Before Secretary Chase's time the bonds of the United States had always been issued for a definite time, and usually at 6 per cent. It is due to his foresight and firmness that, for the first time in the history of public loans, the option expressed in the 3-20 and 10-40 year bonds was secured by the government. The current rate of interest, he said in 1SG1, was greater than the government ought to pay. In 18G2 he declared that no prudent legislator would venture to impose on the labor and business of the people a fixed interest of 6 per cent, on a great debt for twenty years", unless the necessity was far more urgent than then appeared. In 1863 he asked for authority to issue 5 per cent. notes, and over $200,000,000 of them were found even then to be available. In spite of earnest remonstrance, he insisted that all loans at 5 per cent. or over should be redeemable at the option of the government after five, or, at the utmost, after ten years. The 10-40 year 5's were authorized by the last act passed while Mr. Chase was secretary of the treasury. He resigned in June, 1864, and six months afterward was appointed Chief-justice of the Supreme Court of the United States.

Secretary Fessenden's administration, from July 1,1864, to March 3,1865, is memorable for the courage with which, even when the treasury was overdrawn, he refused to avail himself of the facile but dangerous aid of a new issue of legal tender notes, and for the brilliant negotiation of the popular 7-30 loan under the skilful management of Jay Cooke. Mr. Cooke had liberal commissions, but they were wholly contingent upon the success of his operations, which involved a large preliminary outlay at his own risk. Not a note was delivered to him until the cash was actually paid into the treasury. Before Mr. Fessen-den returned to the Senate he recommended and secured the passage of the act of March 3, 1865. authorizing an issue of 6 per cent, bonds, amounting to $600,000,000 in addition to amounts previously authorized, and permitting the conversion of any obligations of the United States, whether bearing interest or not, into such bonds, provided that the public debt should not thereby be increased.

The consolidation of the debt and retirement of the legal tenders was thus provided for. in pursuance of the original intention of Congress and of the executive. Secretary McCulloch,if he had retained the confidence of Congress, had ample power to fund the entire debt in 5-20 year 6 per cent. bonds. The consols of 1865,1867, and 1868 were issued under this authority, to take up the maturing notes, the certifies of indebtedness, and the temporary loan. The legal tenders might have been absorbed in the same way, if the secretary had not conceived it to be his duty to call special attention to this process, and at the same time to allow himself to become involved in the controversy about the reconstruction of the South. By this course he needlessly alarmed the country, at the same time giving mortal offence to the majority in Congress; and the result was the peremptory-mandate which, in 18G8, forbade the farther retirement of the superfluous currency. The 3 per cent. certificates of deposit were issued in 1867 and 1868, to take up the remainder of the compound interest notes.

The administration of Secretary Bout-well, from 1869 to 1873, is marked by the passage of the funding act of 1870. That act authorized the issue of bonds amounting to $200,000,000, afterward increased to $500,000,000, at 5 per cent., payable in ten years; $300,000,000 at 4 1/2 per cent., payable in fifteen years; and $1,000,000,000 at 4 per cent., payable in thirty years. In 1875 Senator Sherman secured the passage of an act requiring a resumption of specie payments in 1879, and authorizing the sale of any of these bonds to provide for the redemption of the fractional currency and of the legal tenders. There has been no subsequent legislation on this subject except the act of 1878, requiring the legal tenders, after redemption, to be reissued and kept in circulation. The certificates of deposit, authorized in 1872 and 1878, bear no interest, and do not affect the amount of the debt.

In 1871 $200,000,000 of the 5 per cent. loan of 1870 were sold, of which amount about one-half was taken by the national banks and one-half was sold to Jay Cooke & Co., representing bankers in Europe and in the United States. In 1873 $100,000,000 more of 5 per cents. were sold by Secretary Richardson. In 1874 Secretary Bristow disposed of the rest of the 5 per cent. loan, mainly in Europe. The 6 per cent. bonds were called in and paid as fast as the new 5's were issued. The commission on this exchange was 1/4 of 1 per cent. In 18 Secretary Morrill sold $90,000,000 of the 4 1/2 per cent. loan to August Belmont & Co., allowing 1/2 of 1 per cent. commission on condition that the buyers should assume the expense of preparing, printing, transporting, and issuing the bonds, and make payment therefor at the treasury without cost to the government. In 1877 Secretary Sherman sold $150,000,000 more of the same securities to Belmont & Co., and in June the 4 per cents were offered to the public. Within thirty days the subscriptions ran up to $75,000,000. The further sale was then suspended, on account of the agitation concerning the repeal of the resumption act and the coinage of depreciated silver dollars. In 1878 $100,000,000 more were sold to the public, and heavy importations of United States bonds from Europe were absorbed at the same time. In December, 1878, Secretary Sherman estimated the amount of United States bonds still held abroad at not more than $200,000,000.

It is hardly too much to say that the assistance of the banks in these operations was indispensable.1 After the Revolution, and again, after the war of 1812, the treasury was compelled to avail itself of the aid of banks holding close relations to the government. The same necessity had once more arisen. The first Bank of the United States absorbed nearly one-fifth of the public debt in 1791. The second Bank of the United States carried about the same proportion of the debt of 1816. When the civil war closed, in April, 1865, the newly organized national banks had aided the treasury in placing and carrying the immense loans required to maintain the armies and fleets in active service for four years, and held themselves government paper to the amount of $390,000,000. They have since assisted in the negotiations by which the interest on the public debt has been reduced from $150,000,000 a year to $83,000,000. Their co-operation alone has made the resumption of specie payments possible. The banks held on the 1st of January, 1879. nearly one-third of the whole issue of legal tender notes. If they had presented these notes for redemption, the example would have been followed by other holders, and the treasury would have been forced to suspend payments.