Weak federal policy. ever, rendered them blind to the fact that Congress had the power by taxation to extirpate the evil and afford the people protection. Their shuffling policies are well illustrated by the historic enunciation of Buchanan in another instance when he declared that the states had no right to secede, but that there was no power in the Constitution to coerce a sovereign state. To paraphrase, the state bank systems of currency were almost criminally wrong and unjust, but there was no power in the Constitution, ordained though it was "to establish justice," to prevent the wholesale fraud upon the people which the lax currency systems of the states engendered. The Civil War resulted in enfranchising the slaves. It also liberated the whole people from evils of state bank currency. Respecting the several issues of Treasury notes prior Treasury to the Civil War, it is interesting to note that the first emission of this form of "bills of credit" (1812) was made during the administration of Madison, and although a question as to the constitutionality arose, it was determined in favor of the issue both by Congress and the President. It was, however, held beyond the power of Congress to give the notes the legal tender function, but they were made receivable for all public dues. Later issues were authorized in the administration of Van Buren, Tyler, Polk, and Buchanan, all of them 'strict constructionists." Both Jefferson and Tyler favored the use of these notes as currency, and when they were issued in small denominations, they actually became for short periods a part of the circulation of the country. 66 Hamilton's views on the subject were expressed in his report on the bank plan, as follows: "The emitting of paper money by authority of government is wisely prohibited to the individual states by the Constitution, and the spirit of that prohibition ought not to be disregarded by the government of the United States." notes. I. THE UNITED STATES LEGAL TENDER NOTES CHAPTER VIII 1861 TO 1865 Treasury, 1861. THE financial and monetary conditions which con- State of the fronted the administration of Lincoln in 1861 were such as would have severely taxed a finance minister with the genius of Hamilton and the wide experience of Gallatin. The Nation was at the brink of civil war, the outcome of which could not be foreseen. Its debt of about $76,000,000 was greater than at any time since the period following the War of 1812, and most of this debt had been created during years of peace. The Nation's credit was poor, its securities having been sold at more than 10 per cent below par by the outgoing Secretary of the Treasury. rency. The currency consisted of about $250,000,000 of specie The curand $200,000,000 of bank-notes, and whilst the 1600 banks, as a whole, possessed a fair quantity of specie (probably 45 per cent of their note-issues), most of it was held by the banks in the money centres. The condition of the paper circulation was very far from satisfactory. Great dissimilarity in the laws governing banks in the several states precluded uniformity, security, or safety. There was no central place of redemption, hence most notes were at a discount, varying with the distance from the bank of issue. It was estimated that there were 7000 kinds and denominations of notes, and fully 4000 spurious or altered varieties were reported. |