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L. E. (Lucius Eugene) Chittenden.

Recollections of President Lincoln and his administration online

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the dimensions of the ordinary twenty-five-cent piece. To
hold the stamp more firmly in place, side-pieces of cop-
per were added, which were turned over a small portion
of the face in such a manner as not to interfere with its
legibility, the denomination being plainly visible. The
stamp thus encased could be carried in the pocket, and
had all the conveniences, and almost the durability, of
a copper coin. Trading and business firms were quick
to appreciate its advantages. By stamping their busi-
ness card, or any other legend of the firm, in the copper
which covered the reverse of the stamp, it was made to
serve as an advertisement. Its value as an advertise-
ment was sufficient to pay the considerable expense of
encasing the stamp.

But for the act of March 3, 1863, which prohibited
the use of these and all similar devices, the encased stamp
must have had a considerable circulation. According
to Mr. Gregory, Mr. Gault received so many orders for



302 RECOLLECTIONS OF PRESIDENT LINCOLN

them that he could not supply the demand, although his
shop was in operation night and day. He encased the
eight denominations, from one cent to ninety cents each.
It is of some interest, as showing the actual demands of
commerce for fractional coins, to know that more of the
one-cent value were ordered than of all the others ; the
three cent came next ; those of five cents and ten cents
taking third and fourth places. Thirty cents was the
highest denomination ordered, and these only by one
firm. A very small number of the denomination of
ninety cents were made, and sold as specimens, which
are now extremely rare.

These stamps were ordered by firms in the retail dry-
goods, grocery, jewellery, and other trades, insurance
companies, owners of hotels, wine-stores, restaurants, and
proprietary articles, more in number being required for
the latter than for all the other trades combined. They
were ordered by one firm of private bankers located in
Montreal. They appear to have been circulated in New
York, Boston, Philadelphia, Detroit, Chicago, Cincinnati,
and several smaller Northern cities.

It is also of interest that the limited use of this device
should be known and preserved. I therefore describe
the specimen now before me, for which I am indebted to
Mr. Charles Gregory. It is the form in which, I think,
stamps will be used as currency, if the restrictive act
should be repealed and the necessity hereafter arise.
The stamp is the blue one-cent stamp of the time, with
the engraved head of Franklin, over which are the words
" U. S. Postage," under it the words " One Cent." Over
the face is a thin sheet of colorless mica, so transparent
that its presence is not apparent to the eye. The cop-
per covering, or frame, covers the reverse, the circular
periphery, a space a sixty-fourth of an inch wide, around



AND HIS ADMINISTRATION. 303

the face, with two oval side-pieces extending a fourth of
an inch towards the centre. Stamped in the reverse of
the copper frame is the advertisement of a proprietary
article, and under that the words " Pat. Aug. 12, 1862.
J. Gault."

The convenience of the postage currency was great,
and the amount called for increased to an extent which
became troublesome to the Post-office Department, and
the secretary decided to take it into the Treasury, where
it legitimately belonged. Accordingly an act was passed
which suspended its further issue, and substituted in its
place currency of another description.

The act of March 3, 1863, authorized the Secretary of
the Treasury to issue " fractional notes," in such form as
he deemed expedient, in lieu of postage and revenue
stamps and of the fractional notes commonly called
postage currency, and to provide for the engraving,
preparation, and issue thereof in the Treasury Depart-
ment building. Such notes were exchangeable for Treas-
ury notes in sums of not less than three dollars, were re-
ceivable for postage and revenue stamps and in payment
of any dues to the United States less than five dollars,
and were redeemable at the Treasury under regulations to
be established by the secretary. The amount of the issue,
including postage and revenue stamps issued as currency,
was limited to $50,000,000.

No currency issue of the government has ever accom-
plished so much public convenience in proportion to its
amount as the fractional currency. Its use was uninter-
rupted until May 16, 1866, when the coining of five-cent
pieces of copper and nickel was authorized, the further
issue of fractional notes of a less denomination than ten
cents was prohibited, and the five-cent notes outstanding
were directed to be redeemed and cancelled. The act of



304 RECOLLECTIONS OF PRESIDENT LINCOLN

the 14th of January, 1875, authorized the coinage of sil-
ver coins of the value of ten, twenty-five, and fifty cents,
to be issued in redemption of the fractional currency
until the whole of it was redeemed. The whole amount
issued, including the reissues in the place of worn and
mutilated notes, has reached the enormous aggregate of
$368,724,079.45. In other words, the amount author-
ized of $50,000,000 has been reissued more than seven
times. The act of June 21, 1879, provided for the re-
demption of the fractional currency then outstanding
with any money in the Treasury, and for its destruc-
tion. Under this act there was carried into the state-
ment of the public debt, as fractional currency lost or
destroyed, $8,375,934. This amount has proved far be-
low the actual loss or destruction. On the 31st of May,
1890, after making this deduction, the amount still out-
standing was $6,912,010.97. Of this amount it is safe
to assume that seventy per cent., or $4,838,407, has been
so far lost that it will not be presented for redemption.
There is thus shown a clear profit to the United States
on the issue of the fractional currency of more than
$13,000,000, or more than twenty-six per cent, of the
$50,000,000 to which the issue at any one time was lim-
ited.

"Why has this large proportion failed to be returned
for redemption ? The answer is necessarily speculative.
Collectors of stamps and other memorabilia of the epoch
have absorbed some of it. But it has happened, in the
experience of many, that each has become possessed of
a fractional note so worn or mutilated that it was de-
clined by the person to whom he offered it. The name
of the person from whom he received it was forgotten,
the amount was too small to pay for the trouble of
sending it to Washington for redemption; he laid it



AND HIS ADMINISTRATION. 305

aside in some corner of his pocket-book, where it re-
mained to be further worn, until, tired of seeing it, he
at length threw it away. Such has been my own expe-
rience. It has been multiplied by that of others, possi-
bly in instances numerous enough to account for the
loss.

If the public convenience were alone in question, there
would be a reissue of the fractional currency. It was,
and would still be, universally preferred to small silver
coins. So long as it could be had in a cleanly condition,
institutions were willing to incur expense to obtain it,
especially for their lady customers. If the silver, instead
of being coined, could be deposited in some out-of-the-way
place in bars too heavy for asportation, and the cost of
coinage applied to the cost of issuing fractional currency,
the public would be better accommodated, and the silver
bars could rest undisturbed until some convulsion should
subvert all existing financial conditions.

There was much complaint at the time, and the repu-
tation of the secretary suffered, from his persistence in
allowing the engraving, printing, and complete manu-
facture of the white paper into the money of the frac-
tional currency, ready for issue, to be done in the Bureau
of Engraving and Printing without any oversight or su-
pervision. The bureau itself had grown from nothing
to very large proportions, as an annex or convenience to
the office of the secretary. It was subject to none of the
checks which the Treasury system imposed upon other
bureaus, and an unauthorized issue of currency was quite
possible, which might never be detected if it were not
greater than the percentage of notes not returned for
redemption. There was so much criticism of the secre-
tary's action that he appointed a commission, which re-
ported the danger, and earnestly recommended that the
20



306 RECOLLECTIONS OF PRESIDENT LINCOLN

bureau should be brought under the general Treasury
regulations. But no change was made by Secretary
Chase. His view of the matter was, that naked steal-
ing could not be prevented by checks ; that confidence
must be reposed in somebody; and it was safer to
trust one man than a great number. One of the first
acts of his successor, Mr. Fessenden, was to comply with
the recommendations of the commission. Since that
time checks have been added which now make the bu-
reau safe, and render any fraud as nearly impossible as
it can be under human management.

Justice to all at any time concerned in the manage-
ment of the Bureau of Engraving and Printing requires
the statement that neither investigation, lapse of time,
nor the subsequent redemption of its issues has produced
any evidence whatever of fraud or wrong in that bureau
down to the close of the war. On the contrary, the very
large amount now outstanding indicates that there has
been no unauthorized issue. Such, I am glad to know,
is the opinion of experienced officers still remaining in
the department.

There is an act of Congress which prohibits the en-
graving upon any of the Treasury issues of any portrait
the original of which is living. It originated in the fact
that the head of the Bureau of Engraving, in 1864, placed
his own portrait upon the plate of the five-cent note.
It was a presumptuous act, so fiercely denounced by the
press that only a single issue from the plate was made.
To prevent its repetition, the act was afterwards passed.
This five-cent note is much sought after by collectors,
and is much the scarcest of the Treasury issues during
the war.

The fight of legal tender had been won, and won on
the ground stated by Thaddeus Stevens in the opening



AND HIS ADMINISTRATION. 307

sentence of his speech : " This bill is a measure of neces-
sity, not of choice." The act had been passed and ap-
proved. We could issue $150,000,000 in currency at
once, $60,000,000 would pay the demand notes, leaving
$90,000,000 to pay our soldiers and carry on the war
for some months to come.

"We had also gained our first military success. Grant
had captured forts Henry and Donelson, and was push-
ing for Nashville. The clouds seemed to be breaking
away, and the future to look more hopeful.

I was therefore surprised when one afternoon, late in
February, 1862, President Lincoln entered the register's
room with as sad a look as I ever saw upon his careworn
face. He dropped wearily into a seat he had previously
chosen, and after a short silence exclaimed :

" What have you to say about this legal-tender act ?
Here is a committee of great financiers from the great
cities who say that, by approving this act, I have wrecked
the country. They know all about it or they are mis-
taken."

" You have done nothing of the kind," I said. " The
time for argument has passed. Legal tender is inevita-
ble. The gentlemen you mention have made it a neces-
sity. The people would take our notes without the
legal -tender clause. The banks and the copperheads
will not. We cannot risk the country in their hands.
You have followed your own good judgment in signing
the act. The people will sustain you and Secretary Chase
and Congress."

" I do not see that I am exclusively responsible," he
continued. " I say to these gentlemen, ' Go to Secretary
Chase; he is managing the finances.' They persist,
and have argued me almost blind. I am worse off than
Saint Paul. He was in a strait betwixt two. I am in



308 RECOLLECTIONS OF PRESIDENT LINCOLN

a strait betwixt twenty, and they are bankers and
financiers."

"You are right in signing the act," I said; "that
point has passed debate."

"Now that is just where my mind is troubled," he
continued. " We owe a lot of money which we cannot
pay ; we have got to run in debt still deeper. Our cred-
itors think we are honest, and will pay in the future.
They will take our notes, but they want small notes
which they can use among themselves. So far I see no
objection, but I do not like to say to a creditor you
shall accept in payment of your debt something that
was not money when it was contracted. That doesn't
seem honest, and I do not believe the Constitution sanc-
tions dishonesty."

"No more do I," I replied. "I do not claim that
legal tender can be upheld as an abstract right under
the Constitution. But self-preservation is a right higher
than the Constitution. "We are warranted in making
any sacrifice of property or political right to save the
Union. Gold and silver are beyond our reach ; our sol-
diers must be paid and fed and clothed. We can issue
Treasury notes, and circulate them as currency. It is
right and honest that we should give them the quality
of legal tender, provided we return to specie as soon as
the necessity has passed. I have watched the debates
in Congress. I have read the opinion of your attorney-
general. There are those who hint and suggest that
legal tender is provided for in the Constitution. I have
read no speech in which that right is broadly asserted.
I believe it safer to defend our position on the ground
of necessity."

"I understand that is Chase's ground, though he
does not put it so strongly. We shall see. We will



AND HIS ADMINISTRATION. 3Q9

wait to hear from the country districts, from the peo-
ple."

He again relapsed into silence, which I did not inter-
rupt. Then he said, " When the old monks had tired
themselves out in fighting the devil, did they not have
places to which they retired for rest, which were called
retreats ?"

" They did," I answered ; " though I understand they
were for spiritual rather than bodily recuperation."

" I think of making this office one of my retreats" he
said. "It is so quiet and restful here. Do you never
get discouraged ?"

" I shall be delighted to have you," I said, ignoring
his question. " I only wish I could say of it, as Father
Prout sang of the Groves of Blarney,

" ' There's gravel- walks there for speculation,
And conversation in sweet solitude.' "

" Tell me more of that ballad," he exclaimed, cheer-
ily. " I like its jingle. What an Irish conceit that is
' conversation in sweet solitude.'' "

" I fear I cannot. I must send you the book. I only
remember,

" ' There's statues gracing this noble place in,

All heathen goddesses so fair,
Bold Neptune, Plutarch, and Nicodaymus,
A-standing naked in the open air.' "

" I must have that book to-night," he said. " A good
Irish bull is medicine for the blues."

He left the office actually to the sound of his own
musical laugh. He sent for the book a copy of Crof-
ton Croker's " Popular Songs of Ireland." It is before
me now ; priceless almost, when I remember that it once
gave Abraham Lincoln some pleasure, some respite from
his cares.



310 RECOLLECTIONS OF PRESIDENT LINCOLN

I have several reasons for this prelude to a sketch of
the greenback. It suggests what every American ought
to know that it was resorted to in a very dark period
of the war ; that it was accepted by the President on
his faith in the financial policy of Secretary Chase, who
advocated it not as a constitutional right per se, but as a
right, like the proclamation of freedom to the slaves,
founded upon military necessity. The story may possi-
bly be regarded as trivial, but it tends to show with
what intense earnestness the President bore his grave
responsibilities, and that he seized upon an amusing
story or volume because it diverted him for the mo-
ment, and strengthened rather than weakened his ca-
pacity for his graver duties. I think it tends also to
illustrate the simple honesty of his mind. Had Mr.
Lincoln been preserved to the republic, I do not believe
that the question of legal tender would have been car-
ried into the Supreme Court of the United States. The
weight of his influence, never so powerful as on the day
of his death, would have been thrown in favor of com-
mencing the retirement of the legal-tender notes at the
close of the war, and the return to a specie basis at the
earliest date consistent with prudence and discretion.

A "greenback" is a statement engraved and printed
in the similitude of a bank-note that " the United States
will pay to the bearer - - dollars." It bears on its face
the engraved signatures of the register and treasurer
of the United States ; a memorandum that it is' issued
under the act of March 3, 1863 ; and that it is a legal
tender for - - dollars. A fac-simile of the Treasury
seal is printed upon it in red ink and by a separate im-
pression. In an open space on the back is a statement
that " this note is a legal tender at its face value for all
debts, public or private, except duties on imports and



AND HIS ADMINISTRATION.

interest on the public debt," with a note of the punish-
ment denounced against its counterfeiting or alteration.
Originally it bore a certificate of its right to be convert-
ed into bonds of the United States, bearing interest at
the rate of six per cent, per annum. This right was
withdrawn by the act of March 3, 1863, as to all notes
not presented for exchange before the 1st day of July in
that year.

The greenback, then, is the naked promise of the
United States to pay the bearer a certain number of
dollars, unsecured except by the national credit, without
date or time of payment, which, for all ordinary purposes,
is money, equal to the gold ?nd silver coins authorized by
law.

The alteration and counterfeiting of bank-notes, crimes
almost unknown to the present generation, were common
when the state-bank issues existed. The bank-note com-
panies owned a patented green ink, which they claimed
was a protection against photography, that it was diffi-
cult to erase, the composition of which was a secret un-
known to the criminal classes. Secretary Chase decided
that the backs of the legal-tender notes should be print-
ed with this patented green ink, giving to such notes
literally green backs. The soldiers, quick to seize upon
an appropriate name, on the first visit of the paymaster
with these notes, gave them the name of " greenbacks."
This name was universally adopted, and became as per-
manent as the notes themselves.

The authority for the issue of greenbacks was con-
ferred by three acts of Congress, passed respectively
on February 25 and July 11, 1862, and March 3, 1863.
The first act authorized the issue of $150,000,000 ; but
$60,000,000 of these were to be in lieu of the $60,000,000
of demand notes authorized by the act of July 17", 1861.



312 RECOLLECTIONS OF PRESIDENT LINCOLN

Each, of the other acts authorized the issue of $150,000,-
000, making the whole amount authorized $450,000,000.

The largest amount of greenbacks outstanding at one
time was on the 3d of February, 1864, less than one year
after the passage of the last act. The aggregate then
reached was $449,479,222, or within a little more than
half a million dollars of the full amount authorized.

The act of June 30, 1865, restricted the amounts of
greenbacks issued and to be issued to $400,000,000, and
" such additional sum, not exceeding $50,000,000, as may
be temporarily required for the redemption of temporary
loan" (sic). The aggregate in circulation on the 31st of
August, 1865, which may be taken as the close of the
war, was $432,553,912, and on the 1st day of January,
1866, $425,839,313.

This large amount, however, was not an addition of so
much money to the circulation of the country. Had it
been, the inflation of prices and the activity of specula-
tion would have been greater. The net increase of the
circulating money at any time during the war would re-
quire a computation more complicated than is suited to
this sketch. It may be mentioned, however, that the
circulation of the state banks, estimated in the loyal
states at $150,000,000, had been withdrawn, and that
issued to national banks was not large enough to take
its place. The difference between these two amounts,
with the whole amount of coin, had disappeared. The
outstanding fractional currency must be added to the
greenbacks, and the loss of state bank circulation and
coin deducted, in order to ascertain the net increase. It
affected values, no doubt, but probably not so much, as
the value of greenbacks was diminished by depriving
them of the right of exchange into interest - bearing
bonds under the act of March, 1863.



AND HIS ADMINISTRATION. 313

At the close of the war there was a worthy successor
of Secretary Chase at the head of the Treasury. Re-
publics are fortunate which in periods of financial diffi-
culty are able to secure the services of such men as Sal-
mon P. Chase and Hugh McCulloch. "We had, by the
bullet of the assassin, lost the potential personality of
Abraham Lincoln. His secretary, McCulloch, in the
true spirit of the legal-tender legislation, as soon as the
necessity had passed, turned his energies towards a re-
turn to a sound specie basis, and to the retirement of the
greenbacks as the first and proper step towards that de-
sirable goal. The national debt had then reached the
gigantic amount of more than $2,800,000,000. To form
an accurate judgment of the progress of which the re-
public was capable when it was relieved of the incubus
of slavery and permitted to expand under the influences
of peace ; to preserve the national credit ; to provide for
and pay the debt due to the soldiers and sailors who had
crushed the rebellion ; and promptly, without delay, to
lay out and enter upon the shortest safe road to specie
payment, required not only a man able to comprehend
the financial situation, but who had the boldness and
courage to act upon his convictions. They have an ex-
pression on the Pacific coast which conveys a world of
meaning. They say of a man who has shown great abili-
ties wherever he has been placed that he is a " scopy "
man. Secretary McCulloch was evidently a "scopy"
man. In his first report to Congress after the close of
the war, on the 4th of December, 1865, he declared in
plain terms that the legal-tender acts were war measures
passed in a great emergency, that they should be regard-
ed only as temporary, that they ought not to remain in
force a day longer than would be necessary to enable the
people to prepare for a return to the gold standard, and



314 RECOLLECTIONS OF PRESIDENT LINCOLN

that the work of retiring the greenbacks which had been
issued should be commenced without delay, and carefully
and persistently continued until all were retired. Such
words were powerful because of their sense and justice.
By the act of April 12, 1866, Congress authorized the
secretary to commence the withdrawal of the green-
backs from circulation, to retire $10,000,000 within six
months from the passage of the act, and thereafter to
continue the process at the rate of $4,000,000 per month.
The unanimity with which the secretary's policy was
supported was shown by the vote in the House of Rep-
resentatives on the passage of this act. There were 144
votes in the affirmative, and only 6 in the opposition.

Secretary McCulloch immediately instituted the proc-
ess of retirement, and conducted it with quiet and em-
inent discretion. By the end of the year 1866 he had
reduced the greenbacks outstanding from $425,000,000
to $380,000,000, and was proceeding quietly to continue
the process at the rate of $4,000,000 per month.

But suddenly there was a change in the political at-
mosphere. A multitude of impecunious patriots, scat-
tered over the North and West, discovered that they
were being oppressed and afflicted beyond endurance by
the contraction of the currency. They made the coun-
try resound with their meanings of distress. The specu-
lators of the " bull " party joined in the cry. Together
they organized a political party called the Greenback
Party. It attracted the same class of recruits that went
down to David in the cave of Adullam. Every one that
was in distress and every one that was in debt and every
one that was discontented joined the party, and began
to cry out with a loud voice against contraction, against
the dreadful tyranny of Secretary McCulloch. Then it
was that the republic wanted Abraham IJncoln. Had



Online LibraryL. E. (Lucius Eugene) ChittendenRecollections of President Lincoln and his administration → online text (page 22 of 35)