Immediately after these efforts of the banks to discredit treasury notes, an application was made to Congress for a charter for another United States bank, which proposed to take from the government, as part of its capital, $15,000,000 of these same treasury notes, to withdraw them from competition with bank notes. (Just as the rascally conspirators at Washington are now trying to do with three hundred and forty-six million greenbacks.)
Mr. Madison vetoed the bill, principally on account of this provision. But $28,000,000 of bonds were substituted for treasury notes, as capital of the bank; and by a combination of the Federal party and a few Democrats it was chartered. The charter provided that no other such bank should be chartered by Congress for twenty years. This implied, also, that all treasury notes intended to circulate as money should be withdrawn, and that this bank should furnish all the national paper circulation for twenty years.
For this privilege the bank paid $1,500,000. The contract on the part of the government was disgraceful, but, having been made, it had to be carried out; and it was carried out, as the following acts of Congress show:
The Act of March 3, 1817 (Statutes 3, p. 377).—The second Bank of the United States had just gone into operation. Congress was compelled to comply with its part of the contract. It, therefore, passed this law, which repealed all laws authorizing the reissue of the “treasury notes of 1815.” But the people had these government notes, and they preferred them to bank notes or coin. They knew that the repeal of the law authorizing their reissue could not affect the value of those then in their hands, for a valuable consideration paid the government. They, therefore, held on to the notes (as our people should now, in spite of Sherman, Gage & Co.) Instead of paying them into the treasury, where the law required them to be destroyed, the people held on to them, and used them in business, greatly to the annoyance of the bank and of the Secretary of the Treasury, then a bank man (Mr. Dallas). This officer ordered the collector of revenue to refuse to receive these notes for duties on imports, supposing[supposing] that by this means he could injure their credit and force their presentation at the treasury for payment in coin or national bank notes, that they might be canceled. This gave rise to a suit in Boston. A firm presented treasury notes in payment of duties on imports, for which the law creating them provided that they should be received. The government refused to receive them, and brought suit for the duties. The defendants pleaded a tender of treasury notes. The government answered that they were not legal tender. Judge Story, in 1819, heard the case, and decided for the defendants. The decision is that “Treasury notes are legal tender for everything for which the government makes them receivable.” This decision is in 2 Mason, pages 1 to 18. This decision, though against the government, was never appealed to the Supreme Court. It, therefore, stood as the law of the land.
The Act of May 3, 1822 (Statutes 3, p. 675).—Treasury notes still remained out among the people, to the annoyance of the bank and the Secretary. The decision of Judge Story raised instead of depreciating them in the estimation of the people, and increased the anxiety of the bank and the Secretary respecting them. The notes did not come to the treasury for destruction. (Just so the people acted when John Sherman tried to make them take 5-20 bonds and give up the greenbacks.) They remained among the people until May 3, 1822, when Congress again came to the rescue of the bank and passed the law of that date, which provided that these treasury notes should not be received by any collector of revenue in the United States, and that they should be received and paid at the treasury only. All that came into the treasury were to be destroyed. The people wished to retain these notes; but the bank forced Congress to act against them; and Congress, by destroying their receivability, compelled their surrender by the people. We hear no more of treasury notes thereafter until 1837, when, as usual, the necessities of the government again called them into being.
The Act of October 12, 1837 (Statutes 5, p. 201).—The banks had all suspended, with nearly $40,000,000 government bonds. Not one year before the law had made these banks public depositories, with their promise that they would always pay coin for all liabilities. The government had, in 1835, paid off the last dollar of the national debt. The surplus then in the treasury was nearly $40,000,000. This was in the banks. The government had no money to pay ordinary expenses, unless the treasury used suspended bank notes. This Mr. Van Buren, the President, refused to do. He called Congress together to meet the emergency. Its remedy for the emergency was treasury notes (as it should now be), which Jefferson says are the only reliance of a nation. This act of October 12, 1837, provided for the issue of $10,000,000 treasury notes, in denominations not less than $50, running one year. The law left the interest which they were to bear discretional with the President and the Secretary of the Treasury; but in no case was it to exceed six per cent. Congress appeared too timid to make these notes money bearing no interest. The Secretary, knowing that the people needed them as money, complied with the law by making many of them bear one mill interest per annum. As such they circulated freely as money, and the people were delighted to get and use them. They answered all the purposes of coin, and equalized the exchanges throughout the country. The banks did not, at that time, possess sufficient power to injure them. Men now living remember them and their usefulness, although, imitating the foolishness of the Bank of England, they were never paid out of the treasury but once.
The Act of May 21, 1838 (Statutes 5, p. 228).—This act authorized the reissue of the $10,000,000 treasury notes issued under the act of 1837, which had been canceled. They should have been used till worn out, and then replaced ad infinitum. It has taken time and a great war to open the eyes of the people and Congress to see what Jefferson saw in 1813. And now, again, many are forgetting the facts.
The Act of May 31, 1840 (Statutes 5, p. 370).—This law renews the act of 1837, relating to the issue of treasury notes, and makes the following modifications: 1. That they were to be issued in place of those redeemed; not to exceed in this issue $5,000,000. 2. They were to be redeemed in less than a year, if the treasury was in a condition to redeem them. 3. When ready to redeem them, the Secretary of the Treasury was to give notice. 4. After due notice, these notes should cease to bear interest, if they remained out. This act was to continue only one year. It is evident that Congress supposed the necessity for issuing treasury notes would soon cease. But it was mistaken. Treasury notes continued to be issued up to 1848.
The Act of July 4, 1840 (Statutes 5, p. 385).—This was the first independent treasury act of the days of Van Buren. It had good features, but was badly bungled. The money of the government was to be kept by the government (instead of the banks), in the mints, custom-houses, post-offices and treasury building. The fool part of it was that after January 3, 1843, no payment should be made to the government in anything but gold and silver coin. The banks were suspended. The government was being sustained by treasury notes. But still this law provided that after January 3, 1843, treasury notes should be excluded from the treasury as well as bank notes. An appeal was made to the people, in that year’s election, upon this law, and Van Buren and his coin payments were knocked out by Harrison with wiser plans.
The Act of July 21, 1841 (Statutes 5, p. 438).—This was among the first Whig acts, and they in turn made fools of themselves. They favored a national bank, but opposed treasury notes. The law provided for the issue of $12,000,000 six per cent. bonds. The principal purpose was to redeem the good treasury notes of the Democrats. A Pittsburg man was sent to England to sell the bonds. Though the United States had paid its national debt in 1835, the bonds were no go. The Whigs, having failed to found a bank and sell these bonds, were compelled to rely upon the much-despised treasury notes of the Democrats.