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of financial facts rather than of theories, the following table of the various kinds of paper currency in existence in the United States each year since 1853 has been compiled, in order, if possible, to remove the question of the exact amount of currency in circulation each year from the confusion to which it has heretofore been subject.

The propriety of including the 7 3-10 per cent notes, the compound interest notes, the 3 per cent certificates, and the various other forms of unfunded debt of the government among the forms of currency, will doubtless be questioned by some; but it is well known that all these did circulate to a large extent as money, though not so rapidly as the non-interest-bearing treasury notes. Reference to the law authorizing the 7 3-10 per cent notes will also show that they were intended to circulate as money; the Secretary was authorized to issue them as legal tender to all creditors for the amount of the principal, together with the interest accrued on any such note at the date of tender.* A large proportion of the $672,578,850 of 7.30 notes, and the $159,012,140 of compound interest notes, outstanding on July 1, 1865, were issued under authority of the law of June 30, 1864, which made them a legal tender for the face value of the notes and the accrued interest. The 3 per cent certificates, also authorized by the act of March 2, 1867, were intended as a substitute for $50,000,000 of United States notes, which were by that means released from the vaults of the national banks, where they had been held according to law as a reserve against circulation and deposits. These certificates were therefore practically an addition of $50,000,000 to the currency in 1867.

* See Digest of Laws, Act of June 30, 1864, and March 3, 1865.

While there may be some reasonable question as to the propriety of regarding the 7.30 notes and the compound interest notes as an addition to the volume of currency to the full amount of their issue, there can be no doubt that a just estimate of the volume of currency in use each year must take them into the account at some ratio of the total amount outstanding, even if it be not more than two-thirds their face value. As to the 3 per cent certificates, there can be no question that they were an addition to the volume of currency to the full amount of their issue. They were unlike the present non-interest-bearing certificates issued to the banks, because no special reserve of United States notes was held in the treasury for their redemption, whereas the United States notes received for the present certificates are held as a special deposit in the treasury, and are not used for any other purpose than the redemption of the certificates.*

Even if the practical effect of the 7.30 and compound interest notes to increase the volume of paper money be estimated at no more than one-half their nominal value, and if the total volume of bank notes and unfunded debt circulating as money in 1866 be estimated as equivalent to no more than $1,300,000,000, thus making a deduction of $500,000,000 for the amount of such notes that would not circulate to any considerable extent as money-even with this deduction, it will be seen that the period of greatest contraction in the paper money circulation of the United States was from 1866 to 1869.

But there is still another and even more important point to be considered in connection with the contrac

*See Act June 8, 1872.

tion from 1866 to 1869. The war of the rebellion closed in 1865. Previous to that time there were twelve of the Southern States, viz.: Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Texas, Virginia and West Virginia, from which national bank notes and United States notes of any sort were practically excluded. These twelve States had a population in 1870 of 9,999,401. In the immediate vicinity of the armies of the United States in the border States, such as Tennessee and Virginia, there would of course be a large circulation of United States notes, but with the great bulk of the nearly 10,000,000 of population in these twelve Southern States United States notes and national bank notes were almost unknown until the close of the war. Until 1866 therefore, the entire amount of paper money included in the table was practically confined in its circulation to the population of the Northern and Atlantic States, a population which, from 1865 to 1866, probably did not exceed 23,000,000 to 24,000,000, and was only 27,000,000 in 1870. It was not until 1867 that the rehabilitation of the South began to draw much capital from the Northern States, and the amount of currency in the Southern States even in that year could not have been over one third as much per capita as in the Northern States. It is fair to presume, however, that by 1869 or 1870 the greatest effect of the new requirements of the people of the Southern States for currency had been experienced, and that from 8,000,000 to 10,000,000 more people were using United States and national bank notes as their only currency than in 1865-6. These facts will show the unreliability of any of the usual estimates of the amount of currency per capita in

the United States based upon the entire population. There are so many elements to be considered that it is doubtful if any estimate of the amount of currency per capita of the population using it can be made that will not be open to criticism.

The table given on another page shows, however, conclusively that the period of greatest contraction of the paper money of the United States per capita of the population using it was from 1866 to 1869-70. It is therefore to be presumed that if the amount of paper money per capita of the population had been the controlling element in the stimulation or the depression of industry, improvements and trade, as is popularly believed, the most positive evidences of such depression from a scarcity of the currency per capita of the population would have been experienced from 1866 to 1870. But it is well known that this was popularly regarded as a period of unexampled prosperity in the United States. The increase of railroad mileage was greater each year during the whole period; beginning with an increase in 1866 of about 3 per cent on the mileage of 1865, the ratio of increase was greater each year afterward until, in 1871, it was over 12 per cent on the mileage of 1870; prices (in currency) of nearly all commodities advanced largely during the first half of the period and were maintained during the latter half, notwithstanding a decline in the average annual price of gold from 140 in 1866 to 123 in 1870. Values of real estate also, throughout the country, increased during the whole of the period in question. It is therefore plain that whatever would otherwise have been the effect of the great contraction of the currency from 1866 to 1870, it was neutralized and overcome by some more general and potent cause,

which, it seems to the writer, is to be found in the increased production of gold and silver at the beginning of the period in question, and the effects of the three great wars of the preceding six years. Not only does the increased production of the precious metals at that period afford some explanation of the universal stimulus given to trade, enterprise and speculation from 1867 to 1872, but the decrease in the production of the same metals affords the clue to the causes which resulted in the crisis of 1873.

The following table gives the amount of each kind of treasury paper, as well as the amount of bank notes, in circulation each year, and also the aggregate of both each year, from 1854 to 1876:


*The amounts given for the bank note circulation in the United States about the 1st of January each year for the years 1854-55-56-57-58 are taken from a report of the Secretary of the Treasury, and were published in a tabulated form in Hunt's Commercial Magazine for March, 1857.

+ The circulation of the State banks in 1863 was given in the report of the Comptroller of the Currency for 1873, and the above amount was obtained for that publication from page 210 of the report of the Secretary of the Treasury on the condition of the banks at the commencement of the year 1863. The returns from Delaware, Maryland, Louisiana, Tennessee and Kentucky were not complete. The aggregate amount of State bank circulation reported at that time was much greater than at any previous period.

The $45,449,155 of State bank circulation given for January 1, 1866, is the amount of State bank notes reported by the national banks, which at that time had recently been reorganized as such from State banks. But as there were still other State banks in existence, it is probable that the $45,449,155 was considerably below the aggregate of State bank notes in existence at that date.

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