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[668] July 17th and August 5th, 1861. It authorized the Secretary to negotiate a loan, in part or in full, under either of the following forms: 1st, the sale at par of scrip bearing seven per cent. interest, redeemable at par after twenty years; 2d, the issue of treasury notes at 7.30 per cent. interest, redeemable after three years, with the privilege of exchange by the purchaser for government bonds bearing six per cent. interest; 3d, the issue of analogous notes at 3.65 per cent., redeemable after one year and convertible into three year notes at 7.30 per cent.; 4th, the sale of bonds bearing six per cent. to the amount of one hundred millions at 89.32 per cent., payable in Europe and redeemable at par after twenty years; 5th, the issue of notes, payable at sight, to the amount of fifty millions. Finally, the notes at six per cent., which, as we have stated, had been put in circulation, were legalized by the authorization given to the Secretary to raise the amount to twenty millions, besides the loan recently voted. Mr. Chase, being unable to find purchasers for the bonds at seven per cent., was obliged to resort to the treasury notes bearing 7.30 per cent. interest. As he could not rely upon the public to furnish him directly the amount represented by these notes, he again applied to the banks of New York, Boston and Philadelphia to aid him in this difficult operation. They subscribed for a sum of two hundred and fifty millions; the first third of these notes was to be delivered to them on the 19th of August, and the last on the 1st of December, on the condition that the government should not compete with them in re-selling this paper to the public. The difference between the date of the interest-bearing note and that of actual payment of the money into the hands of the Secretary, would secure them a certain profit. The notes payable at sight were easily convertible into coin. By these measures the Secretary could count upon being able to realize nearly two hundred millions to defray current expenses until the next meeting of Congress.

In authorizing the issue of the fifty millions of notes which bore no interest, the law of July 17th made them redeemable at sight; but this last clause was soon to be replaced by the legal tender act, as the inevitable consequence of the crisis through which the United States was passing. Peculiar circumstances had

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Salmon P. Chase (1)
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