﻿i6

WAR BORROWING

nomination from $100 to $20 resulted in a com-
promise at $50.

A month later the act of March 2, 1861 — the
first of the emergency revenue measures 17 enacted
on the eve of a great war to supply a depleted
treasury — authorized the President of the United
States to float a $10,000,000 loan or, if satisfactory
terms were not obtainable, to issue treasury notes in
lieu thereof, and also to substitute treasury notes
for the whole or any part of the money which he
was authorized to borrow by previous acts.18 Such
notes were to bear six per cent, interest, to be
emitted in denominations of not less than $50 and
to mature in two years unless called for earlier
redemption. Notes were actually issued to the
amount of $35,364,450, of which $22,468,100 was
redeemable in two years and $12,896,350 sixty days
after date.

With the administration of Secretary Chase the
older form of short-term obligations which had
proved so ineffective in the first year of the war was
abandoned for two related expedients: (a) inter-
est bearing obligations of somewhat longer term
as the three-years seven and three-tenths per cent,
notes, and (b) non-interest bearing demand notes.19
Both of these measures underwent development.
The longer term notes became, with improvement in
the investment market, funded loans. The non-
interest bearing demand notes degenerated into the

17	Knox, chap. ix.

18	Bayley, p. 371.

19	Mitchell, “ A History of the Greenbacks ” (Chicago, 1903),
part I.