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CHAPTER III.

UNITED STATES NOTES AND FRACTIONAL CURRENCY; DISTINCT
IVE PAPER; EXCHANGE OF MUTILATED AND DEFACED NOTES,
ETC.

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tion.

Commonly called “LEGAL-TENDER NOTES," from being made by law a legal tender for debts; and “GREENBACKS,'' from the green color in which the backs have always been printed. They are issued under the following provisions of law :

ACT OF FEBRUARY 25, 1862, CHAPTR 33, SECTION 1. Be it enacted by the Senate and House of Representatives of Acts of authoriza the United States of America in Congress assembled,

That the Secretary of the Treasury is hereby authorized First act. to issue, on the credit of the United States, one hundred and fifty millions of dollars of United States notes, not bearing interest, payable to bearer, at the Treasury of the United States and of such denominations as he may deem expedient, not less than five dollars each :

Provided, however, That fifty millions of said notes shall be in lieu of the demand treasury notes authorized to be issued by the act of July seventeen, eighteen hundred and sixty-one; which said demand notes shall be taken up as rapidly as practicable, and the notes herein provided for substituted for them: Anil provided further, That the amount of the two kinds of notes together shall at no time exceed the sum of one hundred and fifty millions of dollars;

And such notes herein authorized shall be receivable in payment of all taxes, internal duties, excises, debts, and demands of every kind due to the United States, except duties on imports, and of all claims and demands against

the United States of every kind whatsoever, except for interest upon bonds and notes, which shall be paid in coin, and shall also be lawful money and a legal tender in payment of all debts, public and private, within the United States, except duties on imports and interest as aforesaid. And any holders of said United States notes, depositing any sum not less than fifty dollars or some multiple of fifty dollars, with the Treasurer of the United States, or either of the Assistant Treasurers, shall receive in exchange therefor duplicate certificates of deposit, one of which may be transmitted to the Secretary of the Treasury, who shall thereupon issue to the holder an equal amount of bonds of the United States, coupon or registered, as may by said holder be desired, bearing interest at the rate of six per centum per annum, payable semi-annually, and redeemable at the pleasure of the United States after five years, and payable twenty years from the date thereof.

And such United States notes shall be received the same as coin, at their par value, in payment for any loans that may be hereafter sold or negotiated by the Secretary of the Treasury, and may be reissued from time to time, as the exigencies of the public interest shall require.

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Seconilact.

ACT OF JULY 11, 1862, CHAPTER 142. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

That the Secretary of the Treasury is hereby authorized to issue, in addition to the amounts heretofore authorized, on the credit of the Unitel States, one hundred and fisty millions of dollars of United States notes, not hearing interest, payable to bearer, at the Treasury of the United States, and of such denominations as he may deem expedient:

Provided, That no note shall be issued for the fractional part of a dollar, and not more than thirty-five millions shall be of lower denominations than five dollars.

And such notes shall be receivable in payment of all loans inade to the United States, and of all taxes, internal duties, excises, debts, and demands of every kind due to the United States, except duties on imports and interest, and of all claims and demands against the United States, except for interest upon bonds, notes, and certificates of debt or deposit; and shall also be lawful money and a legal tender in payment of all debts, public and private, within the United States, except duties on imports and interest, as aforesaid.

And any holder of said United States notes, depositing any sum not less than fifty dollars, or some multiple of fifty dollars, with the Treasurer of the United States, or either of the Assistant Treasurers, shall receive in exchange therefor duplicate certificates of deposit, one of which may be transmitted to the Secretary of the Treasury, who shall thereupon issue to the holder an equal amount of bonds of the United States, coupon or registered, as may by said holder be desired, bearing interest at the rate of six per centum per annum, payable semi-annually, and redeemable at the pleasure of the United States after five years, and payable twenty years from the date thereof:

Provided, however, That any notes issued under this act may be paid in coin, instead of being received in exchange for certificates of deposit as above specified, at the direction of the Secretary of the Treasury.

And the Secretary of the Treasury may exchange for such notes, on such terms as he shall think most beneficial to the public interest, any bonds of the United States bearing six per centum interest, and redeemable after five and payable in twenty years, which have been or may be lawfully issued under the provisions of any existing act;

May reissue the notes so received in exchange; may receive and cancel any notes heretofore lawfully issued under any act of Congress, and in lieu thereof issue an equal amount in notes such as are authorized by this act;

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SEC. 3.

And of the amounts of United States notes authorized by this act, not less than fifty millions of dollars shall be reserved for the purpose of securing prompt payment of such deposits, (temporary loan deposits authorized by the same act,] when demanded, and shall be issued and used only when, in the judgment of the Secretary of the Treasury, the same or any part thereof may be needed for that purpose.

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SEC. 3. And be it further enacted, That the Secretary of Third act. the Treasury be, and he is hereby, authorized, if required by the exigencies of the public service, for the payment of the army and navy, and other creditors of the Government, to issue, on the credit of the United States, the sum of one hundred and fifty millions of dollars of United States notes, including the amount of such notes heretofore authorized by the joint resolution approved January seventeen, eighteen hundred and sixty-three, in such form as he may deem expedient, not bearing interest, payable to bearer, and of such denominations, not less than one dollar, as he may prescribe,

which notes so issued shall be lawful money and a legal tender in payment of all debts, public and private, within the United States, except for duties on imports and interest on the public debt; and any of the said notes, when returned to the Treasury, may be reissued from time to time as the exigencies of the public service may require.

And in lieu of any of said notes, or any other United States notes, returned to the Treasury and canceled or destroyed, there may be issued equal amounts of United States notes. such as are authorized by this act.

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And the holders of United States notes, issued under and by virtue of said acts, [of February 25 and July 11, 1862,] shall present the same for the purpose of exchanging the same for bonds, as therein provided, on or before the 1st day of July, eighteen hundred and sixty-three, and thereafter the right so to exchange the same shall cease and determine.

Limit of issue.

The joint resolution referred to in the above act only authorized the issue of one hundred millions of dollars of notes in advance of the passage of that act then pending before Congress.

These three acts together authorize the issue of four hundred and fifty millions of dollars; but the construction given by the Treasury Department is that the fifty millions required by the act of July 11, 1862, (see page 37,) to be reserved for the payment of temporary deposits and used only when, in the judgment of the Secretary, the same, or any part thereof, might be necessary for that purpose, were intended by Congress to be a temporary issue, and when once withdrawn, by the reduction of the whole to four hundred millions, not to be reissued. This construction is sustained by the Supreme Court in the case of The Banks v. The Supervisors, (7 Wallace, 26.) The Chief Justice, who was Secretary of the Treasury at the time of the passage of the acts, therein says: "The act of February 25, 1862, provided for the issue of these notes to the amount of one hundred and fifty millions of dollars. The act of July 11, 1862, added another hundred and fifty millions of dollars to the circulation, reserving, however, fifty millions for the redemption of temporary loan, to be issued and used only when necessary for that purpose. Under the act of March

issued. Reduction, &c.

3, 1863, another issue of one hundred and fifty millions was authorized, making the whole amount authorized four hundred and fifty millions, and contemplating a permanent circulation, until resumption of payment in coin, of four hundred millions of dollars.” The same view was again expressed by the Chief Justice, in Veazie Bank v. Fenno, (8 Wallace, 537.)

The amount in actual circulation, including demand notes, Highest amount reached its highest point about August 31, 1865, when it was $433,160,569. At the time of the proclamation of the President, April 2, 1866, declaring the rebellion ended in certain States therein named, it was $422,749,252. It was first reduced below four hundred millions of dollars September 1, 1866, near the time of the President's proclamation of August 20, 1866, declaring the insurrection at an end throughout the whole of the United States, when it was $399,603,592, and has never been so high since that date.

Congress passed the act of April 12, 1866, (chapter 39,) Limiting reducproviding "that of United States notes not more than ten millions of dollars may be retired and canceled within six months from the passage of this act, and thereafter not more than four millions of dollars in any one month,” and the Secretary of the Treasury thereafter continued to reduce the amount in circulation.

Afterwards Congress passed the following act, which Suspending fur became a law. without the approval of the President on the 4th of February, 1868:

tion,

ther reduction.

AN ACT TO SUSPEND FURTHER REDUCTION OF THE CURRENCY.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That from and after the passage of this act, the authority of the Secretary of the Treasury to make any reduction of the currency, by retiring or canceling United States notes, shall be, and is hereby, suspended; but nothing herein contained shall prevent the cancellation and destruction of mutilated United States notes, and the replacing the same with notes of the same character and amount.

At this time the amount outstanding was three hundred

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