"Its subsequent popularity, however, | dition to $1,500,000 which the bank paid as a was owing to a variety of causes. The bonus for its charter, the net receipts over notes were made receivable everywhere for and above disbursements amounted to dues and customs, and in payment for pub- $4,993,167. The available funds in the lic lands. They were to bear interest from Treasury on the 1st of January, 1820, were the day of issue, at the rate of 5 2-5 per less than $250,000, and the estimated defi cent. per annum, and their payment was ciency for the year amounted to nearly guaranteed by the United States, principal $4,000,000. This state of affairs was owing and interest, at maturity. They thus fur- partly to the disastrous effects of the comnished a circulating medium to the coun-mercial crisis of 1819, heavy payments for try, superior to the paper of the suspend- the redemption of the public debt, contined and doubtful State banks. These ued through a series of years, and large issues were therefore considered more outstanding claims, amounting to over desirable than the issue of additional $30,000,000, resulting from the late war stock, which could be realized in cash with Great Britain. To meet the emeronly by the payment of a ruinous dis-gency, a loan was authorized by act of May count. The whole amount of Treasury 15, 1820, and $999,999.13 was borrowed at 5 notes issued during the war period was per cent., redeemable in twelve years, and $36,680,794. The Commissioners of the $2,0000,000 at 6 per cent., reimbursable at Sinking Fund were authorized to provide pleasure, this latter stock realizing a prefor their redemption by purchase, in the mium of 2 per cent. By act of March 3, same manner as for other evidences of the 1821, 5 per cent. stock amounting to $4,735,public debt, and by authority of law $10,- 276 was issued at a premium of over 5 per 575,738 was redeemed by the issue of cer- cent., and the proceeds used in payment of tificates of funded stock, bearing interest at the principal and interest of the public from 6 to 7 per cent. per annum, redeema- debt falling due within the year. ble at any time after 1824. "An effort was made in 1822 to refund a During the years 1812-13 the sum of portion of the 6 per cent. war loans of $2,984,747 of the old 6 per cent. and de- 1812-14 into 5 per cents., but only $56,705 ferred stocks were refunded into new 6 per could be obtained. Two years later the cent. stock redeemable in twelve years; and Government was more successful, and, unby an act approved March 31, 1814, Con- der the act of May 26, 1824, 6 per cent. gress having authorized a settlement of the stock of 1813 to the amount of $4,454,728 Yazoo claims' by an issue of non-interest- was exchanged for new stock bearing 4 bearing stock, payable out of the first re- per cent. interest, redeemable in 1833-34. ceipts from the sale of public lands in the During the same year $5,000,000 was borMissisipi territory, $4,282,037 was issued for rowed at 4 per cent. to provide for the this purpose. On the 24th of February, payment of the awards made by the Com1815, Secretary Dallas reported to Congress missioners under the treaty with Spain of that the public debt had been increased, in February 22, 1819, and a like amount, at consequence of the war with Great Bri- the same rate of interest, to be applied in tain, $68,783,122, a large portion of which paying off that part of the 6 per cent. was due and unpaid, while another con- stock of 1812 redeemable the following siderable proportion was fast becoming year. The act of March 3, 1825, authordue. These unpaid or accruing demands ized a loan of $12,000,000, at 44 per cent. were in part for temporary loans, and the interest, the money borrowed to be applied balance for Treasury notes either due or in paying off prior loans, but only $1,539,maturing daily. To provide for their pay-336 was exchanged for an equal amount of ment a new loan for the full amount 6 per cent. stock of 1813. needed was authorized by act of March 3, 1815, and six per. cent stock redeemable in fifteen years, was issued in the sum of $12,288,148. This stock was sold at from 95 per cent. to par, and was nearly all redeemed in 1820 by purchases made by the Commissioners of the Sinking Fund. "The Government became a stockholder in the second Bank of the United States, to the amount of 70,000 shares, under the act of incorporation, approved April 10, 1816. The capital stock was limited to $35,000,000, | divided into 350,000 shares of $100 each. The Government subscription was paid by the issue of 5 per cent. stock to the amount of $7,000,000, redeemable at the pleasure of the Government. This was a profitable investment for the United States, as in ad "In the year 1836 the United States was, for the first time in the history of the country, practically out of debt. Secretary Woodbury, in his report of December 8, 1836, estimated the amount of public debt still outstanding at about $328,582, and this remained unpaid solely because payment had not been demanded, ample funds to meet it having been deposited in the United States Bank and loan offices. The debt outstanding consisted mainly of unclaimed interest and dividends, of claims for services and supplies during the Revolution, and of old Treasury notes, and it is supposed that payment of these had not been asked for solely because the evidences of the debt had been lost or destroyed. The estimates showed the probability of a surplus of at least $14,000,000 in the Treasury at the close of the year 1836, and this estimate proved to be far below the truth. In this favorable condition of the public finances, Congress adopted the extraordinary resolution of depositing the surplus over $5,000,000 with the several States, and under the act of June 23, 1836, surplus revenue amounting to $28,101,644.91 was so deposited. "In 1837, however, the state of the country had changed. The 'flush' times of 1835 and 1836 had been succeeded by extraordinary depression, which ultimately produced a panic. In May most of the banks suspended specie payments. The sales of public lands, and the duties on the importations of foreign goods, which had helped to swell the balance in the Treasury to over $42,000,000, had fallen off enormously. Even on the goods that were imported it was difficult to collect the duties, for the law compelled them to be paid in specie, and specie was hard to obtain. It had become impossible not only to pay the fourth installment of the surplus at the end of 1836 to the several States, but even to meet the current expenses of the Government from its ordinary revenues. In this emergency the Secretary of the Treasury suggested that contingent authority be given the President to cause the issue of Treasury notes. This measure was generally supported on the ground of absolute necessity, as there was a large deficit already existing, and this was likely to increase from the condition of the country at that time. The measure was opposed, however, by some who thought that greater economy in expenditures would relieve the Treasury, while others denounced it as an attempt "to start a Treasury bank." "However, an act was approved October 12, 1837, authorizing an issue of $10,000,000 in Treasury notes in denominations not less than fifty dollars, redeemable in one year from date, with interest at rates fixed by the Secretary, not exceeding 6 per cent. These notes, as usual, were receivable in payment of all duties and taxes levied by the United States, and in payment for public lands. Prior to 1846, the issue of notes of this character amounted to $47,002,900, bearing interest at rates varying from one-tenth of one per cent. to 6 per cent. To provide in part for their redemption, authority was granted for the negotiation of several loans, and $21,021,094 was borrowed for this purpose, bonds being issued for a like sum, bearing interest at from 5 to 6 per cent., redeemable at specified dates. These bonds were sold at from 2 per cent. discount to 3 per cent. premium, and redeemed at from par to 19 per cent, advance. "War with Mexico was declared May 13, 1846, and in order to provide against a deficiency a further issue of $10,000,000 in Treasury notes was authorized by act of July 22, 1846, under the same limitations and restrictions as were contained in the act of October, 1837, except that the authority given was to expire at the end of one year from the passage of the act. The sum of $7,687,800 was issued in Treasury notes, and six per cent. bonds having ten years to run were issued under the same act to the amount of $4,999,149. These were sold at a small advance, and redeemed at various rates from par to eighteen and two-thirds per cent. premium. "The expenses incurred on account of the war with Mexico were much greater than the original estimates, and the failure to provide additional revenues sufficient to meet the increased demands made a new loan necessary, as well as an additional issue of notes, which had now become a popular method of obtaining funds. Under the authority granted by act of January 28, 1847, Treasury notes to the amount of $26,122,100 were issued at par, redeemable one and two years from date, with interest at from 5 2-5 to 6 per cent. More money still being needed, a 6 per cent. loan, having twenty years to run, was placed upon the market, under the authority of the same act, and bonds to the amount of $28,230,350 were sold at various rates, ranging from par to 2 per cent. premium. Of this stock the sum of $18,815,100 was redeemed at an advance of from 1 to 21 per cent., the premium paid (exclusive of commissions) amounting to $3,466,107. Under the act of March 31, 1848, 6 per cent. bonds, running twenty years, were issued to the amount of $16,000,000, and sold at a premium ranging from 3 to 4.05 per cent. This loan was made for the same purpose as the preceding one, and $7,091,658 was redeemed by purchase at an advance ranging from 8 to 22.46 per cent., the premium paid amounting to $1,251,258. "The widespread depression of trade and commerce which occurred in 1857 was severely felt by the Government, as well as by the people, and so great was the decrease in the revenues from customs that it became absolutely necessary to provide the Treasury with additional means for meeting the demands upon it. Treasury notes were considered as preferable to a new loan, and by the act of December 23, 1857, a new issue was authorized for such an amount as the exigencies of the public service might require, but not to exceed at any one time $20,000,000. These notes were receivable in payment for all debts due the United States, including customs, and were issued at various rates of interest, ranging from 3 to 6 per cent., to the amount of $52,778,900, redeemable one year from date, the interest to cease at the expiration of sixty days' notice after maturity. In May, 1858, the Secretary of defraying the ordinary expenses of the the Treasury informed Congress that, Government were almost immediately curowing to the appropriations having been tailed and jeopardized by the attitude of increased by legislation nearly $10,000,000 | the States which attempted to secede. The over the estimates, while the customs confusion which followed the inauguration revenue had fallen off to a like amount, it of the administration of President Lincoln would be necessary to provide some means demonstrated the necessity of providing to meet the deficit. In these circumstances, unusual resources without delay. A sysa new loan was authorized by act of June tem of internal revenue taxation was in14, 1858, and 5 per cent. bonds amounting troduced, and the tariff adjusted with a to $20,000,000, redeemable in fifteen years, view to increased revenues from customs. were sold at an average premium of over As the Government had not only to exist 3 per cent. Under the act of December and pay its way, but also to provide for an 17, 1873, $13,957,000 in bonds of the loan army and navy constantly increasing in of 1881, and $260,000 in bonds of a loan of nuinbers and equipment, new and extraor1997, were issued in exchange for a like dinary methods were resorted to for the amount of bonds of this loan. purpose of securing the money which must "The act of June 22, 1860, authorized be had in order to preserve the integrity the President to borrow $21,000,000 on the of the nation. Among these were the issue credit of the United States, the money to of its own circulating medium in the form be used only in the redemption of Trea- of United States notes and circulating sury notes, and to replace any amount of notes, † for the redemption of which the such notes in the Treasury which should faith of the nation was solemnly pledged. have been paid in for public dues. Only New loans were authorized to an amount $7,022,000 was borrowed at 5 per cent. in- never before known in our history, and terest, the certificates selling at from par the success of our armies was assured by to 1.45 per cent. premium. The failure to the determination manifested by the peorealize the whole loan was caused by the ple themselves to sustain the Government political troubles which culminated in the at all hazards. A brief review of the loan civil war. In September, bids were in- transactions during the period covered by vited for $10,000,000, and the whole amount the war is all that can be attempted within ofered was speedily taken. It soon be- the limited space afforded this article. The came evident, however, that war was inevi- first war loan may be considered as having table, and a commercial crisis ensued, dur- been negotiated under the authority of an ing which a portion of the bid lers forfeit- act approved February 8, 1861. The creded their deposits, and the balance of the it of the Government at this time was very loan was withdrawn from the market. Au- low, and a loan of $18,415,000, having thority was granted by the act of Decem- twenty years to run, with 6 per cent. interber 17, 1830, for a new issue of Treasury est, could only be negotiated at a discount notes, redeemable in one year from date, of $2,019,776.10, or at an average rate of but not to exceed $10,000,000 at any one $89.03 per one hundred dollars. From time, with interest at such rates as might this time to June 30, 1865, Government sebe offered by the lowest responsible bid-curities of various descriptions were issued ders after advertisement. An unsuccess- under authority of law to the amount of ful attempt was made to pledge the receipts $3,888,686,575, including the several issues from the sale of public lands specifically for their redemption. The whole amount of notes issued under this act was $10,010,999, of which $4,810,000 bore interest at 12 per cent. Additional offers followed, ranging from 15 to 33 per cent., but the Treasury declined to accept them. "Up to this period of our national existence the obtaining of the money necessary for carrying on the Government and the preservation inviolate of the public credit had been comparatively an easy task. The people of the several States had contributed in proportion to their financial resources; and a strict adherence to the fundamental maxim laid down by Hamilton had been maintained by a judicious system of taxation to an extent amply sufficient to provide for the redemption of all our national securities as they became due. But the time had come when we were no longer a united people, and the means required for of bonds, Treasury notes, seven-thirties, .$1,130,279,000 196,118,300 969,992,250 716,099,247 3,050,444,907 20, 1871, the same bonds to the amount of $725,582,400 have been refunded into other bonds bearing a lower rate of interest. The success of these several loans was remarkable, every exertion being used to provide for their general distribution among the people. compound interest notes, fractional cur- these two acts, 6 per cent. bonds to the rency and coin certificates, together with a amount of $958,483,550 have been issued to large amount of bonds issued in order to date. These bonds were disposed of at an raise the money necessary to pay for mili- aggregate premium of $21,522,074, and untary supplies, and other forms of indebted-der the acts of July 14, 1870, and January ness growing out of the war. The rebellion was practically at an end in May, 1865, yet the large amount of money required for immediate use in the payment and disbandment of our enormous armies necessitated the still further negotiation of loans under the several acts of Congress then in force, and it was not until after the 31st of August, 1865, that our national debt began to decrease. At that time the total indebtedness, exclusive of the "old funded and unfunded debt" of the Revolution, and of cash in the Treasury, amounted to $2,844,646,626.56. The course of our financial legislation since that date has been constantly toward a reduction of the interest, as well as the principal of the public debt. "In 1867 the first issue of 6 per cent. bonds, known as five-twenties, authorized by the act of Feb. 25, 1862, became redeemable, and the question of refunding them and other issues at a lower rate of interest had been discussed by the Secretary of the Treasury in his annual reports, but the agitation of the question as to the kinds of money in which the various obligations of the Government should be paid, had so excited the apprehension of investors as to prevent the execution of any refunding scheme. "The act to strengthen the public credit was passed March 18, 1869, and its effect was such as secured to the public the strongest assurances that the interest and principal of the public debt outstanding at that time would be paid in coin, according to the terms of the bonds issued, without any abatement. "On the 12th of January, 1870, a bill authorizing the refunding and consolidation of the national debt was introduced in the Senate, and extensively debated in both Houses for several months, during which the financial system pursued by the Government during the war was freely reviewed. The adoption of the proposed measure resulted in an entire revolution of the refunding system, under which the public debt of the United States at that time was provided for, by the transmission of a large amount of debt to a succeeding generation. The effect of this attempt at refunding the major portion of the public debt was far more successful than any similar effort on the part of any Government, so far as known. "By an act approved March 3, 1865, a loan of $600,000,000 was authorized upon similar terms as had been granted for previous loans, with the exception that nothing authorized by this act should be made a legal tender, or be issued in smaller denominations than fifty dollars. The rate of interest was limited to 6 per cent. in coin, or 7.3 per cent. in currency, the bonds issued to be redeemable in not less than five, nor more than forty, years. Authority was also given for the conversion of Treasury notes or other interest-bearing obligations into bonds of this loan. An amendment to this act was passed April 12, 1866, authorizing the Secretary of the Treasury, at his discretion, to receive any Treasury notes or other obligations issued under any act of Congress, whether bearing interest or not, in exchange for any description of bonds authorized by the original act; and also to dispose of any such bonds, either in the United States or elsewhere, to such an amount, in such manner, and at such rates as he might deem advisable, for lawful money, Treasury notes, certificates of indebtedness, certificates of deposit, or other representatives of value, which had been or The act authorizing refunding certifimight be issued under any act of Congress; cates convertible into 4 per cent. bonds, the proceeds to be used only for retiring approved February 26, 1879, was merely Treasury notes or other national obligations, intended for the benefit of parties of limitprovided the public debt was not increased ed means, and was simply a continuation thereby. As this was the first important of the refunding scheme authorized by measure presented to Congress since the previous legislation. close of the war tending to place our secu- "The period covered precludes any atrities upon a firm basis, the action of Con- tempt toward reviewing the operation by gress in relation to it was looked forward which the immediate predecessor of the to with a great deal of interest. The dis- present Secretary reduced the interest on cussion took a wide range, in which the some six hundred millions of 5 and 6 per whole financial administration of the Go- cent. bonds to 3 per cent. It is safe to say, vernment during the war was reviewed at however, that under the administration of length. After a long and exciting debate the present Secretary there will be no dethe bill finally passed, and was approved by viation from the original law laid down by the President. Under the authority of Hamilton. James A. Garfield. James A. Garfield and Chester A. Arthur were publicly inaugurated President and Vice President of the United States March 4, 1881. of Senator Conkling to five important places, and these protests were heeded by the President. With a view to meet them, and, doubtless, to quiet the spirit of faction rapidly developing between the Grant and President Garfield in his inaugural ad- anti-Grant elements of the party in New dress promised fuil and equal protection of York, the name of Judge Robertson was the Constitution and the laws for the negro, sent in for the Collectorship. He had batadvocated universal education as a safe- tled against the unit rule at Chicago, disguard of suffrage, and recommended such avowed the instructions of his State Conan adjustment of our monetary system vention to vote for Grant, and led the "that the purchasing power of every coined Blaine delegates from that State while dollar will be exactly equal to its debt- Blaine was in the field, and when withpaying power in all the markets of the drawn went to Garfield. Senator Conkling world." The national debt should be re- now sought to confirm his friends, and hold funded at a lower rate of interest, without back his enemy from confirmation; but compelling the withdrawal of the National these tactics induced Garfield to withdraw Bank notes, polygamy should be prohibit- the nomination of Conkling's friends, and ed, and civil service regulated by law. in this way Judge Robertson's name was An extra session of the Senate was alone presented for a time. Against this opened March 4. On the 5th, the follow-course Vice-President Arthur and Senators ing cabinet nominations were made and Conkling and Platt remonstrated in a letconfirmed: Secretary of State, James G. ter to the President, but he remained firm. Blaine, of Maine; Secretary of the Treas- Senator Conkling, under the plea of "the ury, William Windom, of Minnesota; privilege of the Senate,”- -a courtesy and Secretary of the Navy, William H. Hunt, custom which leaves to the Senators of a of Louisiana; Secretary of War, Robert State the right to say who shall be conT. Lincoln, of Illinois; Attorney General, firmed or rejected from their respective Wayne MacVeagh, of Pennsylvania; Post-States if of the same party-now sought to master General, Thomas L. James, of New York; Secretary of the Interior, Samuel J. Kirkwood, of Iowa. In this extra session of the Senate Vice President Arthur had to employ the casting vote on all questions where the parties divided, and he invariably cast it on the side of the Republicans. The evenness of the parties caused a dead-lock on the question of organization, for when David Davis, of Illinois, voted with the Democrats, the Republicans had not enough even with the Vice President, and he was not, therefore, called upon to decide a question of that kind. The Republicans desired new and Republican officers; the Democrats desired to retain the old and Democratic ones. Republican Factions. President Garfield, March 23d, sent in a large number of nominations, among which was that of William H. Robertson, the leader of the Blaine wing of the Republican party in New York, to be Collector of Customs. He had previously sent in five names for prominent places in New York, at the suggestion of Senator Conkling, who had been invited by President Garfield to name his friends. At this interview it was stated that Garfield casually intimated that he would make no immediate change in the New York Collectorship, and both factions seemed satisfied to allow Gen'l Edwin A. Merritt to retain that place for a time at least. There were loud protests, however, at the first and early selection of the friends defeat Robertson. In this battle he had arrayed against him the influence of his great rival, Mr. Blaine, and it is presumed the whole power of the administration. He lost, and the morning following the secret vote, May 17th, 1881, his own and the resignation of Senator Platt were read. These resignations caused great excitement throughout the entire country. They were prepared without consultation with any one-even Vice-President Arthur, the intimate friend of both, not knowing anything of the movement until the letters were opened at the chair where he presided. Logan and Cameron-Conkling's colleagues in the great Chicago battlewere equally unadvised. The resignations were forwarded to Gov. Cornell, of New York, who, by all permissible delays, sought to have them reconsidered and withdrawn, but both Senators were firm. The Senate confirmed Judge Robertson for Collector, and General Merritt as Consul-General at London, May 18th, President Garfield having wisely renewed the Conkling list of appointees, most of whom declined under the changed condition of affairs. These events more widely separated the factions in New York-one wing calling itself "Stalwart," the other "Half-Breed," a term of contempt flung at the Independents by Conkling. Elections must follow to fill the vacancies, the New York Legislature being in session. These vacancies gave the Democrats for the time control of the United States Senate, but they thought it unwise to pursue an advantage which |