14

WAR  BORROWING

per  cent,  bonds.  In  1846-8  there  were  issued,  under
the  provisions  of  the  act  of  July  22,  1846,  $7,687,-800,
  and  under  the  provisions  of  the  act  of  January
28,  1847,  including  reissues,  $26,122,100  —  all
bearing  interest  at  the  rate  of  five  and  two-fifths  or
six  per  cent,  with  the  exception  of  $1,766,450  of  the
earlier  issue  which  bore  a  nominal  rate  of  one  mill
per  cent,  per  annum.
(D)  The  crisis  of  1857  and  the  suspension  of
specie  payments  swiftly  changed  a  comfortable
treasury  balance  into  the  prospect  of  a  disturbing
deficit. 13  The  established  revenues  would  under
normal  conditions  have  been  sufficient  to  meet  expenditures ­
  ;  but  the  suspension  of  the  banks  had  been
followed  by  sharp  contraction  of  business.  Much
dutiable  merchandise  had  been  placed  in  bond  and
the  flow  of  current  income  rapidly  dwindled.  To
tide  over  the  interval,  Congress  on  December  23,
1857,  at  the  request  of  the  Secretary  of  the  Treasury, ­
  authorized  the  issue  of  one-year  treasury
notes  “  for  such  sum  as  the  exigencies  of  the  public
service  might  require  ”  not  to  exceed  at  any  time
the  amount  of  $2o,ooo,ooo. 14  The  notes  were  to
be  issued  at  par  in  denominations  of  not  less  than
$100,  with  interest  at  not  more  than  six  per  cent.
They  were  to  be  receivable  for  all  public  dues  and
when  redeemed  might  be  reissued  within  the  period
of  final  maturity.  The  issue  was  to  be  emitted  in
two  installments  —  the  first,  to  the  amount  of  $6,-000,000
  forthwith;  the  remainder,  by  public  tender
“  at  their  par  value,  for  specie  to  the  bidders  offer-13
  Knox,  pp.  70-1.  14  Bayley,  p.  368.