The next important event that occurred during Mr. Knox's administration of the Currency Bureau was the resumption of specie payments on January 1, 1879.
The Act of January 14, 1875, provided for and required the coinage of silver in denominations of 10, 25 and 50 cents, of standard value, to be issued in redemption of an equal number and amount of fractional currency of similar denominations, until the whole amount of such fractional currency outstanding should be redeemed.
This Act also repealed the limitations upon the aggregate amount of circulation of national banking associations and its distribution equally among the States and Territories.
The Secretary of the Treasury was required to redeem the legal-tender, United States notes, in excess of $300,000,000, to the amount of 80 per centum of the sum of national bank notes issued to new banks or banks increasing their circulation, and to continue the redemption of such notes until the amount outstanding was reduced to $300,000,000. The Secretary was also required, on and after January 1, 1879, to redeem in coin United States legal-tender notes then outstanding upon their presentation for redemption at the office of the Assistant Treasurer in New York, in sums of not less than $50, and the Secretary was authorized to issue bonds of the United States as described in the Act of Congress approved July 14, 1870, to provide for such redemptions.
The Legislative, Executive and Judicial Appropriation Act of June 21, 1879, contained a provision authorizing the Secretary of the Treasury to use for the immediate payment of pensions the legal-tender currency in the Treasury of the United States for the redemption of fractional currency.
There is still outstanding in fractional currency about $1,998,368.501 a large part of which never will be presented for redemption.
1June 30, 1922.
In commenting upon the resumption of specie payments in his report for 1878, Mr. Knox said that as the time approached for resumption, strong opposition developed and desperate efforts were made to secure a repeal of the Act, on the ground that while it was conceded by those who opposed resumption that the Treasury and the banks could readily redeem their circulating notes, it would not be possible for the banks to provide for the redemption of their deposits in gold.
Notwithstanding this opposition and the pessimistic predictions of those who were opposed to the attempt at resumption, and the return of the Government to the Hamiltonian idea of paying its debts in the currency of the world, resumption was successfully consummated, and, as Mr. Knox stated in his report for 1878, while the banks of the country at the date of resumption held more than one-third of the outstanding Treasury notes, they had so much confidence in the ability of the Secretary of the Treasury to successfully maintain resumption, that none were presented by them for redemption. At the same time the people held more than $300,000,000 of the issues of the national banks, based upon the bonds of the nation, and preferred such notes to the coin itself. There was no demand, therefore, for the payment of the notes of the Government, and the gold coin in the Treasury increased more than thirty-six millions in the ten months succeeding the date of resumption.