Comte de Paris, History of the Civil War in America. Vol. 3.
Henry Coppee , LL.D., Ed.

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[414] actual revenue of the Federal Treasury during that year. The rise in the price of all commodities in consequence of former issues of paper money had brought about some important modifications in trade, which, for fear of a sudden depreciation at the end of the war, had a tendency to bear upon the Federal funds. Mr. Chase was right in believing that the difficulties experienced in 1862 in finding subscribers to the Federal loan would not again occur in 1863, provided that a certain clause in the law which at that period had rendered this placing of bonds almost impossible was expunged, because this clause directed that the five-twenty bonds, when bought with greenbacks, should be received at par, although there was considerable difference between the depreciation of bonds and that of paper money. The debt, however, could not be funded as fast as he had desired: in order to meet the most urgent expenses he was obliged to resort temporarily to other sources besides the loan. As we have stated before, the army could not wait: the pay of the soldiers had been delayed for more than a month. In order to provide for this payment it was necessary to resort to a new issue of paper money. But at the same time prudence required that measures should be adopted to prevent a glutting of the market with the paper of the Treasury. In the preceding year, prior to the suspension of specie payments by the banks, the latter had in circulation notes to the amount of $130,000,000, whilst the specie circulation, including the metallic reserve of the banks in the States loyal to the Union, represented the sum of $210,104,000. In December, 1862, the circulation of bank-notes amounted to $167,000,000, whilst that of greenbacks was $210,000,000, the gold and silver having almost entirely disappeared. It will therefore be seen that the Federal paper had purely and simply been substituted for the latter, without doing any injury to the paper of the banks, which had increased to the extent of thirty-seven millions. In order to make room for a new issue of greenbacks without increasing to excess the total amount of paper in circulation, it was therefore necessary to reduce that of the banks. In order to bring about this result, and to facilitate the funding of the debt at the same time, Mr. Chase proposed quite a new system, which, after a long discussion, was adopted