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WAR BORROWING

charter of the Bank of the United States had ex-
pired in 1836 and in 1837 there was general sus-
pension. To meet the monetary demand as well as
to satisfy the financial deficit the issue of one-year
treasury notes, bearing not more than six per cent,
interest and in denominations not exceeding $50,
was authorized in 1837 to an amount not exceeding
$10,000,000. The notes were to be issued in
optional payment of public creditors and were re-
ceivable for all taxes and dues. As issued a large
part of the notes bore a merely nominal rate of in-
terest and were speedily presented in payment of
taxes, to that extent accomplishing the fiscal and
failing the monetary purpose in view.

The precedent established, recourse was had from
1837 to 1844 under authority of eight successive
acts to no less than thirteen emissions — issues and
reissues — to an aggregate amount of $47,002,900.
Used primarily to meet financial exigencies in a
period when neither bond issues nor bank loans
were regarded as feasible, the expedient continued
to serve in presence of a disordered and inelastic
currency system a monetary need as distinct from
a fiscal requirement. So employed, the treasury
note was the center of much of the political con-
troversy and constitutional debate which raged in
these troubled years over the specie circular, the in-
dependent treasury system, the organization of a
national bank, and the emission of paper money.
The outcome was to vindicate the fiscal usefulness
and to discredit anew the monetary effectiveness
of the treasury note. By the close of the period
the distinction had been clearly made that: “ the