i6

WAR  BORROWING

nomination  from  $100  to  $20  resulted  in  a  compromise ­
  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)  interest ­
  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  noninterest ­
  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.