonds negotiated than to issue legal tender notes.
---[once again, you left out part of the passage, which I colourized red;  why ?]

The act for this additional issue of greenback currency was passed and approved by President Lincoln, July 11, 1862.  It provided that the notes should be redeemed on demand in the six per cent. gold bonds.

SECOND MISTAKE.

The great mistake ---greater than all other mistakes in the management of the war--- was the abrogation of the right to fund the greenback currency in gold bonds, as provided for in the two preceding acts.

All the other mistakes, civil and military, which occurred during the war were of slight consequence when compared with the mischievous and grave consequences resulting from this one mistake.  Taking away from the holder of this paper money the right to have it redeemed on demand in gold bonds, besides being manifestly unjust to the holders, let the government and the whole country ---banks and people--- down into the slough of an irredeemable paper currency, where we have, remained for over eleven years.  From 1864 to 1875 it has been a dead weight on the business and industry of the country, without elasticity, and without any provision whatever being made for its redemption or payment.  Its redundancy and consequent depreciation has operated very injuriously to the legitimate business of the country.  It was an instrument of expenditure representing the waste of war, and not possessing the essential elements of a commercial currency.  A majority of the people, however, have been deluded into the belief that those broken promises, representing the waste of war, were money, and a proper standard of value as a basis for doing business, and have plunged headlong into all sorts of speculations, unprofitable enterprises, extravagance in living general abuse of credit, idleness, and consequent demoralization.

If the right to fund the greenbacks into the six per cent. gold bonds had not been abrogated, no financier or practical business man, whose opinion is worth quoting, can doubt that we would have gone to specie payment within two or three years after the close of the war, in spite of ourselves.  The individual indebtedness at the close of the war in 1865 was small.  Every one was comparatively free from debt.  The six per cent. gold bonds were sought for as an investment.  They soon appreciated to par in gold, and if the right to fund had been continued, the greenback currency would have appreciated to par in gold along with bonds.  The legal tender act would have served its purpose as a war measure, and we would have returned to the specie standard without material detriment to the legitimate business of the country.  In this way we would have avoided a large part of the extravagance and demoralization that has been so reckless since the close of the war.

The circumstances leading to this mistake are fully set forth in the Financial History of the War, pages 188 to 198, but I will briefly recapitulate the facts.  The $900,000,000 loan act was passed and approved by the President March 3, 1863.  At the urgent request of Secretary Chase a clause was inserted in the act, taking away the absolute right of the holders of greenbacks to fund them into six per cent. gold bonds after July 1, 1863, and leaving it discretionary with the Secretary to allow them to be funded or not, as he might deem best for the public interest.  Under this discretionary power the Secretary allowed them to be funded up to January 21, 1864.

The legal tender act had worked well and all of the $500,000,000 six per cent. bonds authorized by the first act had been taken up at par.  The Secretary then decided that he would not allow any more funding in the six per cent. bonds, but would allow the holders of the greenbacks to fund them in a five per cent. bond.  This mistake of the Secretary arrested the funding of the greenbacks into bonds, and materially depreciated and lowered the standard of this currency.

This attempt of the Secretary to float live per cent. bonds made it necessary, in order to meet the enormous war expenses, to issue and keep out large amounts of currency in the form of greenbacks, interest bearing notes, certificates of indebtedness, fractional currency and national bank notes, besides the irredeemable currency issued by state banks.  Gold and commodities continued to advance in price.  On the fifteenth of January, 1864, gold was $1.55, on the fifteenth of April, $1.78, on the fifteenth of June, $1.97, and on the twenty-ninth of June, $2.35 to $2.50, which showed that the legal tender notes were then only worth forty cents on the dollar in gold.  The next day, the thirtieth of June, 1864, Mr. Chase resigned the office of Secretary of the Treasury.  At this time the inflating paper issues outstanding were over $1,100,000,000, and in a few days thereafter gold reached its highest quotation, $2.85, or more accurately speaking greenbacks depreciated until they were only worth in gold thirty-five cents on the promised dollar, at the Board of Brokers, in the city of New York.

Secretary Chase and myself differed materially in regard to the points herein stated in managing the finances.  When the Financial History of the War was published, I sent him a copy, and received from him the following reply:

Washington, July 15, 1869.

My dear sir:  This morning I have received your book on the Financial History of the War, promised in your letter, which came several days ago.  I have had time to give only a very hasty glance at the contents.  You adhere, I perceive, to your old views on the points where we differed;  and I cannot say I have changed mine.  But I shall read your connected account of what transpired both while and since I was Secretary of the Treasury, with attention and interest, and will write you by-and-by more in detail.  Meantime, I remain with that sincere regard and respect, which your abilities most honorably devoted to the welfare of our country inspired in me.

Faithfully yours, S.P. CHASE.

Hon. E. G. Spaulding.

No further communication was ever received from Mr. Chase on the subject.  He commenced his administration of the Treasury in 1861, as a believer in hard money, and a firm advocate of the Sub-Treasury law, and without much practical knowledge of the credit machinery by which the great financial transactions of the country are carried on.  He left the office with twice as much inflating paper outstanding as ought ever to have been issued, and with the promised dollar printed on the face of the greenback worth only from 35 to 40 cents in gold.

Hon. Wm. Pitt Fessenden was appointed Secretary of the Treasury in place of Mr. Chase, and entered upon the duties of the office July 5, 1864, and continued in the office performing the duties very acceptably about eight months, and until the second inauguration of President Lincoln, March 4, 1865, when Mr. McCulloch was appointed in his place.

Secretary McCulloch was one of best practical financiers in the country, and managed the Treasury Department with marked prudence and ability.  His annual reports were based upon correct principles, and were very clear and able expositions of the financial situation.  If Congress had continued to give him proper support, instead of repealing the law for retiring greenbacks, it is my firm belief that he would have conducted us back to the specie standard during the four years of his administration of the Treasury Department, and without materially affecting, in an unfavorable manner, the legitimate business of the country.  The controlling majority in Congress was weak and vacillating in its course, and utterly failed to make any provision for redeeming the greenback currency.

After the surrender of the rebel armies to Gen. Grant and Gen. Sherman the volunteer army was mustered out of the service, and had to be paid in full.  Secretary McCulloch obtained the means to pay them chiefly by the issue of 7.30 treasury notes.  The amount required for that purpose was very large, and the amount of these notes outstanding in October, 1865, was $830,000,000, which were, by law, expressly fundable within three years into six per cent. gold bonds.  The right to fund them was not abrogated, and within three years they were all taken off the market and funded in those bonds.  This shows conclusively how treasury notes may be retired from circulation by an efficient system of funding.  The greenbacks would have been funded in the same way if the original contract for funding them had not been abrogated.

Upon the inauguration of President Grant on the fourth of March, 1869, Hon. George S. Boutwell was made Secretary of the Treasury, and entered upon the duties of the office March 11 [on March 18, the credit strengthening act became law].  The President, in his inaugural address, expressed himself favorable to a return to specie payments at the earliest practicable moment, and in his annual message, he said in reference to an irredeemable currency, "It is an evil which I hope will receive your most earnest attention.  It is a duty, and one of the highest duties of the government to secure to the citizen a medium of exchange of fixed and unvarying value.  This implies a return to a specie basis, and no substitute for it can be devised.  It should be commenced now. * * * I earnestly recommend to you such legislation as will insure a gradual return to specie payments, and put an immediate stop to fluctuations in the value of the currency."  The first act of Congress approved by President Grant after his inauguration, contained an express promise in these words: "The United States solemnly pledges its faith to make provision, at the earliest practicable period, for the redemption of the United States notes in coin."

This promise on the part of Congress to make provision for the redemption of the greenback currency in gold, has been about as badly broken as was the promise made in the first legal tender act February 25, 1862, to redeem it in six per cent. gold bonds.

It is true that by the acts of Congress the revenues derived from custom duties and internal taxes were ample, in 1869, to pay the annual expenses of the government and interest on the public debt, and leave a surplus, and consequently an accumulation of gold in the treasury which would, in due time, have been an ample fund "to redeem the United States notes in coin" in accordance with the above promise.

Here commenced the third mistake on the part of the Treasury Department in the management of the finances.  Secretary Boutwell did not regard this surplus as at all necessary to the support of the credit of the greenbacks, or as a reserve by which they could ultimately be redeemed in coin.  He therefore proceeded to pay off and take up the bonded debt not yet due for ten to fifteen years, leaving the past due greenbacks (badly broken promises) still in the slough of irredeemable currency, without any provision whatever for their payment.  In this way he reduced the public debt including three per cent. notes about $368,000,000 during the four years of his administration, but did not redeem any of the greenbacks, or keep any reserve for that purpose.

He also went further and committed an act which I have always regarded as a violation of the spirit and intent of the original legal tender act, in procuring new engraved plates to be made and the printing and paying out of a new emission of legal tender notes in time of peace, four years after the close of the war, when the public interests did not require, at that time, any such forced loan to be made.  The clause in the original legal tender act in regard to the re-issue of the greenback currency is as follows:  "Such United States notes shall be received the same as coin at their par value in payment of any loans that may hereafter be sold or negotiated by the Secretary of the Treasury, and may be re-issued from time to time as the exigences of the public interests shall require."  The only ground on which, by any possibility, the legal tender notes could be constitutionally issued was that it afforded a means by which the war powers of the government could be carried into full effect in the prosecution of the war.  But four years after the close of the war, it was not constitutional to reissue them, and it was very clear that no legitimate "public interest" required that this new emission should be reissued.  On the contrary, it was manifestly for the "public interest" that as fast as these notes were returned to the treasury they should be held there, or cancelled, until the balance outstanding were on a par with gold.  The forcing into circulation of a new emission of broken promises so long after the close of the war was not only a violation of the constitution, but was manifestly contrary to the spirit and intent of the legal tender act as originally passed.  Secretary Boutwell's policy of using his surplus revenues to pay off a funded debt not due, instead of redeeming the broken and past due promises, was based on the fallacious idea put forth by him on many occasions that the country would "grow up" to the situation, and that the greenback currency would ultimately all appreciate to par with gold by the increased population, and the enlarged demands of the business of the country without making provision for redeeming it.

Hon. William Richardson succeeded Mr. Boutwell as Secretary of the Treasury, on the seventeenth day of March, 1873 [on February 12 silver was demonetized, banker Spaulding did not object].  He was assistant Secretary under Mr. Boutwell, and upon assuming the duties of Secretary continued the same mistaken policy in regard to the finances which had been carried out by his predecessor.  Both of them went so far as to claim that the greenbacks withdrawn from circulation during Mr. McCulloch's administration of the treasury, were still a reserve, and that they had a right to reissue them in case of an emergency.  During the great financial panic which occurred in the fall of 1873, and with a view to stop it, Secretary Richardson did actually reissue and pay out in the purchase of bonds, not due, the sum of $26,000,000 of greenbacks, which Mr. McCulloch in a recent letter says, "was as powerless to stop the panic as bread pills would be to check the progress of the cholera or yellow fever."

The general policy of both Mr. Boutwell and Mr. Richardson was, to pay a debt not due, and leave neglected 'and unpaid the broken promises or the government, which had remained unpaid for several years.  During their administration of the treasury the amount of greenbacks outstanding was increased from $356,000,000 to $382,000,000.  Subsequently Congress, by act of June 20, 1874, fixed that sum as the maximum amount of the greenback currency, "and that no part thereof should be used as a reserve, 1 which effectually cut off the pretense that the previously redeemed greenbacks were a reserve to be used by the Secretary of the Treasury at his discretion.  Thus leaving the greenback currency $26,000,000 more in 1874 than it was in 1869, when Mr. Boutwell became Secretary of the Treasury,

The Supreme Court of the United States, in the case of Lane County vs. The State of Oregon, decided, that the greenback currency was not a legal tender in the payment of taxes levied by that State.  7 Wallace R., 71.  Also in the case of Bronsen vs. Rhodes, 7 Wallace, 220, that where the contract in express terms is payable in gold coin of the United States it cannot be satisfied by a tender of the greenback currency.  These two cases are regarded as good law, and have not been overruled.

In the case of Hepburn vs. Griswold, 8 Wallace, 604, the Court (opinion of Chief Justice Chase), decided that a contract made payable in dollars before the passage of the legal tender act, could not be satisfied by a tender of greenbacks; that, such act, so far as it applied to debts contracted before its passage, is unconstitutional.

Hon. J.W. Wallace, the official reporter of the United States Supreme Court, in a letter written by him March 9, 1870, says of this decision, "that notes of the United States when tendered in payment of a contract made previously to the passage of the legal tender act of February, 1862, was no lawful tender, was concurred in by five judges, not by three as assumed in the paragraph quoted.  These five judges were the Chief Justice, and Justices Nelson, Grier, Clifford and Field.  Judge Grier had left the bench before the opinions were delivered, but he was on it when the case was argued in conference;  and when the judgment of affirmance of the Court of Appeals of Kentucky which had decided the tender bad, was irrevocably and perfectly agreed upon."

Subsequent to the decision in the above case of Hepburn vs. Griswold, the Supreme Court was filled up by the appointment of new judges, and consisted of nine judges ---Chief Justice Chase and Associate Justices Nelson, Clifford, Swayne, Miller, Davis, Field, Strong and Bradley.  This court, thus constituted decided, to hear a full argument on all the points raised in the cases of Knox vs. Lee, and Barker vs. Davis.  The argument was heard at the December Term, 1870.

The court, after mature deliberation, decided, five to four, that a tender of United States notes on debts contracted previous to the passage of the legal tender act, February 25, 1862, was a valid tender in payment of such debts, thereby overruling the previous decision of the court in the case of Hepburn vs. Griswold.

Mr. Justice Strong delivered the opinion of the majority of the court, and Mr. Justice Bradley read an opinion on the same side.  On the other side of the question very elaborate opinions were read by Chief Justice Chase and Justices Clifford and Field, all of which are published in 12 Wallace Reports, 457.

Hon. Reverdy Johnson, in a recent communication reviewing this case, comes to the conclusion that Justice Strong did not intend to go so far as to decide that such an act would be constitutional if passed in time of peace.  In that part of the opinion which appears at page 540 (12 Wallace), Justice Strong says the inquiry is whether such laws "were, when enacted, appropriate instrumentalities for carrying into effect or executing any of the known powers of Congress, or of any department of the government.  Plainly to this inquiry, a consideration to the time when were they were enacted, and of the circumstances in which the government then stood is important."  He then states, in glowing but not exaggerated terms, what was the overwhelming necessity for the passage of the legal tender act in February, 1862, and adds "it is not to be denied that acts may be adapted to the exercise of lawful power, and appropriate to it in seasons of exigency which would be inappropriate at other times."  Judge Bradley, the other new member, expressed the same idea of necessity even more emphatically.  Said he:  "It follows as another corollary from the views which I have expressed, that the power to make treasury notes a legal tender, whilst a mere incidental one to that of issuing the notes themselves, and to one of the forms of borrowing money, is nevertheless a power not to be resorted to except on extraordinary and pressing occasions, such as war or other public exigencies of great gravity and importance; and should be no longer continued than all the circumstances of the case demand."  This very plainly indicates that the majority of the court would not have decided the legal tender act constitutional if it had been passed while the government was on a peace footing.

Letter from Justice Strong of the U.S. Supreme Court, in favor of returning to our normal condition:

"Philadelphia, March 8, 1870.

"Hon. E.G. Spaulding:  My Dear Sir: I received a short time since through your politeness, a copy of your "Financial History of the War."  I have not hitherto acknowledged the receipt, and returned the thanks I owe, because I wished first to read the book, and my engagements have been such of late, that I could not find the necessary time.  I have now read it, and have been both instructed and interested.  The financial history of the country during the war is quite as remarkable as the war itself, and I am glad you have spread it before the public so intelligently.  There were doubtless some mistakes, but it is wonderful that there were no more, and no greater.  Now if we can soon return to our normal condition, the scars of the war will soon be obliterated, and we shall have remaining only the blessings achieved.

"I should be glad to discuss with you some subjects brought forward in your book, but I have not now the time, I can only say that your book, as a whole, is, in my opinion, very valuable, and that you deserve the gratitude of the country not only for your history, but for the part you acted during the war in sustaining the power of the government.

I am, yours truly,
W. STRONG.

If a tender of the new emission of greenbacks put out by Secretary Boutwell in 1869-70, should be made on an existing contract, it is doubtful whether such tender would be valid, because, four or five years after the close of the war, there did not exist any public necessity for such a forced loan.  The revenues were then ample to pay all expenses and leave a surplus, which, under a mistaken policy, was used to unfund the public debt, leaving the over-due debt unpaid.

My Dear Sir:--- I have the honor to acknowledge the receipt of your letter of the 6th inst., and with it a copy of your Financial History of the War, for which I desire to return my thanks.

The constant pressure upon my time has prevented me from giving the book more than a cursory inspection, but it seems to he a valuable acquisition to our financial history, and throws considerable light upon the important question of a return to specie payments.  I am one of those who believed that it was for the interest as well as the duty of the nation to return at once to the true and solid standard of value as soon as active hostilities had ceased;  that we should have treated the currency as we did our armies ---regarding the volunteers and the greenbacks alike as necessities of war, to be dispensed with as fast as possible on the return of peace.  I think we made a great mistake in not doing so;  that the shortest method was the shortest and best;  that the only way to reach the object is by a steady and persistent contraction of the currency ---a painful process whenever it comes, no doubt, but harder and worse for us the longer it is delayed.

I hope that Congress will address itself with courage and constancy to the solution of the problem as soon as it meets;  and will feel assured that the American people have intelligence enough to support those who do it.  My views on the subject are of little importance to anybody, but, as an American citizen, I should be sorry and ashamed to find my country unable and unwilling, in a time of peace and prosperity, to provide for its over-due paper.

Very respectfully,
E.R. HOAR.

In 1874, Congress passed an inflation act authorising a large increase of the greenback currency and containing other mischievous provisions.  This act was submitted to President Grant, and extraordinary efforts made by the inflationists in and out of Congress, to have him approve it.  He refused to do so, and on the 22d of April vetoed the act in a message to the Senate condemning this measure of inflation in unqualified terms.

He says "the theory, in my belief, is a departure from the true principles of finance, national interest, national obligation to creditors, congressional promises, party pledges by both political parties, and of the personal views and promises made by me in every annual message sent to Congress and in each inaugural address."

This veto is regarded as one of the most important and useful acts of President Grant's administration.  It had an important influence in checking the clamor for more irredeemable currency.

Secretary Richardson, after holding the office about fourteen months and a half, resigned, and on the 4th of June, 1874, Hon. Benjamin H. Bristow was appointed Secretary of the Treasury, and entered upon the duties of the office.

In pursuance of the provisions of the act of Congress passed June 20, 1874, an Assorting Bureau has been established in the Treasury Department for the redemption of National Bank currency.  This assorting and redeeming process serves a very useful purpose in taking out of circulation all the worn, dirty, mutilated and defaced notes, and replacing them with clean ones.  All this is done in a satisfactory manner, and by an equitable assessment, the Banks pay all the expenses of this Assorting Bureau;  but in so far as it seeks to be an efficient redemption of the National Bank notes, it utterly fails to give that vitality and elasticity which ought to attach to a commercial currency.  The greenbacks and National Bank notes circulate on a par with each other, and each kind of notes possess about the same purchasing power.  Both kinds are worth about 85 cents on the promised dollar.  The consequence is that there has not been, and there cannot be, any efficient redemption of bank notes in the present condition of the currency, because there is neither object nor motive to prompt it.  This, so called, redemption simply resolves itself into the swapping one kind of irredeemable paper for another kind of no higher value.  But, inasmuch as it renovates the paper circulation, whether we call it redemption, or a process by which clean notes are furnished, is not material.  This redemption bureau will, however, become very important as soon as there is a general resumption of specie payments.

On the 24th of June, 1874, President Grant published his further views in regard to resuming specie payments:

"First--- I would like to see the legal-tender clause, so-called, repealed, the repeal to take effect at some future time, say July 1, 1875.  This would cause all contracts made after that date, for wages, sales, &c., to be estimated in coin.  It would correct our notion of values.  The specie dollar would be the only dollar known as the measure of equivalents.  When debts afterwards contracted were paid in currency, instead of calling the paper dollar and quoting gold at 20 per cent. premium, we should think and speak of paper at so much discount.  This alone would aid greatly in bringing the two currencies nearer together at par.

Second--- I would like to see a provision that at a fixed day, say July 1, 1876, the currency issued by the United States should be redeemed in coin on presentation to any Assistant Treasurer, and that all the currency so redeemed should be cancelled and never reissued.  To effect this it would be necessary to authorize the issue of bonds, payable in gold, bearing such interest as would command par in gold, to be put out by the Treasury only in such sums as should from time to time be needed for the purpose of redemption.  Such legislation would insure a return to sound financial principles within two years, and would in my judgment, work less hardship to the debtor interest than is likely to come from putting off the day of final reckoning.  It must be borne in mind, too, that the creditor interest had its day of disadvantage also, when our present financial system was brought in by the supreme needs of the nation at the time. * * * *

---[exchange non-interest U.S. notes for gold interest bearing bonds --- great plan]

ECONOMY AND TAXATION.

"Again, I would provide an excess of revenue over current expenditures.  I would do this by rigid economy and by taxation, where taxation can best be borne.  Increased revenue would work a reduction of debt and interest, and would provide coin to meet demands on the Treasury for the redemption of its notes, thereby diminishing the amount of bonds needed for that purpose.  All taxes after redemption begins should be paid in coin or United States notes.  This would force redemption on the national banks.  With measures like these, or measures which would work out such results, I see no danger in authorizing free banking without limit."

---[bright man, really bright;  greenbacks: danger, note-printing money corporations: no danger]

Senator Sherman, who was the most efficient member in procuring the original legal tender act to be passed through the Senate in 1862, introduced into the Senate at the last session of Congress, "An act to provide for the resumption of specie payments."  This bill after being very fully discussed and criticised in the Senate and House, was passed and approved by the President, January 14, 1875.

The first section requires the Secretary of the Treasury, as rapidly as practicable, to cause to be coined at the mints of the United States, silver coins of the usual denominations, above five cents. and redeem all the fractional currency of similar denominations outstanding, amounting to about $40,000,000.

The third section removes the monopoly feature of the Bank act, and allows free banking in all parts of the United States.  Whenever bank notes are issued for circulation under this new law, eighty per cent. of greenbacks are to be redeemed by the Secretary of the Treasury, for all the new bank notes issued, and he is to continue such redemption pari pasu with new issue of bank notes, until there shall be outstanding $300,000,000 of greenbacks, and no more.  And on and after January 1, 1879, the Secretary of the Treasury shall redeem the greenbacks in coin, and to enable him to "prepare and provide for the redemption authorized or required in this act, 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 authorizing the refunding of the national debt,' with like qualities, privileges, and exemptions, to the extent necessary to carry this act into effect, and to use the proceeds thereof for the purpose aforesaid, and all the provisions of the law inconsistent with this act are hereby repealed."

This act for the resumption of specie payments is quite mandatory in its terms, and if Congress is not weak and vacilating enough to repeal or modify the law, and the yearly revenues are kept up to a proper amount, it will prove to be much more effective to bring about resumption than is generally supposed.  The first section of the act "authorizes and requires" the Secretary of the Treasury to have enough silver coins struck at the mints to redeem all the fractional currency now outstanding, and Secretary Bristow, in obedience to the requirements of the act, is now coining the silver at the mints, as fast as possible, with a view to calling in all the fractional currency and have it replaced by the small silver coins like those in common use before the war.  This will not be contraction, for the reason that the silver will take the place of paper.

The third section of the act is equally mandatory in requiring the Secretary to redeem all the greenback currency, in gold coin, on and after January 1, 1879.  Preliminary to this important step, it is provided as before stated, that under the free banking feature of the law, for every $100 of bank notes issued, $80 of greenbacks shall be withdrawn from circulation.  In this way it is believed that there will be quite a large reduction of greenbacks before January 1 , 1879, and possibly it may be reduced to $300,000,000, which is the maximum amount fixed by the act for the legal tender circulation.  This amount, and whatever amount above that sum is outstanding on the first of January, 1879, is to be redeemed in gold on demand, when presented in sums of $50, and upwards.  The object of the act is, by continued redemption in gold coin, to circulate $300,000,000 greenbacks on a par with gold.  Can this be done under the provision of the act ?  If it can be done it will cause a general resumption of specie payments by the banks and people in all their business transactions.  All business will then be done on a gold basis, and laborers and operatives will be paid in gold and silver, or its equivalent, and not in an irredeemable and depreciated paper currency.

What are the means provided by the act to enable the Secretary to resume specie payments at the time specified ?  All the necessary 5 per cent. gold bonds which can be disposed of at par for coin, are authorized by the act, and placed at the disposal of the Secretary.  These bonds are now at par and above, and if they continue so to January 1, 1879, the Secretary will, if the revenues are kept up, have ample provision made for redeeming the greenbacks in gold coin at that time.  If gold coin is paid out for greenbacks, the gold will take the place of greenbacks in the banking and business operations of the country, so that there will be only such contraction as is necessary to the stability of legitimate business.  If a suitable gold reserve is retained in the Treasury against the greenbacks in circulation, there will be no loss of interest, because neither the gold nor the greenbacks bear any interest.

What is most to be feared is, that Congress will repeal the act, or so modify it as to prevent resumption at the time specified.  With the known and expressed views of President Grant he would no doubt, veto any bill of that kind which may be passed during his term of office.  The law will probably continue in force until 1877, and it is possible that further provision may be made to aid in causing resumption to take place January 1, 1879.  But if only the present law remains on the statute book to that time, it will be found to be more efficient than is generally supposed, in bringing about the desired result, especially if the 5 per cent. gold bonds continue to sell at par for gold.

It is the general impression that the act ought to have authorized more extended preparation for resumption, and I am free to say that I have shared this feeling.  If, however Congress gives proper support to the measure, by keeping up the revenues, it is by no means certain that the Secretary by a judicious administration of the act, will not be able to resume specie payments by January 1, 1879.  The Treasury must be well supplied with gold, and an ample yearly revenue provided, in order to resume and maintain such resumption.  If the reserve of gold is made ample, resumption will be easy.  The greenbacks not having been issued upon commercial values, but for the waste of war, will require extraordinary support in order to maintain specie payments.  At present there is too great a disparity between the reserve of gold in the Treasury and the amount of greenbacks to be redeemed.  Whether resumption takes place in three, five or ten years, a larger reserve of gold will be necessary, or the greenbacks must be reduced.  It is perfectly plain to every practical business man, that the greenback currency cannot be redeemed in coin until the Government is able to let coin flow into business channels and again circulate as money, the same as it did previous to the war.  Coined money must resume its place in the business of the country simultaneously with the withdrawal of the greenbacks, so that there shall be no material disturbance to legitimate business, when resumption takes place.  This can be accomplished if there is a continued surplus of gold received into the Treasury and retained there as a reserve against the greenback currency.  Every one hundred dollars set apart as a reserve against an equal amount of greenbacks, would be a practical payment of them, and as neither bears interest there would be no loss of interest.  Every gold broker knows perfectly well that there can be no successful resumption until there is a much larger reserve of coin, and he accordingly asks $1.16 cents in greenbacks for a dollar in gold, but let him know that the Government holds an adequate reserve fund against the greenback currency, and the National Banks a like fund, the appreciation of greenbacks would be such that his occupation as a gold broker would be nearly gone, even if the gold did not pass out of the Treasury.  This large reserve would be tangible evidence to him that the Government was master of the situation.

When the business of the country is carried on upon a gold basis, and resumption is continued as an accomplished fact, all the greenbacks and National Bank notes which cannot be kept permanently on a par with gold, will necessarily have been retired from circulation, and either cancelled or held in the sub-treasury, or vaults of the banks.  This surplus of paper currency, which is no doubt largely in excess of the requirements of legitimate business, ought to be cancelled and permanently kept out of circulation, so as not to hazard a continuance of specie payments.

A constitutional standard of value having been thus established, the Government, desiring to return to its legitimate function of coining money and regulating its value, will ultimately wish to rid itself of the trouble and risk incident to the issuing a paper currency and redeeming it in gold, and will finally repeal the legal tender act.  This will leave the business of free banking where it belongs, open to all its citizens, to be carried on upon a gold basis, under proper legislative provisions.  It would probably be better for all concerned if the legal tender act should be repealed at an earlier day, and at the same time provide for retiring the greenbacks by the issue of five or six per cent. compound interest notes, fundable in two and three years into a five per cent. ten year gold bonds.  But the present resumption act has not been passed with that object in view, and for the present it will be best to support the law as it now stands, and if possible, add to its efficiency by further legislative provisions.  The banks should be required to retain half the gold interest received on the bonds deposited as security for their circulating notes as a part of their reserve, preparatory to resumption, January 1, 1879.

The State of New York at the last session of the legislature, passed a law, Chap. 73, which was approved by Gov. Tilden, March 22, 1875, "To establish specie payments on all contracts or obligations payable in this state after January 1, 1879."  This law was passed in pursuance of the principles laid down in the case of Lane County vs. the State of Oregon, 7 Wallace R. 71, that the greenbacks are not a lawful tender in payment of taxes imposed by state legislation.  The text of this N.Y. law is as follows:

"Section 1.  All taxes levied and confirmed in this State on and after January first, eighteen hundred and seventy-nine, shall be collected in gold, United States gold certificates or National bank notes which are redeemable in gold on demand.

2.  Every contract or obligation made or implied after January first, eighteen hundred and seventy-nine, and payable in dollars, but not in a specified kind of dollars, shall be payable in United States coin of the standard of weight and fineness established by the laws of the United States at the time the contract or obligation shall have been made or implied."

This completes the statement of the measures now in force for resuming specie payments, which is the most important question now before the country.

The Treasury sales of gold at 16 per cent. premium, and the receipt of greenbacks in payment, and the immediate reissue of such depreciated greenbacks, at par, to pay the civil expenses of the Government, ten years after the close of the war, is an anomaly in any solvent government, and plainly shows the weakness and incompetency of Congress in not providing ample revenues to carry on the government in time of peace without resorting to any such, discreditable means.  The gold revenue is sufficient to keep up the sinking fund and pay the gold interest, but the currency revenues seem to be inadequate for ordinary expenses.

It is generally understood that Secretary Bristow continues his monthly sales of gold, (which ought to be husbanded for resumption in 1879,) to raise the money to pay the current expenses of the Government, because Congress has failed to provide sufficient means to carry on the Government in any other way.  It is also generally understood that Secretary Bristow would not resort to this monthly "make-shift" of keeping these broken legal tender promises in circulation, if Congress provided the means of administrating the government in the old fashioned, honest way.  Every reissue of these broken promises, backed by the legal tender provision, is a forced loan in time of peace, and is plainly in violation of the constitution.

These sales of gold at this time, when the act for the resumption of specie payments in 1879, is in full force, is not a good indication for resumption at that time.  More revenue will be necessary, and it remains to be seen whether it will be provided to aid in carrying this very important measure into effect.

Secretary Bristow is believed to be sound on the main question.  In his first annual report in December, 1874, he very clearly sets forth the evils of an irredeemable paper currency as follows:

"The history of the irredeemable paper currency repeats itself whenever and wherever it is used.  It increases present prices, deludes the laborer with the idea that he is getting higher wages and brings a fictitious prosperity from which follow inflation of business and credit and excess of enterprise in ever increasing ratio, until it is discovered that trade and commerce have become fatally diseased, when confidence is destroyed, and then comes the shock to credit, followed by disaster and depression, and a demand for relief by further issues.  The universal use of, and reliance upon, such a currency tends to blunt the moral sense and impair the natural self-dependence of the people, and trains them to the belief that the Government must directly assist their individual fortunes and business, help them in their personal affairs, and enable them to discharge their debts by partial payment.  This inconvertible paper currency begets the delusion that the remedy for private pecuniary distress is in legislative measures, and makes the people unmindful of the fact that the true remedy is in greater production and less spending, and that real prosperity comes only from individual effort and thrift.  When exchanges are again made in coin, or in a currency convertible into it at the will of the holder, this truth will be understood and acted upon."
---[so what is your opinion of the ir-redeemable paper money issued by banks ?]

Secretary Bristow is now making preparation to retire the fractional currency and replace it with silver coin, but, without any surplus revenue, he will not be able to accumulate gold in the Treasury, and must rely, at present, on the sale of the five per cent. bonds, authorized by the third section of the resumption act.  It remains to be seen whether Congress will have the wisdom and courage to pass any further laws for increasing the revenue, or authorizing any further preparations for resuming specie payments on the first of January, 1879.  This is the great question now before the people.  I have a strong desire to witness a general and permanent resumption of specie payments.  If I live to see it accomplished, I will write a concluding chapter on the "History of the legal tender paper money, issued during the Great Rebellion."  Meantime I desire to repeat that if the legal right to fund the greenbacks in the six per cent. gold bonds, in accordance with the original legal tender act, had not been abrogated, we would have reached specie payments as early as 1868, seven years ago, and without very seriously injuring the legitimate business of the country.

The wit of man, during the last hundred years, has not been able to contrive any method by which a paper currency can be circulated on a par with gold, unless it can be conveniently converted into gold coin on demand.  It is not enough that "the whole property of the country" is held liable to ultimately pay the greenbacks.  Such security, though ample, is too general and intangible for the purpose.  This "whole property" can only be reached and applied through the slow process of taxation.  On this general theory the greenbacks have been greatly depreciated for over eleven years, and the government will continue in this discreditable condition, until some specific provision is again made for its redemption.

It was issued as a redeemable currency ---it is now irredeemable, with no certain standard of value, and not possessing the requisites of a commercial currency.  Congress ought to make ample preparation for its redemption in 1879. ---Will it do its duty ?

E.G. SPAULDING.
Buffalo, Oct. 1, 1875.

My Dear Mr. Spaulding:
I thank you for a copy of your book.  It is written without passion or prejudice, and makes it entirely clear that in adopting a legal tender currency, the government adopted a means not merely wise, but indispensible and effective.  I always wonder at the resistance which the policy encountered.

With kind respect and esteem.
Faithfully your friend,
WILLIAM H. SEWARD.

The Hon. Horace Maynard, of Tennessee, was one of the few men of the South who remained in Congress during the war, and always supported the Union cause.  Having been for many years a member of the Committee of Ways and Means, he is one of the most influential men in the House.  He was a member of that Committee during the winter of 1861-2, when the Legal Tender Act, the Bank Bill, and other financial measures, were matured, and he still retains that position.  The following letter from Mr. Maynard, on that question, will be read with interest.

Dear Sir: ---Thanks for the book, as well as the copy you sent me.  It is well-timed and much needed.  So successful were the financial arrangements during the war that people incline to believe them as automatic, accomplished, with no special credit to anybody.

Of all who were concerned, you were the one to have prepared the book ---entitled as you are, pre-eminently, to the credit of the great measures which carried the nation so triumphantly through the financial struggles.  While I did not feel at liberty to participate very actively in the passage of acts which must affect other portions of the country far more seriously than that which it was my fortune to represent, it gratifies me to remember that both in the Committee of Ways and Means and in the House they received my unfailing support.

As a result we have now the best currency ever known in the nation.  Let it now he made convertible into coin at the pleasure of the holder, and nothing would be left to he discussed.  Why this has not been done, why it is not done, why it should not be done, I confess, after all I have read and heard, I am not able to see.

One of these days some bold man will take the step, and then everybody will wonder why it had not been taken years before.  Would that you were again at your place in the House.

My Dear Sir:---  You have done a good service in preparing your book;  nor is there anybody to whom this duty belonged more than yourself.  In all our financial trials, while the war was most menacing, you held a position of great trust, giving you opportunity and knowledge.  The first you used at the time most patriotically, and the second you use now for the instruction of the country.

I am not content with the long postponement of specie payments;  I believe that the time has come for this blessing, and I begin to be impatient when I see how easily people find excuses for not accepting it.

Believe me, dear sir,
Very truly yours,
Charles Sumner.

Dear Sir:--- Your favor of the 14th ultimo was forwarded from Albany to this place.  Also a copy of your Financial History of the War.  I have read it with much interest, and can say that I consider it a fair and impartial history of the doings of the Committee of Ways and Means and of Congress while I was a member, and since as far as I understand their action.  I am pleased that you have seen fit to place their doings on record.  I thank you for the copy sent me.

Yours very truly,
ERASTUS CORNING.

Dear Sir:--- I have yours of the 23d instante, and have mailed to you to-day a copy of Mr. Sumner's speech on reconstruction, also the Globe which contains my own, on the Finance Bill.  It seems to me that you have a right to be well satisfied with the part you took in initiating the financial measures which have carried the country so successfully through the war.  We are somewhat excited here, but I have faith that everything will come right in a little time if we are discreet in our action in Congress.

Yours with great respect,
Samuel Hooper.

My Dear Sir:--- I have received and partially read, with great interest, your Financial History of the War.  It recalls many interesting events almost forgotten, and is therefore like an old friend.  I am much obliged to you for it, and will give it a careful reading and a place in my seeded set of books.

Very truly yours,
JOHN SHERMAN.

My Dear Sir:--- I hasten to render my thanks for a copy of your History of the Legal Tender Act, and the accompanying note, received this morning.

No one could more fully appreciate than I did, and still do, the vital importance of the financial measures adopted for maintaining the government during the war.  On all occasions, in private conversation and in public assemblages, I have endeavored to do them justice and cause them to be estimated as 1 estimated them.  Without them I do not see how our armies could have been raised, equipped, clothed, fed, transported and kept in the field until the enemy were subdued.  But my attention was too closely absorbed by military affairs for me to discriminate between the several views discussed, or to observe to whose sagacity and energy the country was most indebted.  A hasty glance through your History has enabled me to see that you have afforded means for correct judgment upon the interesting points involved.

With sincere regard, I am,
Truly your friend and obedient servant,
Edwin M. Stanton.

My Dear Sir:--- Please accept my cordial thanks for your "Financial History of the War Legal Tender" which you sent me.  I have given it a hasty examination, but enough to see that it is a full and true history of the subject of which you treat, presenting the facts connected therewith in their chronological order.  A work to set the public judgment right at this time, and for reference it will be truly valuable.

I am surprised to know that not one of the historians of the times has furnished the facts and evidence which you have so fully and clearly represented.

Yours truly,
H. HAMLIN.

My Dear Sir:--- Many thanks for your kind letter of the 9th, with a copy of your "Financial History of the War."  I have only had time to glance over the index.  It will be very valuable and interesting volume and I shall have pleasure in perusing it.  No one can doubt that the making the issues of the United States a legal lender was the great element of success.  Without it the war could not have been carried on six months longer.  Again thanking you for thinking of an old friend.

I am very sincerely yours,
W.W. CORCORAN.

Hon. E.G. Spaulding:
My Dear Sir:--- I cordially thank you for giving me the opportunity to peruse your valuable History of the Legal Tender Paper Currency issued during the late Rebellion ---a measure which more than any other, contributed to the salvation of the Republic from great disaster.  Without money suddenly and amply created, there could have been no army.

That measure was a novelty ---a paradox in the history of nations--- a forced loan, with the cordial consent of the lenders !  The sterling common sense of the loyal people saw it was a necessity, and accepted it with cheerful acquiescence;  and every man of common sense now sees that the everlasting good which the measure wrought, outweighs a thousand fold the temporary evils which it has occasioned.

It appeared to me at the time (and has never appeared otherwise) that the originating and perfecting of that measure was one of the wisest acts of true statesmanship that were displayed during the civil war, and will ever be regarded as a precedent of great value to the people of republics.  The clamor against the measure, during the war and since, was and is simply the voice of selfish partizanship, and the cry of "unconstitutionality" was only the cry of disloyal politicians against the efforts for the salvation of the republic.  Wisely did Madison declare that public necessity takes precedence of all Constitutions;  and Mr. Lincoln as wisely said that the Union is older than the Constitution, and took measures outside the letter of the Constitution to save it.

The philosophic historian and statesman of another century, with vision unobscured by the smoke of conflict, will point to the Legal Tender Paper Money Act as one of the chief instrumentalities which preserved for themselves and their children the blessings of free institutions;  and among the names of the statesmen to whose wisdom and energy the nation is chiefly indebted for the measure, yours, sir will ever appear most prominent.

I am, dear sir, with gratitude for your public services,
Your friend and fellow citizen,
BENSON J. LOSSING.

My Dear Sir:--- Your favor of the 5th instante came to hand yesterday, and your book on the Financial History of the War, has just arrived.  Of course I have not yet had time to read it, but I have no doubt of its having received all the care necessary to make it valuable, and I know of no one who could more acceptably perform the service.  You and I differed as to the policy of issuing the Legal Tender notes.  Forecasting somewhat the train of difficulties in the way ---such as increasing the ultimate debt--- disorganizing trade and the final retirement.  I then thought it possible to avoid their issue.  Now I do not discuss the question because there are so many unpatriotic and discordant utterances on the subject, and I may be in error, but I have never had a doubt in my own mind that we could have furnished ample means to the Government and saved hundreds of millions of our public debt by reducing the discount on credit to the minimum final through some such course as that I advocated at the time.  Your course then was patriotic and has been since, and some of the errors since committed I know hare not had the sanction of your judgment.  Others have gone further than you proposed, and there are yet others who even now do not propose to halt.  But I am hopeful that we shall in due time emerge from our present unhappy condition and get our finances in a condition so that if another war was necessary, and I trust that day may be far off, we could bear our part without extreme trial.  Please accept my thanks for the copy of your work.

Very truly yours,
JUSTIN S. MORRILL.

My Dear Sir:--- Please accept my thanks for your book on the finances during the war, which has been received.  I have not had time to read it, but have looked through it curiously, and saw that you had not departed from the principles which influenced us when we were striving so hard to get the financial bills through the Congress.  I shall give the book a thorough reading before Congress meets.  Specie payments seem as far off as ever.  Mr. Boutwell seems to believe the reduction of the debt, with the increase of business will bring about resumption in due time.  He remarked to me a few days since that with the present tariff and internal revenue laws, the whole debt could be paid in twelve years.  I am curious to see what financial policy he will announce in his annual report to Congress.  I have great distrust of the action of Congress unless the Government advocate measures to restore the value of the currency.  A positive policy on the part of the Government strengthens public opinion, and that operates powerfully on the action of Congress.

Yours with regard,
S. HOOPER.

"We render hearty thanks to the Hon. E.G. Spaulding, of Buffalo for his "History of the Legal-Tender Paper Money issued during the great Rebellion."  It is the clearest and tersest account yet given of the origin of the Legal-Tender act, the views of those members of Congress who aided and of those who resisted its passage, the various modifications it underwent, closing with the text of the bill as finally passed;  the construction simultaneously given to it with regard to the medium wherein the Five-Twenty bonds were payable, etc., etc.  The origin, tenor and and scope of the National currency act, and of the various acts by which our systems of finance and currency have since been modified, are also elucidated by extracts from speeches in Congress, by contemporary letters, etc., etc.  Mr. Spaulding was an active member both of the Committee of Ways and Means, and of its sub-Committee having charge of this subject, and is thus enabled to throw much light on the general subject.  We advise any man who wants to cheat himself into the belief that the funded debt of the United States may lawfully be paid in greenbacks not to read this handy volume, unless he is anxious to know that he is a rascal and that everyone sees it."

Dear Sir,--- I have just finished reading your article in the April number of the North American Review, in which you review somewhat at length the history of the Legal-Tender Act recently prepared by me, criticising the measure very freely and the course pursued by those who took a prominent part in its passage through Congress.  The measure has always been open to public scrutiny, and I have no complaint to make of any fair criticism which you or any other gentleman see fit to make.  It was passed in a great emergency as a "war measure," and not with a view to have it continued indefinitely as a permanent policy of the Government in time of peace.  As a war measure it proved a success, and has therefore vindicated itself.

Seeing, however, that you criticise individual action, I desire to correct one mistake which you have fallen into, and when corrected it will leave your criticism without much force and certainly less pointed in regard to myself.  In your article you assert that I claim to have carried the measure "over the administration and through Congress," and this assertion is quoted and repeated by you several times in the course of your article;  whereas the words quoted are not taken from any remarks of mine, but are contained in the speech of Hon. Theodore M. Pomeroy, one of my colleagues from New York, delivered in the House of Representatives, February 19,1862, while the amendments of the Senate were under consideration.  On looking at page 132 of the history of the measure, you will find Mr. Pomeroy's remarks, in which he asserts that I originated this measure and carried it triumphantly "over the administration and through the Congress," but nowhere can you find any such words of mine.  On the contrary, I only gave a narrative of the facts in chronological order, and on page 6 of the book you will find that I expressly state that

"I do not claim any particular merit or demerit for what I did in preparing and aiding to secure the passage of the bill.  I was placed in a position where, if I performed my duty, I must act, and act with vigor and promptitude.  The perilous condition of the country did not admit of hesitancy or delay.  I endeavored, in the peculiar and responsible position in which I was placed, to do what I conceived to be my duty, and that is all that I claim to have done.  My associates performed their duty with equal fidelity and usefulness."

These were the words I used instead of the words which you quoted from Mr. Pomeroy's speech and attributed to me.  In giving the history of the measure it was my aim to state facts, leaving it for others to decide upon the merits and demerits of those who aided in the passage of the act, as well as those who opposed it, without any unkind or harsh expressions on my part, and without attributing the action of the parties of either side of the question to stupidity or ignorance, which seems to be the drift of your article, assuming on your part, superior knowledge and wisdom.

I am glad to notice among the disparaging epithets you use against true men like Thadeus Stevens, John A. Bingham, John Sherman, Henry Wilson, and other zealous patriots in the union cause, that you speak kindly of my late friend, Wm. Pitt Fessenden, who as chairman of the Finance Committee, reported it to the Senate, and in his opening speech upon the great importance of the measure said, "it needed long, careful and vigorous discussion.  It has had it in the other branch of Congress.  I have read that discussion from beginning to end;" and, notwithstanding you think the debate was weak and full ot absurdities, Mr. Fessenden further says: "It has been able and clear on both sides of the question."  He voted to strike out the Legal Tender clause in the bill, and failing in that, he, on the final passage of the bill, voted for it, including that clause.

I am pleased, also, that in your article you speak so favorably of the "superior discernment" of the late Judge Collamer, for moving to strike out the legal tender clause on the ground that it was unconstitutional.

In his speech on that occasion he said in substance, "That the oath he had taken to support the constitution was recorded in heaven as well as on earth, and that even if it was a necessity he could not vote for the hill."  Preston King took the same ground, and yet both of these gentlemen in less than a year voted for $100,000,000 legal tender notes in addition to the $300,000,000 which had been previously issued.  They were true men; and when the exigency arose for paying three or four months back pay of the soldiers who were periling their lives in the field in a gigantic struggle with the rebel armies during the cold month of January, 1863, both these senators recorded their votes for the additional issue of $100,000,000 to enable the Secretary to redeem the promises of the government to the union army, so that the men could send money home to their half starved families, while they were fighting rebellion in front.

Mr. Fessenden, Judge Collamer and Preston King, three patriots now dead, thus recorded their votes, holding their constitutional scruples in abeyance.

The vote on this additional issue of greenbacks stood as follows:

Yeas--- Messrs. Anthony, Arnold, Browning, Chandler, Clark, Collamer, Davis, Dixon, Doolittle, Fessenden, Foot, Foster, Hale, Harding, Harlan, Harris, Henderson, Howard, Howe, King, Lane, (of Indiana,) Lane, (of Kansas,) Latham, McDougall, Morrill, Nesmith, Rice, Sherman, Sumner, Ten Eyck, Turnbull, Wade, Wilkinson, Willey, Wilmot, Wilson, (of Mass.,) Wilson, (of Missouri,) and Wright ---38 in the affirmative.

Nays--- Messrs. Powell and Salisbury. ---2 in the negative.

Approved January 17, 1863.

When Mr. Lincoln signed the bill to authorize this issue, he expressed his reluctance thus:

I have signed the Joint Resolution to provide for the immediate payment of the army and navy of the United States, passed by the House of Representatives on the 14th, and by the Senate on the 15th instant.

The Joint Resolution is a simple authority, amounting however, under existing circumstances, to a direction to the Secretary of the Treasury to make an additional issue of one hundred millions of dollars in United States notes if so much money is needed for the payment of the army and navy.

My approval is given in order that every possible facility may be afforded for the prompt discharge of all arrears of pay due to our soldiers and our sailors.

While giving this approval, however, I think it my duty to express my sincere regret that it has been found necessary to authorize so large an additional issue of United States notes, when this circulation, and that of the suspended banks together have become already so redundant as to increase prices beyond real values, thereby augmenting the cost of living to the injury of labor, and the cost of supplies to the injury of the whole country.

It seems very plain that continued issues of United States notes, without any check to the issues of suspended banks, and without adequate provision for the raising of money by loans, and for founding the issues so as to keep them within due limits, must soon produce disastrous consequences.  And this matter appears to me so important that I feel bound to avail myself of this occasion to ask the special attention of Congress to it.

That Congress has power to regulate the currency of the country, can hardly admit of doubt; and that a judicious measure to prevent the deterioration of this currency, by a reasonable taxation of bank circulation or otherwise is needed, seems equally clear.  Independently of this general consideration, it would be unjust to the people at large, to exempt banks, enjoying the special privilege of circulation, from their just proportion of the public burdens.

In order to raise money by way of loans most easily and cheaply, it is clearly necessary to give every possible support to the public credit.  To that end, a uniform currency, in which taxes, subscriptions to loans, and all other ordinary public dues, as well as all private dues may be paid, is almost, if not quite indispensable.  Such a currency can be furnished by banking associations, organized under a general act of Congress, as suggested in my message at the beginning of the present session.  The securing of this circulation, by the pledge of United States bonds, as therein suggested, would still further facilitate loans, by increasing the present and causing a future demand for such bonds.

In view of the actual financial embarrassments of the government, and of the greater embarrassments sure to come, if the necessary means of relief be not afforded, I feel that I should not perform my duty by a simple announcement of my approval of the Joint Resolution which proposes relief only by increasing circulation, without expressing my earnest desire that measures, such in substances as those I have just referred to, may receive the early sanction of Congress.

By such measures, in my opinion, will payment be most certainly secured, not only to the army and navy, but to all honest creditors of the government, and satisfactory provision made for future demands on the treasury.

---[Lincoln merely repeated his lifelong view that bank paper, based on government bonds, is the best currency the country may have.]

This patriotic record on earth, in a desperate struggle for liberty and union will, I trust, on the day of final account stand justified in the sight of God, as it is now by all true men, and that "a tear from the recording angel in heaven's chancery" will blot out all their other conflicting records.  In a crisis presented like the dark hour of January, 1863, I shall ever honor all those noble men of both Houses of Congress for the votes thus given in favor of paying the soldiers and their starving families.  This record has passed into history, and will ever remain an enduring memorial of their fidelity to the national cause.

You claim in your flippant article, that the legal tender act was not necessary, even as a war measure, and that it was passed under a "fraudulent" misrepresentation of the facts.  In the view thus taken by you, I think you are mistaken.  I am gratified, however, to notice you say "it is but just to add that Mr. Spaulding did strongly and invariably insist upon the difference between legal tender notes which were fundable, and the latter issue which were not so."  I regard this as a vital part of the measure, and still think that the right of funding into 6 per cent. bonds ought to never have been abrogated.  It was necessary to prevent redundancy, and consequently to prevent depreciation of the notes.

I have no desire to multiply words on this subject at this time.  My main object in this letter is to correct your erroneous statement in regard to myself, and at the same time speak kindly of my associates who sustained the union cause in its hour of extreme peril.  Notwithstanding your individual criticism of those who spoke in favor of the legal tender even to the construction and rhetoric of some of the speeches, it is probable they will not deem it necessary, as I do not, to make any defense.  Deeds, not words, are their best defense.

If you find that you are in error in your statements in regard to myself I would like to have you make the correction, and advise me.

Very respectfully,
Your obedient servant,
E.G. SPAULDING.

I have just finished reading your articles in the Gazette of the 12th and 13th instante, on the "first material mistake" made by the Secretary of the Treasury, in the first six months of the war.  You show very clearly and forcibly the antagonism of the sub-treasury to modern commercial transactions, and the utter impossibility of carrying on a war upon a specie basis, while it is in operation, discarding, as it does, the bank check and the system of settling large transactions by offset through the Clearing Houses now in operation in all the great centres of commerce, and which forced the banks to prematurely suspend specie payments the last of December, 1861.

I agree with you that the time has come for gathering up into convenient form, the facts in respect to the financial management during the war, in order to improve the lessons drawn from the past nine years of experience.

Another material mistake in the management of the finances followed the first, but it was not in the adoption of the legal tender act, nor in the issue of fundable greenbacks, but in the unnecessary large overissue of unfundable greenbacks and five and six per cent. interest bearing treasury rotes.

The whole scope and object of the first legal tender act was to quickly create a national currency, then imperatively necessary for disbursement to the army and navy (because there was then no national currency in existence that could be had), and at the same time provide for funding it, as soon as it became excessive, into 6 per cent. gold bonds in order to prevent any great inflation of currency or prices;  and I am free to say that I never advocated the issue of any greenbacks that were not so fundable.  Not one dollar of greenbacks ought to have been issued beyond the amount necessary to float the six per cent. five-twenty bonds.  The funding in these bonds was a practical redemption of them, and there was no great excess while they were so redeemed.  It was not a redemption equal to being redeemed in gold, but its redemption in six per cent. gold bonds was a good practical redemption, the best in that great crisis the Government could offer, and it formed a pretty good standard of value on which to rest all the internal transactions of the business during the war;  and certainly no one could be very materially injured by being compelled to receive greenbacks in payment of debts, so long as they could be immediately returned to the Government in exchange for gold bonds.  Gold became demonetized, and the standard of value fixed by that act was greenback currency convertible at the will of the holder into six per cent. gold bonds.  No large amount of funding took place until May, 1863, because there was no excess of greenbacks.  At that time the greenbacks had filled up the channels of circulation, became somewhat redundant, and funding, which had been tardy, now became more active.  This returning of greenbacks to the Treasury for bonds, furnished the means for carrying on the war, and the further issue of greenbacks became unnecessary.  Jay Cooke, during the nine months following April, 1863, successfully funded the balance of the first $500,000,000 5-20 bonds, which proved conclusively that it was not necessary to inflate the currency another dollar, either by the issue of greenbacks, interest bearing treasury notes, or any other form of inflating paper, in order to provide sufficient means for carrying on the war.  The greenbacks were printed and paid out for government disbursements, and when funded were returned to the Treasury ready to be reissued and again funded, and so on from week to week and month to month.  The act as at first adopted was self regulating.  When there was an excess of greenbacks, not bearing interest, they would naturally flow into the six per cent. bonds in order to save interest.  It was a great blunder to abrogate this healthy redemption of the greenbacks.  It unsettled the vital principle of the act, and destroyed the standard of value fixed by it.  Serious mischief followed.  A very large increase of greenbacks and interest-bearing Treasury notes were issued by the Secretary.  Inflation of prices, wild speculation, uncertainty and demoralization was the consequence throughout the remainder of the war, and which still continues, so that even up to the present time there is no standard of value for the greenback, and no provision made for redeeming it either in bonds or gold, and specie payments seem to be indefinitely postponed.  The present Secretary prints new plates and reissues this currency without any fixed standard of value, thereby perpetuating the uncertainty which attaches to all legitimate business.  If the right of funding the greenbacks in accordance with the original legal tender act had not been abrogated, the standard of value would never have been so reduced, the demoralization would have been very much less, people would have shaped their business in accordance with the law, and very likely specie payments would have been restored after the war, and certainly, at no time would the value of greenbacks have been below the price of the six per cent 5-20 bonds.

The right given to the holders of greenbacks to fund into six per cent. bonds was by the original legal tender act in the nature of a contract;  its abrogation was unjust to the holders of the notes, and I always regarded it as the second and most material mistake in the management of the finances during the war.  The facts necessary to a full understanding of this question you will find stated in the history of the legal tender act, from page 167 to 201, and I hope you will elucidate the subject as clearly as you have the first material mistake above mentioned.

1.  The first material mistake on the part of the Secretary of the Treasury was in compelling the associated banks of New York, Boston and Philadelphia to pay the gold loan of $150,000,000 into the sub-treasury, instead of checking directly on the banks for it, thereby forcing the banks into a premature suspension of specie payments in December, 1861.

2.  The second great mistake, and the one that will be the longest felt, was in abrogating the provision in the first legal tender act, which gave the right to the holders of the greenbacks to fund them at any time into six per cent. 5-20 gold bonds.  It will take a long time yet to recover from the evil effects of this mistake.

I am, very truly yours,
E.G. SPAULDING.

Among the other beneficial results left us by the Great Rebellion, was the system of national currency and banking ---a very important governmental and commercial agent, as well as bond of national union;  but which, in consequence of a conflict of opinion among the ablest statesmen of the country, was not attainable in time of peace.

The first United States Bank was established in 1791, under the influence of that peerless statesman, Alexander Hamilton.  It was approved by Washington, performed important service to the country, and continued in existence until 1811, the year previous to the last war with Great Britain, when its charter expired, and consequently great embarrassments were experienced in prosecuting that war, because the government was left without any adequate national currency to carry it on.

The second United States Bank was chartered in 1816, and continued with like beneficial results as the first until 1836, when its charter expired.  Both these banks were fiscal agents of the Government.  They received and disbursed all the public money entrusted to them without expense, and without the loss to the Government of a single dollar.  These banks were likewise of great advantage to the business community.  Some of the ablest efforts of Webster and Clay were in favor of its continuance, and notwithstanding the decision of the Supreme Court, headed by Chief Justice Marshall, in favor of its constitutionality, President Jackson, by reason of his official position, effectually resisted a re-charter, removed the Government deposits to certain State Banks, which proved very disastrous, heavy losses were sustained by the Government, overtrading ensued, and there was a general suspension of specie payments in 1837.

The friends of a United States Bank again passed a bill through Congress for another bank in 1841, which was defeated by the veto of John Tyler.  The independent treasury system was finally adopted in 1846, which isolated the Government from all banks and paper money, leaving it without any monied institution, like the bank of England, or other national agency to resort to for aid in case of war.  Consequently at the breaking out of the Rebellion there was no system of currency adequate to the requirements of a great war.

The independent treasury and state banks were tried, and very soon found to be wholly inadequate.  Secretary Chase recommended the present national banking system, which he urged upon Congress in his first and second annual reports, as well as in special communications.  The first draft of this bank bill was prepared by Mr. Spaulding, chairman of the Sub-Committee of Ways and Means, having this subject in charge, in December, 1861, but it did not pass and become a law until February 25, 1863, and although some national bank currency was issued in 1864, the system did not get fully into operation until 1865.

It was of considerable benefit in supporting the public credit towards the close of the war, and all the banks over the country rendered essential service in negotiating the loans, but the Government issue of the legal tender notes with, and without interest, was the vital measure and main support of the Army and Navy, during the war for the union.

The experience of the last eighty years under our present form of government, has clearly shown that the power to coin money from the precious metals, and regulate its value, and the power to issue bank notes should be exercised by the same authority and be equally under governmental supervision.  The power to coin money is, by the constitution, vested in the United States Government, and forbidden to the separate states.  In regulating the value of coined money, it is essential that the government should also regulate and control the paper money issued by banks, because a convertible paper money is only an extension of coined money, and when both kinds of money circulate in the same jurisdiction, they constitute the measure of value for all business operations.  It is plain, therefore, that both kinds of money should be under the same authority and control in order to regulate the value of both.  State bank issues are local in character and credit, and possess none of the attributes of a national currency.

The function of regulating the currency of a great nation possessed of large internal as well as foreign commerce, and subject to the calamities of war, can only be successfully performed by the general Government.  The extention of railroads, water ways, and internal commerce all over the country without regard to state boundaries, and the vast requirements of the late war, have more clearly demonstrated than ever before, the necessity of a convertible paper currency, co-extensive with the boundaries of the United States.

The important resulting benefits growing out of the great rebellion are many and various, but none of them will be of more lasting benefit to the government and people, than the inauguration of the System of National Currency and Banking, now in full operation, and which, with proper amendments, will be adequate to the wants of the nation in time of peace as well as in the time of war.  Banking is a business requiring accumulated capital and loanable funds.  The issue of circulating notes is another important feature, the leading idea of which is the establishment of one sound uniform currency of like similitude and value, co-extensive with the boundaries of the United States, based upon national credit combined with private accumulated capital, and under the general control and supervision of the Treasury Department at Washington.

By the National Currency act the Government guarantees the currency and limits the amount to $300,000,000, (since 1874 there is no limit);  requires it to be secured by gold bearing bonds deposited with the Treasurer of the United States with a margin of ten per cent.;  requires each bank to redeem its own notes in lawful money on demand, and to keep an adequate reserve for that purpose; makes them a legal tender for all taxes and other dues to the government except customs, and for all salaries and other dues owing by the government within the United States, except the principal and interest of the funded debt.  It also makes them receivable by each National Bank for all ordinary debts due them, and each bank designated as a depository, is also required to receive it on deposit from all public officers.  These provisions in the law operate to nationalize and decentralize this currency;  the United States Government tax of ten percent on all State Bank bills effectually kills the issues of all Stare institutions, and consequently the national currency with all these advantages has a wide circulation all over the United States, and connected as it is with the greenback legal tender notes, they together are the measure of value in carrying on the internal commerce of the country, notwithstanding their depreciation.  Their present depreciation is a fault which can only be remedied by a general resumption of specie payments, in which the government must take the lead by placing the greenback currency on a par with gold.

Two things remain to be done in order to make it the best banking system ever devised:

1.  Redemption of this currency on demand in gold and silver;  at the same time divest the law of every feature of monopoly by making it free and open to all.

2.  Organize one or more banks at commercial centres, with large capitals but limited circulation, under the supervision and control of the Treasury Department, to receive and disburse the public money, without expense, somewhat like the Bank of England, and a repeal of the Independent-Treasury act, which in its operation is antagonistic to legitimate business, does more harm to the finances than it does good, and which may be discontinued without detriment to the public service, and thereby save the expense of keeping it in operation.

This would make the National Banking System adequate to the wants of the nation in peace and war, and combine a large share of the capital of the country in support of the government, and thereby become a strong bond of national union.

My Dear Sir:--- I have been absent from home for some weeks past, on a visit to Minnesota.  This will explain to you how it has happened that the receipt of your favor of the 15th ultimo has remained so long unacknowledged.  I have read the Financial History of the War, which you were kind enough to send me, and am greatly pleased with it.  Such a work was much needed, and it has been prepared by you with care and ability.  No one had more to do with the financial legislation of the United States in the trying years of 1861 and 1862 than yourself, and no one was more familiar with the views of those members of Congress who approved of the issue of the legal tender notes.  Had you and the other distinguished gentlemen who co-operated with you in the preparation of "financial measures for the support of the Government" in the years referred to, supposed that the notes, the issue of which you so vigorously and successfully advocated, would be used as a circulating medium after the exigency which, in your judgment, justified their issue had ceased to exist, I hazard nothing in saying that other measures would have been resorted to to raise the means for the prosecution of the war.  Nothing shows how far the country has departed from cardinal principles in finance and morals more clearly than the fact that the measure which was advocated by its friends solely as a war measure under the pressure of a great necessity, is now sustained by Congress and the people as a financial policy.  You know as well, if not better, than other men, under what circumstances and for what purposes the legal tender notes were issued, and it is in the highest degree creditable to you that as you had the nerve to advocate their issue when the measure was unpopular, you also have now the nerve to advise that they be retired, in opposition to a decided and overwhelming public sentiment in favor of their being continued in circulation as a part of the financial policy of the Government.

Very truly yours,
HUGH McCULLOCH.

My Dear Sir:--- It is now some weeks since I received your note and the book which you were so kind as to send me.  In the midst of interruptions of one kind and another, I have been able to make only slow progress in reading it.

I think I can very fully appreciate the difficulties in which you were placed in regard to the course to be taken, and I have no disposition to censure any one who acted on a firm and honest conviction that he was doing his best to save the country.  I have no doubt that you did so, and I do not pretend to affirm that you may not have been right, in your judgment, of the nature of the crisis.

The whole article in favor of Legal Tender seems to me to resolve itself into the single word necessity.  The same argument that justified the Russians for setting fire to their own homes in Moscow to drive out Napoleon.  If it be notoriously the tyrant's plea it may not the less sometimes be a justification in the cause of liberty and right.

Unfortunately for myself I am slow to be convinced that the cause was so desperate as absolutely to need a desperate remedy.  The great objection which I have to the enactment of Legal Tender, is that the country through it has for the first time taught a lesson of fraud.  Much noise has been made about paying the debt of the country in greenbacks.  I do not see wherein it is more than an application of the same rule ---to wit: that a government can by mere force of its strength, make a creditor take less than the amount honestly due to him.

The worst of it is that the moral sense of a people is permanently blunted by the resort to such an expedient.  I do not see when or how we shall return to sound ideas;  for all the great army of debtors created since the war, by allowing seventy cents to count for a dollar, are not likely to be very soon ready to pay a dollar and thirty cents or its equivalent in property in satisfaction of the creditors.  Charles XII. of Sweden, in hiss day of "necessity," issued a set of copper coins on which was stamped the word "dollar," and paid his army just as if it really was what it professed to be.  Was not this a cheat ?  Yet where is the difference except in the degree between the two proceedings ?  The Government will not even consent to take this paper, which it forces upon its creditors, in payment for a part of its own claims on debtors, and yet it pretends to claim character for equal and honest dealing in money transactions.  I do not hesitate to say that if a private banker or merchant were to think of introducing such an expedient, supposing it to be possible, be would instantly lose all his reputation of an honorable man.

What is distinctly perceptible in the transactions between man and man, does not change its nature when applied to great bodies, merely because they are too strong to be resisted.  So long as a legal tender note remains in circulation at less than its professed value, it is a solemn lie.  The public, to be sure, accommodates itself to the fraud by raising the price of its commodities and selling for a dollar what is really worth seventy cents.  But everybody cannot do this.  Myriads of those with fixed incomes based upon the old standard fall a sacrifice, in their privations suffered every day of the year.  Who is there then can make the loss good to them ?

If I saw any symptom of return to sound morals within any reasonable time I should qualify my language.  But the experience of the past teaches us that this road once taken terminates only in utter disregard of the whole obligation.  If that be the end in our case, it would have been cheaper to have tried to go on without it.

Yours truly, etc.,
C.F. ADAMS.

Dear Sir:--- Your kind favor came to my address while I was buried in the Adirondack Mountains, whither I had gone on account of my son's health, else I should have acknowledged it sooner.  I have read your book with much interest.  It is just what we needed to fill a hiatus in the history of the civil war, and you were the proper person to write it.  I watched your course in Congress on the financial question with much interest.  Your views always seemed to me more practical than those of most others.  You seemed to act as if it was not the time to discuss theories, but do the best we could under the circumstances.  In short, as we were situated, the only course was a choice between two evils.

I value your work highly as a book of reference, which I sadly needed.

With many thanks for it,
I remain,
Very sincerely yours,
J.T. HEADLEY.

The following important letter on the suspension of specie payments in 1861, and what led to it, was recently written by Hon. E.G. Spaulding, President of the Association of National Banks, and author of the History of the Legal Tender act, to J.S. Gibbons, Esq., of this city, who recently produced a work on the New York banks:

Dear Sir:--- Yours of the 24th instante has been received, and in reply to your inquiry, I would inform you that the sixth section of the loan act of August 5, 1861, partially suspending the independent treasury law of 1846, was at first drafted by me, but was considerably modified and limited in its operation by amendments suggested by Secretary Chase before it passed the two Houses, and became a law.  I was in favor of making the suspension of the sub-treasury act general in regard to all loans, so that the Treasurer might draw checks directly on the banks for the amount loaned, in order that the usual bank expedients might be resorted to in liquidating such checks without disturbing the gold reserves held by the banks, then in a remarkably strong and healthy condition.

This subject was discussed in the Committee of Ways and Means at that time.  I expressed the opinion that the loan of $250,000,000, which was authorized at the extra session in July and August, 1861, could not be made, and the gold actually paid over into the sub-treasury, without so weakening the banks that they would be obliged to suspend specie payments.  William Appleton, then a member of the committee, and a practical banker, from Boston, concurred with me fully in that opinion.  Mr. Corning, of Albany, another member of the committee, also a banker and practical business man, predicted that if the gold reserves of the banks were drawn upon for such large loans, there would be a general suspension of specie payments in less than six months, and his prediction was verified.  There were, however, conflicting opinions in the Committee on the subject, and Secretary Chase seemed to be very desirous of carrying on the war by the actual disbursement of gold and silver, or treasury notes convertible into gold on demand, and without suspending the independent treasury law.  Finally, Mr. Appleton and myself were appointed a sub-committee to prepare a section suspending the sub-treasury law in respect to all moneys obtained on loans, and to confer with Mr. Fessenden, Chairman of the Finance Committee in the Senate, as to the probability of its passage in that body.  Upon a full and free consultation with Mr. Fessenden, he consented to support a section of that kind, and thought it would pass the Senate.  Mr. Appleton was in feeble health, and the duty of preparing the section devolved upon me.  I prepared a section in which he concurred, and which, in general terms, suspended the sub-treasury law in regard to all moneys realized upon loans, allowing it to be deposited in solvent specie-paying banks (state banks, of course, because there were then no national banks), and authorizing the Treasurer to check, from time to time, directly on the banks for the amount.  From a careful reading of the books you have published, I am impressed with the belief that you know the clearing-house, locomotive and telegraph are among the most useful of modem inventions, and that the sub-treasury law is better adapted to the sixteenth than the nineteenth century.  You are familiar with the New York Clearing-house, and know that seventy-five millions of dollars of checks and drafts may be daily liquidated and fully cancelled by paying in gold a resulting balance of not exceeding from two millions to three millions of dollars, and that the whole operation could be concluded in three or four hours, and that a similar balance at the London Clearing-house would be paid mainly by the other banks and bankers giving their checks on the Bank of England, and without using any gold at all.  This, you are aware, economizes time as well as the volume of currency necessary to do this large business, and that it could as easily be applied to government operations as to private business.  In this way I believe that the great bulk of the supplies and material of war for the army and navy could be paid for by the usual bank expedients, and by offset through the Clearing-house of New York and other cities, without materially disturbing the gold reserves of the banks, except in the payment of balances.

The sub-treasury law at that time seemed to be popular with the Secretary of the Treasury, and with some members of the Committee of Ways and Means, as well as the Finance Committee of the Senate;  and the section finally passed in the modified form in which it now appears in the law of the 5th of August, 1861, and is as follows:

§ 6. And be it further enacted, That the provisions of the act entitled "An Act to provide for the better organization of the Treasury, and for the collection, safe-keeping, transfer, and disbursements of the public revenue," passed August six, eighteen hundred and forty-six, be and the same are hereby suspended, so far as to allow the Secretary of the Treasury to deposit any of the moneys obtained on any of the loans now authorized by law, to the credit of the Treasurer of the United States, in such solvent specie-paying banks as he may select; and the said moneys, so deposited, may be withdrawn from such deposit for deposit with the regular authorized depositaries, or for the payment of public dues, or paid in redemption of the notes authorized to be issued under this act, or the act to which this is supplementary, payable on demand, as may seem expedient to, or be directed by, the Secretary of the Treasury.

No question can be raised as to the good intentions of Secretary Chase in administering the loan laws, but it is obvious now that he did not at that time fully comprehend the labor-saving, money-saving and general utility which results in the settlement of checks and drafts through the banks, and the admirable system of offset through the clearing-house.  The wonderful facility then in operation in New York, Boston and Philadelphia, for transferring and liquidating debts without disturbing the gold reserves held by the banks, was wholly ignored by the Secretary.  This operated almost as unfavorably as if the Secretary of War had rejected the locomotive in transporting the army.  The rejection of the bank check and clearing-house made it necessary to increase the volume of currency in various forms in about the same proportion as the rejection of the locomotive would have made it necessary to increase the number of horses to supply and transport the army.

The banks in the three cities above named most patriotically agreed to loan to the Government about $150,000,000, which could have been easily passed to the credit of the Treasurer on their books.  The Secretary had the power, under the above section, to have directed the Treasurer of the United States to check directly upon the banks for this large sum, and the largest amount of the checks so drawn would have been settled by onset through the clearing-house without requiring but a small balance to be paid in gold.  Instead of doing so, the Secretary required the money to be counted and paid over into the sub-treasury on all these loans.  This very soon disturbed the gold reserves of the banks, and it became painfully certain to the managers of the banks in New York and other cities, as early as December, 1861, that the policy which the Secretary adhered to must inevitably lead to a general suspension of specie payments.

A meeting of bank officers was held at the American Exchange Bank in the city of New York, December 28, 1861.  One of the bank presidents ---[you know his name, why not tell us ?], in a well-considered speech delivered on that occasion, criticising the course of Secretary Chase in regard to these loans, said that

"He [Secretary Chase] was urged to draw directly on the banks.  Coin being the basis of credits, it was only in that way the increased financial operations of the Government could be conducted, for it was impossible to maintain the superstructure of credit when the basis is withdrawn, for in destroying the basis the superstructure is also swept away.  He refused to draw directly upon the banks for the proceeds of the loan taken by each.  We are informed that the act of Congress was passed expressly for the purpose of authorizing him to do so, but he gave it a different interpretation, which may be the correct one, although I do not think so."

The failure of the Secretary to recognize the suspension of the sub-treasury law, and his rejection of the bank-check and clearing-house, was the first material mistake made in the management of the finances during the war.  The Secretary was intent upon having the gold for disbursement, without fully comprehending the effect this large drain would have upon the banks and the general finances of the country.

The banks immediately thereafter suspended specie payments ---[which actually is a declaration of bankruptcy], and there is but one opinion among practical bankers, that such suspension was hastened by the injudicious action of the Secretary of the Treasury.

The attempt of the Secretary to carry on the finances during the war upon a specie basis, without the aid of the bank-check and clearing-house, having broken down, I immediately introduced in the House the first legal tender act, which, after an able and full discussion in both Houses of Congress, finally became a law on the twenty-fifth of February, 1862.  I sent you yesterday a book recently prepared by me, containing a history of this most important measure.

This is my answer to your inquiry:

I desire to add that I have reflected much during the last nine years upon the sub-treasury law and its effect upon Government loans, as well as upon the general business of the people.  It is my deliberate conclusion that a great war can never be successfully carried on without a suspension of specie payments while the sub-treasury law is in operation.  I believe further that the financial affairs of the Government, as well as the general business of the whole people, could he much better conducted without the sub-treasury law and with much less expense.

A system of finances for this great country which will be adequate to the wants of the Government and people, in peace and war, has yet to be organized.

Very truly yours,
E.G. SPAULDING.

Dear Sir:--- I have to thank you most cordially for your note of March 28th and the book therein ordered, and for your interesting letter at length of the 29th in answer to my enquiry concerning the legal tender act.  With all your views I fully concur.  If Mr. Chase had ever been a banker or a merchant, he might have joined theory and practice and had the aid of both, but as it was he only had the former;  and that was a theory of his own brain, which through his inordinate self-conceit has cost the country, in all probability, a thousand millions of debt, beyond what would have been contracted on lower prices.  I do not believe a more ignorant man, of practical business affairs can be found in public life.  If he had only been a general reader of history, to say nothing of political economy, he would not have blundered so dreadfully, nor at last, have failed so utterly as a Financial Minister.  There were people to praise him at the outset, but they were ignorant like himself, of all fiscal history;  and even they have now generally joined in with the popular condemnation of his management.

I find the data of the Independent Treasury history so mixed and voluminous, and greatly in very small type, that I am much discouraged in my attempt to reduce it to an intelligent narrative.  But I shall persevere.

It is a patent absurdity that the hoarding of the most valuable part of our currency, is a strength to the currency !  What you say is perfectly true ---that an abstraction of coin from use, necessitates a corresponding enlargement of the other media of exchange.

I am heretical enough not to believe in the National Bank Scheme.  It is an insidious plan of currency that is never practically redeemed, and never will be.  But we have learned from it, and tested the advantages of a "national circulation," and that is a good deal.  It will serve its day and go by the board.

Then, we may adopt the scientific idea of a National Bank, of which the Bank of England is the most conspicuous example.  Our finances must be Federalized, as our states have been, and we should then soon govern the exchanges of the world.  The present system is a national bank with all its capacity of mischief, and little of its good.  Again thanking you for your letters and the book.

Very truly,
J.S. GIBBONS.

The following letter, addressed to Mr. Spaulding by J.E. Williams, Esq., President of the Metropolitan Bank, New York, is one that ought to command attention.  Mr. Williams has no superior among the bankers of the country in financial ability and experience.  His views, with respect to the financial situation of affairs, coinciding with those made public by Mr. Spaulding, are expressed with great clearness and force:

Mr Dear Sir:--- Many thanks for your letter, which I have read in the Buffalo Express.  It is quite time, I think, that the friends of the administration, who care more for that, and for our general government, than for the crude notions of finance prevailing at Washington, should speak out, and fearlessly criticise the measures they disapprove.

The five per cent. loan is a failure ---at least so regarded here, by every business man I have heard speak of it--- and ought to be withdrawn at once from the market.  That which has been taken should be exchanged for six per cent. bonds at the option of the owners, and a loan bearing six per cent. interest, payable in gold, offered to the public without delay.

I understand that between seventy and eighty millions of demands on the Treasury have accumulated in Washington, and now await payment.  This ought not to be.  The money market is easy ---the loan at six per cent. would now readily be taken, and this favorable state of financial affairs should be seized onto secure money for the Government.

And why not pay six instead of five per cent. interest ?

Do not the people pay the taxes from which this interest is paid ?  Is not money in this country worth fully six per cent ?  Can the Government reasonably expect to carry on an expensive war and hire money by the hundreds of millions at less than six per cent.?  Is it fair to tax the people to their utmost capacity to pay and then expect them to furnish funds at less than the market price ?  Is not such a course an unjust tax on the good sense and patriotism of the people of this country ?

This constant increase in the volume of the paper currency is having a very discouraging effect on all the prudent, thinking people.  Prices have felt the last addition of one or two hundred millions much more than the previous four hundred millions;  for the reason, that the first issue was needed for the business of the country, while it would seem, from the effect produced on the market values, that the last issues were not required by any business demand whatever, but are merely a make-shift of Mr. Chase to meet present demands on the Treasury.

Yours truly,
J.E. WILLIAMS.

Dear Sir:--- I have just received the Buffalo Morning Express of the 26th March, in which is your admirable letter to Morris Ketchum, Esq., of New York, on the finances of the country.  I had previously seen extracts from it in the Tribune, and its remarks upon it.  On reading the letter in full I discover the same standard views ever expressed by you, and to which I have always given my hearty assent.

As I have before stated to you, it has ever appeared to me perfectly plain and simple, this matter of our finances.  When it was fully settled that we could not carry on this war on a gold basis, and that some form of paper money must be substituted, while the war was continued, it has seemed to me that there was but one proper course for the Government to pursue, and that to issue legal tender notes and pay every claim against the Government as fast as presented, and to create (or issue) a government bond, bearing six per cent. interest in gold, in which these legal tenders could at all times, at the pleasure of the holder, be converted.  In my opinion there should not have been but one kind of bonds issued, and that a 20-year bond, at least until one thousand million had been issued;  after that point had been reached, I would not have particularly objected to the issue of 5-20 6 per cent. bonds, redeemable after five years, but as you state in your letter to Mr. Ketchum, there should never have been but one standard of interest for government bonds.

(Temporary loans such as 2-year 5 per cents. or any other temporary loan, would have no effect on the general principle). 6 per cent. is a fair standard for the Government and the people, and to that all standard values should bear a proper relation.

In my opinion the country could never be flooded with a depreciated currency so long as the door was open to convert surplus money into 6 per cent. gold bearing bonds.  I have a simple metaphor which I sometimes apply to this matter.  I compare it to a flowing stream, on which a dam is built, and when the water rises to its height it easily and gracefully flows over and nothing more is seen of it.  Now when the country has more floating paper money than it wanted, it will surely flow into a place of rest, (or bonds).  It will be impossible to keep afloat an amount great enough to materially inflate prices.

Since it has been given out that we were to have a bond bearing 5 per cent. put upon the market, I have discovered more uneasiness as to the future of our financial affairs than ever before since the war commenced.  It is so apparent that it is to be forced upon the people against their will, that it produces distrust.  If it could be done without diluting or watering the currency, it might be a debatable policy.  But as it cannot it does not even admit of that.  What Mr. Chase can mean by his present policy I cannot divine.  If this loan has to be negotiated abroad it might not effect us here, but no great amount of it can be, nor do I deem it advisable it should be.

We can absorb all the Government needs at home, and without the least inconvenience, if they will keep within easy reach of the people a 6 per cent. gold bearing bond, and I should prefer that not one dollar should go abroad.

Let heavy taxation follow a free issue of legal tender, and a wide door open for conversion into 6 per cent. gold bearing bonds, the Government may, without fear, ride out the financial storm in perfect composure.

Truly your friend,
JOHN P. ELTON.

Dear Sir:--- Accept my thanks for the several papers forwarded.  Your letter "hits the nail on the head" beyond a doubt, and I agree fully in your expressed views, as to the evil consequences of Mr. Chase's action in unsettling the rate of interest on conversions.  The whole country will see ere many months, that your opinion, and congressional action, was most sound throughout.  The Committee of Ways and Means, now entirely under the control of Mr. Hooper, on financial subjects. ******

It looks as if the 10-20 loan was to be a failure.  Had Chase kept right on with the 6s he would have absorbed all the spare capital, (or rather credit,) of the country, and been in a sleek condition, instead of coming out "spring poor," as a barnyard horse.

Yours truly,
H.H. VAN DYCK.

Dear Sir:--- I duly received your favor of 16th inst., with the advanced sheets as stated, of your intended publication on the Legal Tender act, which will, I think, prove a work of interest to financial men.

You are doubtless aware that the officers, and a majority, if not all, of the Directors of the Bank of Commerce, did not coincide with the views of Mr. Gallatin and associates, who visited Washington in January, 1862.  We had no hand in appointing them as delegates on behalf of the banks, but on the contrary, Messrs. Chas. H. Bussell and Deming Duer, directors of the bank, and myself as its cashier, were in Washington early in January, 1862, as a committee from the Bank of Commerce on the subject of the national finances, when several gentlemen, delegates from certain banks in New York, Boston and Philadelphia, appeared in Washington in opposition to the financial measures then proposed and under consideration by Congress.

The Committee of the Bank of Commerce not concurring in the views of these gentlemen, did not unite in the meeting called on Saturday, January 11, 1862, at the office of the Secretary of the Treasury, to confer with the Committee of Ways and Means and the Finance Committee of the Senate.  Mr. Russell, (and I think one or two other directors of the bank then in Washington), did, however, by invitation of the Secretary of the Treasury, attend the meeting, but totally dissenting from the propositions then made, took no part in the proceedings of the gentlemen present.  Mr. Russell was before the Committee of Ways and Means, and frequently with the members of that Committee and of the Senate Committee, who were considering the matter of issuing legal tenders, and stated fully his own and the views of the Committee of the Bank of Commerce on that subject, which were adverse to such issues if other means could be realized by the Government, and to be adopted only in the exigency of failure otherwise, as appears to have been stated to you by Mr. Russell's letter of January 29, and in the views he then expressed I believe the president and all, or nearly all, of the directors as well as the committee, concurred.

By the way, Mr. Russell was a director, but not the Vice-President of the Bank of Commerce---which please correct in your publication.

I was, as you state, in Washington while the bill was pending in the Senate, and at the request of Mr. Secretary Chase, I appeared before the Senate Finance Committee with him and fully explained to them the workings of the bank settlements through the Clearing House, and the impossibility of forcing a circulating medium of the demand notes issued by the Treasury, unless they were made a legal tender, and in answer to the enquiries expressed my thorough conviction that the emergency had arisen requiring the issue of legal tenders.

You are correct in your supposition regarding my instrumentality in procuring the interest on bonds, &c., being made payable in coin.

I have shown your letter and the pages to Mr. Russell and to Mr. Kennedy, and will show them to the other gentlemen named.

Yours very truly,
HENRY F. VAIL.

My Dear Sir:--- I received this morning your History of the Legal Tender act, and as far as I had time to look into it, found what I knew could not he otherwise, to be very accurate.

We shall dispose of this question, I presume, in due course of our coming session of the court, which begins 1st of October.  I have always regretted that the greenbacks were made a Legal Tender, and I think the Chief Justice now is of opinion that the omission would not have had much effect one way or the other, in its operation upon the hills.  Not at least as much as he thought at the time the bill was passed.  That the necessities of the government and business interests of the country would have given them all the credit, important or material.

I am very much obliged to you for this authentic record of one of the most important measures growing out of the war, and difficult to deal with since.

Very truly yours,
S. NELSON.

Dear Sir:--- On my return home I am pleased to find a copy of your history of the "Legal Tender Paper Money."  It is a valuable historical document, and I am thankful for your kindness to me ---in remembering me in the distribution of it, and concur with you fully in the views you take on the subject.

Why our court has for two years postponed their consideration of the question, is unknown to me, and I don't feel any responsibility for its postponement.  Excuse my pencil.  I write with difficulty.

Very respectfully and truly, yours &c.,
R.C. GRIER.

Dear Sir:--- I received both your letter and the "Financial History of the War," for which I am very much obliged to you.

I read the book with much interest, because it gives the first clear view, as a whole, of the financial measures of the Government during the war, that I have had;  but mainly because it gives an accurate and full account of the relation of the Chief Justice, while he was Secretary of the Treasury, to those measures;  and especially to the legal tender clause, about which there was some uncertainty and much curiosity.

A careful examination of all that is to be found in your book, on that subject, leaves the impression on my mind that he had never had any doubt as to the constitutionality of that measure, but doubted its policy or expediency.  This doubt seems to have been entirely removed, and his conviction of the necessity of that provision to enable him to carry on the department of the government under his charge, made him at last an advocate of it.

If judicial propriety admitted of it, I could not give yon any reliable opinion of the probable action of the Supreme Court.  Of course I know the views of some of its members, but there are enough whose views I do not know (some of them are propably undetermined in their own minds), to make the matter as uncertain to me as to you.  I have a very strong impression that the opinion of the majority of the court, if rendered while constituted as it now is, will be such as the Chief Justice shall think it ought to be, when delivered.  But with all my intimacy with him, and some knowledge of his character and habits of thought, I have no idea what that will be. * * *

I am, very truly, your friend,
SAMUEL F. MILLER.

Dear Sir:--- Hon. D.S. Bennett has handed me your book on the "Financial History of the War."  Accept my thanks for the same.  It subserves a very great convenience in bringing into a small and accessible compass matter that would require days of search in the Congressional Globe and public journals to find.

Yours very truly,
JOS. P. BRADLEY.

My Dear Sir:--- If I have neglected to acknowledge your kindness in sending me a copy of your excellent book, it has been that I might write after a careful perusal should enable me to speak understandingly of its value.  I have given it an attentive perusal, and while I thank you heartily for your courtesy in sending it, I thank you still more cordially for your labor in collecting and publishing it.  To those who take an interest in the subject of the currency, the book is invaluable.  I am glad also to see that, while you put forth no claims to personal credit, yet you have established by the force of documentary evidence, in the most irrefragible form, your own just claims to the merit of standing foremost amongst the statesmen who carried on their shoulders the soldiers who won the victories over the rebellion.

Much is clue to the army and to the heroes who led it;  but nothing less is due to the heroic statesmen whose sagacity and genius gave to the war "the sinews, without which the army would have striven in vain."

I am truly respectfully yours,
NOAH DAVIS.

Dear Sir:--- I have received your kind note, together with your (too brief) little volume on the "Financial History of the War."  I have read it with much interest.  It is a valuable contribution to the legislative history of the country at a most important and critical period.  The idea of issuing U.S. treasury notes for currency, and making them legal tenders in payment of debts, was in my opinion the result of wise and sagacious statesmanship and a thorough knowledge of the character and resources of the American people.  The latter was undoubtedly the keystone of the financial arch, and without it the whole structure must have crumbled in pieces before the close of the war.  Here was a people who from their earliest history had been taught to look upon a public debt as public calamity, scarcely surpassed by any other.  In times before they had been restive under a debt of a hundred millions;  and now the necessity was upon them of going, no doubt, not only by the hundred, but by the thousand millions.  And unless some scheme could be devised whereby gold and silver could be dispensed with as a measure of value or a circulating medium for cancelling of indebtedness, and something else substituted in its place capable of being enlarged to a magnitude equal to any emergency, the finances must have failed.  This substitute the legal tender notes gave us.  They it was that stimulated and encouraged the business interests of the country, kept up prices, and afforded ample facilities for the prosecution of all the best industries consequent upon a state of war.  Yet it was a bold measure from which, as you well know, many of the wisest and best of your associates shrank.  Secretary Chase never gave his adhesion until he was compelled by the clamor of hungry soldiers to devise some way to get money.  Especially was this the case with the leading men in the Republican party of Democratic antecedents ---men whose political opinions had been formed in the school of Jackson, Van Buren, Wright and Benton.  To these men the support of a measure making government paper a legal tender, seemed like giving the lie to the whole political record.  I remember very well that while you were preparing the bill I had several conversations with you on the subject.  You feared for the fate of the measure in the Senate.  Believing the measure to be of pressing necessity, I desired to use whatever influence I might possess (if any) in its favor, and accordingly I sought an interview with the late Preston King, senator from this state, on the subject.  I found him, as I expected, opposed to the bill;  but also (what I did not expect) very earnestly and bitterly opposed to it.  It seemed to him utterly at war with all his pronounced opinions on financial subjects.  And although as pure and devoted a patriot as ever existed, he seemed to be apparently doubting whether the Union was worth saving by such money.  He would listen to no argument about it, and such as I ventured to try made no impression.  He declared he would not consent to it as long as any other conceivable means remained untried, and if I recollect right, he did oppose the bill to the last.  However, the measure was successful, and it is no more than simple justice to say what I personally know to be true, that for its origin, maturing and becoming a law, the country is indebted to you more than any one man.  Your persistent and unwearied labors, your complete and thorough mastery of the subject, the respect and defference with which you were regarded by your fellow members, securing to you at all times a friendly and attentive hearing.  All these it was that turned the scale in favor of the bill.

I have never had any doubt as to the constitutionality of the bill.  Ample authority is found for it, not only in the grant of all necessary means to carry into effect the express poxvers, but in three at least of the expressly enumerated powers of Congress.  I should be sorry to see any compromise decision of the court, to the effect that such a measure was constitutional in war and not in peace.  If the power is there for any purpose or time, then Congress must be the exclusive judge as to the necessity or propriety of its excuse.  But this letter is extending beyond due limits.  Permit me to say in conclusion that I am of the opinion that your speech on the presentation of the bill was one among the very ablest forensic efforts ever delivered in that house.  I thought so then, and now, on a careful re-perusal of it, after what was then prophesy has become history, I am confirmed in that opinion.  The great events and measures of that Congress, in which you bore so prominent a part, are sufficient of themselves to secure you a position in history which few of your countrymen have the good fortune to attain.

Thanking you for your kind expressions towards me personally, and with best regards to yourself and family,

I am, very truly your friend,
F.J. FITHIAN.

My Dear Sir:--- I thank you for your courtesy in sending me a copy of your "Financial History" and your kind remembrance of me.  I have only thus far been able to read your opening speech, and which, in view of the events which have transpired since its delivery, was wonderfully prophetic and eminently sound and able.  I think you have demonstrated beyond all cavil that the only resource available to the Government at that time, to enable it to support its armies and maintain its navy, was the issue of treasury notes.  I think you have also shown what was always clear to my mind, that these notes would have failed utterly to have accomplished the desired purpose if they had not been made a legal tender.  This brings us to the constitutional power to declare what shall be a legal tender.  It is the conceded attribute of every government to declare what shall be legal tender ---in other words, what shall be the money.  This power was exercised by the colonies and the states prior to the adoption of the constitution of 1789.  If the states could not declare what they pleased as legal tenders, then what sense in the prohibition upon them, that they should not make anything but gold and silver a legal tender.  So also the prohibition upon the states not to emit bills of credit.  It has never been but that Congress could do this, it follows logically that it could also declare what should be a legal tender.  This view is amplified in my opinion in 27 New York, and very neatly and succinctly stated by Attorney-General Bates, in his letter to you, which I first saw in your book.  I have no doubt of the constitutional power of Congress to pass the legal tender act, and I think the United States Supreme Court will so hold when the question is presented to them.  The expediency or necessity of such a law is quite another question.  I have only looked at it as a question of power, and your speech and subsequent events have fully satisfied me of the necessity and wisdom of your action.  It saved our Union, and we must now see how we can the most speedily get back to a specie basis.  After I have looked through your most interesting and valuable book, I will write you again, at the peril of being too prolix.  Judge Davis would like a copy, and is there any place here where I could procure two or three more.

Very cordially yours,
HENRY E. DAVIES.

Dear Sir:--- I received your "History of the Legal Tender Paper Money issued during the great Rebellion," in due course of mail, and beg yon to accept my thanks for the gift.  As a teacher of political economy I shall find it particularly valuable, and although I have had no time to do more than look at the arrangement of topics, I can see.  that it would have saved me a good deal of labor if I had had it in my hands before.

It would be an idle thing for me to make any observations on the subject.  I do not see how the Government could have stood under its burdens if it had taken a course materially different from that which was taken.  And in regard to the return to specie payments, I do not see how a decision of the Supreme Court against the constitutionality of the act in private bargains can of itself bring about such a return.

Very respectfully yours,
THEODORE WOOLSEY.

My Dear Sir:--- I am very much obliged to you for a copy of your book.  It will be of essential service to me, and to all others who, like me, wish to learn from an authentic source the exact financial lessons which our war is fitted to teach.  I have begun to read the book in course, am pleased with it as far as I have read, but thought I would not delay acknowledging it till I had finished.  When I am through with it, I will perhaps communicate with you again.  I may be in Buffalo in the course of the autumn, and if so I shall do myself the pleasure of calling on you.

With great respect, yours,
A.L. PERRY.

Dear Sir:--- Accept my thanks for a copy of the "Financial History of the War."  The college term having closed, I availed myself of the first leisure moments since its reception, and have perused it with care and interest.  It is a very valuable contribution to the history of the war.  This little volume furnishes a connected account of the financial difficulties encountered in subduing the rebellion, and the manner in which they were overcome.  Always aware of the importance of the measures originated and carried to completion mainly by your unremitted exertions, I am more than ever convinced that without the "Legal Tender" our armies could not have been maintained in the field, and all our efforts to preserve the union by force must have resulted in discomfiture.  How helpless would have been our patriotic President and resolute Lieut.-General and his brave soldiers, without the necessary "sinews of war."  History will, I am sure, place those services which preserved the credit of the government during its peril in the same exalted rank with the more brilliant achievements in the field which command our admiration and gratitude.

Again thanking you for the volume which you have been kind enough to compile, and which was certainly a great desideratum.

I remain ever truly, your obedient friend and servant,
JAMES P. WHITE.

Dear Sir:--- Your kind letter of the 18th ultimo, I had the pleasure to receive in New York on the 21st.  On that day also came to hand your valuable work, the "History of the Legal Tender Act," for which please accept my thanks.  I have examined it with great interest, and regard it as an authorative statement of the financial legislation during the war.  Owing to your intimate and prominent connection with that legislation, no one, it seems to me, was better qualified to treat fully and justly the subject, as the book incontestably proves.

The late gold speculation will have a good result if it quicken the public mind to the importance of an early return to specie payments.  Had not Congress interfered with the policy of contraction of the late Secretary, we should have by this time been well on our way to a gold standard.  Had the new administration kept its gold and not sold any of it, would not such policy have reduced the premium ?  Would not such a course have brought us easily and naturally, (in the line of trade) even now, far on the road to specie payments ?

With kind regards to Mrs. Spaulding and yourself,

I am respectfully yours,
JOHN T. HEARD.

My Dear Sir:--- Accept my thanks for the copy kindly sent me, of your "Financial History of the War."  It is an important and valuable work for the historian and the student, of the wonderful times to which it relates ---discussing, as it does, the problem of furnishing "the sinews" for the greatest civil war of modern days.  How much military glory think you, in any war, would be acquired on land or sea, by gentlemen of the army and navy at the front, if the "ways and means" were not first invented by statesmen in the rear ?  Here, in part at least, cedant arma togæ.

I still think it was neither constitutional, necessary, nor wise to declare the notes a "legal tender."  But of this I am content that courts and history shall judge now.

Yours truly, etc.,
C.L. VALLANDIGHAM.

Mr Dear Sir:--- I have the honor to acknowledge the receipt of your letter of the 12th instante, and of the volume entitled "Financial History of the War."  For both I beg to return my thanks.  I have not yet heen able to read the volume, but I have no doubt it will fill a vacuum which every student of our late history, and even many actors in it, has most sensibly felt.  Your position at the time gave you special facilities for knowing all which lay beneath the surface of the pages of the Globe or the newspapers.

Very truly and respectfully,
GEO. Hunt PENDLETON.

My Dear Sir:--- Allow me to thank you for the "Financial History of the War," as well as for your kind letter accompanying the same, which I have this day received.  Pressing professional engagements will prevent me from examining the book at present;  but it is a most capital idea to have in such concise form the history of the financial legislation of Congress during the war.  Otherwise, volumes upon volumes, and report upon report, would have to be searched to find what you have here in 300 pages.

I sincerely hope, however, that "the sinews of war" may not be needed again very soon, and that we may be permitted to repair the waste places in our impoverished land.  Hoping that we may at some time meet again and renew our kind personal relations, I beg to remain,

Very truly yours,
MARTIN J. CRAWFORD.

Herewith I return Senate bill No. 617, entitled "An act to fix the amount of United States notes and the circulation of national bank notes, and for other purposes," without my approval.  In doing so I must express my regret at not being able to give my assent to the measure which has received the sanction of a majority of the legislators chosen by the people to make laws for their guidance, and I have studiously sought to find sufficient arguments to justifiy such an assent, but unsuccessfully.  Practically, it is a question whether the measure under discussion would give an additional dollar to the irredeemable paper currency of the country or not;  and whether, by acquiring three-fourths of the reserves to be retained by the banks, and prohibiting interest to be received on the balance, it might not prove a contraction.  But the fact cannot be concealed that theoretically the bill increases the paper circulation one hundred million of dollars, less only the amount of the reserves restrained from circulation by the provisions of the second section.

The measure has been supported on the theory that it would give an increased circulation.  It is a fair inference, therefore, that if in practice the measure should fail to create the abundance of circulation expected, the friends of the measure, particularly those out of Congress, would clamor for such inflation as would give the expected relief.  The theory, in my belief, is a departure from the true principles of finance, the national interest, national obligation to creditors, congressional promises, party pledges on the part of both political parties, and of the personal views and promises made by me in every annual message sent to Congress and in each inaugural address.

In my annual message to Congress in December, 1869, the following passage appears:

"Among the evils growing out of the rebellion and not yet referred to, is that of an irredeemable currency.  It is an evil which I hope will receive your most earnest attention.  It is the duty, and one the highest duties of the government, to secure to its citizens a medium of exchange of a fixed, unvarying value.  This implies a return to a specie basis, and no substitute for it can be devised.  It should be commenced now and reached at the earliest practicable moment consistent with a fair regard to the interest of the debtor class.  Immediate resumption, if practicable, would not be desirable.  It would compel the debtor class to pay beyond their contracts the premium on gold at the date of their purchase, and would bring bankruptcy and ruin to thousands.  The fluctuations, however, in the paper value of the measure of all values ---gold--- is detrimental to the interest of trade.  It makes the man of business an involuntary gambler, for in all sales where future payment is to be made both parties speculate as to what will be the value of the currency to be paid and received.  I earnestly recommend to you, then, such legislation as will insure the gradual return to specie payments, and put an immediate stop to the fluctuations in the value of the currency."

I still adhere to the views then expressed.  As early as December 4, 1865, the House of Representatives passed a resolution, by a vote of 144 yeas to 6 nays, concurring in the views of the Secretary of the Treasury in relation to the necessity of contracting the currency with a view to as early a resumption of specie payments as the business interests of the country will permit, and pledging co-operative action to this end as speedily as possible.

The first act passed by the Forty-first Congress, on the eighteenth day of March, 1869, was as follows:

"An act to strengthen the public credit of the United States:

"Be it enacted, etc., That in order to remove any doubt as to the purpose of the government to discharge ail its obligations to public creditors, and to settle conflicting questions and interpretations of 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 obligations of the United States, and of all interest-bearing obligations, except in cases where the law authorizing the issue of any such obligations has expressly provided that the same may be paid in lawful money, or in other currency than gold or silver;  but none of said interest-bearing obligations not already due shall be redeemed or paid before maturity, unless at such times as the United States notes shall be convertible into coin at the option of the bolder, or unless at such time the bonds of the United States bearing a lower rate of interest than the bonds to be redeemed can be sold at par in coin.  The United States also solemnly pledges its faith to make provision, at the earliest practicable period, for the redemption of United States notes in coin."

This act still remains as a continuing pledge of the faith of the United States to make provision, at the earliest practicable moment, for the redemption of United States in coin.  The declaration contained in the act of June 20, 1864, created an obligation that the total amount of United States notes issued or to be issued should never exceed four hundred millions of dollars.  The amount of actual circulation was actually reduced to three hundred and fifty-six millions of dollars, at which point Congress passed the act of February 4, 1868, suspending the further reduction of the currency.  Forty-four millions have even been regarded as a reserve, to be used only in case of an emergency such as has occurred on several occasions, and must occur when from any cause the revenues suddenly fall below the expenditures, and such reserve is necessary, because fractional currency amounting to fifty millions is redeemable in legal tender on call.  It may be said that such a return of fractional currency is impossible, but let steps be taken for a return to a specie basis and it will be found that silver will take the place of fractional currency as rapidly as it can be supplied.

When the premium on gold reaches a sufficiently low point, with the amount of United States notes to be issued permanently within proper limits, and the treasury is so strengthened as to be able to redeem them in coin on demand, it will then be safe to inaugurate a system of free banking, with such provisions as to make the compulsory redemption of the circulating notes of banks in coin, or United States notes themselves redeemable and made equivalent to coin, as a measure preparatory to free banking, or for placing the government in a position to redeem its notes in coin at the earliest practicable moment.  The revenues of the country should be increased so as to pay the current expenses, provide for a sinking fund required by law, and also a surplus to be retained in the treasury in gold.

I am not a believer in any artificial method of making paper money equal to coin, when coin is not owned or held ready to redeem the promises to pay, for paper money is nothing more than promises to pay, and is valuable exactly in proportion to the amount of coin it can be converted into.  When coin is not used as the circulating medium, or the currency of the country is not covertible into it at par, it becomes an article of commerce as much as any other produce.  The surplus will seek a foreign market, as will any other surplus.  The balance of trade has nothing to do with the question.  The duties on imports being required in gold, and about enough to satisfy that demand remains in the country.  To increase this supply I see no way open but by the government hoarding, through the means above given, and possibly by requiring national banks to aid.

It is claimed, by the advocates of the measure herewith returned, that there is an unequal distribution of the banking capital of the country.  I was disposed to give great weight to this view of the question at first, but on reflection it will be remembered that there still remains $4,000,000 of authorized bank-note circulation assigned the states having less than quota not yet taken.  In addition to this the states having less than their quota of bank circulation have the option of $25,000,000 more to be taken from those states having more than their proportion.  When this is all taken up, or when specie payments are fully restored or are in rapid process of restoration, it will be time to consider the question of more currency.

My Dear Sir:--- I give you many thanks for sending me a copy of your "Financial History of the War."  But I give you more thanks for publishing the work itself.

Last winter I became painfully aware of the want of such a work.  I attempted to prepare a speech upon our financial condition.  Upon looking around I could find no account of the financial measures resorted to during the war save in the statutes and the Globe.

Mining in those mountains was so tedious that my speech was not prepared until all debate to which it was pertinent had been closed.

The book came to hand this morning.  Of course I have only looked to see its contents, and have not read those contents.  That I shall do hereafter, and I am sure I shall read not only with interest but with gratitude.

I remember the leading ideas argued in my speech upon the legal tender act, to which you refer in terms of compliment.  If I were to make the speech under like circumstances, but with the light of all the experience we have since had, I do not know wherein I should wish to change it.

I thought we should resort to a paper circulation because we could not command coin ---that the Government should make the paper because it could make safer paper than the banks ---that it should make the capitalist take them because we made the soldier take them ---that this circulation should be in the form of promises to pay, because within the usual form, but not to pay on demand because we know we could not pay on demand ---that we never should make a dollar of paper when we could borrow a dollar at a fair rate of interest ---we should stand ready to take in exchange for notes that did draw interest.  The great mistake of our time, I think, was when we refused to make our notes convertible into bonds.

Very truly yours,
T.O. HOWE.

Dear Sir:--- I received your letter containing your speech and accompanied by your book, for which please accept my thanks.  I regard them as very valuable, and your book will be very useful in enabling politicians to make an accurate study of the financial question.  The ultimate redemption or proposal to redeem the greenbacks is the true way to resumption, and for that purpose a larger revenue of gold is necessary.  This was the burden of my speech and of my bill last winter.

While I regard Schenk's "bill to strengthen the public credit," as a misfortune, yet the clause which pledges the faith of the Government to make provision at the earliest practicable period for the redemption of the greenbacks in coin, was an amendment which I proposed in the Conference Committee on the bill which [President] Johnson pocketedThe bill finally passed was a copy of that.  Preparation to resume specie payment is in my opinion the first great duty of the Government.

I dissent from you reluctantly on one point ---reference to the repeal of the clause authorizing the conversion of greenback's into Five-Twenties.  That repeal was indispensible to the sale of the bonds.  Capitalists would not buy bonds at par, wh.  ich could not by any possibility g.   above par.  As long as the people could take their greenbacks and convert them into bonds at par, the bonds would not get above par in the market.  The two things were of unequal value inherently, and could not both be kept afloat at the same.  ime if convertible.

If the bonds appreciated, the greenback.  would be converted and pass out of circulation, and as a circulation was necessary more would have to b.  issued, and the effect would be to drag down the bonds, because these in turn would be convertible, and so on.  The provision of.  onvertibility I always regarded as impracticable.  If the conversion was not made it was because the bonds were depreciated and would not sell at par.  If they were converted the purpose of a circulation was defeated unless they were constantly renewed.

I would write more at length if I had time.

I am very truly yours,
Oliver P. MORTON.

My Deak Sir:--- I owe you an apology for my delay in acknowl.  ging the receipt of jour "Financial History of the War."  The truth is, I have been so much occupied that I have not until the last few days, examined it.  My official connections with the Congress during the time embraced in your work, enables me to speak of its accuracy and value.  And as relating to extraordinary and necessary legislation to sustain the Government during the years of its great trial, it will be hereafter, as well as now, a convenient and well received authority.

Very truly yours,
Reuben E. FENTON.

Dear Sir:--- I have received the copy of the "Financial History of the War," which you had the kindness to forward to me.  The work is a very meritorious one, and you have obliged me very much by sending it to me.

Very truly yours,
C. SCHURZ.

"1.  The government of the United States is in law and honor bound to pay the debt incurred by the issue of its promises to pay, as soon as by its own action it can render itself able to pay.

"2.  When, under circumstances like ours, an irredeemable paper currency is constantly depreciated, at a discount as to coin, that depreciation proves that its volume is in excess of the real wants of the general business of the country.  This being the case with our paper currency, the present crisis cannot have been caused by any insufficiency of that currency as to the real requirements of business.

"3.  While a sudden fright or panic, showing itself in runs upon banks, &c., may under certain circumstances be momentarily checked by an additional issue of currency ---a stage of affairs which lies several months behind us--- a crisis caused by the unproductive consumption of capital and overspeculation, cannot be remedied by an addition to an already redundant paper currency.

"4.  The proposition that the Government may, without the most pressing necessities, springing from extreme public danger, issue any additional amounts of irredeemable paper currency at its arbitrary discretion, merely to exercise a certain influence upon the business of the country, tends to create a system which wdl place all the private fortunes of the city at the mercy of the Government.

"5.  A currency, which to the vice of inconvertibility adds the vice of redundancy, has always had, and must naturally have the effect of stimulating over-speculation and gambling;  of diverting the energies of the people from honest, productive labor;  of leading to the unproductive consumption of capital and the creation of fictitious values;  of naturally expanding the system of credit;  of demoralizing business as well as social life;  and thus of seriously aggravating the causes which produce the general break-down at once.

"6.  The further expansion of such a currency, during or after a crisis, can only revive and stimulate anew tlie influences which have already demoralized business and brought forth crops of disaster.

"7.  An addition to such currency does not only not add to the wealth of the country, but does not increase the efficiency of the currency Itself as a means of exchange, for the reason that it drives up prices, and by stimulating speculation causes its being drawn away from the legitimate business of the country to the centres of speculation.  It will not make, permanently, money easy, but rather raise than reduce tlie current rates of interest.

"8.  For the same reason every addition to such currency will not satisfy, but excite the demand for more and more, and thus push the country forward on the road to bankruptcy and repudiation.

"9.  No legitimate economic interest of the country will, therefore, be permanently benefitted by such expansion, but all will be injured.

"10.  Least of all is the agricultural interest benefitted by our irredeemable and redundant currency.  It is, on the contrary, most grieviously injured by it, because the farmer must pay extravagant prices for all he has to buy, while the prices of the principal products he has to sell are regulated by a foreign market untouched by our home inflation, and controlled by the competition of the world.

"11.  These evils will be increased by every further expansion and consequent depreciation of the currency, and the idea that the agricultural interest and those sections of the country ---the west and the south--- whose prosperity depends on a profitable cultivation of the soil, can be readily benefitted by further expansion, is therefore fallacious in the highest degree.

"12.  On the other hand, the agricultural interest will be vastly benefitted by an early return to specie payments, because resumption will greatly reduce the price of the commodities the farmer has to buy, while it will not in a proportion, reduce the price of the principal products he has to sell, thus adding greatly to the purchasing power of his income.

"13.  The idea that the return to specie payments can be facilitated by that sort of prosperity which would be brought forth by further inflation involves a mischievous fallacy.  Further inflation would only revive and stimulate all the evil influences of a redundant irredeemable currency upon all economic movements, again excite over-speculation, promote excessive importations, thus turning and keeping trade balance against us;  again expand the credit system to the bursting point, and lead to new and more disastrous revulsions.

"14.  Such expansion would render impossible the fulfilment of the conditions which must precede the resumption of specie payments;  retrenchment and economy in public and private affairs, contraction of the credit system and of private indebtedness, prudent management of business, &c.

"15.  The idea that the return to specie payments can in the safest way be brought about by doing nothing and waiting until the development of the resources of the country and the growth of business have brought our paper money and gold to a par in commercial value is equally fallacious, for the reason that the period of relief thus vaguely pointed out lies in an undefined and undefinable future;  that in the meantime all the demoralizing and dangerous influences of our irredeemable and redundant currency remain at work with undiminished vigor and activity;  that there will be continued danger of further inflation being forced upon us by agencies beyond our control, as the government at the present moment is already expanding the currency;  that thus the day of promise is put off further and further, and that the very difficulties and disasters which the advocates of the do-nothing policy fear will spring from legislative action in the direction of specie payments will naturally occur, and have in fact occurred, under the do-nothing policy itself, as recent events have clearly demonstrated.

"16.  The resumption of specie payments cannot surely be brought on but by legislative action;  and no more propitious moment can be found for the inauguration of a resumption policy than the present, for the reason that much of the work of preparation which must precede resumption has already been done by the crisis.  Private indebtedness has been greatly reduced;  credit in business transactions has been largely contracted; the prices of commodities have already declined to a low point;  business men have generally but light stocks on hand, and for months have been circumspect in their operations.  The possibility of loss through the appreciation of the current money or the decline of prices will therefore be now as little as we ever can expect it to be."

My Dear Sir:--- On my return from New York, last evening, I found your letter of the 26th, and also your work on our finances as affected by our legislation in the early years of the rebellion.  I have, of course, as yet only given it a very hasty examination, but it is sufficient to perceive that you have made a most valuable contribution to the history of the country during that most eventful period.  And what greatly enhances its value is the fact that, while its importance cannot be overlooked or gravely over-estimated, it has been almost ignored by all the various historians of the great rebellion.  Your position in Congress, and the part you took in the great financial questions of the day, your familiarity with the whole subject, and your tastes, all peculiarly fitted you for this important work, and you seem to have exhausted the subject.  I hope, in justice to yourself and also for the general good, that you will see that a copy of the work is put in most of the important libraries of the country, for the future benefit of the historians of that period.  There are great lessons to be learned from our experience, and the "almighty dollar" is the great power, without which campaigns are never successful.  Thanking you for your kind remembrance, I remain,

Most truly yours,
E.W. LEAVENWORTH.

My Dear Sir:--- When in Boston last week I saw for the first time a copy of your "Financial History of the War," and was intending to order it immediately on my return home, when your letter and the book in question arrived.  I have not had time to more than glance at its contents;  I know, however, that it supplies an important element of our recent history, and that the work has been well done.  Please receive my thanks for your kind remembrance.  I have thus far read everything that you have published that I have seen, and agree with you fully upon all matters, with a single exception, and that is this:

I do not believe that with the present volume of currency, and the consequent maintenance of abnormal prices, that resumption of specie payments is practicable by any method.  I do not believe that any legal enactment compelling the Treasury or the banks to retain and accumulate gold will produce a sufficient sum to meet redemption, or that gold could be kept here for any length of time after redemption had been commenced, on any basis of accumulation.  If you, in conjunction with your ideas of accumulating gold, will advocate a measure of contraction, I am with you, heart and hand.

Have you read a recent work by Bonamy Price, professor of political economy at Oxford, Eng., entitled "Principles of Currency ?"  If not, allow me to recommend it to you as worthy of perusal, although I do not fully agree with all the propositions contained in it.

I do not know how valuable a report I can get up for this year.  I sometimes feel almost discouraged, as the results of investigation are so paradoxical and unsatisfactory.  It sometimes seems to me that the more I investigate and discuss these matters the less I know;  but, at the same time, I have an abiding confidence that we shall in the end manage to struggle through all our difficulties, but perhaps at the cost of a sad experience.

Trusting that I may have, at no distant day, the pleasure of a personal interview, I remain, yours very truly,
DAVID A. WELLS.

Dear Sir:--- Yours of the 26th is just at hand, and I have also the pleasure to acknowledge the receipt of your "History of the Legal Tender Paper Money issued during the great Rebellion."  I have glanced at it sufficiently to see that it is a valuable contribution to our financial literature ---a work that will be found very convenient and useful for reference in the future.  I am much obliged to you for it, and shall peruse it at my leisure.  I arrived at home, from my summer's tour to the Gulf of St. Lawrence, last evening, so that at present I am much occupied.

I am glad you took so strong ground in your letter to Mr. McCulloch in favor of restoring the currency to par with gold.  It is, by far, the most serious matter now before the nation.  What the action of Congress, at its next session, will be, no one can predict.  There will be a strong effort to further inflate, and if that cannot be done, then to hold on to the present amount of currency.  I think, with you, that the intervention of the Supreme Court may be the only way in which the country can be relieved;  and, undesirable as that mode of relief is, it will be far better than to float on under our depreciated monetary system.

I shall ever be ready to afford any assistance in my power toward securing a gradual but efficient contraction of the circulating medium.  I don't know whether you saw my plan, proposed last winter, of withdrawing the greenbacks by issuing compound interest notes instead;  if so, I should like to know how it strikes you.

I am, yours truly,
AMASA WALKER.

My Dear Sir:--- I am very glad to possess the volume received from you this morning, and thank you for sending it to me.  I have not yet had time to more than glance at its contents, but I know that no one is more competent than you are to treat the subject intelligently and exhaustively.

I am, dear sir, yours very truly,
ALEX. H. RICE.

Dear Sir:--- With many thanks for your kindness in sending it, I beg to acknowledge the receipt of a copy of your lately-issued "History of the Legal Tenders."  I have not been able to more than glance through it here, but have sent it down to my house, where I can read it more leisurely.

In answer to your request for my views upon the work, I can only say now, that the magnitude of the subject, and its importance to the future, certainly warranted, if it did not actually demand, its publication;  and it is equally certain, from your known connection with the measure from its inception to its final adoption, that you were the one to collect, prepare and send forth its history.  Very truly yours,

W. Tecumseh SHERMAN,
Gen'l and Sec'y of War.

Dear Sir:--- I have the honor to acknowledge the receipt of your "Financial History of the War," which I intend to examine with the care its merits require.  I think it will fill a need in the financial history of the country.  There can be no more abstruse problem than our present financial relations, and anything which shall show the origin of our present system, so as to elucidate the principles upon which it operates, will be a benefit to the country.  With many thanks for your courtesy,

I am, yours truly,
BENJ. F. BUTLER.

Dear Sir:--- Yours of the first, together with your "Financial History of the War," came duly to hand.  Please accept my thanks for your kind consideration.  I know of no man so well fitted as yourself to write that history, and I am delighted that you have performed what I am sure, with your sound views on the subject, will prove a service to the whole country in the work you have accomplished.

Yery truly yours,
J.A. GARFIELD.

Dear Sir:--- Some time has elapsed, and more than I intended there should, between the receipt of your book and its acknowledgment;  allow me first to thank you for it, and then to say that having examined it carefully, I regard it as a most valuable manual of the financial events of the War ---events that have culminated in a gladdening peace, and that are yet to exert an influence upon the monetary affairs of our own country ---and perchance of the world--- most useful and salutary or most mischievous and pernicious, according as wisdom or folly may most prevail in our councils.

Highly as those of us who participated in the financial events of the war, must regard your book to the future historian, who will be called to weave them into a narrative of the deepest interest to future generations;  it will be more than doubly valuable.  Sincerely congratulating you therefore, and renewedly thanking you for my copy, I remain with the highest respect,

Yours very truly,
EDWARD HAIGHT.

My Dear Sir:--- I thank you for your volume vindicating the "Truth of History."  It is not a new idea to me, that to you is attributable, in a very large measure, the adoption of the "Legal Tender System" of our War Finance.  You have rendered a valuable service, and your book will always be an authority on the subject of which its treats, and which it seems to me to exhaust.

It is a rare distinction to be so identified as are you with that policy, without which the late struggle of the government had been a failure.

I most heartily congratulate you.  With renewed thanks for your courtesy, I am, as ever, very truly, your old friend,
JAMES O. PUTNAM.

My Dear Sir:--- I am in receipt of a copy of your "History of the Legal Tender paper money issued during the Great Rebellion," for which please accept my sincere acknowledgments.

The great financial achievement which this work so clearly and ably presents to the public mind, is the most wonderful known to the history of nations, and I but do you simple justice when I say, that, to your financial wisdom and skill the country is in a large degree indebted for its accomplishment.  It detracts nothing from the honor due to the brave officers and soldiers who rallied in defence of the Union and Constitution when in peril, and through whose courage and patriotism our national salvation was perfected, to say that like credit is due to the Stattsmen who grappled with the great financial problem on the floor of Congress, and solved it in law, so successfully that the Ways and Means for prosecuting the war, subduing the rebellion, restoring peace, and extending the blessings of freedom to all the people of this nation, were obtained without recourse to other agencies than the national faith.

Your able exposition of this question in the work before me ---a question upon which hung the national life--- entitles you to the gratitude of the American people.

I am, sir, with much respect,
Your ob't servant,
A.M. Clapp.

Dear Sir:--- Yours of the 24th April is received, as also the book for Mr. Harmon, for which please accept my thanks.  The Book shall have my careful attention.

The fact is I do not see how we could have got through with the late war, but for the Legal Tender Law.

We had no money, no credit at home or abroad.  The Tender Law was absolutely necessary to our continued existence.  No one has suffered by it, but all have gained.  The Treasury note law would have been a dead letter but for the legal tender act.

Yours, truly,
J.F.D. LANIER.

My Dear Sir:--- I am very much gratified that you should remember me with a copy of your book, "The Financial History of the War."  It does, indeed, supply a very important omission in all other histories of the war, and will become at once a book of reference.  It is also a monument to your own statesmanship in the darkest hour of our trial, of which you may well be proud, and to which you have a right to call the attention of your countrymen.

I am, truly yours,
H. L. DAWES.

The following facts relating to the currency of France are compiled from documents accessible to all the world:

1. The aggregate circulation of notes of the Bank of France, including "notes payable to order," was on September 11, 1873 ... 2,890,341,276 francs.

September 9, 1875. ... 2,361,819,283 francs.
Decrease. 528,424,993 francs.

2. Counting five francs as equal to one dollar, this is a contraction of $105,684,999 in twenty-four months.

3.  The notes of the Bank of France are the only paper money which circulates in France.  They are a legal tender, are paid and received as the equivalent of specie, and for a year or more have been as good as gold [silver, really].

4.  The maximum note circulation of the Bank of France was reached on October 31, 1873, when it was 3,071,000,000 francs, or $614,200,000.  The total on September 9, 1875, as above given, is equal $472,400,000, being a contraction of $141,800,000 in less than two years.

5.  This contraction is not accidental, like the trifling reduction which has taken place during ihe current year in our legal tender and bank note issues.  In the language of the inflationists, it is "forced."

6.  During the war and the payment of the indemnity, the French Government borrowed of the bank an immense sum in notes, for which it paid only one per cent. per annum interest, that rate being barely a sufficient compensation to the bank for manufacturing and handling the notes.

7.  For the past two years the French Government has been steadily paying its debt to the bank, preferring to fund its one per cent. loan into five per cent. rentes rather than encounter the risks of an inflated paper circulation.

8.  The total amount of this one per cent. war debt due from the government to the bank was, on

September 11, 1873. .... 1,374,052,500 francs
September 9, 1875. ..... 649,620,000 francs
decrease ..... 724,432,500 francs
equal to $144,886,500.

9.  By a recent treaty with the bank, the government engages to pay off the entire amount of this war debt by the end of the year 1879.

10.  The bank is pledged to resume the full payment of all its liabilities in coin on Jan. 1, 1878, by which time the government engages to reduce its war debt to $60,000,000.

11.  In the interval the policy of the bank is not "to make the volume of the currency equal to the wants of trade," but on the contrary, it has steadily contracted its advances to the mercantile community by maintaining a higher rate of discount than that ruling in the open market.  As a consequence of this policy the discounts of the bank have diminished as follows.  They were on

September 11, 1873. .... 948,569,253 francs.
September 9, 1875. ..... 505,834,586 francs.
Decrease. ....  442,734,667 francs.
Equal to. .... $88,546,933

12.  At the present time the rate of discount at the Bank of France is four per cent., while that at the Bank of England is only two, and the current rates in Paris outside of the bank are from 2½ to 3.3/8.

13.  In consequence of this double operation, i.e., the repayments of the government and of the private debtors, the circulation has diminished, as we have shown above, and the specie in possession of the bank has increased as follows: It was on

September 11, 1873. ..... 708,869,992 francs.
September 9, 1875. ......  1,618,943,228 francs.
Increase. ....  910,073,236 francs.
Equal to ..... $182,014,647.

The above summary embraces, we believe, all the important facts in relation to the changes which have been made in the paper circulation of France.
---[No, you did not.  You conveniently left out that in France silver is the unit of account and silver coins circulate in daily transactions.  In the United States, the so-called inflationists, want the same:  silver coins and treasury notes to be the only and exclusive circulating medium.
The French government does what Andrew Jackson and the Independent Treasury did: separated the fiscal affairs of the government from the notes of banks.  In the U.S. you call it tyranny, the joining of the purse and sword, a "first material mistake."
And in your suggested solution you do not recommend the following of the French example of independent treasury, silver coin, treasury note  ---you are merely promoting the elimination of United States notes, now that silver had been eliminated a year or so ago.]
Bold and energetic as the action of the bank has been, no injurious effects on trade are visible.  General business for two years past appears, in fact, to have been much better in France than it has been in either England, Germany, or the United States.
---[every one of these three countries suffers under the banking and currency system promoted by Spaulding !!!]
No candid man can extract from the conduct of the French Government and bank a particle of countenance for any of the quack money schemes which have been broached among us.  They have fixed a day for resumption, as we have done, but not without making provision for decreasing their paper and increasing their specie.  They have not aimed at a cheap currency, with the maximum of paper and the minimum of coin.  They have not confounded gold and government bonds together, and deluded themselves with the idea that there is no essential difference between the two.  The end to which the Bank of France is aiming is to make its notes at all times and under all circumstances convertible into specie [silver], and to accomplish that object they know that they cannot safely issue all the notes that the business community will absorb in times of confidence, nor do they trust to any other resources in time of difficulty than an ample stock of the precious metals in their vaults.  This, as we understand the matter, is the lesson taught by English, German, Dutch and French banking ---always to have on hand a full supply of the exportable precious metals in order to maintain the credit of the non-exportable promises to pay those metals.

Dear Sir:--- Your note of the 11th inst. was duly received, and the interesting volume prepared by you has since come to hand and been looked over, so far as I have been able to command the necessary time.  I hardly need say that I am greatly obliged for both, though I think I am in duty bound to assure you that, to those of us who care to watch the financial machinery of the country, nothing could be more opportune or interesting than your account of the steps by which we are able to make the industry of our people available, and carry on the war so much better than could be done by our foes, who lacked the sinews which you and your associates supplied.  Your book should have a wide circulation, and, after being read, many persons will realize, as now they do not, how much you had to contend with, and how fatal to our national life would less energy on your part have proved.

I have been more or less intimate with the finances of Massachusetts since 1840, as clerk in the Treasury and State Auditor, to which office I was appointed when it was created in 1849, and I can understand the work you did for us.  I should have been glad if our idolatrous worship of gold as a currency (not as money) had been less, and that it could have been seen that all we had to do was to create a debt or lay a tax, and that the most direct and, under the circumstanoes, perhaps the most equitable course, was to make the debt.

Free banking, with prompt, par, central convertibility of notes and checks, is what the country needs of all things;  having first, of course, an immediate return to the specie standard, or change from the debased or seventy-five cent dollar to one worth one hundred, providing that all contracts now existing and payable in the degraded currency shall be paid in that when due, or in an equivalent of the other, so that there shall be no real change in the relation between parties, as there was when we abandoned specie and substituted paper, with the idea that legislation could affix or determine its value.

If interest had been provided for on the legal tenders, and the notes taken and paid as currency for all purposes, and convertible always into long bonds with gold interest, there would have been no real harm done.  At any rate, legislation could not have swindled the then creditors by depriving them in many cases of one-half the real value of their claims.  Legal tenders without interest were bad, while with interest they would have been doubly good.

Truly and respectfully yours,
DAVID WILDER.

Dear Sir:--- Your favor of the 25th instante is at hand, with pamphlet enclosed, which I have only time at the moment hastily to read.  I will give it a more careful perusal, and send you, as desired, such comment upon the subject as my familiarity with the early financial events of the war may suggest.  I fully agree with you that ihe two great errors of Secretary Chase were, first, his refusal to use the instruments and expedients that the experience of commercial nations has made necessary for banks in distributing the money which our associated banks loaned the government.  Second, that he assented to the suggestion of the brokers, whom he afterwards employed to sell the government bonds, by divorcing the currency debt from the funded debt, so that the former could no longer be converted into the latter, and was therefore left to indefinite deterioration.  This was a clever device to facilitate the sale of bonds, but a fatal one to the currency.  I do not believe it possible to restore specie payments otherwise than by re-enacting this funding power and cancelling every note thus exchanged.  But the public feeling of obligation has become so weakened that a rate of interest will be insisted upon too low to accomplish the object.

Yours truly,
GEO. S. COE.

Dear Sir:--- I am in receipt of advanced sheets containing the introduction to the second edition of your valuable work on "The Financial History of the War," for which attention please accept my best thanks.  The second edition, and especially the introduction to it, appears before the public very appropriately at this time, when the currency question is rapidly assuming national importance.

I have read the introduction twice over, and have to say "it is all gold and no dross."  It makes entirely clear who was responsible for the financial policy of the government which led to an over issue of irredeemable paper money, which produced the fathomless abyss in which the country is now floundering.  In 1869, I pointed out in the columns of the New York Herald this erroneous policy;  but I was then, and so remained, until I received your new introduction, quite in the dark as to the originators of that policy and the exact modus operandi by which it was worked out to its fatal results on our whole financial and commercial system.  This introduction, I repeat, comes most acceptably at this time, and adds materially to the interest of your "Financial History."

On the principles of paper money or currency proper, we entirely agree, as indeed all students of political economy must ---those principles being established by scientific and analytical reasoning.  If there is any room for difference, it may possibly be found in devising the safest and best method for the issue and regulation of such money.  It now more than ever seems to me to be desirable that we should adopt the English and French systems of withdrawing the power from the banking corporations to issue currency notes, and lodge the same in the hands of a department of the government, so constituted that, like the supreme bench, the whole monetary system of the country may be, so far as possible, removed from the vortex of party politics.  Professor Price, in his Oxford lectures, characterizes the issue department of the Bank of England as "a government department carried on on the premises of the bank."  I would not place any bank in that responsible position.

The question, in my judgment, should now be permanently settled by a constitional amendment, leaving no option to Congress but to pass laws in conformity with its provisions;  and one should be, that no more paper money shall at any time be issued than can be maintained at par with gold.  There is no other method, as yet known, whereby the amount of such money necessary to meet the requirements of business can be determined.  It is the simple natural law of supply and demand, the indications of which are always clear and easily understood by those issuing circulating notes.  Under such a system the legal tender character of government notes may be dispensed with, and our national paper, like our gold, will pass everywhere on a par with each other.  Excuse this digression, and believe me to remain,

Very truly yours,
H. BOWLBY WILLSON.

I have received and read with great pleasure the preface to your new edition of "The History of the Legal Tender Act."  Your work will not only do good at present, but it will remain as an historical authority on the subject, and cannot fail to be an important contribution to the reliable records of our recent war.  It will also put in a compact and accessible form the most forcible arguments for a return to specie payments.  I doubt if you know how much good and effective results your work is doing, and I hope that you will continue to make new editions ---at least until we shall have a resumption of specie payments.

I wish to call your attention to a fact that it is possible may not have been brought to your notice.  In the case of Rosvelt vs. Meyer, 1 Wallace, 512, involving the constitutionality of the legal tender, a motion to dismiss was granted;  and in the case of Trefilcock vs. Wilson. 12 Wallace, 687, involving the same question.  The case of Rosevelt vs. Meyer was fairly and squarely submitted.  Now, have you ever reflected what would have been the decision in the case of Rosevelt vs. Meyer, in the winter of 1864, if the case had not been dismissed ?  If you will examine the list of judges, you will see that seven members of the court would have voted against the constitutionality of the law.  I suppose the case was undoubtedly dismissed for political reasons, and not on law grounds.  Mr. Chase was still Secretary of the Treasury, and the war progressing, and an adverse decision would have entailed great financial disturbance while we were confronting the enemy.  Mr. Roelker, the counsel of Mr. Meyer, has told me that Mr. Chase was very anxious that the case should not be decided on its merits, and that it should be dismissed.  It is probable, considering the later overruling of the dismissal, that the dismissal was a judicial dodge.  The court quite probably, therefore, has been once manipulated and once packed on the legal tender question.  It seems to me that in some of your future editions of your work it would be well to insert in full the conflicting decisions of Rosevelt vs.  Meyer and of Trefilcock vs.  Wilson.  These decisions are very instructive, and will show to those who hereafter come upon the political stage not only what Congress will do in great national emergencies, but also what the highest court will do in such emergencies.  I do not mean by this language to condemn either Congress or the judiciary, because I have always said that if it was absolutely necessary to save the country to violate the constitution, I would not hesitate to violate the constitution.  The constitution was made for the country, and not the country for the constitution;  and the absolute safety of the country must therefore be paramount to the constitution.  Still, I think it best to give posterity all the facts, and I think you can with propriety say that your only hope is that future generations, in a like great emergency, will only act as wisely, discreetly, magnanimously and patriotically as the people in your generation have acted against the great slave rebellion.  Yours very respectfully,

ISAAC SHERMAN.

My Dear Sir:--- I have received your note of the 25th inst, and also the volume you were so kind as to send me.  "Truth is stronger than fiction," and the "History of the Legal Tender Paper Money used during the Great Rebellion," and the results are more interesting and wonderful than any work of fiction.

You have done yourself great honor by your services as a financial general during the rebellion, and in the preparation of this little volume you have furnished a most convenient record of the sayings and acts of those servants of the people whose duty it was to supply the means with which to protect and finally save the country.  Please accept my thanks for the volume, and believe me, Very truly yours,

JNO. JAY KNOX.

My Dear Sir:--- On my return from a short visit to the eastern portion of our state, I found your letter of the 21st of July, and the book referred to therein.  I have not yet had time to examine the history, but, from your close connection with the financial events of the war, I have no doubt of its correctness and value.  As a participator in those events, I am able to testify to the want of comprehension of all previous writers upon the subject.  You were entirely able to fill the void, and I have no doubt you have done so.  Please accept my thanks, and believe me,

Truly yours,
W. Pitt FESSENDEN.

Dear Sir:--- Your letter, with "Financial History of the War," came duly to hand.  Please accept my thanks for the work.  It is really an invaluable portion of the great history of the great struggle for national life.  Your opportunities for knowledge of the subject being of the finest character, posterity, as well as the present age, must owe you a debt of gratitude for this timely service in fixing in permanent form a clear and concise statement of all the facts.  The conduct of our finances and the struggle in the field are equally creditable and memorable, and must be forever linked inseparably together as exhibitions of the energy and genius of our race.

Yours truly,
JOHN COBURN.

Dear Sir:--- If the truths in your letter could have been placed before the public at an earlier day, in the clear and forcible manner in which you have stated them, I think they would have so influenced public sentiment that we should have been spared a portion of the mischief resulting from present inflation.  Mr. Chase has done well.  I hope his great success will not render him indifferent to wise counsel.  I thank you for sending me the letter, and am, Very truly, your obedient servant,

A.R. ENO.

Dear Sir:--- Accept my hearty thanks for the advanced sheets of the "Introduction" to a further publication of your "Financial History of the War of the Rebellion."  I am glad that you contemplate the issuing of a new edition of a work, for the prepartion of which you are fitted above all other men.  Your position as Chairman of the Sub-committee of Ways and Means of the House of Representatives, at the time the legal tender act was passed, placed you in possession of facts which, from the nature of the case, others could not know.

The Thirty-seventh Congress was one of the most statesmanlike and patriotic bodies which ever assembled in this or any other country.  It promptly apprehended the magnitude of the questions before it, and to the utmost of its ability met them in the most efficient manner.  It was, perhaps, the greatest calamity of the war that the financial policy established by that Congress was not cordially seconded and continued by successors and by the head of the Treasury Deparment.

Mr. Chase was pressed for that position because of the regard of the people for his high personal reputation.  He had been an original free-soiler, and had won the favor of the men of advanced views upon that subject.  He had been originally chosen to the United States Senate by Democratic votes on the supposition that his views on financial and analagous questions were acceptable to the Democratic party as it was then constituted.  He was a conspicuous candidate for the presidential nomination in 1860, and, in the estimation of many, presented the ideal of an American statesman.

Upon the election of Mr. Lincoln, it was the demand of Mr. Chase's friends that he should occupy a leading position in the cabinet.  The President-elect was himself disposed to comply with this desire.  At the request of Mr. Horace Greeley, I accompanied him on a visit to Mr. Lincoln, to urge that Mr. Chase should receive the portfolio of the Treasury.  We had been led to believe that another choice had been made for this all-important position.  We represented to Mr. Lincoln that a struggle was imminent which would be decided in favor of the party whose resources held out the longest, and accordingly that a minister of finance was required who would command, in the highest degree, the public confidence.  Mr. Chase, as we believed, possessed that confidence as no other man did whose name was under consideration.

The day following this interview I received a note from Greeley, informing me that Mr. Chase had declined the offer of the Treasury Department.  I lost no time in calling upon him at his hotel.  Mr. Chase pleaded that his education and habits had not fitted him for the duties of the place;  and, he added, with his accustomed courtesy, that if he had had an education like my own, he would feel less distrust of his qualifications for the office.  His appropriate sphere he believed to be the Senate, to which he had just been chosen for the full term of six years.  In response, I assured him that his friends regarded it as his duty to accept the Secretaryship of the Treasury;  and furthermore, that he could at all times count upon the support of every patriotic man whose services he might desire to command.  Mr. Chase finally said, substantially, that he would be guided by the convictions of his friends.

A few days subsequently on my return to New York, I took the liberty to suggest to him the advisability of inviting proposals for what remained of the twenty-five million loan which had been authorized in the closing days of Mr. Buchanan's administration.  At his invitation I visited Washington, but I found him disinclined to offer the loan except upon terms which I felt confident could not then be obtained.  It was apparent that he had thus early become a convert to the so-called paper policy.  Finding it of no use to argue the point, I made no further attempt to influence his views.  It was an acute disappointment that the man whom we had regarded as the strongest supporter of a stable financial system, had so utterly abandoned that idea.  If he had depended on loans properly secured by taxation, and had placed his reliance upon the patriotism of the country, it is my belief that the credit of the nation would have been maintained upon a permanent foundation, and the depreciation of our currency would have been, in a great measure, obviated.  The machinery of our banks was at his disposal, and never had a more generous disposition been shown by the monied interest of any country to support the measures of a financial minister.

The two loan acts passed at the extra session of the Thirty-seventh Congress provided for the modification of the sub-treasury law, for the express purpose of enabling the Secretary to avail himself of these facilities.  But he refused to accept them, and persisted in demanding that the banks should pay in coin the amount of the loans for which they had subscribed.  The effect was most disastrous.  He thus destroyed, almost at a blow, the basis of bank credits, and forced a suspension of specie payments.  The gold which had constituted the basis of banking transactions was absorbed by the Treasury, to be paid out to contractors, and immediately to be hoarded where it could no longer be useful in business or for the public exigencies.  Mr. Chase might have avoided this, but he saw fit to precipitate the disaster.  To do this in a period of national calamity, I shall always regard as an act of most extraordinary infatuation.

Immediately after the failure of the banks, the bill was introduced by yourself authorizing the issue of United States notes to circulate as currency, and providing for the funding of them in six per cent. bonds.  Your plea was that of necessity.  I did not share your views.  Accordingly, I opposed in debate the proposition to issue a legal tender paper currency which the framers of the constitution had wisely intended to inhibit.  At the same time, I am free to admit, that the accompanying provision to fund these paper promises promptly in the bonds of the United States was a measure of redemption which could not, under the circumstances, be too highly commended.  At this moment it presents the only means possible for an early and safe return to specie payments.  Had it been consistently adhered to, it would have brought the country to that point before the present administration came into power.

But unhappily, a Congress succeeded to the thirty-seventh which was not controlled by the high moral considerations, and which did not possess the capacity of its predecessor.  Loose views of financial integrity were entertained.  The Secretary of the Treasury found the majority were pliable to his purposes.  At his demand legislation was had abrogating the provision for the conversion of the legal tender notes into bonds and also empowering him to issue other evidences of debt at his discretion.  A power so tremendous has seldom, if ever before, been lodged in the hands of a minister.  I am constrained to say that it was exercised almost wantonly.  The credit of the nation was depreciated to the verge of bankruptcy.  A five per cent. loan was placed on the market;  compound interest notes and other ephemeral devices were resorted to in order to shore up the stupendous financial fabric which seemed to be tottering to its fall.  I counted the different varieties of paper which were emitted until, if my memory serves me right, the number reached thirty-three, when I gave up in despair.

The instinct of the people was wiser than the subtlety of the men who assumed to guide it.  Mr. Lincoln was placed a second time in the field for President, while Mr. Chase was compelled to yield to the storm which he had created and retire from the Treasury.  To the errors of his three years of office the country is indebted for the needless augumentation of the public debt by the sum of at least one thousand million dollars.  But perhaps a still greater evil was the repudiation, by an obsequious majority in Congress, of the national faith which had been pledged to the holders of the legal tender notes.  By section I of the act approved February 25, 1862, it is provided that "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 the bonds of the United States," etc.  This provision, which was endorsed upon every note issued, was repealed in a manner which I must characterize as clandestine.  Henceforth the notes were irredeemable, and in that form they sunk from one depth of degradation to another, until they were worth but one-third of their face value.  The moral sense of the community was also debased until it became as low as that of the government.

Under the ensuing administration an ability and integrity of purpose was displayed by the Secretary of the Treasury, the Hon. Hugh McCulluch, which, had he been properly seconded by Congress, might still have retrieved the national faith.  But a career of jobbery had now been entered upon.  Partisanship superseded the dictates of national honor.  This chapter of our history will be perused by Americans in the future only with emotions of shame.

The appointment of Mr. Boutwell to the Treasury Department was a concession to the spirit of the times.  Under his administration of the public finances, the currency, which had been legalized only as a war measure outside and beyond the constitution, was still further expanded, although peace had been restored and its original purpose had been accomplished.

It is an encouraging omen that the public mind has at length become aroused to the importance of restoring the constitutional currency.  Wherever elections have been held, the people, in disregard of partisan considerations, have voted against any further inflation of the currency.  I devoutly trust that the good work will go on until the great wrong which has been inflicted upon the industry of the nation shall be righted.  You will, I trust, pardon me for saying in conclusion that the first requisite for the accomplishment of this desirable end is a radical change in the administration of the government.  Faithfully yours,

F.A. CONKLING.

Hon. Samuel Cox having made a good speech in the House in opposition to inflation and repudiation, Mr. Spaulding addressed him a letter on the subject.  The following is an extract from Mr. Cox's letter in reply:

"You see I have refreshed myself at your fountain.  I am happy that the opportunity occurred to hit repudiation between the eyes.  We are all on our side so entirely powerless we cannot but challenge the Republicans to do something in the coin line.  I will never cease to remind them of your pledges and the plighted faith of Congress.  As if a debt in the people's pockets was not as honorable an obligation, and more so, than any other !

Y ours truly,
December 24, 1869.
Samuel S. COX.

Dear Sir:--- Your valued favor of the 17th instant was duly received, together with the volume on the "Financial History of the War," for which I am much obliged.  It is an interesting and valuable work.  I can say this without having progressed very far in the reading of it.  I shall take it up and finish it at my leisure.

I was, from the first, in favor of the "legal tender" act, of which you were so largely the author, believing it to be a necessity.  I have not seen any reason to change my mind with the progress of events.  But the war being over, I confess to a good deal of disappointment to find how great and how general is the unwillingness of the people at large to return to a sound currency.  The patriotism that carried the North through the war seems to be exhausted, and demoralization to have taken its place.  Some few there are in favor of returning to specie payments, professedly, but if any plan is suggested looking to contraction as a means to this end, it will be found to have no friends.

If we cannot have existing evils remedied in any other way, I hope the Supreme Court of the United States will find that while the law making United States notes a "legal tender" was "necessary and proper" during the war, it is neither constitutional or right, now that the war and the necessity have passed away.  Certainly this view should apply to any further issue.  Unless we get relief in this way, I despair of any that does not come by the severe discipline that follows wrong doing. * * * I remain, dear sir,

Most respectfully yours,
A.A. LOW.

My Dear Sir:--- I thank you very heartily for the copy of the "Financial History," which I recognize as a valuable contribution toward the elucidation and final solution of our great financial problem.  I have so often heard your views referred to by my brother and his partner, Mr. Robinson, that I am eager to have the opportunity of personal conference with you on what I regard as the crucial question this administration has to meet, viz., the return to specie payments, and a currency with a real and fixed value.

To turn our faces at once, and like a flint, in the direction of resumption, I hold to be our cardinal duty.  The rapidity, of the movement is of less consequence, the danger being rather that we should go too fast when once started.

I am rejoiced that the country is to continue to have the benefit of your experienced counsels, and trust it may not be long till I shall have the opportunity of discussing these matters with you in person.

Very respectfully and truly, your obedient servant,
J.D. COX.

My Dear Sir:--- I have received and read with interest your "Introduction" to the second edition of your "Financial History of the War."  It is able, impartial and timely, and, like the original work, reflects great credit upon the author.  I hope it is destined to exert all the influence in the settlement of the grave questions pending that its merits so well deserve.  If you differed from me at the inception of some of these financial measures, we do not differ now, and I am glad you find leisure and feel it to be your duty to still render services to your country.

Very sincerely yours,
JUSTIN S. MORRILL.

MyDear Sir:--- With your letter I duly received the advance sheets of your "Introduction" to a further edition of the "History of the Legal Tender Act," for which please accept thanks.

I have carefully read your statement of facts, and they fully accord with my memory regarding them.  Your volume will be an exceedingly valuable acquisition to the financial histories of the world.  Since the close of the rebellion there has been no well defined financial policy leading us in the direction of specie payments, and to this failure on the part of the government we may attribute the downfall in the panic of 1873 of the "paper structure" we had reared, and the subsequent paralysis of the mercantile and industrial interests of the nation.  There can be no permanent prosperity to our country until we are restored to a sound basis for our transactions.  With kind regards,

Yours very truly,
JOHN J. CISCO.

Dear Sir:--- Your favor of the 25th ultimo came duly to hand, in which you ask me to give my personal recollection in full of the circumstances connected with the early part of the financial history of the war.

After the accession of Mr. Lincoln to the Presidency, the securities of the government became difficult of sale, and they declined to such an extent that for the week ending June 24, 1861, the following quotations were published:

U.S. Bonds, 1881 (coupon), 6 per cent. ... 83¾ ... 83¾
U.S. Treasury notes, 12 per cent. int. ... 101¾ ... 102
U.S. Treasury notes, 11% ... 101 ... 101¼
U.S. Treasury notes, 10¾% ... 100¼

Zealous exertions had been made by carefully-organized committees of the New York Chamber of Commerce, the month before, to obtain subscriptions to government loans by sending circulars throughout the Northern States, in which citizens, public officers, banks, and other institutions, were solicited to act as voluntary agents. But the aggregate secured was inconsiderable, and utterly failed of the amount required for pressing necessity.  The great conflict was rising daily into more appalling magnitude.  Moneyed capital, with instinctive timidity, buttoned tightly its pockets, and shrank from the danger.

Fortunately, the commercial conditions of the Northern States were altogether favorable.  The panic of 1857 had been followed by three or four years of great productiveness and economy, which had so turned international exchanges in favor of this country that larger balances in coin than ever before had, during 1860 and 1861, been imported from Europe.  The banks in New York alone holding the unprecedented amount of fifty millions, equal in August, 1861, to about fifty per cent. of their liabilities, while the apprehension of war had produced a general curtailment of credit throughout the Northern States.

After the disastrous battle of Bull Run, and when Washington was closely beleaguered, and the avenue thence to New York through Baltimore was intercepted by the enemy, Mr. Chase, then Secretary of the Treasury, came to this city via Annapolis, and immediately invited all persons in this community who were supposed to possess or to control capital to meet him on the evening of August 9th, at the house of John J. Cisco, Esq., then Assistant Treasurer of the United States in New York.  This invitation drew together a large number of gentlemen of various occupations and circumstances.  During the discussion which ensued, I suggested the practicability of uniting the banks of the North by some organization that would combine them into an efficient and inseparable body, for the purpose of advancing the capital of the country upon government bonds in large amounts, and through their clearing-house facilities and other well-known expedients, to distribute them in smaller sums among the people in a manner that would secure active co-operation among the members in this special work, while in all other respects each bank could pursue its independent business.  This suggestion met the hearty approbation of the assembled company, and arrested the earnest attention of the Secretary.  At his request it was presented to the consideration of the banks at a meeting called for that purpose at the American Exchange Bank on the following day, and was so far entertained as to secure the appointment of a committee of ten bank officers, to give it form and coherence.  The committee convened at the Bank of Commerce, whose officers zealously united in the effort, and a plan was reported unanimously.  It may be found, with the names of the committee, in the Bankers' Magazine of September, 1861.  Their report was cordially accepted and adopted by the banks in New York, those in Boston and Philadelphia being represented at the meeting and as zealously and cordially united in the organization.  It was greatly desired to include also the banks of the West, but it was found impracticable to secure the co-operation of the state banks of Ohio and Indiana, and the state banks of Missouri, the only other organization under a compacted system, were surrounded by combatants.

It was at once unanimously agreed that the associated banks of the three cities would take fifty millions of 7.30 notes at par, with the privilege of an additional fifty millions in sixty days, and a further amount of fifty millions in sixty days more, making one hundred and fifty millions in all, and offer them for sale to the people of the country at the same price, without change.  In this great undertaking the banks of New York assumed more than their relative proportion.  To ensure full co-operation and success, the expedient of issuing clearing-house certificates, and of appropriating and averaging all the coin in the various banks as a common fund, which had been invented but the year before, was applied to this special object with good effect.

So vast a responsibility, involving figures of such magnitude, had never before been attempted in this country, and the assumption of it with such promptitude was without precedent in history.

The capitals of the banks thus associated made an aggregate of one hundred and twenty millions, an amount, greater than the Bank of England and the Bank of France combined, each of which institutions had been found sufficient for the gigantic struggles of those great nations, from time to time, in conflict with all Europe.  And this combination, made up of distinct and independent corporations, while it possessed all needed capacity for government work, was free from the objections made to one great financial institution.  The following figures also show that its financial condition was one of great strength:

Liabilities ...... Circulation .... Assets in coin
Banks in New York .... $92,046,308 ... $8,521,426 .... $49,733,999
Banks in Boston .......... 18,252,061 .... 6,366,466 ........ 6,665,929
Banks in Philadelphia ....... 15,335,838 ..... 2.076,857 ........ 6,765,120
$125,617,207 ..... $16,964,749 .......................
$125,617,207 .......................
Total ......... $142,581,956 against $63,165,039 coin on hand, equal to 45 per cent. of all liabilities.

Surely, such conditions as these, with judicious administration, were adequate to the work which the country required. A great merit of this bank combination at that critical moment, when the life of the nation hung in the balance, consisted in the fact that it fully committed the hitherto hesitating moneyed capital of the North and East to the support of the government.  The bank officers and directors who thus counselled and consented were deeply sensible of the momentous responsibility which they assumed, but all doubt and hesitation were instantly removed, and perfect unanimity was secured by the question, "What if we do not unite!"  And, acting as guardians of a great trust exposed to imminent danger, they fearlessly elected the alternative best calculated to protect it.

The problem to be practically resolved by the Banks was this.  How can the available capital be best drawn from the people, and devoted to the support of Government, with the least disturbance to the country? and by what means can arms, clothing and subsistence for the army be best secured in exchange for Government credit ?  These were simply questions of domestic exchange, and most naturally suggested the use of the ordinary methods of Bank checks, deposits and transfers, that the experience of all civilized nations had found most efficient for the purpose, and that this should be accomplished by the Associated Banks, in a manner best calculated to prolong their useful agency, and to preserve the specie standard, it was indispensible that their coin reserves remain with the least possible change.  Accordingly it was at once proposed to the Secretary that he should suspend the operations of the Independent Treasury Act in respect to these transactions, and following the course of commercial business, that he should draw checks upon some one Bank in each city representing the Association, in small sums as required, in disbursing the money thus advanced.  By this means his checks would serve the purpose of a circulating medium, continually redeemed, and the exchanges of capital and industry would be best promoted.  This was the more important in a period of public agitation when the disbursement of these large sums exclusively in coin, rendered the reserves of the Banks all the more liable to be wasted by hoarding.  To the astonishment of the committee, Mr. Chase refused.  Notwithstanding the act of Congress of August 5th, which it seemed to us was passed for the very object then presented, but which he declared upon his authority as finance minister, and from his personal knowledge of its purpose, had no such meaning or intent.  This issue was discussed from time to time with much zeal, but always with the same result.  It was seen by the most experienced Bank officers to be vital to the success of their undertaking.  To draw from the Banks in coin the large sums involved in these loans, and to transfer them to the Treasury, thence to be widely scatter over the country at a moment when war had excited fear and distrust, was to be pulling out continually the foundations upon which the whole structure rested.  And inasmuch as this money was loaned to the Government, and was in no sense a trust reposed in the Banks, there appeared to them no reason why it should not be drawn by checks in favor of Government contractors and creditors, who would require to exchange them for other values in commerce and trade, through the processes of the clearing-house.  And this consideration was greatly strengthened by the fact that these advances were made and the money publicly disbursed, a long time before the Treasury Notes were ready for delivery to the Banks which had paid for them.  In the light which has since been shed upon the act of Congress referred to, it is evident that undue weight was given to the views of the Secretary, and that the Banks would have conferred an incalculable benefit upon the country, had they adhered inflexibly to their own opinions.  But the pressure of startling events required prompt decision, and the well known intelligence and patriotism of the Secretary, gave to his judgment overwhelming power.  It soon became manifest that in consenting to have their hands tied, and their most efficient powers restricted, while engaged in these great operations, and in allowing their coin reserves to be wasted, by pouring them out upon the community in a manner so unnecessary and exceptional, the Banks deprived themselves and the Government of the ability of long continuing, as they otherwise could have done, to negotiate the national loans upon a specie standard.

This first, great error, if it did not create a necessity for the legal tender notes, it certainly precipitated the adoption of that most unhappy expedient, and thereby committed the nation at an earlier day, to the most expensive of all methods of financiering.

One other subject of discussion between the Secretary and the Associated Banks at the same time arose, which led in the same direction.  Congress by its act of 17th July, had authorized loans to the amount of 250,000,000.  This could be issued either in bonds running twenty years at not over seven per cent. interest ---7.30 notes running three years, or 50,000,000 of the amount could, at the discretion of the Secretary, be made in currency notes payable on demand without interest.  As the undertaking of the Associated Banks covered 150,000,000 of this sum, and it was desired that they continue the work thus auspiciously begun, a question of the expediency of putting out the circulating notes was immediately raised by one of its members.  A very small amount had been emitted.  The Treasury was empty of coin to redeem them, and could only be replenished by the proceeds of the Bank loans.  It was evident to the Bank officers that they could not sustain coin payments, if the transfers from their vaults to that of the Treasury, were subject to be intercepted and absorbed by these notes of Government.  Nor could the Banks receive them upon deposit from the public as money, while they were responding to the Government and to their own dealers in coin.  It was an inflation of the currency in the form most embarrassing to the enterprise they had commenced.  Accordingly the Secretary was urgently solicited to refrain from exercising the discretionary powers given him of creating the Treasury currency, until all other means were exhausted.  In response to a resolution to that effect, the Secretary assured the Bank officers of his acquiescence in their suggestion, but at the same time insisted that it was improper for a public officer to openly pledge himself not to exercise a power conferred by the law.  With this understanding the Banks began their work, paying into the Treasury in coin one hundred and fifty millions in sums at the rate of about five millions at intervals of six days.  Even with all these unfavorable circumstances surrounding them, it was an encouraging fact observed by those who were anxiously watching the practical operation of this great and novel experiment, that while the circulating notes in tne country were restricted, the disbursements of the Government for the war, were so rapid, and the consequent internal trade movement was so intense, that the coin paid out upon each installment of the loan, came back to the Banks through the community, in about one week.  The natural effect of this general commercial activity upon the circulating medium, being simply to quicken its flow.

After taking the third amount of fifty millions by the Associated Banks, those in New York who had at that time paid in of their proportion over 80,000,000 in all, found themselves in this position.

Their aggregate coin, which on the 17th August, before the first payment into the Treasury,
was.  $49,733,990
in December 7th. .... 42,318,610
a reduction of only ...... $7,415,380
and the other two cities in like proportion.

In the meantime the 7.30 notes taken by the banks had been purchased by the people to the extent of some fifty millions, notwithstanding a prolonged and vexatious delay in issuing them by the Treasury Department.  The popular feeling was all that could have been desired for continuing that method of distribution.  It may be confidently affirmed that had the banks been permitted to exercise their own methods of exchanging the bonds for the varied products of industry required by the Government, they could have continued their advances in sums of fifty millions for an indefinite period, and until the available resources of the people had been all gathered in.  It is to be borne in mind that these resources were all existing at home, and that the increased industry which the war excited, was daily creating new means for investment.  It may be presumptuous to affirm that the legal tender notes could have been dispensed with altogether.  But it is safe to say that the causes which seemed to justify that act would have been long deferred to the saving of hundreds of millions to the country.

But at this time the demand notes were paid out freely by the Treasury, and began to appear as a cause of embarrassment among the banks who were pressed to receive them upon deposit, and while they could not decline them without diminishing public confidence in the Government credit, they could not give them currency without impairing their own specie strength.  In fact the notes became at once a substitute for coin withdrawn from circulation, and their emission expressed a purpose of resorting to Government paper issues to carry on the war.  So soon as these notes thus appeared the reflux of coin to the banks at once sensibly diminished.  During three weeks from the 7th December, the reserves of the banks in New York fell to $29,357,712;  a loss of thirteen millions within that short period, and on the 28th December, after conference with the Secretary, in which he still adhered to the views before expressed, it was decided as expedient for the banks to suspend specie payments.

At that moment the associated banks yet held over forty millions in coin, and it was still possible for them to continue their advances to the Government but for the two obstacles thus interposed.  Before entering into this last conference with the associated banks, some of the members expressed to the Secretary the importance of continuing his relation to an organization which combined so much of experience, capital and financial resource, and which was yet capable of rendering the Government invaluable service.  And that if an irredeemable paper currency was the inevitable resort, it would be more expedient and economical for the Government not to become involved in its dangers, but to impose the duty and responsibility of issuing the notes upon the banks, who would naturally be compelled to keep the day of redemption continually in view.  Thus, as a suspension of coin payment was about to be declared, it was practicable to preserve from distribution and set aside the forty millions of coin then owned by the banks, together with one hundred and fifty or sixty millions of Government bonds, which could be taken by them as a special security for two hundred millions of notes, which could then be immediately issued by the associated banks from their own plates, and be verified and made national by the stamp and signature of a government officer.  And that such an issue, so supported by coin and bonds, at once simple and expeditious, would serve the temporary purpose required, with little, if any, deterioration below coin value, and that it would be then practicable for the banks to continue without further agitation their advances.  But the Secretary declined to entertain this suggestion, preferring the system of national banks, which he had already conceived.

Looking back over events that have since transpired, it must be admitted that this suggestion possessed true merit.  It would have preserved a coin basis for the currency, prevented the destructive expansion, relieved the Government from its almost inextricable entanglement with the circulating notes, and compelled an early restoration of coin payments.  And with a proper use of the expedients and machinery of banks, by utilizing their power of effecting exchanges, which was subsequently applied by the Secretary in the national banking system without reserve, this amount would have been found sufficient.  When we review the excessive cost of the war, the vast increase of the national debt, and the public and private evils which a profuse currency have entailed upon the country, it must appear evident that in failing early to use and to exhaust all those means and appliances of commerce and banking that the experience of other civilized nations have proved most effective, a great and irreparable mistake was made.

One more good service the banks in New York were yet enabled to perform, which, although not great in amount, was most important in its effect upon the credit of the government.

On the first day of January, 1863, $8,000,000 of the national debt, issued in 1842, became due.  It was the first loan that matured after the passage of the legal tender act, and upon its prompt payment in coin, in which the debt was incurred, depended the reputation and credit of the United States at home and abroad, and its ability to make future loans upon favorable terms.  It was a momentous question whether the government would apply the new law to its own obligations, and thus establish a precedent for the future.  There was not sufficient money in the Treasury to pay the debt, and up to the latest hour the question was anxiously discussed in the departments at Washington, and almost decided, to plead inability and to fall back upon the legal enactment.  At this juncture Mr. Cisco, Assistant Treasurer in New York, to whose patriotic service and wisdom the nation is greatly indebted, zealously interposed his influence.  Upon his application to the banks there, they promptly furnished the requisite amount in gold, receiving his personal assurance that it should be repaid out of the revenue when received at his office, and thus the country was again saved from an irretrievable financial disaster.

The legal tender act was regarded by very many men of influence, from the beginning, as a foregone conclusion, and as a measure of inevitable necessity in war.  Great doubt was continually expressed whether this people would submit to the necessary taxation for war purposes, and whether the country would bear the strain of so gigantic a struggle if conducted upon principles of sound commercial economy.  However we may now honestly differ upon that subject, as we did then, it is certain that had the real temper of the nation been earlier felt by the government, it would have greatly modified and retarded the financial legislation of Congress, and the practical administration of the Treasury.  The people proved themselves to be thoroughly in earnest.  They needed no patronage to awaken the most heroic devotion, and to draw out the noblest sacrifices as well in private life as in the army.

It is more immediately practical to enquire what was the nature and effect of that important act ?

It was, in simple fact, an arbitrary and absolute decree of the government, that with an empty treasury, and in need of all things, its notes payable whenever able and without interest, should be accepted by the people as money.  The primary object was to secure material of war without present payment, and in order to effect this exchange it was necessary;  secondly, that the edict should empower those who first received the notes to enforce them as money in like manner upon others, and so to distribute the burthen throughout the community.

This forcible entry of the government into the private affairs of the people, so utterly at variance with the fundamental principles of our system, so great an abridgment of personal liberty, and operating as a tax so unequal in its effects, was a rigorous measure of war, and as such was vindicated only as a temporary act of dire necessity.  In enforcing this unequal burthen, Congress did not leave the holders of the notes without some measure of relief, but it gave to all the option of converting them at pleasure into a six per cent. gold-interest-bearing bond, payable in twenty years.  By this means, the notes became equal in value to the bonds for which they were made exchangeable, and while during the war the payments of gold interest continually operated to produce a curtailment of the volume of the notes in circulation, the return of peace opened a market abroad for the bonds, which would have ensured the early and entire absorption of the war currency, and thus cleared the way for specie payments.

But, in an evil hour for the country, other counsel obtained possession of the good judgment of the Secretary, and yielding to it, he consented and urged Congress to withdraw this privilege of converting the notes, so that thenceforth all issues were made without it.  All notes emitted consequently became an unmitigated burthen upon commerce of indefinite duration, from which there was no escape.  A new currency was created utterly at variance with all economic laws, and in conflict with all recognized rules of commerce and exchange.  It did not, like all sound currency, naturally spring out of industry, production and trade, but it was an enforced result of exhaustion and necessity.  It did not come and go, following the beneficent courses of commerce, expanding and contracting with the times and seasons that required it.  But it remained an unyielding, inflexible mass, subject only to the chances and vicissitudes of war.  As the war progressed and the country became poorer, this currency increased, giving new instruments and facilities to expend just in proportion as the means of payment were consumed.  With a compulsory currency thus made, the measure of prices and daily deteriorating yet still increasing, is it strange that all other property was eagerly sought for in preference to this, and that prodigal expenditure became the law of the land ?

In depriving the currency of its convertible privilege, it has been made perpetual.  Ten years of peace have elapsed and it yet remains.  Commerce did not originate and cannot absorb it.  There is no natural relation between the two, but they continue in their original antagonism.

I believe that the only practicable relief to the country must come from restoring this privilege.  Not of conversion into six per cent. bonds, but in those bearing such rate of interest ---say five per cent.--- as will induce holders to exchange them.  This simple measure, coupled with the repeal of the legal tender act for all future operations, will, in my judgment, open the way for the gradual and easy disposition of this unnatural currency ---will restore commerce to the operations of natural laws, give a new and healthy stimulus to industry and trade, and with a country as rich and productive as ours, we shall speedily return to general prosperity.  This is the last struggle of the war, and I believe that the whole country earnestly desire to meet and to finish it.

Very truly yours,
GEORGE S. COE.

My Dear Sir:--- Since I read your greenback history and introduction to the second edition, I have looked over copies of some of my letters of the war period.  I found one dated Oct. 4, 1861, to Secretary Chase which so coincides with your views that I have copied it and send it to you enclosed.  Do with it what you please, * * *

My Dear Sir:--- Many thanks for the kindly words to me, personally, in your letter of the 1st instant.  I only wish they were better deserved.

Will you permit me to add a few more plain words ---as you like frankness--- on this all engrossing subject ?  In the hope, not only that I may make myself more intelligible, but with the hope, also, (I confess,) of modifying your views.

A complete understanding of this subject is of quite as much importance to the Government as to the banks.  Indeed, as you substantially suggested, our interests in this matter are identical.  Whatever strengthens the banks' vaults, increases public confidence in them, and in their ability to carry the Government through.  While an increase in the Sub-Treasury's coin weakens us and the Government too.  For the public, the people understand that you rely on us.  Herein is a mutual interest, then, which I propose to speak of plainly, directly and respectfully.

You give as a reason for not drawing your checks on the "Loan Banks," that, "however, harmless or beneficial it might be, if confined to the New York banks, it would inevitably result in a general payment and receipt for public dues of bank notes, which in turn would lead to expansion, which in turn would terminate in suspension and vast injuries to the sound banks."

1st. I confess this dark array of disastrous consequences has a black face on it. But as neither of us is afraid to look into faces of that color, let us try and see what lies beneath.

The law authorizes you to select specie paying banks.  Suppose you designate, as such, only banks in New York, Philadelphia and Boston, as "Loan Banks" to draw upon.  You are thus relieved from any necessity of looking at what might be the consequences if you were to draw on other or less responsible banks.  This narrows the question down to those three cities in which the banks have made common cause with you, and they guarantee each other for the fulfilment of their contract with you.  The banks in all these cities are as sound as the banks in either city.

2d. What you seem to regard as a dangerous element, the bank officers look upon as essential to their safety. What you think would guard against suspension of specie payments, they think most likely to precipitate that demoralizing calamity.  What you claim for the Sub-Treasury, they ask for the banks ---the disbursement of all United States funds !  While you regard the payment of public dues in bank notes, convertible at the pleasure of the holder into coin, as an evil to be avoided, they hold it to be as convenient and safe a mode of discharging public obligations as it is private debts.  While you speculate as to what is best for sound banks, they think, with their practical experience, they know what is best for their institutions.  And inasmuch as the law was made to give the banks this advantage, they feel they have a right to demand it.

3d.  Their general reasons for these conclusions are that Congress meant something, (it is but fair to suppose) when they passed the act of August 5th, 1861, suspending so far the Sub-Treasury Act as to allow you to do what we ask, namely, draw on the loan banks.  You will remember you agreed, so far as it was in your power, to conform your operations in this regard to our wishes.  That was the result of our understanding with you as taken down after you left us on Saturday, from the lips of each of the bank officers composing the committee, who heard all you said and noticed your earnest manner.  For myself, I was instructed not to agree to take our share of the second fifty millions unless the Government would so far agree to help us as to draw on the banks that furnished the money.  This feeling arose, not so much from a desire to derive any petty gain of time or interest by this mode, as it did from a wish to adopt a method which would enable the banks to carry through, without ruin to themselves, this unprecedented loan to the Government.  In point of magnitude without a precedent, I believe, in any country.

4th.  You can now, perhaps, better than before, enter into our feelings and understand our surprise that you should not take our judgment in this matter, but rather argue on the supposition that we do not understand the legitimate operations of our own business so well as you do.  This happens, too, under circumstances very peculiar.  But for the banks the Government could not pay at all! It would have been bankrupt six weeks ago.  Surely, my dear sir, this is no time for splitting hairs, or for you to tell bank officers ---(impliedly, it is true,) that they don't understand what dangers they propose to encounter.  Nor is it a time for you to refuse what they ask merely on an abstract theory of yours as to what might happen.  If, on the other hand, you should persist in the course you indicate, is there not danger that you will create the very evil we all desire to avoid, namely, a suspension of specie payments ?

5th.  As to the two-years' treasury notes, I am more and more of the opinion that you have no legal right to take them of the people at large, whether our treasury note committee requests you to take them or not to take them, it is all the same, in my opinion, as to your duty.  The associated banks paid you a consideration for taking these notes out of their vaults, and you contracted to do so.  They pay you in another loan of fifty millions.  If the public or a foreign country had loaned you fifty millions on similar terms, you would have been justified, no doubt, by Congress in making a law unto yourself predicated on public necessity.  But no such loan has been made, either by the public or by Europe.

Already the brokers are telling us that they shall pass in the two-years' notes, which they have bought at a discount, take out the 7-30 notes and sell them on the street at a discount, which they can, and make a profit ---thus commanding the market.  This is the first disastrous demonstration, but, I fear, by no means the last.

The case plainly stated looks unsightly.  You hire money at 7.30 to pay obligations bearing only 6 per cent. interest not due for a year and a half, when you need that very money to maintain your existence, and when, as I sincerely believe, you are under no moral or legal obligation to pay a dollar, but on the contrary, are bound not to pay without the sanction of Congress.

One word and I have done.  You will remember that you said to us in the committee, "I am so desirous of meeting your views that I would almost place myself in the hands of this Treasury Note Committee, to do as they should say, confident they would not ask of me anything illegal or improper."  This, sir, induced me to move the taking of the second fifty millions.

I am, most respectfully and very truly yours,
J.E. WILLIAMS.

My Dear Sir:--- I thank you for your introductory pamphlet, which comes at a most opportune moment, and will be of great assistance in enlightening the public mind and in forming a sound opinion.

With great regard, very truly yours,
GEORGE WILLIAM CURTISS.

Dear Sir:--- Accept my thanks for the copy you were kind enough to send me of your instructive and interesting "History of the Legal Tender Paper Money Issued During the Great Rebellion."  I there find, within a narrow compass, admirably arranged, all that need be studied on the subject;  and in connnection with what is purely historical, may also be found thoughts and suggestions on questions of finance worthy of deep attention.  The extent to which the book may be circulated will be the measure of its usefulness.

Very truly yours,
E.H. STOUGHTON.

Dear Sir:--- I thank you for the "Introduction" to the new edition of your "Financial History of the War."  The work will always form an interesting chapter in the history of our great struggle, and it ought now especially to attract attention when the effort is being made to perpetuate the error of abolishing money, which, in effect, abolishes property, and which your book shows was only consented to amid the excitement of war, and in the belief that it was necessary to maintain the Union.

I did not concur in the measure even then, and still think it only aggravated the evils it was intended to meet, and added, as General Dix estimates, at least $1,000,000,000 to our debt.  Is there anything more susprising than that now, more than ten years after the war, after the man who, as Secretary of the Treasury, recommended the measure, has, as Chief Justice, pronounced it not only unconstitutional, but a blunder, and as having impaired instead of aiding our credit;  and when the great body of those who then supported it to aid the government have abandoned it, that a portion of those who then opposed the war, and opposed this and all other measures adopted to carry it on, and denounced it as unconstitutional, should now seek to make permanent this disastrous policy ?  The fact that the Supreme Court validates only the legal tenders issued during the war, to which you call attention, shows, however, that there need be no fear of that, and that the court will soon put down the fraud even if the people would tolerate it, of which I have no fear.

Yours truly,
MONTGOMERY BLAIR.

Senator Isaac P. Christiancy, of Michigan, in his letter to the Hard-money Convention, in Detroit, said:  "Now, I am so old, fogy in my notions and opinions as to hold that, when an individual or nation is deeply in debt, the true and only honest way of getting rid of that burden is the plain, old-fashioned way of paying the debt in money where it was agreed to be paid in money, or in something of equal value and convertible into money;  and if we cannot pay the whole at once, or when due, then to pay the interest in the meantime, and the debt as fast as we can.  If we have not the money to pay with, then the better plan is to go to work in any and every form of productive industries, producing values which will command the money, rather than to adopt the plan substantially followed by a large proportion of our people of speculating out of each other in purely fictitious values, like two boys who shut themselves up in the same room for a week, and both got rich, or fancied they had got rich, by trading and retrading jackets with certain offers of boot money each way, which neither ever intended to pay.

Mv Dear Sir:--- I have read just enough of the "Financial History of the War," this morning, which you have very kindly sent to me, to be much interested therein.  As a history it is invaluable, showing as it does, in the clearest possible manner, how the means were obtained for prosecuting the war which finally saved the Union.  I feel under great obligations to you for preparing this valuable and concise narrative.

I am, dear sir,
Very truly yours,
E.D. MORGAN.

Hon. E.G. Spaulding, of Buffalo, who was a member of the Committee of Ways and Means of the House of Representatives at the time of the passage of the legal tender act, as well as of the sub-committee which had especial charge of that subject, has written a "History of the Legal Tender Paper Money Issued During the Great Rebellion."  This has just been published in the form of a neat octavo volume of two hundred and thirteen pages, and constitutes one of the most valuable contributions to the history of the late struggle for the preservation of the Union.  It presents copious extracts from the speeches of members of both Houses of Congress for and against the bill, and is a complete compendium of the views which then prevailed on both sides of the question, as well as a faithful record of the circumstances under which the measure was resorted to.  The moment when the nation was engaged in a struggle which taxed its utmost energies and resources, was certainly not the time for that elaborate consideration necessary to the development of the most desirable system of finance.  Action, prompt, decisive, and practical, was what the crisis demanded; and while it cannot be denied that the issue of a legal tender paper money unsettled values, and thus occasioned more or less injustice among the people in their settlements with each other, besides increasing the expenses of the war through the general rise in prices of all commodities, it is equally undeniable that it was a most efficient instrument in the hands of the government in enabling it to meet the exigencies of the time, and in bringing the war to a successful termination.  It is not as an advocate of a particular plan of finance, however, but as its historian, that Mr. Spaulding appears before the public, and in this light his book is of incalculable value.  Its strict accuracy is endorsed by the most prominent of the members of both houses of Congress who aided or opposed the measure whose history he relates, and participated in the discussions by which it was preceded.  The experience of that time contains invaluable instruction for our future guidance, and even the mistakes committed may be converted into benefits by turning to profitable account the lessons which they afford.  This instruction, and these lessons, Mr. Spaulding has placed before us in the most compendious form possible, and no statesman, business man, or student of finance ---indeed, we might almost say no citizen--- can afford to be without his book.

My Dear Sir:--- I am indebted to your polite attention for an advance sheet of your "Introduction" to the second edition of that more than excellent "Financial History of the War," which emanated from your pen some years since.  I read that effort, soon after it made its appearance, with more than ordinary pleasure and profit, and now have just completed the perusal of your introductory to the forthcoming edition.

It is but the part of candor that I should here express the opinion that your criticisms relating to the management of our national finances during the period that has intervened since the commencement of the war to crush rebellion occurred, are but merited and just.  That war found the nation with an empty treasury, and an imperious necessity for the ways and means to enlist, equip, pay and sustain an army of sufficient force to maintain the National Union from overthrow.  That was a trying and fearful crisis, but the ingenuity of statesmanship proved adequate to the emergency.  The nation had neither gold nor silver nor paper currency with which to meet the wants of that important and critical period, and hence the national faith was pledged in bonds and paper money to an extent that met the demands of a protracted and expensive struggle.  That achievement was without parallel in the history of nations, and reflected great credit upon the wisdom of our statesmanship and the patriotism of our people.

To you, sir, as much as to any other statesman of that period, is the nation indebted for a financial policy that bore it through the war successfully.  I apprehend that the second edition of your "Financial History of the War" is superinduced by an effort now being made to inflate our paper currency and postpone the day of its redemption in gold and silver.  This movement may be regarded as of serious import.  It seems, indeed, incredible that any considerable number of citizens should make an assault upon the national faith and credit by placing our currency beyond the hope of immediate or remote redemption, but such is the lamentable fact.  The call for an unlimited volume of paper money issue, when every effort should be made in the direction of early resumption, is indeed alarming.  A more reprehensible policy at this period of our history cannot well be imagined, and it demands all the wisdom available to avert the impending evil.  The government is pledged to resumption at the earliest day practicable.  To postpone that important period indefinitely, as the advocates of inflation propose, would bring discredit upon the national faith and honor, and cover our government with inevitable disgrace.  And, beyond this, it would involve the industrial and commercial interests of the country in a common ruin.

Our currency is irredeemable now, and yet it is proposed that the government shall issue untold millions more, and thus plunge the nation into ultimate repudiation.  This policy is a delusion, and would, if it should obtain, border upon crime.  It is a fraud in its intent, and its consummation wouid stamp the nation with infamy.  Its advocates contend that the issue of five or six hundred millions, more or less, of government promises-to-pay will give an impulse to the business energies of the country and bring early prosperity, when its effect would be to depreciate every paper dollar to a standard of value below fifty cents.  Now a paper dollar is worth but eighty-five or eighty-six cents, with a downward tendency.  It would not take long under inflation to bring us to a point where it would require two dollars of paper currency to purchase one dollar of gold or silver.  Such a prospect is to be deeply deplored, and the danger that it foreshadows should be promptly met and turned aside.

If the nation should yield to the demands of the inflationists, and set its printing presses and paper mills at work to pour forth a flood of new-made paper money, that would afford no adequate relief to the business interests of the country.  There is more currency now than can be reached for general business purposes, inasmuch as there are but two ways of calling it forth from the vaults of the Treasury and the banks.  One is to purchase with currency property or labor, and the other is to obtain it by stealth.  Hence to make millions more would not afford the promised relief, for the simple reason that the people do not seem to possess the means of purchase, and the chances for theft are not very favorable.

The ills complained of, and which seem to prompt to inflation, arise from the fact that we have in this country at the present time too many consumers and too few industrious producers.  There is a numerous class who have undertaken to live by their wits and upon the efforts of the more industrious.  This condition of affairs brings business want and distress where there should be abundance, and those who have thus brought themselves to such a state by idleness, extravagance, or mismanagement, are now loudest in their demands for inflation.  It is upon such that the engineers of this pernicious measure rely for its success, and yet that class would suffer the deepest disappointment when it should fully be consummated.

It occurs to me that your views of finance are peculiarly adapted to the work of bringing this nation back to the paths of resumption, prosperity and happiness, and that it will be a fortunate day for the country when they are fully accepted and adopted as the policy of the government.

In 1861 we were called upon to make sacrifices to preserve the national unity and integrity.  In 1875 the duty is none the less imperious to rally in behalf of honest money, and that we may preserve the national faith and honor.

I am, sir, with much respect,
Your obedient servant,
A.M. CLAPP.

The farming interest has been complaining for six or eight years bitterly every year that it could not make money.  Of course it can­not make money;  for it is bound down, chained down to a gold and silver currency when it sells, while it is compelled to do a large por­tion of its purchasing in a depreciated "paper money."

You thought that you gained a victory when you passed the trans­portation bill the other day.  I tell you that the great speculative railroad interests in this country gained a victory a hundred-fold greater when you passed the $400,000,000 legal-tender bill;  so that they may, if possible, revive their Southern Pacific and Northern Pacific, the Grand Central, their Grand Eastern, their Grand Western, and their Transcontinental Railroad schemes, and find money to float them.  These are the men who gained a victory in this House within six weeks;  the great speculators of the country, who want inflated prices, and what they call abundant money;  and your farmers' bill will turn to ashes within your grasp;  and your railroad speculators will go on drawing in their money for bonds which never will be redeemed, involving the farmers ultimately in ruin and despair.  Now, if I read political economy aright --and I am not ashamed to say that I read a great deal of it in books, but I get some from merchants and "practical men"-- that will be the result of your policy.

It is said that we want an elastic currency.  No, sir;  we do not.  We may want more half-bushels, more quart and pint cups, more yard-sticks, but we do not want them made of India rubber, nor do you of the West and South.  You do not want a yard-stick that will measure thirty-eight inches to-day, and thirty-four inches to-morrow.  You may want more yard-sticks, but you want them all of the same standard.  In my State we have carefully preserved in glass cases the standard weights and measures which the General Government has sent us for the use of our people, and we go there and test our yard-sticks and peck-measures, and pint cups with great care.  Now I am willing that we shall have more pint cups and half-bushels and yard-sticks, but I want the standard unimpaired.  I want the twenty-­five and eight-tenths grains of gold to the dollar which you promised me I should get in the markets of the world.  But you will not give it to me;  and what is more you will not tell me when you will give it to us, nor will you tell me when you will try to give it to us.  I want the standard of value restored.

Gentlemen, I repeat, there is no road to resumption through expansion, except the road that goes through repudiation.  If I am not altogether wild in this matter ---I have with me the boards of trade, the chambers of commerce, the great merchants and bankers and financiers--- if I am not altogether wild in this matter, this is the decisive, the turning-point in the national finances, and what is of infinitely less importance, a turning-point in the history of political parties.  Many men who long for political reorganization have looked eagerly for the action which was to bring it about.  Sir, parties are not called into existence by a proclamation.  Parties create themselves.  They grow out of some profound belief, some great moral purpose.  You are furnishing that belief and that purpose to-day, by making it necessary for men to rally, without regard to party lines, for the defense of sound economical principles and the preservation of the honor of the nation.  There is no man so good that I will vote for him for any office, from president down to constable, if he is unsound upon this financial question.  There is no man so dear to me that I will not fight him from the word "go" until the election closes, if he is unsound on this question.  And I know very many men who agree with me on this point.  But I do not care whether there be five, or fifty, or five hundred;  I am planted as firmly on this ground as in the days when I was a radical abolitionist, though I could not see the possibility of triumph within a hundred years.  I believe, I know what is right upon this matter, and I have no doubt that what is right will come uppermost in this country, that the people will sustain it. ---Speech of Gen. J.K. Hawley, of Hartford, in the House of Representatives, April 1, 1874; in opposition to the free-banking bill

Persons who possess the first edition of the "Financial History of the War," can add this new matter and have it rebound so as to make up the second edition.

The "introduction" and "testimonials" embraced in the first thirty-two pages can be placed in first part of the book.  The additional appendix is paged in continuation of the appendix to the first edition, and can be placed in the back part of the book.  The additional index is also paged in the same way.

"Berzevicky 'Az északi kereskedelemnek széleskörűvé tételé'-ről szóló és a bécsi gyűlés elé terjesztett emlékiratával a királyság háborús szükségleteit szolgáló pénzügyi politikájának jótékony hatását a külkereskedelem fejlesztésével akarta állandósítani, mert a korlátlan inflációs politika, bármilyen haszonnal is járt, az állampénzügyek ziláltságát idézte elő és államcsődbe kergette a Habsburg birodalmat."

"Az állampénzügyek fokozatos romlása már II. József török háborúival kezdődött.  A hadi kiadások rohamos emelkedése a császár uralkodásának utolsó 3 évében évi 20 milliós állandó költségvetési hiányt okozott.  A francia háborúk [amiket a Habsburg-ház kezdeményezett] óriási összegeket nyeltek el:  1793 és 1798 között a háború évente átlag 90 millióba került, míg a jövedelmek átlaga nem haladta meg a 75 milliót;  hat év költségvetési hiánya 357 millióra növekedett.  Az egyre emelkedő kiadásokat sem rendkívüli adókkal, sem bel- és külföldi kölcsönökkel, kamatozó kötelezvényekkel nem sikerült fedezni.  Az állam, hogy a háború folytatásához szükséges összegeket előteremtse [és itt tényleg ex nihilo teremtésről van szó], kénytelen volt fedezet nélkül való papírpénz nyomásához folyamodni.  De, míg II. József halálakor 28 millió papírpénz volt forgalomban, ez 1811-ben 1 milliárd 60 millióra rúgott.  A folyamatos papírpénz-szaporítás odavezetett, hogy a bankóforint értéke állandóan esett:  míg 1796-ban a papír pénz annyit ért mint az ezüst, addig 1811-ben 100 ezüstforintért már 1000 bankóforintot kellett adni.  A háborús kiadások előteremtése nemcsak a monarchiában történt a fent említett eszközökkel.  Franciaország az asszignátákkal fedezte a forradalmi, Poroszország és Oroszország [pedig] a Napoleon elleni, háborúkat.

"A papírpénz értékének [vásárló erejének] folyamatos csökkenése a gazdasági életben minden reális számítás előbb-utóbbi felborításával fenyegetett.  A Bécsi kormány igyekezett a bajok elejét venni [ha a kormány tényleg elejét akarta volna venni a bajoknak, akkor egyszerűen abba hagyta volna a háborúskodást]:  1806-ban Zichy Károly pénzügyminiszter 75 milliós kényszerkölcsönt vett föl, majd a deflació[a fizetőeszköz számának csökkentése] mellett foglalt állást --eredménytelenül.  1809-ben elrendelték minden ezüsttárgy beszolgáltatását;  ezt a rendeletet ugyan Magyarországra nem merték kiterjeszteni, de a döntő jelentőségű rendszabályokat nálunk is életbeléptették.  1810-ben a bankóforint helyébe, azok háromszoros értékét képviselő, váltócédulákat (ein lözungs schein) kerültek, de ez a rendelkezés nem érte el az óhajtott célt, mivel a pátens nem korlátozta az újkibocsájtású fizetőeszköz mennyiségét.  A következő évben, 1811-ben, megtörtént a teljes eréllyel végrehajtott leértékelés.  A forgalomban lévő pénzjegyek elvesztették névértékük négy-ötödét.  1812 végére kivonták a forgalomból a bankópénzt és 212 millió forintban állapították meg a kibocsájtásra kerülő váltócédulák összegét.  A rézváltópénz értékét is ---ebből mintegy 130 millió forint értékű volt forgalomban--- egy-ötödére szállították.

"Alighogy e rendelkezések végrehajtása befejezéséhez közeledett, újra kitört a háború, a papirospénz-kibocsájtás ismét megindult.
---[a háború nem "kitört" ---csak úgy a semmiből]

"A forgalomba került jegyek értéke rohamosan csökkent;  ami 1812-ben 73%-on állott, az 1815-re 30%-ra zuhant.  A napoleoni uralom összeomlása után, az állampénzügyek szanálása érdekében, 1816 január 1-én megtörtént a második leértékelés.  A megjelent pátens, az Osztrák Nemzeti Bank alapításával egybekötve, a forgalomban lévő pénzjegyek névértékének két-ötödére való csökkentését is kimondotta.  [vagyis, a teljes munkával megkeresett egy forint jegy egyszeriben csak 40 fillért ért]  A váltócédulák, melyeket az állam 1811-ben teljes névértékükben igért beváltani, névértékük két-ötöd részére szállottak le."