lands sold by the said authority, and of all debts by the United States; credit to be given for the interest due on the notes at the time of payment. The Secretary of the Treasury was authorized to borrow, on the credit or the notes, at not below par, such sums as the President might deem expedient. 1838—Unavailable balances-Conflicting statements-“ Government must stop in a few days" if not relieved. that, although the means of the Treasury fo the whole year would probably be equal t the expenditures, yet the Department might notwithstanding, be unable to meet the claim upon it when they fell due, because th largest proportion of the charges upon th Treasury, including the payment of pension and the redemption of Treasury notes, be came due in the early part of the year, whil the resources on which it might otherwise rel would mostly be unavailable until the las due from banks, might not be punctuall half of the year, and a portion, being deb paid. The state of the country and of the public finances was no more favorable at its close of the year 1837 than it had been at its beginThe act of March 31, 1840, was passed t ning. There was in the Treasury January 1, 1838, an apparent balance of over $34,000,000, remedy: this inconvenience, although stre uously opposed as unconstitutional and u but of this amount the largest portion was unavailable. It consisted of the amount de-in session at one time for twenty-five hou necessary, the House of Representatives bein posited with the several States, $28,101, 644.97; on the bill. It renewed the provisions of th of money belonging to the Government de- act of October 12, 1837, except as to th posited with suspended or insolvent banks; amount of notes and the time in which the of amounts due from merchants or bonds might be issued; and authorized the issue given for duties on imports, difficult or im- notes in lieu of those which had been or mig possible to collect; and of various other items be redeemed, but not to exceed, in the amou aggregating, so large an amount that the Sec- of notes outstanding at any one time, the su retary of the Treasury estimated the available of $5,000,000 to be redeemed sooner than on balance at the close of the year at only $1,118,393. It is probable that even this esti-year if the means of the Treasury would pe mate was too large, as President Van Buren informed Congress in May, 1838, that the available means in the Treasury amounted to about $216,000, with large demands suspended in the departments awaiting payments from appropriations yet to be made by Congress, and that the Government must stop in a few days if provision was not made to carry it on. The dues to the Government being largely paid in the Treasury notes of 1837, which the Department was forbidden to reissue, the revenue was almost nothing, and it became necessary to provide additional means. Further relief given-Another issue of The act of May 21, 1838, authorized the Secretary of the Treasury, with the approbation of the President, to cause Treasury notes to be issued, according to the provisions of, and subject to all the conditions, limitations and restrictions contained in the act of October 12, 1837, in place of such notes as had been or might be issued under that act and afterward paid into the Treasury and canceled. 1839-Again in trouble-Another issue authorized. The act of March 21, 1839, authorizing a further issue on similar conditions, was passed at the instance of the Secretary of the Treasury, who informed the House that it would still be impossible to meet the demands upon the Treasury without it. 1840-More "embarrassment "-Another issue to relieve it. President Van Buren in a special message, dated February 17, 1840, informed Congress which the Department was ready to redeen mit, by giving sixty days notice of those not no interest to be allowed thereon after the e piration of the sixty days, the act to contin in force one year and no longer. 1841 – “Embarrassed” again – Big de ciency!-In four years expenditures exce revenue by over thirty millions-Agai "relieved." Secretary Woodbury, in his report on t finances, dated December 7, 1840, estimate that at the close of the year 1841 there wou remain in the Treasury an available balan of only $824,273, and that even this sm balance might entirely disappear and an actu deficit of several millions be found under t operations of the compromise tariff act of 183 customs duties levied, aided by fluctuation which was rapidly reducing the amount in the amount of goods imported, which ha fallen off during the year 1840 nearly six millions of dollars. ficit the act of February 15, 1841, was passe To ward off the danger of this possible d with the limitations and provisions of the a of October 21, 1837, as modified by the act March 31, 1840. President Tyler in his message to Congres at its extra session in June, 1841, estimat the probable deficit in the Treasury at t close of the year at $11,406,132.98, while Se retary Ewing estimated the deficiency on t 1st of September at $5,251,388.30, and i formed Congress that during the previous fo years the expenditures had exceeded t revenue by $31,310,014.20. On this point says: "Thus and to this extent, within the last four ye were the expenditures pushed beyond the amount in the Treasury and the outstanding debts due the revenues. They were made to absorb the surpl United States, so that the Treasury was, on the 4th March, 1841, exhausted of its means and subject to -"Loan bill of 1842." The only remedy for these continually recarring deficits was by a loan, redeemable at a time sufficiently distant to allow the public finances, aided by returning prosperity among the people, a chance for recovery. A bill to borrow $12,000,000, redeemable after eight years, was introduced in the House, June 14, 1841, and debated during many successive days. It was opposed by some who declared themselves averse to creating a national debt; by others who professed to see in it a scheme for starting a national bank, and by others Tho preferred the issue of treasury notes to obtaining a loan. It was advocated by members who said that it was not creating a debt, but funding one which already existed, entailed on the country by the Democratic adzinistration which had just gone out of power, and that it was the more manly course to openly ask a loan, payable at some distant day, rather than to continue the issue of notes hich must return to the treasury in a few Teeks or months to cause another deficit. The bill finally passed both houses, and vas approved July 21, 1841. It authorized the President to borrow, on the credit of the nited States, at any time within one year, a am not exceeding $12,000,000, at a rate of inerest not exceeding 6 per cent., payable quartly or semi-annually, the loan to be reimursable either at the will of the Secretary of e treasury after six months' notice, or at ay time after three years, from January 1, 842. The money borrowed was to be aplied to the redemption of outstanding treasTy notes, and to defray the public expenses. The Secretary was authorized to purchase at ay time before the time named for the relemption of the stock such portions thereof the funds of the Government might admit and any surplus in the Treasury was pledged for the redemption of the stock. This loan does not appear to have met with uch favor from those who had money to nd, owing to the unsettled state of the oney market, and the short period which as to elapse before it became redeemable. Tp to December 20, 1841, the amount received was only $5,532,726.88; while the estimated ficiency on January 1, 1842, was $627,559.90, and the estimated excess of expenditure over he revenue for the year 1842 was $14,218,70.68. In this emergency Secretary ForFard recommended an extension of the time within which the residue of the loan not yet aken should be redeemable, the reissue of the treasury notes heretofore authorized by ap law, and an increase of the duties on certain classes of imports. An act authorizing the issue and reissue of treasury notes was proved January 31, 1842, after meeting with inuch opposition on the old grounds of the unconstitutionality of bills of credit, the inexpediency of adding to the paper money of the country, and the plea that a little economy would enable the Government to meet its expenses without causing a deficit in the treasury. Its supporters denied that the that the best way to provide for the deficiency measure was unconstitutional, and admitted that if a loan bill was passed the money could would be by obtaining a loan, but asserted not be obtained in this country, and that it would be necessary to send the bonds to Europe for sale, which would consume much time, while the needs of the treasury were urgent. The act authorized the notes to be issued under the provisions and limitations contained in the act of October 12, 1837, except that the authority given to issue was to expire at the end of one year from the passage of the act. It was manifest, however, that the power to keep $5,000,000 in treasury notes outstanding could not make up a deficiency of over $14,000,000; and in order to provide for this deficit, a bill had been introduced in the House, December 21, 1841, extending the time limited by the first section of the act of July 21, 1841. In the debates which followed the responsibility for the condition of the finances was charged by each party on the other. This bill became a law April 15, 1842. It provided that so much of the loan obtained after its passage should be reimbursable as should be agreed upon at the time of issuing the stock not to exceed twenty years from the first day of January, 1843. The Secretary of the Treasury was authorized to dispose of the stock below par if its par value could not be obtained, but not until the loan had been duly advertised and proposals for subscriptions invited. The President was also authorized to borrow an additional sum of $5,000,000 if the exigencies of the Government should require it, under the same provisions and limitations More relief-Another re-issue of treasury notes in 1842. Notwithstanding the favorable terms offered to investors it was still found impossible to obtain par for the stock; and to prevent its sacrifice a bill was introduced in the House to allow the issue of treasury notes when the remainder of the stock could not be sold at par. It was stated in debate by the Chairman of the Committee of Ways and Means, who introduced the bill, that the immediate liabilities of the Government were $4,875,000, and to meet these demands not one dollar was available, and that the stock must be either "sacrificed to the Shylocks of the country" or some other means must be provided to meet these liabilities. The bill does not appear to have met with much opposition, the necessity for its passage being apparent. It was approved August 31, 1842. It provided that no stock authorized by the act of July 21, 1841, and April 15, 1842, should hereafter be sold at less than par, and in case the stock could not be sold at or above par, and the exigencies of the public service should require it, the Secretary of the Treasury was authorized to issue in lieu thereof treasury notes to the amount of not more than $6,000,000 under the provisions and limitations contained in the acts of October, 1837, and March, 1840. The notes when redeemed might be reissued or new notes issued in their stead, but none were to be issued after April 15, 1843, and the amount outstanding at any one time was not to exceed $6,000.000. The treasury notes issued under the act of March 3, 1843, were simply issues of new notes in place of such as had been issued under any previous acts of Congress, and which had been or might be redeemed at the Treasury, or received in payment of dues. The necessity for the issue was in the fact that the estimated revenues for the year were very little in excess of the current expenses. 1843-A growing national debt-A new loan and new issue of treasury notes. The National debt at that date was said to be $27,409,338, of which $11,068,977 fell due during the year, and might be presented for payment. Under these circumstances it became necessary either to obtain a new loan, to increase the taxes-always an unpopular expedient or to issue new Treasury notes, as had been done at each session for the past six years. The course was adopted of giving authority both to obtain a new loan and to issue treasury notes, though this latter expedient was characterized in debate as a mere makeshift to enable the Government to get along from day to day and to maintain its credit without repudiation. The bill was approved March 3, 1843. It provided that when any outstanding treasury notes, issued under previous acts of Congress, should, after the passage of the act, be redeemed, the Secretary of the Treasury, if the public service required it, might cause other notes to be issued in their stead, under the limitations and provisions of the acts under which the notes were originally issued. It authorized the payment of interest on notes issued under this act after maturity, and also on those issued under the act of August 31, 1842. The third section of the same act authorized the President, if, in his opinion, it should be for the interest of the United States so to do, to redeem such of the notes then outstanding as they became due by the issue of stock of the United States, under the limitations and provisions of the act of April 15, 1842, except that no commissions were to be allowed to agents, and the stock should be redeemable at a period not later than ten years from the issue thereof. Under this act stock to the amount of $7,004,231.25 was issued, most of which was sold at a small premium. 1846-The Mexican war begins-Large threatening deficiency-More treasury notes issued. War with Mexico was declared May 13, 1846. On the 15th of June Secretary Walker in formed Congress that if the war should con tinue till July 1, 1847, there would be a defi iency in the Treasury of $12,587,000. To pr vent this threatened disaster a bill was intr duced in the House of Representatives July 1846, and passed both Houses, although of posed on the ground that the only honorabl way of providing for the increased expense necessary while the war lasted was by in creased taxation: that the feature of the bil which allowed the reissue of treasury note as fast as they were redeemed, was Co verting the treasury into a national banl and that the course of legislation showed th inconsistency of the Democratic party, then i power, which had originated the Sub-Treasur bill, requiring payments to or by the Govern ment to be made in gold or silver, and wa now asking authority to issue paper money after having at the outbreak of the war, so r duced the tariff that the revenue was likely t be lowered at least $10,000,000. The bill was approved July 22, 1846. authorized the issue of treasury notes accor ing to the exigency of the Government, and i place of the notes redeemed others were to b issued; but the amount of this emission ou standing at any one time was not to excee $10,000,000. The notes were to be issue under the limitations and provisions of th act of October 12, 1837, except that the autho ity given was to expire at the end of a yea The same a from the passage of the act. also authorized the President, if, in h opinion, the country needed it, to borrow o the credit of the United States such a sum he might deem proper, instead of issuing th whole amount of Treasury notes authorized but not exceeding, together with the Treasur notes issued, the sum of $10,000,000-th stock to be issued under the limitations an provisions of the act of April 15, 1842, and be redeemable at a period not exceeding te years from the date of issue; no commission were to be paid to agents. 1847-Fallacious Treasury estimates-Ar other Loan Act, The estimate of Secretary Walker, befor referred to, proved very fallacious. A su larger than his estimate of the amount neede to prevent a deficit was obtained; yet in h annual report, dated December 9, 1846, th Secretary was obliged to inform Congress th a deficit of $4,779,042.01 was still probable. I January, 1847, he appears to have informe the Chairman of Ways and Means that th treasury was nearly empty, and that there wa an immediate necessity for authority to issu more treasury notes or to obtain a new loar A bill authorizing the issue of new treasu notes or a loan to the amount of $3,000,00 passed both Houses and became a law Janu ary 28, 1847; but the origin and conduct the war with Mexico had been reviewed i debate, and various propositions were mad to so amend the tariff on foreign goods in ported as to increase the revenue, especiall to lay a heavy duty on tea and coffee. It authorized the President to cause trea ury notes to be issued for such sums as were avowing at the same time his utter want of required, but not exceeding in the whole confidence in the estimates of the Secretary amount issued the sum of $23,000,000, and no of the Treasury, and stating that at least note was to be of a less denomination than $50. $25,000,000 would be required. The bill evenThe notes were to bear such interest from tually passed both Houses; but the adminisdate of issue until redeemed as should be tration was charged with having plunged the fixed by the Secretary of the Treasury, and country into an unnecessary foreign war, and were redeemable at one and two years after the conduct of the struggle was reviewed and date. The Secretary was authorized to borrow severely condemned. The bill was approved money on the credit of the notes, but no notes March 31, 1848. It authorized the President were to be pledged, hypothecated or sold at less to borrow within a year from the approval of than their par value with accumulated interest. the act on the credit of the United States, a They were to be paid to such public creditors sum not exceeding $16,000,000 at an interest as chose to receive them at par and were made of not more than 6 per cent. per annum, payreceivable for all duties, taxes and debts due able quarterly or semi-annually, reimbursthe United States. The Secretary was author-able at any time after July 1, 1868. No certifiized to purchase said notes at any time, but cate was to be issued for a less amount than only at par for the principal and accrued in- $50. The expenses attending the execution terest. When any of the notes authorized by of the act were not to exceed $16,000,000. the act were redeemed, other notes might be The Secretary of the Treasury was authorIssued in their stead, but the amount of said ized to purchase the stock of the loan at any notes outstanding at any time, together with the time before the date at which it became reimstock authorized by the same act, was at no bursable at the market price not below par. time to exceed $23,000,000. The principal of Under this act stock was issued amounting to the notes could be funded at any time in $16,000,000. stock bearing 6 per cent. interest, redeemable at any time after December 31, 1867, and this privilege was extended to the holders of any treasury notes issued under previous acts. The authority given by the act of July 22, 1846, to issue treasury notes, was extended by the fifteenth section to the period fixed by this act on the same terms and conditions, but the issue under this section was not to exceed $5,000,000. Section 16 of the same act gives the usual authority to the President, if needed, to borrow money instead of issuing the whole amount of treasury notes. and to issue therefor stock bearing interest at not exceeding 6 per cent., redeemable after Dec. 1, 1867. 1848-Still another loan. President Polk, in his message of December 7,1847, informed Congress that if the war with Mexico continued until July 1, 1848, the expenditure would probably exceed the revenue about $16,000,000, while Secretary Walker, in his report of December 8, estimated that the sum necessary to be kept in the treasury to meet the wants of the Government, and maintain the enlarged operations at the mints, would require $18,729,114.27, in addition to the probable revenue. A bill to authorize a loan not to exceed $18,500,000 was accordingly introduced in the House, January 19, 1848. The Chairman of the Committee of Ways and Means, informed the House during the debate, that an error had been discovered in the financial statement of the Secretary of the Treasury, which disclosed the gratifying fact that there were in the treasury nearly $7,000,000 more than had been stated to the House in consequence of which it was supposed the loan might be reduced to $12,000,000, but that the Secretary of War had since asked an appropriation of nearly four millions to supply certain deficiences in that branch of the public service, and it would therefore be necessary to make the amount $16,000,000, and he moved an amendment making the alteration, PART II. Continued Democratic Mismanagement of Finances from 1857 to 1861-Another Series of Blunders-Dissolving Treasury Balances ~ Embarrassments and Deficiencies become Chronic— Continual cry for more Treasury Notes and more Loans—The various responsive. Acts The National Credit down to ZeroIncreasing Expenditures and Diminishing Revenue. The revolution in trade and commerce which occurred in the year 1857 disastrously affected the revenues of the Government, as it did the incomes of the people, and the Administration which had just declared that amid such wide-spread financial wreck and ruin the Treasury would continue to pay gold and silver only, was forced really to the hu miliating necessity of asking authority to issue paper money. In December, 1857, large treasury balance $20,000,000 in treasury notes. A bill for this purpose was introduced, and in the debates which followed it was truly said that the closing hours of the XXXIVth Congress had been consumed in efforts to deplete an overflowing treasury, while the early days of the XXXVth Congress were devoted to efforts to fill an empty one. Only a short time before the Secretary had asked Congress to reduce the accumulating coin on hand by a revision of the revenue laws, and now he was asking leave to fill its empty coffers by the issue of paper money. Instead of proposing a reduction of expenditures an increase was recommended. The Secretary of the Treasury asked increased expenditures to collect the diminishing revenue, while the Secretary of War wanted permission to raise four or five additional regiments at an additional expense of four or five millions of dollars-though the whole business of the country was paralyzed, its commerce almost destroyed, its industrious classes living in enforced idleness, with willing hands imploring in vain the privilege of labor, and the Government bankrupt, asking authority to fill its coffers by the issue of paper money. A bill authorizing the issue of $20,000,000 treasury notes was consequently passed, but a prediction was made that this amount would be largely insufficient, and that by the end of the year the treasury would be maný millions in debt, and that prediction was soon verified. In 1858 asking a loan to meet expensesLoan Act of 1858 passed. In May, 1858, the Secretary of the Treasury was compelled to inform Congress of his difficulties; that owing to the appropriations having been increased by legislation nearly $10,000,000 over the estimates, and the revenue from customs having fallen below the estimate about an equal amount, means to meet the deficit should be provided. A bill to authorize a loan not exceeding $15,000.000 was reported to the House May 26, 1858. This bill was subsequently amended, the amount being increased by the Senate to $20,000,000, and became a law June 14, 1858. The interest was not to exceed 5 per cent., and the loan was made redeemable at any time after fifteen years. Another treasury note reissue asked for in 1859-Loan Act of 1860 passed instead. Secretary Cobb, in his annual report to Congress, dated December 22, 1859, uses the following language: "In the estimated means of the Treasury for the present and fiscal years it will be seen that no provision is made for the permanent redemption of any portion of the $20,000,000 of Treasury notes. The authority for re-issuing these notes will expire on the 20th of June next, and it will, therefore, be necessary for Congress to extend the law for that purpose another period.' proved June 22, 1860. It authorized a loan of $21,000,000 with interest at not exceeding 6 per cent., redeemable in not less than ten or more than twenty years, The failure to realize the whole amount authorized was caused by the political troubles that culminated in the war of the rebellion. Bids were invited for $10,000,000 on September 8,1860, and the whole amount offered was speedily taken. A commercial crisis ensued, during which a portion of the bidders forfeited their deposits, and the loan was withdrawn from the market. The amount finally secured was only $7,022,000. Another issue of treasury notes needed. As a result of this failure authority for a further issue of treasury notes was asked for by Secretary Cobb. In his report of December 4, 1860, he says: "To meet the remaining outstanding Treasury notes and interest thereon there is yet to be negotiated $11,000,000 of the loan authorized by the act of June, 22, 1860. The statement just made of the difficulties attending the payment for the stock already sold, in connection with the fact that capitalists in the present United States stock at par, renders it almost certain condition of the country seem unwilling to invest in that this remaining $11,000,000 cannot now be negotiated upon terms acceptable to the Government. The condition of the Treasury is such that no serious delay can be indulged. Authority should be given for the issue of treasury notes to an equal amount, to be negotiated at such rates as would command the confidence of the country, and to create that confidence the public lands should be unconditionally pledged for the ultimate redemption of the Treasury notes which it might become necessary to issue." Usurious rates of interest. The rate of interest actually paid on the notes issued under this act has been the subject of frequent dispute, and the facts, as given in an official form, are as follows: "Under the Act of December 17, 1860 (12 Statutes, 121), treasury notes were issued, redeemable at the expiration of one year from date, bearing interest as follows: $70,200 at 6 per cent. $5,000 at 7 per cent., $24,5000 at 8 per cent., $33,000 at 8% per cent., $10,000 at 8% per cent., $65,000 at 9 per cent., $10,000 at 94 per cent., $16,000 at 91⁄2 per cent., $77.000 at 9% per cent., $1,027,500 at 10 per cent., $266,000 at 10% per cent., $623,000 at 10% per cent., $1,367,000 at 10% per cent., $1,432,700 at 11 per cent., $4,840,000 at 12 per cent., making a total of $10,010,900 Additional offers were received, ranging from 15 to 36 per cent., which were refused.' More embarrassments during profound peace-The credit of the nation at zeroProposition to back it with that of the several States! In January, 1861, the Secretary, in order to relieve the treasury from its embarrassments, was forced to ask Congress for authority to obtain a loan without restriction as to the price of the bonds, This money was needed, not to meet loans falling due, or to pay the expenses of war, but was asked for in a time of profound peace, to meet the current expenses of the Government. Never before, since the year 1789, when a small sum was Congress appears to have differed with the borrowed to pay salaries, etc., under the new Secretary as to the propriety of reissuing the Government, had a loan been asked to meet notes; for instead of giving authority to do so, ordinary expenditures. So low had the credit a bill providing for their redemption by of the Government fallen at that time that means of a loan was introduced, and passing Secretary Dix suggested to Congress, as a both houses almost without debate was ap-financial resource, that the several States be |