Full text of The Merchants' Magazine and Commercial Review : April 1865, Vol. LII, No. IV

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THE

MERCHANTS’ MAGAZINE
AND

COMMERCIAL R E V I E W .

y

nence overlooking the river Aar, in the Canton of Aargau in Switzerland,
called the Castle of Hapsburg, was the residence of the Counts of that
name. The member of the family who built this castle was Bishop of
Strasburg, and he doubtless enjoyed many a day in theflcinity in pursuits
and pastimes which the bishops of the present age do not deem quite
consistent with their sacred functions, and which, to say the least, could
contribute but sIighthU;o the welfare of the flock. Some a ^ m p t to trace
this family back to tffe Old Romans, aud while no»one doubts that it had
an ancestry somewhere, even anterior to their day, yet the accuracy of
the genealogy given may be questioned. The line is, however, traced
with probability to the seventh and with certainty to the eleventh century ;
but the particular person of this house whose fame reached such a pitch
of eminence as to* (bake it known throughout th&iivilized world, was
born.in the year 1218 of our eja,*and is known jjWistory as R udolph of
Hapsburg.
■*.
Our eccentric'Statesrnan, J ohn RANDpLPH^-of Roanoke, is said to have
replied to some members of the House of Representatives, who talked
much of the advantage to posterity of their schemes of legislation, with
the sarcastic question: “ W hat has posterity ever done for us, that we
should do so much for i t j ” This solecistic sarcasm contains much truth
when applied to the suoject of this sketch, for, great as is the deserved
fame of R udolph of Hapsburg, derived from his personal deeds and those
of his ancestry, yet its lustre is augmented a hundred fold by the wonder­
ful history of his posterity.
..
R udolph ’s father followed the standard of the Emperor F rederic I I .,
to whom he was distantly related. He finally caught the contagion of
his time and determined to sail for the Orient. He called together his
sons and said to th em : “ Be mindful that the Counts of Hapsburg did
VOL. LII.— NO. IV.
16




The House o f Hapsburg in America.

250

[April,

not attain their height of reputation and glory by fraud, insolence and
selfishness, but by courage and devotion to the public weal. As long as
you follow their footsteps, you will not only retain, but augment, the pos­
sessions and dignities of your illustrious ancestors.” He embarked at
Marseilles with thirty barons in bis train for Ptolemais, found on his
arrival that a truce had been concluded with the Saracens, and, dying at
Askalon, in 1240, his mortal remains found their resting place in the Holy
Land.
R udolph , by his own judicious management, extended his paternal in­
heritance on the Upper Rhine, and in the Swiss Cantons. His upright­
ness, his courage, and his infallible tactics as a military leader, created a
demand for liis services as protector of free cantons or cities, or as umpire
in cases of dispute. His generosity, frankness, and contempt of etiquette
when some higher purpose rose to view ^nade him a general favorite.
As Count of Kyburg, a castle near iZuria^Be had neglected to pay hom­
age to the Abbot of S t. G all, who ^ ^ ^ E i i t s lordship. The__pjcelj>J&^
marched w ith a for-cg to vex act this d ut^BfcUboLPH ^ a s ready with
knights andNttfantry to r e p e lrf^ ^ ^ tfk , when
y
in Alsace informed him tha ^ ^ ^ ^ ^ K n s of Basle, heWea by thei^gishop, v
issacred several ofHvs relatives. He
at die clqs^gjka t%iur\a' ^
uaddressed theawto the following
?cT hiSyconn^^ial follow^
the entreaelK ct: “ I am drawn by<jny intend
fused nomag^mo the Abbot for
ties of my friends in another. I
these fiefs, because they are my blheritance from my uncle. But if a man
has two powerful enemies, he should be reconciled to,one of them. If
you agree with ju e that it is nobler to avenge irijuriesh-done to friends,
than to pursue-cflMfcprivate advantage, let us make peace with the Abbot.”
They favored the^mS^surq,j^tti4, jfui^osed an arbitrati&e,. He replied :
“ There- is no n e e ^ o f arb itratio n . T h a Jn isin e ss m ust be settled a t once,
and I w ill be m j own m ed iato r.” J l ^ i p d e wiLi six a tten d an ts to^tlf^ ••
A bl^A s c a m j ^ ^ h ^ r q |! .|i b u i ^ l t l ^ l a t t e 'r U id h i^ jp ^ jjc ia te s a t dinner.
H is fra^k, g allan t and n o b le.b ea rjjp g .cajjtiv ^ t^ th e m 'a il, th e q uarrel was
a t once sett«ted, and he was invited to dine With his enem y. ^H ^ij-elate’d
u a t th e table t b O a d is s u e ^ a f> & j^ ,o u rn a ffl^ i^ t B asle,
aifed th a t
me was cbmipelled to n^Iedt^OTher c o n s i d e r a t e sJSfc o rd er loTteei
self on th,e:se p e p p l « n d th eir Italian bis^jop. S u e h .^ J ^ t ^ d w e c t of
addnees^'tljaf th e foAfewdilcls, ij^f^ew h e u rs ’wbvld h a v d m e t hfflNn deadly ’
A onflict^eea-S re'his allies. T b e ^ c o m p r jC y th e citizens o f& i^ le to d i n e r
hosfagesMjsipledge of sa tisf^ io r^ fb i^ fc o n c lu d e d ^trueq«tS^\vr?!if)*§)ur dayF,
and th efe, efitsarup^d
Is of ftiK cH y ,‘'-'t^ey were w aiting the
.<•' expiragroS'yof r a g t i m e .
Unj-Wliight at, m id n ig h t, R udolph ’s ^ ephew,
. ^ ^ h Se r ic of H ohehzollern, cam e to his te n t w ith in t^ lig etfce ra a t the
E lectoral C ollege of th e E m p ire had m ade h i m ^ i n g o f,f ie R om ans. A t

b u t ^ S |b :,^ tisfie^ ofots truth,
.'Vfclhe u^t-i %^spi%a<Idjth e peo0 hat they Bad “ njade war against
r ___ ____ - ^ r.----------to
'the Count o?S.apsbq^gfand notWffiiast the Roman king;” and the bishop
made the ‘fjot very^ff&jsrent S ciaination: “ Sit, firm, Lord God, or
RuDOLEg^will seize kby~th‘rone?V
—— ------- 1----- V y ~-----------------------------------------------------------------* Sede fortitw^Domioe Deus, vel locum R cjdolfus occupabit tuum.




'___

1865.]

251

V i*

Various circumstances had d ^^ m in ed the election of an insignificant
sigrii&ar
Count over mighty kings. W er n er , ^j-chbishop elect of Mentz, had
made a journey to Rome, in order to receive confirmati«Trand his pallium
at the hands of the Pope. R udolph had protected
by an escort
through the Alps, then infested with robbers, and on hT^return magnifi­
cently entertained him. The prelate, deeply impressed with this behavior,
resolved to reward it. Being one of the imperial electors, he had now the
opportunity. R udolph had marked personal qualities to recommend him.
He was perhaps the greatest strategist of his age. He is supposed to have
re-introduced pontoon bridges, which had been unknown from ajicient
times. His just, generous and noble traits fitted him to deal with that
state of anarchy which had resulted from a virtual interregnum of more
than twenty years—a state of things which contemporaries have aptly
described in the words of Scripture: “ In those days there was no king in
Israel, and every„ono did that which was right in his own eyes.” The
other two spiritual electors were privately brorf^ht over to the views of
the Cardinal Archbishop of Mentz. Other/motives might control the
temporal electors, and others were offered. R udolph had six unmarried
daughters. Such a possession has sometimes proved a fortune, and some­
times a source of torment. In this iri£.tanc^.it was the former. Two of
the electors were in a condition to f^rm matrimonial alliances with the
new candidate, fip
cm tne
the imperial di
dolph ’s friend and relative,
II
took it
F rederic of HohIiS boHern,
to urge thesfe^views to the
re alio
electors, who were
aBo influenced
r candidates
they .were in danger of finding m
s oj existing
abuses. They declared^for R udolph , and
iSdenlmrg and
Bavaria immediately nia led daugjiters..ofi
"nia, at the tim
& mmparch in
O ttocar, King o f£
anarchy,
the Empire, was of c o i ^ spleased
oravia, the
he had by usurpation'' gddel to his'kingiq
t
!e lands had
ducJiy of Austria,
I e d e m c 11. vs^cai
b e e \d s
raced a te e
the E iA
throiwjk tJ
CarpalJaiK'ffii 'Cl
t
He was called upoh
hereditary kingdom, j This
tion, much rqpre so, if it is lyue, as ^maintained by some£rfiat R udolph
had once been A O ttocar’s service as master of his horse. Tkg king re­
fused cqnqMpce, and insulted the new emperor. He deoTared^,hat the
election Jjf ajn an who had ont^s bepn excommunicated bypthe Pope—for
such was R udolph ’s case— was unlawful. But, beaten in battle, the
haughty sovereign yielded his*claim to the other states, and^c^rfsented to
do homage for Bohemia, but h e i g h t thaA jt might b ^ rt^ e c re t in the
imperial tent. His request was granted, ancBhe repaireuynither all glit­
tering in gold, and found the qgip'eror m plam clothes—iftnd the clothes
revealed the men. In the mujjjt o f,jJe ceremony, the si,des of the tent,
were raised, so as to exhibit the proud O ttocar on his 'knees before hi*late despised rival. The wound*was too debp to heal. The King of
Bohemia soon broke the peace and fell in battle.
Thus the founder of that house which at the present day still reig%
over the Austrian Empire, a scion of which has just been transplanted to




252

The House o f Ilapsburg iiv

[April,

our own Continent, was established upon the throne of those lands which
formed the nucleus of that Empire. His right was no more called in
question. The whole empire felt his healing touch. His son A lbert
succeeded him inpAustria, but not immediately on the imperial throne ;
for, unlike his father, he was of harsh and imperious temper and manners.
He was, however, still raised to the throne of the Empire on the death of
his father’s immediate successor, A dolphus of Nassau. It was in the
reign of this A lbert that the three forest Cantons of Switzerland—Uri,
Schweitz, and Unterwalden—struck for independence, and gave rise to
that marvelous history, which, as embodied in S chiller ’s tragedy of
W illiam T ell , has thrilled so many hearts, but which would, to this day,
be very unpalatable to the Hapsburgs. R udolph himself had held the
patronage of these Cantons, but he humored their love of independence,
and did not interfere in the details of their governm ent which A lbert
attempting to do gave rise to the Swiss Confederation, n*v five centuries
old, and a perpetual protest against European despotisnl^f He was assassi­
nated in the year 1308, by a conspiracy headed by his-Bepk^sjfjust as he
was entering Switzerland to enforce his demand ; and, sem i years later,
his son L eopold was signally d e n te d by these Cantons in ..the battle of
Morgarten.
V
Previous to the year 1457*115
iperial dignity had been distributed
among the reigning houses
[ipire; from thatT im '^ 't remained in
the house of Hapsburg
en Austria itsenjjftam ed the rank
of a hereditary empjre. Th
minated in C h S rle ^JV’., who united
ependencies, the Netherlands and
in his own person A%stri
American possessions, and considerFranche Comte, Spain
iidded tlultfhT perial throne, at the
able territory in Italy,'to all.wjiid
M axe * : ia n , was his predecessor,
age of nineteen years,
and governed the Em
Berestin^
1 when L uther ’s first
C harles succeeded
movement broke its loti
(rbulent mol
r sat upon a throne,
him in 1519. Affirino
’and politic
He kept»faith"billy wjf
7 policy. E knew his contenflioriire, ^and was^stUl his
aries. F rakcT s I. had
for th
cbmpetitor for Europea
>rt VII
ingl'and # s the only
’n/his
He trampled upon
sovereign''abld* to turn
his owni/oronation.
■ iifo * his jwa
etiquette in order to v:
j ay
W ary and observing beyonjl* h i / i W ^ per fved th a t/W oolsey
governed the English monargfy anyr,mat.<®mb
ibition goveifc^tl W oolsey ;
he accordingly promised the prelate 4nat
should haviFtJ^fcapal chair
wtcan*’ seemed distant, f^ jL d P X . was
when it became vacant. ..•*‘R[iee ^icanAr
irorrfRf however, had s|^rv^ its end,
still young, but he died soon!' ^ i e proiJl^:,
and needed not therefore to be fulfilled, esi^cially as the disSiftfy could, as
he thought}-^ more safely bestowed.
was succeeded,*tlltrefore, by
A drian B oyens , P r o f e s ^ jf l^ L o u v a ir fl^ iiA R i.E s ’ old tutor. Ho would
have put down the Ref<*ffJpion
he desired to hold it' as a
scourge over the Pope, a i J f t s a
goodwill of the princes of the
empire who favored the KeformenT BBrarmy in Italy seized the Pope’s
person, acting doubtless on his authoritaf, but when lie found the measure
unpopular, he disavowed it, went in piourning, and ordered prayers for
His Holiness’ release. The Holy Father was soon at liberty, but the case
was not decisive as to the efficacy of prayer. W hen he became ready to




1865.]

The House o f H apslurg in America.

253

put down the Reformation—that is, when it agreed with his plan to do
so—he remorselessly seized the immediate successor of the very prince to
whom he doubly owed his elevation—for the imperial dignity had first
been offered to F rederic the Wise of Saxony, who declined it, and caused
it to be given to the youthful C harles . He subjected the Elector to a
mock trial at the gates of Wittennberg, before the infamous Duke of
A lva , and made his life depend upon the opening of.the gates by.
Elector’s family, who were within. He saved his life indHed, but gave his
dominions to the Protestant Prince M aurice , who promised to be his
supple tool. He seized the Landgrave of Hesse, the only prince on the
Protestant side who did not yield, and held him a perpetual hostage. He
governed the States of Germany as if^t^et»liadJ»e«n his hereditary domin­
ions. Ma l ic e f a vedj'^Wfle^jl too s rew dfjbr him, and was the first to
beat him at his own game **of dissimulation. H e knew th at C harle* \
could not ly^rasted. H e\jSls the im p e r il plufis through their disguise,
and having’ won bi^^onfidence, he obtained ..the command of the arm y
re b®n
0® n used in enfqagiqg-the
enfoncincr.the Interim,*
Interim .* thatrik
ifl*mitiffi.o‘
which-was to have
thakis iiTpu■
^

VVj
NS

down the Refcu-matjon. M aurice bad, however, a private understancnngi
with the Protestanrl^rinces, and a secret treaty with IlE \R vdI.of Fr! c e , ^ ^
thatAhe latter should en.tdlyLorraine aP the same .ipstant that he ^
mai-Qj a^aipst the Emperor. He managed so adroitly that C harles never
entertained the slightest suspicion until he was within two hours inarch
of Innsbruck, where His Imperial Majesty was quietly waiting and watch­
ing the progress of the Council of Trent, then in session on the other side
of the mountains. Suffering from gout, and unable to»»ride, he escaped
upon a litter, under cover of a dark and stormy night. He was thus
borne through by-ways to the alpine village of Villaek in Carinthia.
Having narrowly escaped capture by his owmarmy, he was, of course,
ready Uwvwe thi|Protestants the freq^xercise oWheir«eligidT><by signing
the t rea
, i^tiio^i ^vas l!h ^ 3 ^ t\to him i\h ism o u n ta in retreat.
CHARLE3*k^r recovered from^fhis ihock. The Pope and the Catholic
powers coulcPnot trust him ; the Protestants of course could not; he made
some ineffectual attempts to recover himself; but finally chagrin and the
gout wrought together to bring him to the magnanimous resolution to
resign his vast dominions and cares. On his accession to the Empire, he
had given up Austria to his brother FERDixAND^nd the Electors had
appointed the latter tqggucceed him on the imperial throne. He tried
several times to persuade his brother to relinquish this succession to his
son P h il ip —the aggrandisement of his immediate farhilyvbein^ his great
motive, when the hope of his own was past—but when he found this im­
possible, and his imperious counsellors, gout and chagrin, pressed him
sorely, he abandoned his honors and retired to the walls of a convent,
where, like the dying wolf, lie doubtless sought to find a balance against
his many acts of arbitrary rapacity, in the many supposable ones which he
had not committed. The review of the reign of this Hapsburg, and that
of P h il ip II., has led the thoughtful student of history often to contera* Charles, assuming to control alike spiritual and temporal matters, got up a
system of religious doctrine and church order, somewhere between those of the two
parties, which was to be made obligatory until the final determinations of the Council
of Trent could be known. This was called the “ Interim.”




254

The House o f Hapsburg in America.

[April,

plate with gratitude Europe’s narrow escape from the scenes enacted on
the narrower stage of the Netherlands, so finely portrayed by S chiller ,
and recently by our own M otley . Even the reputation which his sup­
posed austerity in the monastery of Yuste had won for him, has all been
dissipated by the discovery of his correspondence, showing that even in
that retreat, his time and faculties were divided between political schem­
ing and gormandizing.
F erdinand , l>y_marriage with A nne of Hungary, inherited that kingdom
in 1526, together with Bohemia, Moravia, Silesia and Lusatia, and in this
augmented dignity originated the title of Arehduke, which still remains in
the family. This extensive domain, with numerous additions, after various
cessions and retrocession, continues in the family to this day. There is not in
the whole civilized world another instance of so great diversity of character,
language and religion crowded together within the same space. It is as
if the period of the northern migrations had*been a vast inundation, dur­
ing which this whole range of country, permeated by the Danube, embrac­
ing the mountains and valleys of the eastern Alps,#fhe Carpathians, the
Giant and Pine mountains and Bohemian forests, htid formed a series of
innumerable eddies, in which this human drift of all |kinds had been col­
lected and whirled round until the waters subsided* and left it all there,
where it still lies not yet assimilated, nor likely to become so. 'The popu­
lation of France, though as large as that of Austria, has become all French,
with but slight mixture on the side of Germany and Italy. The two
latter, though always under numerous independent governments, have
each been one people in language and feeling, with a slight exception in
eastern Prussia. In Germany and Italy independent sovereigns have
striven to keep their subjects from becoming one, lest they should lose
their thrones; but in Austria the one sovereign has made the most violent
efforts, that too all in vain'to unite and harmonize his subjects.
Austria lay on the frontier of Europe,-next to the Ottolfianypmpire. Its
name, Oesterreich, the Eastern Empire, is 5significant. ■■‘The germ, of those
dominions over which the Hapsburgs now reign, was formed in the time
of C harlemagne , in the year 800, by a militia force which guarded the
eastern frontier of his empire from the incursions of Asiatic tribes. Several
centuries later it was increased by the territory above the river Enns, and
became a duchy, around which continued, from time to time, to cluster
the various lands whicl? have finally made up tb^Austrian Empire, the
whole taking the name which the little Margraviate had received as being
the eastern limit of C harlemagne ’s dominions.
Aggrandizement has been the motive of this family, just as of all other
governments, both monarchies and republics, unless it be such as the
Republic of San Marino, or the Duchy of Lichtenstein, which lie below the
level where ambition figures. This idea is nowhere more active than in
our own Republic, and none boast so loudly when traveling abroad of the
extent, wealth and intelligence of their country as our own citizens.
Each feels that he has a personal share in the toil and glory of this
aggrandizement, while in Austria it belongs to the Hapsburgs, and the
private person seldom feels his heart swell and expand with this thought.
The distinction, then, between the House of Hapsburg and any other
sovereign power, is not to be sought in this desire for national aggran­
dizement, but in the principles and policy by which it is pursued. The




1865.]

The House of Hapshurg in America.

255

sovereigns of this family have been much governed by a policy of oppres­
sion and narrow-minded restrictiveness. Apparently changing with the
changes in events, it has remained nearly unchanged, F erdinand Id.
seemed more liberal than his brother C harles . We can scarcely doubt
that he was so. But as a party to the treaty of Passau, he was moved by
a feeling of jealousy of his brother’s power, and by the necessity of the
Elector M aurice ’s aid against the Turks in Hungary. As the bone in the
wolf’s throat was mercy to the lamb, so F erdinand ’s fears and necessities
were liberality to the reformed party in the Empire. He received the
Jesuits into his dominions, but did not adopt their counsels for the exter­
mination of Protestantism. Similar causes dictated, a similar policy until
the opening of the thirty years war changed the aspect of things. The
Protestant armies held the capital of Bohemia and threatened Vienna.
Two hundred years had not killed out the seed sown by J ohn H uss and
his compeers. Indeed, the Protestants were the strongest party in
Bohemia and the neighboring lands of Silesia, Lusatia, and Moravia, and
were strong in the duchy of Austria itself, as also in Styria, Transylvania
and Hungary, and were in open rebellion, already well-nigh triumphant.
But by the battle of White Mountain, in 1620, Prague and all Bohemia
fell into the hands of F erdinand II., who but the year before had succeed­
ed to his hereditary dominions and the imperial throne. This prince had
been educated in the Jesuit College at Ingolstadt. His education but
nourished the superstition of his nature, He gave the Jesuits the problem
of bringing his Bohemian subjects back to the bosom of the church.
They required the people to observe the church ritual. It was a short
process of reduction to a common denominator, and the rule was quite
distinct. Each family must appear in the church in an order to be regu­
lated by their house numbers. To the charge of non-attendance they
could plead that their number or their day was not that contained in the
indictment, or something else equally decisive of their true religious state.
Moreover, a military force accompanied the reformatory agents, and where
submission could not be obtained, the scaffold settled the question. Con­
fiscations and martyrdoms flung terror in all directions, and voluntary
exiles deprived the kingdom of 30,000 of its best families, with all their
servants and retainers, while their forfeited estates rewarded the agents of
this desolation. As a still further reward, the Emperor endowed sixteen
colleges for the Jesuits within his Austrian dominions. W hat body of
men would not work well for such pay ? The monarch rather than the
missionary should be charged with the result. The Inquisition never acted
with more rigor, nor was a policy more ruinous to a country’s best inter­
ests ever pursued. Three-fourths of the people of Bohemia had been
heretics, and their heresy was extinguished. Death was the lightest pun­
ishment inflicted. Far worse was the indiscriminate abandonment to the
license of a soldiery who might gratify every lust and then turn their
victims penniless upon the world to wander in hourly apprehension of
further vengeance, forbidden to use their native language, to exercise their
trades or professions, their marriages declared unlawful, and their children
illegitimate. If any escaped the vigilance of these itinerant reformers in
their first round—and this would doubtless occur from sheer weariness
and satiety of the lusts of the agents— they had slight cause to congratu­
late themselves; for their tormentors might be expected to return with




256

The House o f Hopsburg in America.

[April,

appetites whetted to greater keenness. Bohemia had been perhaps, in
the fourteenth and fifteenth centuries, more than any other land, the light
of Europe, and its great light had been the University of Prague. F e r ­
dinand gave this to the Jesuits, and its light was extinguished ; and from
being the first of Universities it has nearly lost its character as a seat of
learning. This country had had a glorious history for more than two
centuries before these events. Its written memorials were still to be
found in many a house in the kingdom. All traces of this history were,
so far as possible, obliterated, that the people might forget whose children
they were, or rather what their fathers had done. Any monument of their
former glory might become the rallying point of new aspirations, and
none must therefore be left. Hence it has happened that the history of
J ohn H ues, J erome of Prague, and J ohn Z iska , had been, until within a
few years, so imperfectly written. The flames which had consumed the
bodies of the children, had destroyed also the memorials of their fathers’
deeds. Few besides those which had already reached other countries,
and were there preserved, escaped the fire. As printing was not yet
known in the days of the Hussite war, these books were not greatly mul­
tiplied, and it is but recently that enough of these have been recovered to
write this history with tolerable fullness. From the days of F erdinand
H., Bohemia has been scarcely known in the history of the world.
F erdinand pursued the same general policy, though less vigorously in
the rest of his dominions. He attempted to introduce it throughout the
German Empire. He authorized the Catholic sovereigns of Germany to
enforce their subjects’ return to their own faith, as he had done. He
published the so-called edict of restitution, requiring the restoration of all
the ecclesiastical property which had been secularized since the peace of
Passau. But he went too far. H e awakened enemies who would other­
wise have been his friends, or remained neutral. He aroused the appre­
hension of even Catholic sovereigns. The Catholic league headed by
M axim ilian of Bavaria, refused to sustain him, although he had rewarded
this prince with the Palatinate which he had taken from the weak and
unfortunate F rederic , son-in-law of J ames I. of England. His grand
plan was to exterminate protestantism, which he regarded as identical
with rebellion. He looked upon any means necessary to the accomplish­
ment of so beneficient a work as justified by the great end to be achieved.
In attempting to negotiate with the electors of Saxony and Brandenburg,
he represented the contest as not a religious one. In treating with
Catholic France, he allowed the approaching war to be regarded as one
demanded by the interests of the Church and depicted the common dan­
ger to France from the Hugenots, and the German empire from the Pro­
testants. But his plans, if not fully penetrated, were still viewed with
apprehension and even alarm. The German Catholic powers moved
first. This emboldened the Protestants. They called upon F erdinand
in 1629 to convene a diet at Ratisbon. Here they insisted upon certain
concessions, which, though humiliating, he granted, in the hope that his
son would be immediately elected to succeed him on the imperial throne,
C ardinal R ic h e lie u , jealous of the growth of the House of Hapsburg.
sent thither an ambassador and outwitted His Imperial Majesty. The
latter made the concessions, and still the diet was dissolved without his
son’s election.




1865.]

The House o f Hapsburg in America.

At the very time that R ic h e lie u was treating with F erdinand , he
was also closing a treaty with G ustavus A dolphus , King of Sweden,
against the house of Austria, and in June, 1630, that wonderful man
landed in Pomerania on the South shore of the Baltic. The Emperor
despised, but soon learned to dread this new enemy ; for before the close of
1631, all Bohemia was again in the handsof F erdinand ’s enemies, the exiled
nobles were returning and reclaiming their forfeited estates, the forced con­
verts were resuming the forms of worship which they had been compelled to
renounce, and this truest type of the Hapsburg family found himself in­
volved in a war of which he was destined never to see the end. It had
raged ten years, when instead of closing, its earnest realities were just
about to commence. How little this man knew what trains he bad set in
motion 1 By reasonable moderation in 1620 he might have left his house
in the enjoyment of a power and a splendor, nay, even a control in mat­
ters of religious faith, which his more liberal son would have loved in
vain to establish in the peace of Westphalia, after 28 years more of the
most desolating war that ever ravaged the extent of the German Empire.
This war was the great theatre of the genius of G ustavus A dolphus , and
his wise Chancellor O xenstiern — of Count T illy , whose name is the best
synonym for cruelty to the population of cities taken by siege—of W al ­
lenstein , not one of the greatest generals, but one of the most enigmati­
cal characters, which has ever appeared as general. It was too a theatre
for the display of the artful diplomacy of Cardinals R ich elieu and
M azarin . For this whole devastating and embittering struggle, F erdi ­
nand II. was mainly responsible, and although M aximilian of Bavaria
was head of the Catholic league, which generally co-operated with the
Emperor, the latter was the soul of the war which began with his
accession and continued 11 years after his death. The German Protest­
ants have given the name of G ustavus A dolphus unions to their mis­
sionary societies formed to sustain feeble Protestant churches in Catholic
lands. This is at least in bad taste ; for G ustavus was not the peaceful
messenger of the glad tidings, but the martial defender of his party’s
rights. Neither party is at the present day disposed to put this question
to the test of arms, but if they were so disposed, they could not rally under
more appropriate names than those of G ustavus A dolphus for the one,
and F erdinand II. for the other.
These two men, were each in his way, equally devout. W hen the tide of a
hard contested battle turned in his favor, the King of Sweden would drop
upon his knees amid the unsettled dust and smoke and the bodies of the
slain and return his fervent thanks to God for the victory. So F er d i ­
nand , when in 1619 the Protestant forces, masters of Bohemia and Mor­
avia and most of the duchy of Austria, were at the Gates of Vienna, with
scarelv less than a certainty of its capture, B artholomew V a l erius , the
Emperor’s confessor, entered his private cabinet at the moment when he
had finished his devotions, and F erdinand said to him : “ I have reflected
on the dangers which threaten me and my family, both at home and
abroad. W ith an enemy in the suburbs, sensible that the Protestants are
plotting my ruin, I implored that help from God which I cannot expect
from man. I had recourse to my Saviour, and said “ Lord Jesus Christ,
thou Redeemer of mankind, thou to whom all hearts are opened, thou
knowest that I seek thy honor and not my own. If it be thy will that I,




258

The House o f Hovsbura in America.

in tliis extremity, should be overcome by my enemies, and be made the
sport and contempt of the world, I will drink of the bitter cup. Thy
will be done!” I had scarcely spoken these words before I was inspired
with new hope, and felt a full conviction that God would frustrate the
designs of my enemies.”
His life was consistent with this prayer. lie bore adversity with the
fortitude of a saint. His arrogance in prosperity was but a different
manifestation of the same feeling. An affected or real humility fostered
by his educators, led him to admit the poor and even beggars to his presence,
and that too though they might be infected with the plague. He got
up entertainments for the poor and served them himself. He pur­
chased Christian slaves from their African masters. He hired advocates
at his own expense for the needy before courts of justice. And yet his
was the age marked in the history of Germany above all others for cruelty
in religious persecution, and he the man personally responsible for it.
That a man of so mild and clement a natural disposition could cherish at
the same time the cruel feellings which wasted the fairest lands of his
Empire, is a mystery which can only be solved by studying the times, the
strong antipathies and bitterness which arose from L uther and the Refor­
mation, and the strong and thoroughly organized counter-movement
directed by the Society of Jesus. In this, F erdinand II. stands revealed.
The reign of this monarch has been fully sketched, because he is a kind
of type of his house since the Reformation, including even its present re­
presentative, F rancis J oseph I. The others have only been less marked
and extravagant instances of that superstitious, narrow-minded and bigoted
policy, which had its highest manifestation and received its great rebuke
and final check in the German Empire in F erdinand II. Since his days
this policy has reigned only at home within the Austrian dominions, and
even there has been more modest.
The reader is to understand that we picture persons, or at most dynas­
ties and not Catholics or Catholic sovereigns in general. How have the
liberal Catholics of Italy and of the whole continent of Europe regarded
the policy of the House of Hapsburg, both at home and in the Italian
peninsula? In 1S48 the Grand Duke L eopold of Tuscany promised his
people a constitution and a liberal government and began the execution,
when the house of Hapsburg forbade and stopped the movement. In the
spring of 1861 we heard Dr. D o elling er , of Munich, who has very few
equals among Catholic divines, lecture on the temporal power of the Pope.
He is marked with the ultramontane school, and yet he remarked that of
all the possibilities in regard to the future of Italy, the restoration of
Austria’s ascendency was most undesirable.




(To be continued.)

1865.]

The Legal Tender Act.

259

THE LEGAL TENDER ACT.
B y A lbert S tickney , E sq.
T he Legal Tender Act of February 25, 1862, has been by several of
the Statu courts pronounced constitutional. Very possibly the Supreme
Court of the United States will also pronounce it constitutional. Yet
even then, if men generally feel certain that the measure was an unwise
one, and doubtful whether or not it was a constitutional one, any resort
in the future to such means for providing Government funds might be
prevented. The subject is not therefore, even though it is well nigh put
at rest for the present by decision, devoid of interest for discussion.
The act provides that the Treasury notes therein authorized to be issued,
commonly called Greenbacks, “ shall be lawful money and a legal tender
in payment of all debts, public and private, within the United States, ex­
cept duties on imports and interest as aforesaid,” i. e., interest on the pub­
lic debt.
Is this act constitutional ?
The 10th amendment to the Constitution reads thus: “ The powers not
delegated to the United States by the Constitution, nor prohibited by it
to the States, are reserved to the States respectively, or to the people.”
This then is clear; the power, to be vested in the Congress of the United
States, must be “ delegated” to Congress by the Constitution.
Not as was the case with the Congress under the old confederation,
there were given to Congress under the new Constitution all the powers
which naturally belong to the legislative body of a genuine government.
There are the powers “ to raise armies,” “ to provide a navy,” and lastly
the power “ to make all laws which shall be necessary and proper for
carrying into execution ” the other expressly granted powers. For the
execution of these powers of a national government, raising armies, main­
taining a navy, constituting eourts, and others, money must be hiid. This
power to pass a Legal Tender Act, if brought or attempted to be brought,
under the power “ to raise armies,” must come undersome of the powers to
raise money fo r the purpose of raising armies. If brought, or attempted
to be brought, under the power to “maintain a navy,” it must come under
some of the powers to raise money fo r the purpose of maintaining a navy.
And these powers of raising money are specially defined and given.
Under some of these money powers, then, must we find the power to pass
this Legal Tender Act, or not at all. And if we do not find it at all under
them, it does not exist.
These money powers given by the Constitution to Congress are these:
“ To lay and collect taxes, duties, imposts, and excises;” “ to borrow
money on the credit of the United S tates;” and “ to coin money, regulate
the value thereof, and of foreign coin.” These are the only powers given
to Congress, under the Constitution, for the purpose of raising money for
carrying on the general Government. They will be considered, not in
the order in which they are enumerated in the Constitution, but in the
order which suits the course of argument here pursued.
The first one is the coinage power, reading in the Constitution “ to coin
money and regulate the value thereof.” And this clause alone will be
first considered.




260

The Legal Tender Act.

At common law, before the Constitution was formed or dreamed of,
coined metals had always been recognized as money ; i. e., metals weighed
and stamped by the authorities having the power so to weigh and stamp
them. Other articles, too, may have been at times legally or illegally con­
sidered to be money. That is immaterial to us at present. Coined metals
were so considered. Courts of equity, when they decreed damages, in
cases where courts of law would not decree them, always decreed damages
in money. But it was necessary to have the standard of money uniform.
The Constitution then did not touch the point of what should be money ;
coined metals already were so ; nor did it give Congress power to touch
the point of what should be money ; but the Constitution gave Congress
the power to coin what already was money ; i. e., to weigh and stamp the
metals which, without any congressional action at all, were money already,
and to regulate the value of them after they were so weighed and stamped.
It is not then by virtue of the Constitution, or of Congressional legisla­
tion, that gold and silver coin are money, but being money, Congress has
by the Constitution power to coin them and regulate their value after
they are coined.
Nor is it by virtue of Congressional legislation that gold and silver are
legal tender. Gold and silver, being at common law money, were at com­
mon law legal tender for contracts to pay money, and the payment of
money was always decreed as damages by courts of law. The Constitu­
tion recognized this, and under the Constitution they still remained legal
tender for contracts to pay money, and still remained the article in which
courts were to decree damages. But of course the power must be some
where to coin this money, and regulate the value at which it shall be
legal tender, and at what rate courts of law shall decree its payment as
damages, and this is the power given to Congress. Congress never in its
legislation, whatever it may be said to have done, made gold and silver
coin legal tender. Witness the titles of the acts it has passed. “ An act
establishing a mint and regulating the coins of the United States.” The
title of the act shows the intention of the legislation, and the act accomp­
lished what the title showed the intention to b e ; and what the act
accomplished Congress had the power to accomplish, and no more.
It seems clear then, if the preceding statement be correct, that under
this clause of the Constitution no claim can be made as to the power of
Congress to make paper money, or to do anything but “ coin ” money.
But there is good authority for this statement. In the case of H ague v .
P owers, 39 Barb. 446, Judge S mith in an opinion sustaining the consti­
tutionality of the Legal Tender Act, says: “ These two provisions con­
strued together, most conclusively show, I think, that it was the purpose
of the framers of the Constitution to give to the national Government
exclusive control of the currency of the country, and to secure thereby
one currency for the whole country, one national uniform currency. But
that currency most evidently was to be a metallic one.
*
*
The national Government is to coin money, [the italics are in the original
opinion,] i. e., to fix the national stamp upon metals which are to be used
as money.
*
*
*
The money o f the Constitution was to be
hard money, metallic money. It was to be coined
Still although we may succeed in establishing as a point of constitu­
tional construction, and it is nothing more, that the power to make




1865.]

The Legal Tender Act.

261

Treasury notes legal tender can not come under this power “ to coin
money,” yet another position is often taken which deserves notice. It is
often claimed that the power to create money, or as it is called, “ the con­
trol of the currency,” is an inherent attribute of sovereignty. This may
be true. But the question then occurs, is Congress “ sovereign ?” By
the term “ sovereign,” as in this argument used, must be understood a
government not merely supreme in the exercise of those powers which it
possesses, but unlimited in the number of those powers. But it is not of
such a government that Congress is the legislative assembly. The United
States Government is supreme in the exercise of its powers, but the num­
ber of those powers is not unlimited. They exist only when conferred by
the Constitution, and because conferred by the Constitution. The ques­
tion then is not whether the power to create currency is a power belong­
ing to a sovereign government, but whether it is a power belonging to
this constitutionally created Congress. Whether the founders of the Con­
stitution ought to have given Congress the power to create a currency is
very different from the question whether they have given it, and this last
is one of interpretation merely. The power to provide punishments for
crimes is certainly a sovereign power, if there be such an one. Yet no
one claims that Congress has this power, except in a very few constitu­
tionally defined cases. Our inquiry must be, not what are sovereign
powers, but what are congressional powers; and not what are unconsti­
tutional acts of Congress, but what are constitutional powers of Congress.
Chief Justice R edfield in a note in the American Law Register, for
January, 1865, in favor of sustaining the act, says, “ It seems to us, upon
any ground of a priori reasoning/airfy conducted, it was very obvious no
such power as to create a legal currency and legal tender out of their own
bills of credit was given.” But on what other ground of reasoning is
the Constitution to be interpreted than “ a priori reasoning fairly con­
ducted !”*
Nor will any one claim that this act is an exercise of the power to “ lay
and collect taxes, duties, imposts, and excises.” In so far as it made Uni­
ted States taxes payable in these Treasury notes, it might be an exercise
of this power ; for Congress when laying a tax can undoubtedly say in
what these taxes shall be paid. But the point now under consideration
is not the making these notes legal tender for dues to the Government,
but legal tender for dues from one individual to another.
W e come then to the power “ to borrow money on the credit of the
United States.” And if the act in question, that is, the part of it mak­
ing Treasury notes legal tender for private debts to private individuals, can
be brought under this power, it will stand. If it cannot be so brought,
it would seem that it must fall. And here some points will at once be
admitted as now beyond question, and which will clear our ground before
us.
Congress has undoubtedly power to issue United States securities. The
power “ to borrow” surely gives, as a “ necessary means,” the power to give
* Immediately following this quotation Judge R. gives an argument in favor of
the validity of the act, on another ground, which is not at present alluded to. This
quotation is made for the one purpose which it here serves, not for the purpose of
attacking Judge R.’s argument.




262

The Legal Tender Act.

[April,

to the lender a certificate of indebtedness. The word “ borrow ” must in­
clude obtaining money from a lender, and parting with a liability to repay
it. No one would pretend that Congress could not issue or authorize to
be issued a certificate of this liability and a promise to pay interest, at
any rate they think best,.
Congress has, too, the power to say that these securities shall be received
in payment of debts due to the Government. They can make a tax or
duty payable in anything they choose; in gold, silver, copper, or paper.
H ague v . P owers , 39 Barb. 450.
Congress might, too, as far as any constitutional law is concerned, say
it would use these securities with which to pay all the Government’s own
debts to private or public parties; for, under the Constitution, the only
way to obtain money is by “ appropriations made by law.” Congress need
not appropriate money unless it please. They have the sole power, in
their discretion, to order the payment of United States monies; and, as a
mere point of law, independently of the justice of the matter, they need
pay United States debts only at their pleasure, and in any thing that may
to them seem good.
But all these are plain and legitimate performances of congressional
powers. If Congress deem it necessary to obtain money by borrowing,
no one doubts that they may by an act authorize an officer of Govern­
ment to negotiate a loan, to engrave securities therefor, to issue them, to
piornise to pay interest on these securities, to determine their denomina­
tions, and generally to provide all means proper for effecting a loan. But
when the “ borrowing” has been provided for, the power of Congress
ceases. They can go no farther. After the money is borrowed, and the
security issued, and after Government has parted with all its property in
the security to the individual who has loaned the fnoney, is not the bor­
rowing finished? Can Congress then, by legislation, constitutionally say
at what price this private individual shall sell that security? The secu­
rity is his. Government has no longer any right in it. Judge D enio in
an opinion, not yet printed in the Reports, in the case of M eyer v .
R oosevelt in the Court of Appeals of New York, says, “ Was it ever
before supposed to be incident to the contract of loan, that the rights of
other persons, strangers to the transaction, were to be controlled or
affected ?” Can such a piece of legislation be justly called a necessary
means to the act of borrowing?
But suppose it granted that Congress can fix the price at which these
securities shall be bought and sold. Can they do more than that? The
authority to “ borrow ” means an authority to receive money from a voluntan lender, and to give him security therefor. Does it include the
authority to affect the rights of third parties ? When the money is ob­
tained and the security parted with, is not the act complete ? Is it even
the same thing as regards those securities, to regulate their price in money,
and to make them money ? Is it a necessary means to this act of borrow­
ing, to compel a private individual, not the lender, to lose part of the
debts due him, by allowing contracts to be performed contrary to- their
terms? Judge D en io , in the opinion before cited, says of this power of
borrowing, and of the making Treasury notes legal tender, “ But it is a
step far beyond this to require that all persons shall receive them in pay­
ment of all manner of obligations. This has no natural relation to the




1865 .]

The Legal Tender Act.

263

contract of borrowing.” “ Either the borrower or the lender may insist
on any stipulation to which the other will consent, and when the former
is a sovereign State, it may agree to any concessions on its own part not
inconsistent with its constitutional limitations, and insist upon imposing
any terms upon the lender which it may be thought expedient to require,
and to which he will consent. The arrangement of these mutual stipula­
tions embraces all which is material, or which can be appropriately attached
to the contract of loan. A provision which is to control other parties not
connected with the transaction, to their loss, though to the advantage of the
lender, cannot be appropriate, for it is foreign to the nature of the trans­
action, and has never before been employed in connection with such
arrangements.
*
*
*
*
As to being needful, requisite,
or essential, it is not so in any sense which would enable the Government
to impose on the citizens who should have business relations with the
holders of the securities, conditions which would only conciliate such
holders.”
But does this provision, making the notes legal tender, hinder deprecia­
tion, regulate the price at which the securities shall be bought and sold,
or have any tendency so to do ? All legislation tending to restrain and
control the ordinary course of trade, to more than a very slight extent, is
generally evaded. But suppose that any legislation Congress might adopt
for that object could be strictly enforced, and suppose such legislation to
be constitutional. We might then allow that Congress could pass an act
providing punishment for any one selling United States securities below
their par value. Or we might allow that Congress could pass an act im­
posing a tax on all sales made below their par value of United States
securities; a tax equal in amount to the difference between the price and
the par value of the bonds. These would be acts of legislation, whether
wise or constitutional, it matters not at present, at least looking directly
towards the point to be gained. Of such acts there would be no doubt
of the object.
But what is the result, which, from the nature of the case, necessarily
would be gained, and which, as facts have shown, actually has been gained
by making Treasury notes legal tender? Of course, if these notes depre­
ciated, they would be tendered in payment of all debts and obligations in­
curred before the passage of the act. This would be certain. W hat
other result possibly could happen ? Would the depreciation of the notes
be prevented ? Men buy corporation stock and pay for it its market price,
and no more. Men buy a private individual’s note, and pay for it its mar­
ket price, and no more. And men buy a nation’s note, and pay for it its
market price, and no more. After they have bought it, they will pay a
debt with it, provided they can gain anything by it. But that will not
make them pay any more for it than its market value. If Government
issue so many bonds, or manage its finances in any point whatever, in such
a manner that the commercial world thinks the chances are about one in
two that the bonds will be paid, men will give about fifty cents on a dol­
lar for them. This it is that determines their market value, and not the
fact that they can be used to discharge debts. Men will not give par for
the note of an individual when they think the chances are doubtful whether
it will be paid. Nor will they give par for a nation’s note, when they
think, for any reason, there is tne same doubt. After they have bought




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The Legal Tender Act.

[April,

these Government notes, they will undoubtedly pay their debts with them,
,if they can ; but they will not, for that reason, pay a dollar for an article
that they can buy for fifty cents.
Moreover, what had been the fate of every other scheme of the kind ?
I t had been tried in France and failed. It had been tried in the American
Revolution and failed. And where had it ever succeeded ?
It was certain, from the nature of the case, that Government bonds could
not be hindered from depreciating simply by making Treasury notes legal
tender. No other result could have been forseen than the one which ac­
tually happened. Any intelligent merchant would have told Congress
that this must be so. Any man, who had ever read a work on Political
Economy, would have told Congress it must be so. Almost any school
boy would have told them that it had been so. The paper would not, by
being made legal tender, be hindered from depreciating, but creditors
would thereby be deprived of their just dues. This last result was sure
to follow, and it was sure that no other result would follow.
In the case of H ague v . P ow ers , 39 Barb. 451, the court say, “ If the
argument is sound that Congress has power to authorize the issue of
treasury notes, and to pay them out to public creditors, who will volun­
tarily receive them as a substitute for money, and that they are valid pub­
lic securities, I cannot see why it does not follow, as a matter of course,
that it has power, if the occasion will justify so extraordinary a measure,
to declare their commercial value.” It is as a measure to hinder depre­
ciation, and, consequently, as a measure to the exercise of the power of
borrowing money, that the legal tender act is often supported, and in this
light alone we are now discussing it. If Congress intend to pass an act
which shall be an exercise of the power to raise armies, it must provide
some means necessary for the purpose of raising armies: it must provide
for furnishing arms, or ammunition, or commissary stores, or quarter mas­
ter’s supplies, or for raising men. If Congress intend to pass an act in
the exercise of the power to maintain a navy, it must provide for building
dock yards, making ship’s guns, or iron plates, or something necessary for
the purpose of maintaining a navy. It must be really fitted to accom­
plish the object which Congress has the power to accomplish. And if
they pass a measure which depends for its validity on its hindering de­
preciation in United States securities, they must not pass a measure which
very many men could have told them never would have that effect, which
very many men could have told them never had had that effect when it
had been tried, and which surely would have the effect of taking a certain
amount of money from one individual and giving it to another, and no
other. This act does not hinder depreciation. It could not hinder de­
preciation. It may be a certain convenience for Government to provide a
paper currency for the country, and Government undoubtedly does raise a
certain amount of money by the use of this legal tender. But it raises
this money not by borrowing it, but by creating i t ; and this power of
creating money never was given by the Constitution to Congress; and the
framers of the Constitution, wisely judging that the exercise of this power
by any branch of a government, was disastrous, not only did not give the
power to Congress, but expressly prohibited it to the States.
A point of history may throw some light on our question. Consider
what was the state of affairs under the articles of confederation, and what




1865.]

The Legal Tender Act.

265

money powers consequently then were necessary, and what was the state
of affairs under the present Constitution, and what money powers conse­
quently then became necessary. Under the old confederacy there was no
executive; there was no judiciary. The confederacy might engage in
war, and it was the very purpose of its creation that it should engage in
war. Consequently it would need money. Could it lay taxes ? No.
“ Charges of war, and all other expenses which shall be incurred for
the common defence or general welfare, and allowed by the United
States in Congress assembled, shall be defrayed out of a com mon
treasury, which shall be supplied bg the several States. '* * * * The
taxes for paying that proportion shall be laid and levied by the authority
aud direction of the legislatures of the several States, within the time
agreed upon by the United States in Congress assmbled.” Then the arti­
cles continue: Congress shall have power “ to ascertain the necessary
sums of money to be raised for the service of the United States, and to
appropriate and apply the same, to borrow money, or emit bills on the
credit of the United States.” The United States Congress then could
ascertain the sums of money necessary to be raised, and the States were
to raise the money, after Congress had determined the amount, if they so
pleased. W hat could such a Government do ? Or rather, what could
such a deliberative council do, for Government there was none. They
could not raise money by force. The only powert hey had, as far as rais­
ing money was concerned, was the power to borrow. Consequently it was
a measure of absolute necessity to give them the power of making money ;
and this power was given to them. W ithout it they would have been
penniless. W ith it they became bankrupt. And in consequence of the
ruinous effects, which resulted from having no Government, with the power
of making 'paper money, the founders of the Constitution determined to
alter the policy, and have a real government, with the power of raising
money by taxes. W ashington , in his Farewell Address, said : “ towards
the payment of debts there must be revenue ; to have revenue, there must
oe taxes.” “ Cherish puhlic credit. One method of preserving it is to
use it as sparingly as possible.” And Mr. L angdon said in the debates
on the adoption of the Constitution, that he would rather reject the whole'
plan than retain the words “ and emit bills of credit.” W hat change
then did they make ?
In the first place they made a Government, instead of a persuading
council; they created an executive and judiciary, as well as a legislature.
They gave to the legislature of this Government the power of “ coining
money” ; not of making money, but of coining what already was money.
They gave them, too, the powers to “ raise armies,” to “ maintain a navy,”
to “ provide for calling out the militia,” and the ordinary powers of a
strong general government. For the execution of these powers, of course
a great amount of money would be necessary. And the Constitution states
distinctly how this is to be obtained.
The first way indicated is “ to lay and collect taxes, duties, imposts and
excises” to any extent that Congress may deem necessary and wise; to
the extent of all the property in the United States. Congress have under
this clause the power to take every dollar of money, and every piece of
property in the country, if they think it wise.
If Congress cannot raise enough money by this means, or do not deem
VOL. LII.--- NO. IV.




1*7

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The Legal Tender Act.

[April*

it wise to raise all the money they need in this manner, then there is the
second way, viz : to “ borrow” money.
Are not these two powers as great as can possibly be given to any
Government, even in conceivable terms? Can greater power be given to
a Government than the power to take every dollar of property in the
country, and then in addition, to borrow all that any one in the world
will lend them ?
Here then are the two means given to Congress of providing funds for
Government use : the one to raise money, and the other to borrow money.
But where is the power to create money ?
When in the preamble of the Constitution, the object of the formation
of the Constitution is declared to be, “ to provide for the common defence,
promote the general welfare, and secure the blessings of liberty to our­
selves and our posterity,” it is not thereby intended, that for the further­
ance of this object, every power is by the Constitution given, which, in the
opinion of any of the officers or departments of the Government thereby
created, may be adapted to the attainment of that object. Else what
would be the use of adding anything to the preamble ? W hy should the
Constitution go on and define any special powers at all ? Or what would
be the meaning of the clause stating that “ the powers not delegated to
the United States by the Constitution * * * * are reserved to the
States respectively, or to the people 2” B ut the preamble merely, in general
terms, states the objects to be obtained, and the following parts of the
same Constitution specifically provide the means for the attainment of
those objects. The delegation of specific powers for the attainment of an
object is always a strong presumption that no other powers are given.
It being then, without question, that money is needed and can be raised,
for the purpose of carrying on the Government, it is also a fair supposition
that, particular ways of raising money being given, they are the only ways
given.
The framers of the Constitution expressly said, that all the powers of the
general Government were to be found in that instrument; that no power
not found there had any existence. Suppose, then, that the power to raise
armies had never been given. No one would claim its existence. Suppose
the power to maintain a navy had never been given. No one would claim
its existence. Mere incidental subsidiary powers would not be specifically
mentioned. Powers, which are merely necessary means for the exercise of
more broad and general powers, would not be specifically delegated. No
one expects it. But the great important powers of a Government would
surely not be omitted, if they were meant to be conferred. These powers
never are omitted. A man would as soon think of making a promissory
note, and omitting the number of dollars which he was to pay.
Now consider a point of fact, that the issuing of a paper currency, so far from
being an ingenious device of wise statesmanship, now first known to the
world, or a useful and necessary means for borrowing money, always has
been, and before the Constitution was formed, had been, at all times since
there has been such a thing as financial history, the ordinary resort of a
Government in financial troubles. Consider that the French revolutionists
tried it, that our own confederacy tried it, that it was felt by all men to
have been the greatest evil of the Revolutionary war, that, moreover, so far
from considering the act of making legal tender the same thing as coining




1865 .]

The Legal Tender Act.

267

money, or borrowing money, they had a special phrase for it, viz : “ emit
bills of credit,” which they had always used to designate this ruinous
measure, consider that this phrase had been used in the old articles of con­
federation, that it is used in the present Constitution, and then will any
man deny that on principles of sound construction we must hold, that such
a power if meant to be conferred, would have been enumerated specifically
in the regular term of the time, as “ emitting bills of credit,” and that the
power, would in those words have been inserted among the powers of Con­
gress ? Whereas, do we find it? And do we not know that so far from its
being put into the Constitution, it was stricken out, after it had been put
into the first draft of it ?
But even if it be clearly made out that this Act of Congress does not
hinder depreciation, it will still be claimed that the making Treasury notes
legal tender inevitably causes a certain amount of them to be absorbed, and
thus puts it in the power of Government to obtain a certain amount of
money, by issuing them and giving them this quality. Undoubtedly, Gov­
ernment does raise money in this way. But in so doing, they do not raise
the money by “ taxing.” They do not raise it by “ borrowing.” No one invests
money in these legal tender notes which bear no interest. No one makes
loans on them. Enough of them are taken up to use as currency. They
are made money. The price of United States bonds remains what it would
be were there no legal tender notes. Men give for them what they think
them worth. The only effect produced is that we use Treasury notes in­
stead of gold and silver for money. Government may get money by this
means. So it might by seizing it without any legal process. The point is
met by what has already been said, that the Constitution has provided
ways of raising money, ample and sufficient. This way was one well
known, universally designated by a particular phrase, had been used in the
articles of confederation, in common speech, and actually is used in the
Constitution itself, and *yet this way of raising money is not mentioned
among those authorized, but was proposed to be mentioned, and was left
out. This can come in, as a necessary incident to the power of borrowing
money, only in case it can be shown to be something directly auxiliary to
the obtaining a loan. It cannot be shown to be anything of the kind.
Undoubtedly this proceeding puts a few hundred millions into the hands of
Government. But does it do it in a constitutional way ? The old confed­
eracy, being merely a league, having no power to act on individuals, being
merely a persuader of State governments, needed such a power as the
power to emit bills of credit. They could not get along without this
ruinous make-shift. But under the Constitution, the state of things was
entirely changed. Here was a powerful Government, with the power of
taxing individuals, and the power of borrowing what it could not raise by
taxing. W hat more could be asked ? This put at the command of
Government every cent in the couutry, and as much more as any one out
of the country would lend them. Is there anything more that a Govern­
ment could conceivably get? And this the Government has.
One effect this Legal Tender Act certainly has. It makes contracts and
obligations performable in a manner utterly at variance with their letter,
and the intent of their makers, and a portion of the property of creditors is
by this Act arbitrarily transferred to their debtors. This effect it has, and
this only. Are not the debts due a man as much his property as his real




268

Hon. Thurlow Weed.

[April,

estate, both in law and in common sense ? And unless authority for this
Act is given by the Constitution, is not its passage simply a “ depriving of
property without due process of law ?” The Constitution says private pro­
perty shall not be taken for public use, except with just compensation; but
this is taking private property for private, use without any compensation.
In some remarks in the American Law Register for February, 1865, some
examples are given, of cases where great inconvenience results, from holding
legal tender notes to be the equivalent of gold and silver. These examples
are given by a writer who supports the constitutionality of the Act of Con­
gress. He says : “ It is easy to put cases not unlikely to arise, where the
doctrine that coin and Treasury notes are for all purposes legally identical,
and that judgement can only be for so many dollars, payable in whatever
the law has made legal tender at the option of the debtor, would work posi­
tive injustice, where there exists great difference in their market value.”
But can any one put a case of a contract or obligation, made before the Act,
where it does not work positive injustice? The writer says : “ Suppose I
leave $1,000 in gold coin on special deposit, and my bailee converts it.”
Or suppose I left $1,000 in convertible bank notes before anything but gold
and silver were legal tender. Again, “ suppose I loaned $1,000 in gold, and
the borrower agrees to return it in kind.” Or, suppose I loan him $1,000
in convertible bank bills, and he agreed before the Act to repay me, which
was a promise to pay gold. Does the passage of the Act ever work any­
thing but injustice, as far as it has any effect at all ? The only effect it has,
is on contracts made before the passage of the Act, and on all these, is not
the effect one of injustice, and nothing else ?
Arguments against the Legal Tender Act are, now-a-days, generally viewed
by many men with distrust. They are supposed, generally, to be written
with partisan motives, with a design to embarrass ttie Administration, and
by that means to embarrass the Government. This paper is written under
a firm conviction, that much injustice to private individuals wtould have
been avoided, and that the financial position of the Government would have
been much stronger to-day, had the Legal Tender Act not been passed, and
that the passage of the Act was unconstitutional. Though it is too late now
to undo what has already been done, and though a return to another policy
must, to be safe, be very gradual, yet the temperate expression of honest
thoughts on this subject may have some influence in case the nation should,
at any future time, be placed in need of large amounts of money to meet its
wants.

HON. THURIOW WEED.
B y M atthew H ale S mith .
M r . W eed is one of the influential men in the Union, a W arw ick in
politics, though far advanced in life, like the Law Giver of Israel on Nebo,
his eye is not dim nor his natural force abated. His political home for
years, has been at the Astor'House, in the City of New York. He has
occupied one room for a quarter of a century. It is on the lower floor
near the ladies parlor. Around it clusters more influence than any room
in the nation, except the President’s room at the White House. Mr.




#*

1865.]

Hon. Thurlow Weed.

r

269

W eed seems never at rest. He flits in and flits out. He comes in and
goes out as if driven by business which could not be stayed or resisted.
He passes away in the evening train and comes back with the early
morning light. He walks into the dining-room ; but before his presence
is really noticed, he has concluded his meal and gone. His tone is sub­
dued and low, speaking but seldom. A degree of quietness and even
Secrecy seems to mark all his movements. He walks about the corridors
with a cat-like step, rarely speaking to any one, rarely being spoken to.
Moving with so quiet and ^ubdued a mien, that his presence at once
attracts attention and causes visitors to ask : “ Who is that gentleman ?”
He seldom speaks loud. He recognizes any civility, but rarely says any­
thing. His resemblance to cl^gymen is so marked, that his opponents
sometimes put “ Rev.” to his name. His figure is tall, he stoops slightly,
his head inclines to one side after the manner of Mr. B uchanan . His
rooms are the headquarters of the conservative elements of the land with­
out regard to party. Few men of jame or position visit New York, with­
out visiRng him.# He is keen, far-sighted and practical. Not what he
wants tomo, but what he can do, is the principle that guides him. When
his party follow his lead it is successful; when it gets tired of following,
- v weary of what it calls dictation, and disposed to be free, throws off—like
• R m i o b o a m of old— the counsel of the wise, disaster follows. W ithout
ojjSg emoluments or gifts to bestow, he has more influence in the great
evMits ofGhe day than any other man. A tqjggraph comes to him in
cypher, lye# takes the night train for Washington ; before his arrival is
fairly announced, he is back to his old quarters. In like manner he
is summoned to Albany, and is closeted with the powers that be. Plans for
reorganizing the rebel States—the conservative movement for conducting
i the n^gt Presidential campaign—influences that agitate Congress, and
| / knock into pie the well known schemes of politicians— who shall be
* s e n a to r or foreign ministefc-who shall go into the Cabinet, and who shall
stay out, are agitated aj|3perfected in the little chamber which forms the
IJfwf York room of T hurlow ^ eed . More than once a distinguished
▼ Qpbinet officer has reached New York at an early hour in the morning,
1 ljgfor§. the people ^ e re astir, remained quietly all day in consultation
with the astute Statesman, and left at night with the great metropolis
% ^profoundly ignorant of the visit.
He began his public career as an editor in Rochester. He b rig h t the
* f half.of an interest in a small paper and worked it up to a paying success.
The Anti-Masonic excitement was abroad. Mr. W eed admitted into th e
• colju^ns of his weekly some articles denouncing the arrest and death of
*
M organ . This, with an article which he wrote himself, stirred society to
its depth and brought ruin to his craft. As he had sunk the Ij^tle craft,
with that justice that has ever marked his career, Mr. WEED^Uought out
dais partner’s interest and resolved to start an independent paper in Albany,
’ lle became early and intimately attached to W illiam H. S ew ard . The two
formed a mighty power. The one earned laurel^jp the field, the other wore
th em ; and for thirty years the pair h ^ H u i d e d the legislation of
.the nation and disposed of its patronage^^Kvilk Mr. S ew ard , when
Governor of the'State, ^sjriding^w ith sj^pgw lriver, that he might enjoy
his segar. Curious to know who his quiet puffing companion was, J ohnnv
said, “ Captain, what are you?” “ Guess,” was the reply. “ A farmer?”




■A
270

s
Hon. Thurlow TFefcrf.

[April, -v

“ No.” “ A merchanti” “ No.” “ A minister?” “ No.” “ Well w hiJt^.:, J
then?” “ Governor.” “ Governor of what?” “ Of this State.” “ I guess
not.” “ Inquire at the next tavern.” Driving up Mr. S eward , asked the
proprietor, “ Do you know me?” “ Yes!” “ W hat is my name
“ S ew ard .” “Am I Governor of New York?” v “ No, by thunder, T hu r ­
low W eed is.”
■>
Ylr. W eed ’s power is S s heart no less than in his brain. lie nevoV*
f o is ts , deserts, nor neglects a friend, however humble or unfortunate.
He is as p8!ite and considerate to an illiterate breakman or to a domestic.,
as he is to a member of Congress. T h erm s not a boy or man on th e '
Hudson River or New York Central Roads, that does not love him. One
of the conductors said that Mr. W eed cottd send a glass vase to Galena
by the railroad boys without liavirflf'il broken. “ They would carry it in A
their hands for the old man and quarrel for their turns.” He.pays liber*
ally for all favors and has a strange way of Attaching men toTfim. His
private munificence to the lowlyfand indigent is*.unbounded,- and thou­
sands of eyes moisten at the mention ?f his name. Ng*ainouftt of expo- •?
sure or inconvenienp# will keep 1dm from befriending one^lRiom he
wishes to serve. He has been kn^w to wait hours at night in the Central r
depot to meet some friend from the interior who had asked to see him ¥,
there.
A single incident will illustrate Mr. W eed ’s kindness of heart. W B e
busily engaged on a p o s in g matter in his rooms, a S l^fcpr& nt flpfis
card. “ Tell him I an « e * f much engaged, but will „s6’e b in * naming
the hour. The card of a Governor was sent in, to' which me gava^a
similar reply. Soon a knock was heard at the door. “ Opel) the dqgr,
George,” he said to his companion. The door was opened ; a negro man
stood outside, trembling. Mr. \\*fcKD knew him well.
knev?- th a t» f
nothing but stern necessity drew him to liis door. In M ^ te n d e r^ tones ». W
ade him come ^n,-. pushed aside his paper, heard his story Agave
twenty minutes of his precious time, gave binWhit'tle money, granted 'tif
request, which was bette4«.lj^n all, an ^^ e n t 1mm on hi^ way rejoiciiii |
He had no time for a Senator br a-^ovenSor; had time and money
j w
indigent negro, who at the same timfe was a fugitive slave. He is one n f t
the best conversationalists in the country^ His aye kindles^Jhi?
glows, ai^though at times slow to talk, acts with ptfwe'K ^fc^is Afe touches(W 0
the liig'nwt, and the lowest. None can fail to be impressed with- its w o j^ n ^ a
derful u^mme, so noble in it^aculties, so infinite in its resources. jfuT
the n ^ o n
will always reimnn a power. So wise, prac^cal, with su<yL ™
. unbounded political knowledge, few are willing jo oppose him or flj^ena
him. The “ Old Mpn wantsw,” is enough to carry almost any
V
Few me^have.been as lovffa^n their owh.'h'ome. Few men are as valued j f
in’ die reShns of private friendship. The poor find in 1dm a constant
friend ancflhviser, one who does deed* JErWeli as give wbrds. ifrs c o h ^
ness, BisJbnJ^ij, hi^kindness of heart, his liberality, his disinterestedues^
are household words with his friends. A noitofir, infthe State, his highest
honor is in the




1865.]

N ational Finance with Legal Tender.

271

NATIONAL FINANCE W ITH LEGAL TENDER.
P ro fessor G oldwin S mith ,
L ondon , E n g la n d .
S ir ,—I have read in the new spapers^ New York a letter of yours on
the Finances of the United States, copi^jfrom the London Daily News,
that I trust will attract th e , attention of our people and Govejnment,
coming, as it cy^|,.from one^jp conspicuous in science and so friendly to
our nation as yourself. Without doubt you are correct in your convic­
tion that the financial administration is the weak point in this country.
It was the weak point prior to the rebellion,,and has b§&n ever since the
birth of the nation. Some of us have lo^ig been avvaritof this, and have
taken every convenient opportunitytto impress the truth upon government
and people; but truth in politicalg^gpnomy is of unaccountably slow’’
growth every where ; and.here, especially, it is thoroughly opposed and
kept down by an u n r e in in g and unconquerable prejudice in favor of
what is.absur.dly called^* pap^I- money,” as if the'promise to pay a thing
could be the thing itself.
#
You think the root of the mischief here is the Legal Tender Act.
Pardon me for differing with you on this point. It seems to me the
Legal Tender Act is neither root nor trunk, but a mere off shoot of a false
principle, having its root or source on your side of the water, in the pet
bank of your country, the Bank of England. I mean no disrespect to you
or your opinions in this statement, but I wish to place the responsibility
for the false system, under which not only the finances of this country but
of the commercial world are suffering, where I think it belongs. The
establishment of that Bank was the opening of an era of debt in the
world that is needless, endless, and boundless, and our nation is but fulfill­
ing the financial destiny assigned to it by that institution.
It was, as you are aware, the beginning of the public debt of Great
Britain; a debt that was paid, paradoxical as it may appear, in the capital
of the nation when the same was contracted. No other capital but that of
Great Britain paid the cost of the war in which it was consumed, and the
delivery of the capital was its payment. But the sophistical scheme of
false banking re-established the debt for the benefit of mere currency
makers, men who loaned no capital to the Government at all, but added
so much price to the value which the Government received and agreed to pay
for their currency obligations. It is a scheml that transmutes from money
into debt all the exchanges it touches, and piles upon commercial com­
munities a huge mass of needless individual indebtedness, over and above
the sum of the false currency it manufactures. Value pays for value, and
service for service, but a debt currency pays for nothing, it merely post­
pones the payment needlessly that with a currency of money would be
made at once.
No one is paid for his goods or his services in a bank note or check;
one simply gives credit to the promise of a bank instead of the promise of
some other debtor, and gets his pay by parting with the promise for
value received. It is a false principle that discards capital, which is the
object of exchange in money, its element of payment and of wealth, to




272

Letter to Professor Goldwin Sm ith :

[April,

substitute therefor mere debt as the medium of exchange, which, in the
dual nature of money, is precisely that element which of itself makes no
payment and is no wealth. A medium of exchange may be made of
promises, or of paner. or iron, or copper tokens, but so far as it lacks in-

and, to the extent of its convertibility into coin, it depreciates the value

id to be
be its resi*
resip sy ' nufct haSheger
system are supposed
dueed
in any of our new S
State^or
tate^rr frontier settlements, where capital wWSi
w! icarce,
without crippling the energy and industry of the people, and bringing
about in the end almost universal bankruptcy. True, the credits it has
created have enabled individuals to purchase goods at inflated prices on
credit from the Atlantic cities, which they could not pay for, and this, by
a sort of involuntary robbery, has transferred some capital from the older
cities to the interior States and outlying settlements ; but this has been
but a wretched pittance of compensation for the suspension of business,
check of production, confusion and violation of contracts, broken fortunes
and broken hearts, that have followed its operations with the certainty of
death. It would be instructive to trace its history in the experience of
nearly all our Western States, but especially of Illinois and Arkansas.
Banking is a very proper, honest, and useful business; it is dealing in
money and exchange, and in loanable capital. There cannot be too much
of it because it will regulate itself. It is borrowing of those who have
capital to lend, and lending to those who have capital to borrow. But
currency making is another th in g ; it is not a proper, necessary, or use­
ful business ; it is unnecessary, and as unprofitable to any community as
counterfeiting, because it creates price without value, and the false price
must be paid in precreated value for imports, while it checks the exports
of merchandise, forcing money abroad instead, until the excess of the sup­
plies of merchandise at length compels the holders to yield to the price
and demand of foreign markets. Beyond our own borders it does not
raise the price of our exportable commodities a dime, while its irresistable effect is to raise the price of imports, stimulate increased supplies,
and, as I have said, drive our money abroad in dead loss, because of its
degraded value.
Now, the immediate cause of the suspension of money payments, and
of the present ridiculous condition of our currency, with the expansion
of debt under false prices, was, and is, the operation of this false principle
following the negotiation of the so-called 7T% loan with the corporate
banks in the autumn of 1861.




1865.]

N ational Finance with Legal Tender.

273

The approach of the rebellion, evident in 1860, with the repudiation
of Southern debts, which broke the merchants of the North, and the open
rupture in the attack on Fort Sumter, in April, 1861, had so destroyed
general confidence in credits and in trade, and reduced the available assets
of the banks and their liabilities, that the currency of the loyal States
fell below the natural money measure. This appreciated the value of
money and depreciated the relative value of merchandise, until money
became more valuable than merchandise. The foreign exchanges were
turned thereby largely in favor of this country, so that we gained probably
$80,000,000 of gold and silver in the year 1861. The banks were thus
placed in a condition, not merely of ease as to their liabilities, but of anxiety
to lend their credit and maintain their dividends. They had what they
call money to lend, although those of the loyal States, to whom alone
my argument applies, owed, payable on demand in g $ d and silver, the
sum of $420,000,000, with probably $80,000,000 on hand to pay it with.
No official statement of the condition of the banks having been made
at Washington, since January, 1861, it is not easy to determine what por­
tion of the large excess of specie imported and mined here in that year
went into their coffers, as applicable to the payment of their liabilities;
but the general distrust caused private hoarding among those who were
unfamiliar with banks, and, among the friends and customers of those
institutions, the transfer of large sums from general to special deposits,
which amount to the same thing, so it is not probable that the specie re­
serves available for their demand liabilities of $420,000,000 exceeded
$80,000,000, to which should be added, say $80,000,000 of coin outside
of the banks and free of hoards, making the whole circulating medium
to consist of a debt currency of $340,000,000, and money $160,000,000
($500,000,000,) this sum of five hundred millions being less than be­
longed to our capital in real money, as is evident from the state of the
exchanges, with the rapid influx of specie and the rapid efflux of mer­
chandise in exchange. I need not inform you that money goes where it
has the most exchange value, with no more reference to the so-called
“ balance of trade ” than iron, or wheat, or any other exchangeable com­
modity.
Because of this reduction of currency and excess of unemployed capital
the rent of capital was low, and loanable capital and bank debt were beg­
ging customers at 3 to 4 per cent per annum. In this condition of finan­
cial affairs the Government came into the market for a loan of $150,000,000
offering 7T3„ per cent interest per annum. Can you doubt that the banks
could have borrowed this sum for the Government at a much lower rate
than this ? But to have done so would have produced less profit to them
immediately;- they were for grasping the whole 7tsj - per cent at once, and
the want of scientific knowledge, with the indolence of those having charge
of the negotiation on the part of the Government, threw the whole mat­
ter into the hands of the managers of the chartered banks upon their
own terms. Accordingly, without borrowing a dime of capital, they
undertook to lend the Government one hundred and fifty millions of dol­
lars when they had not one hundred and fifty cents to do it with.
As I have said, they already owed a demand debt of $420,000,000,
with only $80,000,000 of money on hand to pay it. They were the cus­
todians of this money, not its owners. It belonged to their prior creditors,




274

Letter to Professor Goldwin Sm ith :

[April,

whose forbearance was due to the favorable condition of the foreign ex­
changes, and consequent absence of any export demand for money.
Creditors for nearly five times its amount were authorized to cheek upon
it at sight when the banks authorized the Government Treasurer to check
upon it nearly twice over again, besides; and they maintained that they
were not increasing the currency because they paid the Treasurer’s checks
in gold. You will see the fallacy of this statement in the fact that their
demand liabilities, which constitute the bank currency, were raised from
$420,000,000 to $570,000,000, against the same sum of money in re­
serve as before.
The Government bonds thus granted to the banks formed the fund out
of which they were themselves discounted ; debt was increased by debt,
not by capital transferred, and the “ deposits ” thus created, say in round
numbers $150,000,000, to the credit of the Government Treasurer, was so
much currency over and above all the pre-existing currency, money,
capital, and wealth of the country; in a word, it was so much fiction. It
matters not in what form or by what instrument a bank deposit circulates,
whether in note or check or money itself, it forms part of the fund offered
like money in exchange against the whole circulating capital of the
country, which determines the relative value of money and of other
capital.
Doubtless some portion of the loan was retaken by capitalists who
checked upon their own pre-existing deposits without increasing the
currency, but more of it was taken by persons who obtained bank dis­
counts for the purpose ; besides, the Government had issued directly from
the Treasury $20,000,000 of its own notes—greenbacks—so I am quite
sure that the sum of $150,000,000 was added to the currency of the
country without capital by the financial operations of the banks and the
Government in the summer and autumn of 1861. No one can be so dull
as to suppose there was any more capital in the country because of this
currency making.
The money demanded as the equivalent for circulating the capital of
the country is never a fixed am ount; it must vary with the aggregate of
capital offered in exchange against i t ; an approximate estimate is all that
we can obtain from the best statistics; but when sterling exchange re­
mains for any considerable period at $4.86-66 to the pound, i. e., 9^ per
cent premium on the Spanish dollar valuation of $4.44-44, which nominal
premium is the true par, if we can then know the amount of the bank
liabilities we can determine the natural volume of the currency with con­
siderable accuracy.
I suppose the natural volume of the currency of the loyal States to have
been something more than $500,000,000 in the fall of 186 1, but if we assume
$500,000,000 to have been the true amount, the $150,000,000 then added
depreciated the value of money here 23 per cent, equal to a premium on the
gold dollar of 30 per cent. To have maintained the equation of international
values it would have been necessary for us to export $150,000,000 of gold
and silver. As soon, therefore, as that fictitious credit to the Government be­
gan to circulate and act upon prices, our exports of merchandise were check­
ed and our imports stimulated ; of course a foreign demand for specie took
place, which it was obvious the banks could on t meet, and they broke, as every
intelligent bullionist knew they would when they undertook the Govern­




1865.]

275

N ational Finance with Legal Tender.

ment loan upon this false principle, for they were being called upon to
pay $150,000,000 of value that nobody ever possessed.
Now this principle is the system of the Bank of England, and when­
ever that bank aids or influences the creation of credits, used as money,
in excess of the true money measure, it either breaks to save the debtors
of the kingdom, or the debtors break to save it, and you have in England
the “ commercial crisis.”
One may read A dam S mith ’s account of that bank, F rancis ’ history,
and nearly every other history, without discovering this principle in its
formation; in other words, without discovering that it was formed by
making a spurious currency, and without capital, except perhaps £72,000
which may or may not have been expended when the bank went into
operation. A simple balance sheet presented in L awson ’s history of
banking will show the truth of this statement to any tyro in accounts
beyond a peradventure.
Two years after its establishment the bank failed, the real cause of the
failure being plausibly concealed by the recoinage of the silver of the
kingdom to which it was attributed, no one caring to notice that the bank
notes had expelled an equal amount of coin, which was sent to Flanders,
leaving so much additional debt to pay and so much less money to pay it
with— so much embarrassment in the place of so much wealth, a double
power of bankruptcy to which the advocates of this system are persistently
blind. One who has nothing is poor, but one who has nothing and is in
debt besides is doubly poor, which latter condition is the currency prin­
ciple of the Bank of England. Such a currency cannot exist without
plundering individuals of so much capital in the payment of the fictitious
price it creates for imports, and leaving them in debt an equal amount
besides.
Here is the balance sheet that I find in L awson ’s history. It was pre­
sented at the bar of the House of Commons, December, 1696, by order
of the House, the bank being then under suspension of payment, as I
have just said, two years after its establishment :
To sundry persons for sealed bills standing out.............................
To sundry persons on notes for running cash...................................
To moneys borrowed in H ollan d ......................................................
To interest due on bank bills standing o u t .....................................
To balance..............................................................................................

893,800 0 0
764,196 10 6
300,000 0 0
17,876 0 0
125,315 2 11
2,101,187 13

5

C R E D IT O R .

By tallies in several Parliamentary funds.......................................
By one-half year’s deficit of fund £100,000 per annum..................
By mortgages, pawns, and securities.................................................
By cash....................................................................................................

1,784,576 16 5
60,000 0 0
230,946 15 2
35,664 1 10
2,101,187 13

5

The voungest clerk who ever balanced a set of books will see at a glance
that the bank owed the whole sum of its assets except the balance of
£125,315 2s. l id . This covered its whole capital and contingent fund.
For two years it had dc^ie an extremely profitable business, paying eight




276

Letter to Professor Goldwin S m ith :

[April,

per cent p6r annum dividends. It is very possible that the whole £72,000
paid in was expended in procuring the charter, the granting of which was
strongly opposed in Parliament, where bribery, it is said, was not un­
known, so that it began without a penny of capital, and after paying
dividends had accumulated the balance above mentioned. Yet the bank
boasted of having loaned to the Government and paid into the exchequer,
before the time stipulated in the charter, a capital of £1,200,000. He
must possess a necromantic skill in accounts who can discover any such
capital in these figures. W hy this balance sheet is not produced by
F rancis in his apparently exhaustive history of the Bank of England, and
why he should say that twenty-five per cent of the subscription was paid
down, leaving it to be understood that the payment was on account of
the £1,200,000 of capital, it is difficult to conceive. The subscribers,
however, were to advance to the Government £1,500,000, of which
£300,000 was to be returned, having nothing to do with the capital of
the institution, and this without doubt is the “ moneys borrowed in Hol­
land ” according to the balance sheet. F rancis may have mistaken it for
a payment on account of the capital.
M ich a el G odfrey , the first Deputy-Governor, sets this matter of capital
at rest. W riting in 1695, he says: “ Some find fault with the bank be­
cause they have not taken in the whole £1,200,000 which was subscribed,
for they have called in but £72,000, which is more than they now have
occasion for. But, however, they have paid into the exchequer the whole
£1,200,000 before the time appointed by act of Parliament, and the less
money they have taken in to do it with so much the more they have
served the public, for the vest is left to circulate in trade, to be lent on
land, or otherwise to be disposed of for the nations service.”
This is a precious piece of sophistry which sets at naught the teaching
of the nursery, that one cannot eat his cake and have it too. Its accep­
tance as truth then and now is a remarkable evidence of the depth of
credulity among intelligent men. The truth is the bank had no capital,
unless the £72,000 was unexpended after procuring the charter. The
Government loaned the bank as much as the bank loaned the Govern­
ment, which was nothing at all. The bank handed into the exchequer
its own notes in exchange for tallies—mere memorandums of unfulfilled
contracts—paper and notched faggots exchanged against each other. The
scheme was a manufacture of currency virtually out of nothing, that is,
without value received. The effect upon prices was exactly the same as
if so much gold had been produced and thrown upon the market, but
here was no gold or other value produced, and the price it created was
therefore paid out of pre-existing gold and silver, the precreated money
capital of the nation.
The bank borrowed no capital and loaned no capital; it simply loaned
memorandums of indebtedness on which the people subsequently loaned
their capital to the Government, and paid interest, or £100,000 annuity,
on their own capital thus loaned for the benefit of the Bank of England.
The people, not the bank, loaned the capital to the Government, but the
bank held all the securities and took all the profits.
A dam S mith supposed that an excess of convertible paper currency
could not be circulated, because the excess would at once return upon its
issuers for redemption. This is one of his errors,-and the more surpris­




National Finance with Legal Tender.

1865.]

277

ing because of the experience of France with L aw ’s banking sixty years
before the “ Wealth of Nations” was written. For four years the infla­
tion continued there, until general prices advanced four-fold, indicating a
four-fold expansion of the currency, and yet the currency did not return
upon the bank for redemption to any inconvenient extent until a few weeks
before its doors were closed in hopeless insolvency, although money was
rushing out of the country all the time. I t is a question of confidence
on the part of the people; if they prefer the paper to money, and do not
call upon the bank for payment, there is no difference in effect between
an inconvertible and a so-called convertible currency, and, as we see in
the example of France, it is easily possible to press upon a credulous com­
munity as much convertible as an intelligent people will bear of an in­
convertible currency. We have not yet, at any time, with our inconvertible
currency reached the degree of inflation that existed in France with their
convertible currency in 1719-20, after three to four years operation of
L aw ’s , and the Royal Bank, which failed in 1720.
The philosophic action of this spurious currency is to degrade the value
of the whole volume of money or currency to the extent of its increase.
The whole convertible sum of this increase and degradation then runs
away, and brings returns in price not in value. In other words, the ex­
cess of currency thus thrown off is wholly absorbed in the false price of
imports, because the exports will command only the price determined by
the demand measured by the currency of foreign countries. A dam S mith
overlooked this inevitable result of local inflation, and supposed that the
specie expelled by what he calls “ paper money ” was sent abroad at its
normal value, and necessarily commanded an equivalent value in the im­
ports, but it is never so. The reason of the shipment of money is because
it is cheaper than merchandise to the exporter, and when it is cheapened
naturally by an excess of production, the excess is a clear addition to the
wealth of the country in the capital it commands in the imports, precisely
like an excess of wheat, or beef( or copper, or any other form of capital
that can only be exported when it is cheapened by supply to an exportable
value. But when money is cheapened to an exportable value without
any excess of production, in other words, by making “ paper money,” the
gold and silver sent abroad is taken from precreated capital, and might as
well be plunged into the sea so far as any benefit accrues to the nation
that exports the.money, simply because it is sold and exported at the de­
graded, and not the natural value. You will observe it is the whole
volume of the currency that is degraded in value, and only the amount of
the degradation that is expelled, so that the whole amount of specie thus
exported is lost in the abnormal price of imports.
Now the people of the United States are thorough dupes of the Bank
of England; they believe in “ paper money” more than they believe in
democracy, and so favor privileged legislation in the matter of currency.
It makes no difference to them who or what issues the note; if it is hand­
somely engraved and “ convertible,” they circulate it in preference to gold,
having no conception that they are lending their capital upon it for noth­
ing, and, in the case of bank notes and bank credits, paying interest on
their own capital thus loaned for the benefit of bank stockholders into
the bargain. Virtually every bank note, or bank debt on account, payable
on demand, is a legal tender ; the man who should refuse to accept it
t




218

Letter to Professor Goldwin Smith :

[April,

would be ostracised—sent to Coventry; he could do no business unless
the note were discredited by some competent authority. It is a forced
loan even from myself and others who see through the iniquity and false­
hood of the thing; we cannot help ourselves; we must accept and circu­
late bank notes, pay interest on our own capital, and deal with the banks
upon their own terms, or do nothing.
The notes issued directly by the national Treasury—greenbacks that
form two-thirds of the legal tender—have the advantage of costing no
interest to the public, but the public know nothing and care nothing for
the advantage. There is not intelligence enough upon the subject in Con­
gress to see the saving to the industrious classes, and the National Bank
Act, which is a copy essentially of the principle of the Bank of England,
imposes a needless cost of interest upon the public for the currency it
authorizes. Public writers and professors are busy here writing down the
“ greenbacks,” that the banks may have the profit of the circulation in
their place. It is doubtful if they know who pays it.
There is an important advantage in all the national currency, whether
furnished directly by the Treasury or through National Banks, as com­
pared with that furnished by the State Banks, namely th is: the national
currency being public debt, directly or indirectly^, forms a fund with which
goods are bought and sold as for cash, relieving a vast amount of em­
barrassment in individual indebtedness. Whereas the State Bank cur­
rency requires to be fed with individual indebtedness. Goods must be
sold on credit to make notes for the banks to discount into currency, and
their system accordingly forces nearly the whole traffic of the country
through debt and credit. But this again is unheeded ; people care noth­
ing about it.
The one idea here is that without a paper currency we should have no
money and do no business. It is a common remark that there is not gold
and silver enough in the world to do the business of the United States ;
and the notion prevails that “ paper money ” is capital, so that the more
we have of it the more business we have. Accordingly it has come to
be considered a sort of patriotic duty for every one to encourage the utmost
extension and circulation of bank and Government notes, and of bank
credits. If there be such a thing as blind ignorance here upon any sub­
ject, it is the most dense upon this subject of “ paper money ;” and if
there be an unpopular man in the nation it is the bullionist. Thus we
drive away capital, the only employer of industry, and substitute debt,
the embarrassment of capital and industry, in its place. But we work
hard and cover our foolish losses with a surplus still.
Under these circumstances you may readily conceive that the Legal
Tender Act is a matter of small practical importance. Theoretically it is
an act in violation of contracts; it is expost facto, unconstitutional, and
the essence of injustice; but its repeal would make no practical difference
in our currency, or in the condition of the national finances. Even in
satisfaction of a judgment and execution no court or individual declines
to accept a check or current bank notes. Legal tender is seldom thought
of, and never demanded except in bank settlements at the Clearing-House,
and the repeal of the act could only tend to a further inflation of the
currency by removing all check upon bank discounts and currency mak­
ing. There is a possible ultimate restraint upon the making of fictitious




t

18fio.]

N ational Finance with Legal Tender.

279

credits by banks, in the legal tender requirement, but as the legal tenders
amount to three times as much as the specie by which the currency was
formerly regulated, we must expect three times as much currency as under
the specie requirement before the restraint can operate. Still it is some­
thing, and better perhaps than no restraint at all.
The Bank of England system enlists the strongest motive to human
exertion—self interest—in the business of damaging the capital of the
country by expanding the currency and degrading the value of money.
The more mischief of this sort they can do the greater is the profit of the
corporators. Instead of furnishing capital to the people, as the people
generally suppose, it is using their capital and charging them interest
upon it, their money capital meanwhile being forced abroad in pure loss
to them for the benefit of foreign producers. But our people like it, and
exhibit a democratic spirit of independence in ignoring the science which
teaches the folly of it.
Asia gets the benefit of this folly of America and Europe, and the pre­
cious metals are driven to the East nearly as fast as they are taken from
the bowels of the earth, because there they escape the contact and depre­
ciation of “ paper money.” If America and Europe obtained an equiva­
lent value in return the benefit would be mutual, but it is not so.
Thankful for your friendship to my country, and for your earnest sup­
port of the democratic principle in its present terrible conflict with bar­
barism here, I am glad of the opportunity to contribute something to
your knowledge of our institutions, and to explain to you the evil nature
of our financial system, which is one of the two greatest evils and antag­
onisms that the democratic principle has yet to deal with in this country.
The other is the tariff system of “ protective” duties on imports, which
by checking imports checks our exports to the same extent, and cripples
the commerce and the industry that the energy and enterprise of our
people would otherwise develop into much additional and enduring wealth.
Both are creatures of class or privileged legislation that are out of place
in the institutions of the United States.
But we are a young nation. England is old. And we follow England
with a weak subservience that our self-styled democrats are too ignorant
to see, or too conceited to acknowledge. We did once set up for our­
selves in politics in establishing a republican government, and did w ell;
but we take no step in political economy until England pioneers and points
out the road. From her we received our great anti-democratic institu­
tions of slavery, protective tariff, and privileged banking for the manu­
facture of a currency of debt. From her we have learned to hate slavery
and abolish it, and we expect to follow her lead already taken in estab­
lishing free trade. But until she moves to protect her capital against the
encroachments of “ paper money,” we shall doubtless continue as blind as
we are now, and know nothing of the difference in currency between
capital and debt, and we shall go on sinking our capital by putting debt
into its place.
If I could induce you to lend your pen and your influence to persuade
your Government to change its great financial institution from a debtJactory to an honest bank, with the simple privilege of every honest
banker to borrow and lend capital withouL limit, it would be something
to repay me for much careful thought upon this subject, and I should feel




280

The Law o f Bankruptcy and Insolvency.

[April)

that I had taken a step to benefit England and m y own country, and the
commercial world.
W ith the highest regard, permit me to subscribe myself, your friend,
C h a rles H . C arroll.

W est Newton, Mass., February, 1865. .

COMMERCIAL

L A W - N O . 2 0.

BANKRUPTCY AND INSOLVENCY.
(Continued from page 198, vol. 52.)
WHAT PROPERTY THE ASSIGNEE TAKES.

I t has been already intimated, that what the bankrupt holds in the
right of another does not pass to the assignee. If, therefore, the bankrupt
has collected a debt for another, and has kept the sum so collected apart,
it belongs, generally speaking, to him for whom it was collected. But if
it is merged (or sunk) indistinguishably into the general assets of the
bankrupt, the owner has only a claim for it, which must be proved
like other debts. So, if the bankrupt sold goods for his principal, and
they are not paid for, the principal can collect the whole debt, and sue
for "it in his own name. Or if the bankrupt has received payment of the
goods, and has kept that payment apart, the owner, generally, could re­
claim i t ; but not if it were merged in, and mingled with, his assets.
The insolvent laws generally exempt from their operation the same or
similar property with that excepted by statute from attachment or levy.
Among these is wearing-apparel; but under this clause in the national
act, it was held that articles of jewelry belonging to the bankrupt passed
to his assignee. In New York, however, it was held that jewelry
and ornaments which belonged to the wife before marriage, or were given
to her afterwards,—even if given by the husband, provided he was
not then insolvent, and gave the articles in good faith,—belonged to the
wife, and not to the assignee. In a case which occurred in Boston, Judge
S tory differed somewhat from Judge B etts , applying the principles of
equity and trust to the question, and allowing to the wife only such
things as the husband must be regarded as holding in trust for her. So
as to gifts lo the children of an insolvent; if made by himself, and in
good faith, before insolvency, we know no reason why they should not
remain the property of the children. If given by a stranger, there could
be no doubt. An interesting case occurred before Judge S tory , in which
the wife of a person who petitioned the court for the benefit of the bank­
rupt law was possessed of a watch of about the value of fifty dollars, pre­
sented to her by the petitioner, about ten years before the filing of
the petition. She had likewise several mourning rings and pins, and
a few other articles of jewelry, of the value of about twenty-five dollars,
some of which had been given to her by friends, and others by the




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The Law of Bankruptcy and Insolvency.

281

petitioner, some years previous, and one mourning ring, of the value of
about five dollars, given her by the petitioner nearly two years before fil­
ing the petition. The petition further stated, that his two sons, of
the respective ages of seventeen and twenty years, had each a gold watch,
of the value of about fifty dollars, which had been purchased-about two
years before with money given by a friend, and with about twenty-eight
dollars given to each by the petitioner, out of his private cash. It
was ruled by the court, that the watch of the wife, and any jewelry given
to her by third persons before the marriage, or by her husband, either
before or since the marriage, pass to the assignee as part of the property
of the bankrupt, to which his creditors are entitled. But jewelry, as per­
sonal ornaments, and mourning rings, given to her by third persons since
the marriage, as personal ornaments or memorials, belong to the wife for
her sole and separate use in equity, and do not pass to the assignee under
the bankruptcy for the benefit of the creditors. That the watches of the
sons, under the circumstances stated in the petition, belong to them,
as their property. But, nevertheless, if the petitioner was insolvent
when he applied a part of his own money to purchase the same for his
sons, he had no right so to do against the claims of the creditors; and
that in equity, therefore, if the petitioner was so insolvent, the sons must
account to the assignee for the amount of the money of the petitioner so
paid towards the purchase of the watches. But if the petitioner was not
then insolvent, and the donation on his part was made in good faith, and
the donation was suitable to his rank in life, condition, and estate, then it
was good, and not within the reach of the creditors, or in fraud of their
rights under the bankruptcy.
A gift is not complete and effectual until there has been an assent to
it on the part of the donee; and the same rule is generally applicable to
a devisee. But where one devised real estate to a bankrupt, the bank­
rupt was not permitted to decline i t ; and the true reason is, that
the assignee had become possessed of his right of acceptance.
After a party is decreed to be a bankrupt, it would seem that whatever
comes to the bankrupt remains his own property. It is sometimes impor­
tant to determine the moment of time before which what comes to
the bankrupt goes to his assignee, and after which all that comes to him
remains his own.
If the title to property, by devise or otherwise, falls upon him after the
petition and before the decree, in England, it goes to the assignee,
as much as if ]t fell before the petition. But our insolvent laws do not
contain the same provisions as to decree, &c.; and it is probable that the
time when the insolvent shall begin to hold as his own what comes
to him will generally be determined by the phraseology of each statute,
or the practice under it. The principle upon which this question must
always be determined, can be no other than this : whatever falls to him
before he is actually and completely an insolvent at law, goes to his
assignee for his creditors; whatever falls to him after this point of time,
remains his own.
If one partner of a firm becomes insolvent, this operates a dissolution
of the partnership; and his assignee takes only his interest in the balance
remaining after the debts are paid. To ascertain this, it is the common
practice to permit the property of the firm to remain in the hands of the
VOL. l i i .— n o . i v .




18

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The Law o f Bankruptcy and Insolvency.

[April,

other partners, for them to settle the affairs of the firm and render
an account. But there is nothing to prevent an appraisement or agree­
ment as to the value of the insolvent’s interest, and a transfer of that for
its value to the other partners. But such arrangement should not be
made without the sanction of the court. And of course it would not
he binding against the creditors, and in favor of the other partners, if it
were made fraudulently, with their connivance or knowledge or reason­
able means of knowledge. The assignee of the insolvent partner is said
to have no right to take the property from the hands of the other partner
or partners. But the solvent partners must have a right to hold the pro­
perty needed to settle the eoncern. This subject has been alluded to in
the chapter on the law of Partnership.
Where, after the petition, property fell to the wife of the bankrupt, in
such a way as to give him the right of possessing it, in the final decree
the “ equity” of the wife’s interest was regarded, and reasonable provision
for her support was made out of this property. And when, at the time
of the insolvency, the wife was possessed of an interest or estate in expec­
tancy, to become hers in possession after the death of some person’, and
that death occurred some time after her husband’s insolvency, the
assignees were permitted to take tl\e property for the creditors, when the
death occurred; but the court made a proper provision for the wife.
An assignment in insolvency passes to the assignee the money of the
insolvent which is in the hands of an attorney who has collected it
for him.
It passes the possibility of estate or title, when that is connected with
an interest; but not a naked possibility, as that of an heir, who expects to
inherit, and probably will, but has no certain right. And the test in all
such cases is, could the insolvent have made a transfer or assignment
of his rig h t; for if so, it passes to his assignee. Thus, an only son of an
aged father has every reason to expect his inheritance ; but his inter­
est is not legally vested in him, and he cannot transfer i t ; and therefore
the assignee does not take it, and if the father dies the day after the son
is insolvent, the son takes it and keeps it. But if the father had property
for his life only, to be his son’s at his death by the original title, the son
must have this, if he lives, and may transfer his right during the father’s
life ; and therefore, if he becomes insolvent, tiis assignee then takes thisri^Af,
and then takes the property at his father’s death. And the assignee may sell
this right and interest at once, and divide the proceeds among the creditors,
and the purchaser of the right will take the property when the father dies.
An assignment in insolvency cancels and revokes any authority or
power or lien which the insolvent had the power of revoking. Therefore,
it does not revoke one which belonged to the agent or attorney as
his own. As where the attorney had a vested right or interest in the
authority; as if he had paid money for it, or on some good consideration
had a right to execute the authority, and apply the proceeds to payment
of a debt due from the principal.
W here there is no insolvent law, there is nothing to prevent a debtor
from making a voluntary assignment of his property, in trust for his
creditors; and to assign so much only as he pleases, and favor one
creditor, or one class of creditors, at his own choice, and generally to con­
stitute the trust upon such terms as he prefers. The mischiefs resulting




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The Law o f Bankruptcy and Insolvency.

283

from this state of things led, as we have said, to the general introduction
of insolvent laws. But these laws do not exist in all the States; and
where they do not, the same questions, and the same diversity of decision
may be expected which led to their adoption elsewhere. Thus, in some
States, no assignment operated to the benefit of creditors who did not
become parties to i t ; in others, their assent was presumed on the ground
that it was for their benefit. And, generally, an assignment which pro­
vided for the absolute discharge of the assignor, was construed with much
more strictness than one which provided only for the distribution of the
property.
THE DISCHARGE O F THE INSOLVENT.

Among the insolvent laws of the several States, there is a great diver­
sity in the kind and extent of relief or benefit which they give to the in­
solvent. In some, only his present assets are distributed, leaving future
acquisitions liable to attachment. In some, the insolvent is discharged
and protected from arrest or imprisonment. In some, the debtor is dis­
charged, if this be voted by a certain proportion of his creditors. In
some, the debtor is discharged, either if so voted, or without or against
the will of his creditors, provided his assets pay a certain percentage of
his debt.
The persons who are entitled to relief under the insolvent laws differ in
the different States, as follows :
In California, Michigan, Ohio, Indiana, Louisiana, Missouri, Connecti­
cut, New York, Massachusetts, Arkansas, and Rhode Island, any debtor,
whether in or out of prison, may have the benefit of the insolvent laws.
In Delaware, Maryland, Tennessee, North Carolina, South Carolina,
Georgia, Alabama, Mississippi, Illinois, and New Jersey, persons only are
entitled to relief who are imprisoned on civil process. But in Maine,
New Hampshire, Kentucky, and Virginia, the relief is confined to debtors
charged in execution.
In Vermont, the only law resembling an insolvent act is one of the
Legislature of 1855, forbidding voluntary assignments with a preference;
but there is a constitutional provision, that the debtor shall not be con­
tinued in prison where there is not a strong presumption of fraud, aftef
he has delivered up and assigned, bona fide, all his estate for the use or
his creditors.
The provisions relating to the effect of the discharge vary, also, in dif­
ferent States. The statutes of Arkansas, New Jersey, North Carolina,
Mississippi, Tennessee, Illinois, Georgia, Missouri, Connecticut, Pennsyl­
vania and Ohio exempt only the person of the debtor from imprisonment.
The statutes of California, Michigan, and Massachusetts provide for the
discharge of the insolvent from liability for the debt itself, if his property
be assigned and distributed among his creditors.
The laws of New York upon this subject differ in important respects
from those of many of the States. We give a few of its provisions, as
abridged from the statutes by Chancellor K ent. “ The insolvent laws of
New York enable the debtor, with the assent of two thirds in value
of his creditors, and on the due disclosure and surrender of his property
to be discharged from all his debts contracted within the State, subse­
quently to the passing of the insolvent act, and due at the time of the




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The L aw o f Bankruptcy and Insolvency.

[April,

assignment of his property, or contracted before that time, though pay­
able afterwards. The creditor who raises objections to the insolvent’s
discharge, is entitled to have his allegations heard and determined by a
jury. The insolvent is deprived of the benefit of a discharge, if, knowing
of his insolvency, or in contemplation of it, he has made any assignment,
sale, or transfer, either absolute or conditional, of any part of his estate,
or has confessed judgment, or given any security with a view to give a
preference for an antecedent debt to any creditor. The discharge
applies to all debts founded upon contracts made within the State, or to
be executed within i t ; and for debts due to persons resident within the
State at the time of the publication of notice of the application for a dis­
charge, or to persons not residing within the State, but who united in the
petition for his discharge, or who accept a dividend from his estate.”
If a bankrupt or insolvent, who can be discharged only by the assent
or vote of his creditors, gives money to any one or more to obtain their
ascent, his discharge is void; and the assignees can recover the money
from the creditor. And if he gives the creditor a bond, note, or promise,
for the same purpose, the paper or promise is void, and so is the dis­
charge. And it has been held that the discharge was void if money was
given for it by some one for the bankrupt, but not by the bankrupt
himself, nor with his authority or knowledge.
No certificate of discharge affects the claims of creditors upon co-debt­
ors or sureties of the insolvent. Nor does it reach the liability of the in­
solvent for torts,— as slander, trespass, or the lik e; nor for claims for
profits of land held by him without title ; nor for debts due to him in any
capacity or relation of trust, which were not proved before the assignee;
nor, generally, for any debts which could not be, by law, proved before
the assignee.
FO R EIG N BANKRUPTCY OR INSOLVENCY.

The effect of proceedings in bankruptcy in a foreign state has been
much discussed and variously determined. The principal question may
be stated thus. Let us suppose that an English merchant, resident in
England, becomes a bankrupt there ; that he has also creditors in New
York, and property there; and that after the proceedings in England,
which certainly vest in his assignees all his property in that country, his
creditors in this country attach his property in New York. Can the
assignee in England set aside the attachment in New York, on the
ground that the property in New York had passed to the assignee by
force of the proceedings in England before the attachment ?
After some fluctuation, the courts in England have settled down upon
the rule, that the proceedings in bankruptcy in the country of the bank­
rupt’s residence operate upon his assets all over the world. And in
France and Holland, and, indeed, among the commercial states of Europe
generally, the same rule prevails. It is based upon two principles. One
is, that the system of bankrupt law should not be considered as local, but
as universal, and that all the various parts of this system in different
states should recognize each other, and by their union form a branch of
what may be called the private law of nations. Another is, that the
bankrupt law, when it sequesters the property of the bankrupt, and passes
it over to his assignee, operates precisely like a grant, or sale, or other




The Law o f BanJcruvtcv and Insolvency.

285

transfer of the bankrupt himself, and should be regarded as his own act,
done by him under compulsion of law.
In this country, in the earliest cases, it would seem that our courts
were disposed to adopt the English rule. But this tendency soon disap­
peared ; and although to this day wise men doubt whether the English
rule is not the most reasonable and just, it seems to be admitted that the
American rule is the very opposite of the English.
W e hold in this country, that the bankrupt and insolvent law form a
part of the law of nations in no sense and in no respect; that they not
only derive all their force from the authority of the state which enacts
them, but have no force whatever—no more than any other local and
municipal law—beyond the limits of that sovereignty.
So, too, our courts hold that the cession of the bankrupt’s assets to his
assignee is not to be regarded as his own act; but rather as the result and
effect of his civil death. He has, as a merchant, ceased to be. He has
no longer anything to do with his property; and does not possess, and
cannot exercise, any more right or power in respect to it than a mere
stranger. And the’ principle on which his assets are to be gathered and
distributed is the same which would be applied if he had died insolvent,
and an administrator, instead of an assignee, had possession of his pro­
perty. Hence it follows, that within the state where insolvency goes into
effect, it operates on all the property, in the same way that insolvency
declared by probate would operate on the effects of a dead man ; that is,
only within the state where it occurs ; leaving creditors under other juris­
dictions to get hold of other assets if they can.
Hence an English assignment under the bankrupt law would not defeat
the attempt of a creditor in New York to get hold of the property cf the
bankrupt that was there, provided the English assignee had not previ­
ously, in person or by agent, got possession of i t; but after the New
York debts and claims are satisfied, the English assignee takes all the
residue. It may be added, also, that the question and the difference refer
to personal goods and chattels only; as real estate has always, in view
of the law, a place, and is transferable only under the law of that
place.
The English courts do not intimate that their bankrupt law can have
any force, as law, abroad ; or that any foreign law can have that force in
England. But they hold that international comity requires that the tri­
bunals in each state shall recognize this law, and the proceedings under
it, in every other. But in this country, it is held that this woull be an
unreasonable and excessive stretch of com ity; and that it is the duty of
our courts to protect our citizens against interference with their rights or
securities by a foreign law, which was made neither by us nor for us.
The English courts, indeed, have recently manifested a purpose—per­
haps in consequence of the American decisions—to limit the operation of
their rule to the proceedings under bankruptcy in states which admit the
same rule. This is perfectly fair, but it tends to reduce this question of
comity or justice into one of mere expediency, concerning which the
courts and authorities of every country must judge for themselves, on
their own facts.
This question is much more important in this country than it is in Eng­
land, because the numerous States of the Union are, in the absence of a




286

The Law o f Bankruptcy and Insolvency.

[April,

national bankrupt law, foreign to each other, in this respect. And vastly
more cases and questions, involving far greater amounts of property, arise
under this question between our States, than can come under it in Eng­
land, in reference to foreign bankrupt laws, or the operation of her own
in foreign States. Thus, by force of the American rule, if a New York
merchant becomes insolvent, a Massachusetts creditor may get security
from the insolvent’s property in Massachusetts, provided he can get hold
of it by attachment before the New York assignee. Everybody agrees
that the foreign assignee acquires such an interest in or right to the pro­
perty, that, if he completes his title by taking possession first, no creditor
can interfere with him.
There is a similar question, whether a discharge of the debtor under a
bankrupt or insolvent law is a discharge of all his debts everywhere. And
it has been decided in a similar way, that is, with a similar difference,
in England and America. Here, however, this very interesting question
is affected importantly by the clause in the national Constitution which
prohibits the several States from passing laws which “ impair the obliga­
tion of contracts” ; but the questions which have arisen upon this subject
are so nice and difficult, and the adjudication in respect to them is
so various and irreconcilable, that it will be impossible to do more than
give a very brief statement of what seems to be the result. And even
this must be stated with some uncertainty.
The foundation of the whole is a distinction introduced by the Supreme
Court of the United States, between the right of the creditor and his
remedy. They say that a State statute which affects the right of a
creditor is unconstitutional and void. But if it affects only his remedy for
a breach of his right, it is not unconstitutional. Thus, a statute which
exempts the person of a debtor from arrest or imprisonment, touches only
the remedy, and is constitutional, although applying to previous debts.
B ut if it discharges the debt, or relieves the property from attachment, or
prevents a judgement or execution, or operates as a stay law, that is,
a law to prevent process of iaw, it affects the right of the creditor and the
obligation of the debtor, and is, unconstitutional unless limited to debts
subsequently incurred. And as a State may pass almost any law about
subsequent contracts, because then people who make the contracts may
know what obligations they assume, if a statute does not say whether it
applies to the present or only to the past, it shall if possible be held to be
intended to apply only to subsequent debts, because it shall be held to be
intended to be constitutional rather than otherwise. But if it expressly
covers all debts, whether subsequent or prior, equally, it is unconstitu­
tional as toall subsequent debts. A State may, however, make partial
exemptions, as of apparel, tools, or even of a homestead, to a reasonable
extent. But the decisions even on this subject are not uniform.
The courts of the United States have held, that no State insolvent law
or process can discharge the debts of the citizens of that State, so as to
affect the citizens of another State, unless those citizens choose to come
into the assignment. This, most of the State courts, if not all, deny.
And therefore a citizen of New York, for example, whose Boston debtor
has become insolvent, and who chooses not to come into the assignment,
but to sue his debtor, brings his action in the Circuit Court of the United
States, sitting in Boston; because, if he brought it in the State courts,




/

1865 .]

Commercial Chronicle and Review.

287

they would say the defendant was discharged, and would not sustain the
action. It is, however, generally true, that a discharge by the insolvent
law of a State in which the contract was made, and should be executed,
and of which the debtor was a citizen at the time it was made, is valid in
another State. Thus, if a Boston man received in Hew York the note of
a New York man, made there and expressly pavable there, and the
promisor failed in New York and was discharged there, and the Boston
man afterwards caught him in Boston and sued him there, the court
of Massachusetts would hold that the defendant was effectually discharged
from the debt.

COMMERCIAL CHRONICLE AND R EV IEW .
T h e P a n i c —C o m p a r i s o n or t h e P r e s e n t P a n i c w i t h fo ^ ^ e r S p r i n g P a n i c s — I t s C a u s e s —
P r i c k s o f U n i t e d S t a t e s P a p e r a nd G o l d — R a t e s o f D i s c o u n t — F a l l i n R a i l w a y S h a r e s
— D e c l i n e i n M e r c h a n d i s e — F a l l i n g o f f o f I m p o r t s — R a t e s o f E x c h a n g e —P r o b a b i l i ­
t i e s of an E arly R e co v er y of P r ic k s .

T he month through which we have just passed, has witnessed another Spring
panic. A heavy fall in the premium on gold, an extensive depression iu the
prices of all commodities, a tight money market, and a number of heavy mercan­
tile failures, are the features which have successively developed themselves dur­
ing the month of March, 1865. The panic of the previous year was entirely
dissimilar. The latter was simply caused by the sudden absorption by Gov­
ernment of some sixty millions of greenbacks; by resolutely hammering down
gold certificates, and sterling exchange ; and by the application of other and
still more equivocal measures to the purpose of diverting capital from invest­
ments iu the share market to investments in Government securities, and to the
additional purpose, perhaps, of injuring the State banking system in order to
make room for the National bankinWfemun The fall in gold was from 184 to
165. Before this had produced any m ^^ ^B fect upon the prices of commodi­
ties, the means of the Treasury to still- further depress the market were ex­
hausted, gold went up to its former figure in little over a week, and the State
banks crept out of their difficulty
ugh not without a fearful sense of the dan­
ger they had been in. The pani
no other permanent effect than to destroy*^
the gold and silver mining bubblesmf the day, transfer the capital invested in
them to Government securities, and make people a little more careful (or a—
few months.
The panic of March, 1863, was of even still*less virulence. It was direcfiy
occasioned by the sale of some ten millions ofgold by the Government, and
lasted but a few days, knocking gold in"three.weeks from 171 to 140.
A comparison of the.effect on the price oAgoid iu paper currency by these
successive Spring panics is interesting :
Spring panic of 1863, March 1st, 171; 6 th, 150; 9th,'163 ; 26th, 140 ; April 2nd, 158
Soling panic of 1864, April 14th, 181; 19th, 166; 26th, 185.
Spring panic of 1865, March 1st, 201, and then running almost steadily down to 147
on the 24th, and up to 152 on the 31st.

0




288

Commercial Chronicle and Review.

[April,

Did there exist no other evidence of the fact, the remarkable periodicity of
these crises would afford strong ground for believing that they were promoted by
official action. The part that the Treasury played in 1863 and in 1864, in pre­
cipitating the revulsions of those years is well known, and the selection of this
season of the year for such operations, is the best that could be made. This,
with the Fall of the year, are the two most active seasons for the employment of
currency. For a short period in both seasons an unusual amount of paper money
is in demand to effect exchanges. This is shown in ordinary times by the exten­
sion and curtailment of bank circulation and discounts; but in these times it is
exhibited in the rise and fall in the purchasing power of the currency ; because
the currency is fixed in amount, and promissory notes are in little use. The cur­
rency, therefore, at these seasons becomes temporarily of%iore value, and the
prices of gold and other commodities fall. No better time c^ld be selected for
giving them an additional downward impetus. As between the Fall and the
Spring, the latter is preferable, for in the former case havoc is played with the
interests of myriads of smFlUarmers, w\Je in the latter it is only the large mer­
chant^ who suffer, who, though their capitals are larger in amount, as capitalists
are fewer in number. An additional advantage consists in the fact, that at this
season the Treasury is generally better filled with gold than at any other.
But whatever inference may be deduced from the singular felicity with which
Treasury raids are favored at this time of the year, the causes of the4present
panic must be looked for as far below those of its predecessors, as its effects ex­
ceed theirs in importance. Political, financial, and conijnercial cause^lj^ve all
contributed to it, we think. More than any other, perhaps, it is owing to poli*
tical causes.
People for a long while past—ever since the fall of Atlanta-^fcave had their
minds fixed upon an early return to peace, and a consequent fall in the premium
on gold. Reasonable or unreasonable, this opinion has held resolute possession
of men’s minds, and has affected their commercial transactions. Then came the
magnificent series of victories, which,im»mencing with the capture of Sa­
vannah, included the fall of Bran^«j|MR?arleston,-^Wilmington anJ Columbia,
and the junction of S h e r m a n ’s am^IPwiELD’s armies. The effect which these
triumphs qtthe Federal arms produced upon the public mind was heightened by
the political demonstration which took place in this city on the 6th of March,
and which found a responsive echo in everjk^rt of the country. We refer, of
'Jpl course, to the jubilee of victory. Here thewwe find the principal cause which
has contributed to the recen?decline.
^
But financial and commercial matters have had something to do with it. We
* -^^tubt ifThese-victories hn^occiirred in mid-summer, or if-the seven-thirty loan
had not been successful, thaCTtifcvictories would have had the’effect we have seen.
The%ipid absorption of nearly* 60,000,000 by the G^jernment, mainly through
the seven-thirty loan, has had aAlodigTous effect. Very little of this money has
*.beenvpaid out again. Bi\t few ^jeei^jjis are to be
Th^lfibe withdrawal
of a large amount of State bank notes from circulation preparatory to the con­
version oHjje banks fromtte State,t.o the Natiou&systems, has had some iMluence in making'curreifcw scai’ce'. Add w these reasons, tketrlmost entire cessatioBof
any demand from imporffrs fQr gold tojpay duties with, caused partly by vague ap-

x



VSV

V

%\

1865 .]

289

Commercial Chronicle and Review.

prehensions and partly by the late changes in the Tariff and Internal Revenue laws,
and bearing in mind that at this season of the year circulating paper is in more
active demand, and we see enough to have caused quite a respectable panic, had
no political causes whatever existed.
But it is not likely that any very permanent impression will be made by the
late decline. The end has not come yet. Ample time has almost universally
been conceded by creditors. The latter class have uever been so accommodating
before. The crisis will probably blow over. The Treasury, frightened at the
prospect of its loans falling in the market below pJr, has, it is said, commenced
to buy gold in order to stiffen matters up again. The following table shows the
course of U. S . securities during a falling market in gold :
PRICES OF UNITED STATES PAPER.

March 1 . . . ,
“ 8, . . . .
“ 15........
“ 2 2 ........
“ 2 9 ,....

/—6’s 1831.—»
Reg.
Coup.
110}
I ll
111
in *
110

110

105
105

105
105

5’s, 1374.
105
....
100

,,,,

....

5-20's.
no*
110f
109}
105
105

10-40’s.
102}
97}
97
91f
911

Gold.

1 year certif.

981
931
981
97
97

201

196
1731
158
151}

But let us now see what havoc this recent panic has created. Under the sys­
tem of banking and the usury laws extant, the pressure is but partially seen in
the following quotations for commercial paper :
RATES O F

DISCOUNT, M A R C H ,

1865,

March 1st to 15th.

March 15th to 31st.

6a7
7

Loans on call, Stock securities.........
do.
Bond and Mortgage,.,
Prime endorsed bills, 60 to 90 days,
do.
4 to 6 months,............
First class single signatures,............. .
Other good bills,...................................

8
8
8
10

7
7
9 a 12
9 a 12
9 a 10}
10 a 15

a 8}
a9
a 9
a 12

The fluctuation in the bank discount line will tell the story more plainly.
These will be found in another part of this volume.
The principal railway shares have sustained the following decline :
P R IC E S O F R A IL W A Y S H A R E S .

March 1.
New York Central........................
Hudson River,................................
Erie,................................................. .............
Cleveland, Col. and C in.,.............
R eading..........................................
Mich. So. & N. I..............................
Illinois Central................................
Cleveland and Pittsburg...............
Chicago and N. W ..........................
Chicago and R. I ............................
Fort W a y n e ...................................

8.
106}
112

731

65}
. •.
110}
66

117}
77
33}
94}
91}

15.
106
109}
64}
...
106}
64}
92}
70
31}
98
87}

22.
93}
98}
59
130
96
58
98}
68

23
88}

82}

29
84
96
45
••••
89}
50
93}
52
21}
85}
76}

This exhibits a fearful decline, an average of over twenty per cent, during the
month. The produce and merchandise markets show a corresponding state of
affairs :




290

Commercial Chronicle and Review.

March 28.
Nominal.
2 0 $ a 21
65 a 58
9.20 a 9.40
1.60 a
a 7.60
33 a
26.00 a 27.00
8 a 10
47 a 51
Nominal.
1.70 a 1.80
2.25 a 2.40
25 a

March 1.
$ 1 1 . a 11.25
21 a 21 i
92 a 93
9.85 a 10.00
a 1.65
8.50 a
43 a
35.00 a 35.50
10 a 13
48 a 52
23 a 27
1.93 a 2.00
2.50 a 2 .6 6
62-J a

Ashes, pots, 1st sort..................................
Coffee, Rio, prime.........................................
Cotton mid. fair, upland............................
Flour, State, superfine................................
Hay, N. R. shipping..................................
Nails, cut......................................................
Petroleum, crude 40 a 47 g r a v ity .........
Pork, prime mess, new ............................
Tobacco, Kentucky lugs............................
Leather, oak (SI.) lig h t............. * ...........
Lumber, spruce, Eastern..........................
Corn, white Southern................................
Wheat, white Genessee............................
Sheetings, brown, standard......................

[April,

In the face of this heavy decline, merchants have held their own remarkably
well. This is partly owing to the clemency of creditors, all of whom in common
with their debtors, look to a speedy recovery of prices to the former level, and
partly to the fact that in many businesses, but little credit is in vogue nowa­
days. But in others, though no six, eight, or ten months notes are passed, yet
short paper at 60 and 90 days is much in use and cramping on short credits is
always more severe than on long ones. Many dealers have lost all the profits
they had reaped during the war, and some have eaten into their original capital.
The decline which follows a fall in gold from 234 in January, to 147 in March,
is not likely to have produced but little loss. One-fourth of the wealth of many
commercial houses has been swept away during the past six weeks.
The following table shows the imports of dry goods into this port and the
gradual cessation of entries for consumption and consequent falling off in
gold duties of which mention has already been made :
V A L U E O F D E V GOODS E N T E R E D F O E

March
“
“
“
“

C O N SU M PTIO N I N M A R C H ,

1865.

1864.

1865.

........................................................................
9 .......................................................................
16.......................................................................
23.................................
30.......................................................................

$3,063,855
2,009,441
1,542,663
1,341,894
2,063,565

$909,229
672,683
830,919
716,009
709,605

T o ta l.................................................................

$10,021,418

$3,838,535

2

W IT H D R A W N

FRO M

W A REH OUSE.

March 2 ........................................................................
“
9.....................................................................
“
16.................................................
“
23......................................................................
“
80...................................................

$260,260
253,397
815.797
244,012
190,133

$656,232
690,183
559,025
389,750
228,817

T o ta l................................................................

$1,263,499

$2,424,007

2 .......................................................................
9......................................................................
16......................................................................
23......................................................................
30......................................................................

$511,695
168,972
517,967
369,392
760,683

$400,548
470,398
266,962
104,659
238,497

T o ta l................................................................

$2,613,709

$1,486,064

E N T E R E D F O R W A R E H O U S IN G .

March
“
“
“
«




r

1865.]

Commercial Chronicle and Review.

291

Total entered for consumption........................
Add withdrawn from warehouse....................

1864.

1865.
$3,838,535
2,424,007

Total thrown on the market...................

$6,262,542

Total entered for warehousing........................
Add entered for consumption........................

$1,486,064
3,838,535

Total entered at the port........................

$5,324,599

The specie movement has been as follows :
S P E C IE AND P R IC E O P GOLD.

Jan.

o*■!

9 •••
16 . • •
23 . . •
30 . • .
Feb. 6 . . •
U
13 • • •
it
20 . . •
il
27
March 5>• • •
“

“

12

it

18
25 »• •

tt

Total

•

/--------- 1 8 6 4 .---------, --------------------------- 1 8 6 5 ------------------Received Exported.
Received. Exported. Gold in Bank. Prem. on gold.
$254,239 $590,262 $1,148,850 $594,353 $20,152,892 127 a 1271
383.519 1,046,251 21 ,357,608 1171 a 121
1,216,204
279,801 1,985,057
50,268
329,833 20 ,211,569
971 a 106
365,608 1 ,0 0 0 ,0 0 0
611,019
997,136 18,896,085 ] 134 a 1 2 0
............. 109 a 1141
324,864
. . 4 +V*
668,747
662,616
478,777 19,682,308 1041 a 109
363,198 1,219,808
370,753 20,297,346 104 a 105f
325,632
981 a 991
264,322
100.882 2 0 ,682,319
94 a 98
407,067
531,700
148,536 20,092,388
96f a 1 0 1
512,358
629,803
83,393 19 ,830,183
861 a 99
465.920
20,015 20 ,737,838
281,304
83,881
108,157 22 ,256,596* 621 a 911
375,101
293,900
164,440 22 ,006,524
47 a 671

........... $ 1,392,526
The rates of exchange have rulec as follows :
. . •

•

B A T E S OF E X C H A N G E IN G O L D .

London, 60 days. Paris, 60 days. Amsterdam.
Jan. 7 1081 a 1091 5.18J a 5.15 411 a 414
ii
14 1081 a 109f 5.18J a 5 .1 3 | 411 a 414
tt
21 1081 a 1091 5.184 a 5.134 411 a 414
28 1081 a 1091 5.20 a 5 .1 3 | 41 a 414
Feb 4 108 a 1091 5.211 a 5.15 41 a 41f
It
11 1081 a 109
6 234 a 5.15 404 a 411
18 107 a 108} 5.271 a 5.20 401 a 4 1 |
25 108 a 1084 5.271 a 5 .1 8 J 401 a 401
Mch 4 108 a 1081 5.271 a 6.211 404 a 411
tt
11 1 07 1 a 1081 6.271 a 5.221 401 a 411
“ 18 1091 a 109} 5 211 a 5.13i 41 a 414
tt
25 109 a 1091 6 .2 0 a 5.15 41 a 414

Frankfort.
Hamburg.
411 a 411 8 6 f a 361
41 a 411 361 a 361
411 a 411 36f a 361
41 a 411 8 6 f a 361
41 a 41§ 36 a 36f
40f a 411 351 a 361
401 a 41
851 a 36f
401 a 41
351 a 36f
4 0 f a 4 0 | 361 a 361
401 a 40f 361 a 361
41 a 41f 36 a 361
40f a 411 36 a 361

Berlin.
72 a 721
72 1 a 721
73 a 721
72 a 721
711 a 72
711 a 721
711 a 72
711 a 72
711 a 71f
701 a 711
711 a 72
711 a 72

In regard to the probabilities of early recovery from the prevailing depres­
sion, the effect of whatever military successes may yet await us has undoubtedly
been already discounted. The Treasury will soon be obliged to pay out a large
portion of whatever amounts of currency it has succeeded in temporarily absorb­
ing, though we believe the policy of the new Secretary to be in favor of reduc­
ing the redundancy all that he can, and we think he will succeed in carrying out
this policy to a great extent. Goods meanwhile will be hammered without
mercy, and when the urgent necessities of merchants have been relieved, the spring
trade will fall off, and the demand for currency concomitantly cease. With a
little further pressure, therefore, the general markets may be expected to gradu­
* Two new National Banka now first included in the totals.




292

Journal o f Banking, Currency, and Finance.

[April,

ally recover, and as the summer is ushered in, something very like the old state
of affairs may exist again. And particularly if peace occurs ; for then, the end
being known, we can see nothing to prevent another rise in prices. Meanwhile,
between these two high tides of inflation, the past one and the future one, those
who cannot live in such low tides as now prevail will be stranded ; to float again,
perhaps, upon the returning flood. Yet these great ebbs of currency will leave
their mark upon every industry, and so gradually weaken the resources of dealers.
Opportunities to make up for sacrifices that are now unavoidable may never
occur. This should caution merchants and others to be more prudent. It is
difficult to get out of the scrape now. To wind up might prove ruinous ; to go
on, as bad. Great prudence and great judgment is required. The return of
peace will play as much immediate havoc with mercantile houses as the coming of
war did. This is the compensation of forces. Mr. M cC ulloch has now the com­
mercial destinies of this country in his hands. We trust he will act with wisdom
and moderation, and show no favor to one interest more than to another—to the
agricultural more than to the mechanical—or to either more than to the commer­
cial. Let him remember that the merchant is just as much a producer as is the
farmer, or the mechanic. With his success the country succeeds ; with his failure
the well-being of all must suffer.

JOURNAL OF BA N K IN G , CURRENCY, AND FIN A N C E .
A P P O IN T M E N T

OF

IIO N . H U G II M C CU LLO CH A S S E C R E T A R Y O F T H E

T R E A S U R Y — T H E S E V E N -T H IR T Y

L O A N — T H E M O N E Y P A N IC — T R U E P R IN C IP L E S O F M O N E Y A N D B A N K IN G — T H E C U R R E N C Y M U ST NOT
B E F I X E D I N A M O U N T— IT M U 8T B E L E F T F R E E — S P E C IE P A Y M E N T S C A L L E D F O R — T H E R IV A L B A N K ­
IN G SY STEM S T O
LEGAL

TENDER

S T A N D O N T H E IR O W N M E R IT S — R E T U R N 8 O F T IIE N E W Y O R K C IT Y B A N K S — T H E
R U L E — R E T U R N S O F P H IL A D E L P H IA

BA N K S— RETURNS

OF B O STO N

BA N K S— T H E

B A N K S O F E N G L A N D AND F R A N C E .

T he chief events of the month have been the appointment of Hon. H ugh
M c Culloch as Secretary of the United States Treasury, the taking of the seven-

thirty loan to the extent of over twenty-five millions per week, and the money
panic, to which reference has been made in another part of this volume.
Mr. M c Culloch, unlike his predecessor, brings to the Treasury Department
the experience of a practical banker, a faculty which, in these days of fiscal
experiments, cannot be too highly rated. In addition to this, he enjoys the
advantage of being intimately acquainted with the details of the department
over which he now presides, having served as Comptroller of the Currency since
that office was created. No man, coming into the office which he has, ever had
so much to perform, so excellent an occasion on which to perform it, so many
powerful tools to work with, and so many people to gratify by performing it
successfully. This consists in no less than entirely remodelling the monetary
system of the country. For this great mission Mr. M c C ulloch is well fitted,
the time is apt, and the people ready to applaud its execution. But what is
done must be done gingerly. A great deal remains to be undone before anything




1865.]

Journal o f Banking, Currency, and Finance.

293

can be done. Yet, pinch whose shoes it may, reform must go on, and the sooner
it goes on the better. Mr. M cC ulloch probably knows that money is anything
that is used for the purpose of exchanging values: that specie is money, bank
bills are money, promissory notes are money, book credits are money ; that these
various kinds of money have various rates of circulation : that specie circulates
more than any other kind of money, bank bills next, promissory notes next—
having but the faculty of circulating two or three times on the average,—and
that book credits circulate less than all, seldom possessing the faculty of more
than a single circulation. That if left to itself the quantity and the kinds of
money needed by society will adjust themselves to the demand : that in times of
security and peace, time-notes and credits will be largely used, and specie and
bank notes very little used : and that, in times of war and danger, specie and
bank notes will be largely used, and time-notes and credits scarcely used at all.
That though in war or other times of insecurity, more quickly circulating paper may
be employed for money than at other times, it does not follow that the amount
of it should be fixed and unalterable, because the wants of society change from
moment to moment, and the demand for currency, with which to supply those
wants, changes as often as the wants do. That, consequently, any currency
which is fixed in amount—no matter if it is only fixed for an hour at a time—
and not free to come into existence, and to be demonetized, whenever required,
is an evil. I t is an evil, because the demand for it being varied every moment,
the value of it must vary every moment, and continual fluctuations in the prices
of commodities must be the result. It matters not if such a currency be made of
paper or gold or what not. If not left free to ebb and flow, it must continually
fluctuate in purchasing value. If gold could not be melted or exported or im­
ported or coined at pleasure, the same effects would ensue with gold as with
paper currency.
All this Mr. M c C ulloch is well aware of. Not that such knowledge
follows as a matter of course from the fact of his having been appointed the
Secretary of the Treasury; for Mr. C hase did not know it, and neither
did Mr. F essenden . But Mr. M c C ulloch knows it, and the people of this
country, and particularly the mercantile community who suffer most from its
being ignored, earnestly ask him to recognise these important elementary truths
of political economy in the practical operations of the Treasury. The time ka3
now passed when any excuse existed, if any ever did exist, for the use of a fixed
currency. The currency should be free, and to be free it must either be of some
substance capable of being demonetized or shipped abroad at pleasure, and vice
versa, or it must be convertible at pleasure into such a substance. We all know
that this means specie. In plain words, we want specie payments again. No
doubt but that in the present state of diminished credit several hundred millions
of United States Treasury notes, even if inconvertible, would continue to be used
as currency, and need not, therefore, be withdrawn from circulation. But we
would have this left entirely free to itself. If the people desired to use them,
well and good. If not, they should be left free to use what currency they
deemed best.
With this great reform all minor difficulties that now attend the system of
banking in this country would vanish. The rival systems would find their




294

Journal o f Banking, Currency, and Finance.

[April,

respective levels, and a good deal of that gloom would be dispelled which now
haDgs over the future of banking in the United States.
The frequent changes of banks, from the State system to the National, deprive
the statements, at least for a time, of much of the value which they formerly
possessed.
NEW

T O R E C IT Y B A N K S .

N ew Y ork B anks . ( C a p ita l, J a n ., 1864, $69,494,577 ; J a n ., 1865, $69,658,787.)

Date.
Dec.
“
Jan.
*4
a

M
Feb.
“
«
it

March
“
44
“

Loans.
Specie.
Circulation. N 6 t Deposits. Clearings.
$203,612,093 !$20,600,441 $3,383,346 $153,805,909 !$593,336,137
199,444,969 19,662,211 3,283,832 147,442,071 471,039,253
195,044,687 20,152,892 3,183,626 147,821,891 635,055,671
189,686,750 21,367,608 3,074,029 148,931,299 538,780,682
187,060,586 20,211,569 2,979,851 146,068,355 611,194,907
169,602,630 18,174,316 2,906,194 143,842,230 656,828,878
186,639,790 19,682,308 2,868,646 152,703,316 663,814,434
185,515,904 20,297,346 2,821,996 156,711,166 584,179,409
186,365,126 20,682,319 2,855,982 156,150,634 518,305,222
183,534,735 20,092,378 2,739,383 153,948,481 481,028,121
186,569,666 19,830,183 2,720,666 153,009,588 511,361,387
188,120,890 20,737,838 2,741,684 152,134,448 412,302,453
211,486,651 22,256,596 4,662,505 174,479,367 636,736,233
207,677,603 22,066,524 4,457,162 166,965,508 604,796,728

2 4 ,..
31...
7 ,..
1 4 ,..
21,..
2 8 ,..
4 ,..
1 1 ,..
1 8 ,..
2 5 ,..
4 ,..
11. ..
* 1 8 ,..
2 6 ,..

The Clearing House has introduced an excellent feature in requiring the banks
to state the amount of Legal Tender they have on hand.
The following are the weekly returns of the New York City banks from the
commencement of this rule :
March
“
«

1 1 ....
1 8 ....
2 5 ....

Legal Tender...................... ............................
Do..................................................................
Do..................................................................

$26,713,408
33,646,014
35,296,166

The following are the returns of the Philadelphia banks :
P H IL A D E L P H IA B A N K S .
P

h il a d e l p h ia

Date. 1865.
Jan. 2,. . .
“
9,. . .
“ 16..
“ 23,.
“ SO,.
Feb. 6 ,. . .
“ 13,.
“ 2 0 ,. . .
“ 27,.
Mar. 6 ,.
“ 13,.
“ 2 0 ,.
“ 27,.

B

a n k s

( C a p i t a l , J a n ., 1863, $11,740,080; 1865, $13,315,720.)

.

Loans.
$48,059,403
49,250,629
49,833,799
49,756,716
60,056,584
50,269,473
49,511,683
48,639,386
48,992,272
49,228,540
49,297,223
48,976,280
60,255,294

Specie.
$1,803,683
1,781,108
1,760,669
1,792,891
1.773,266
1,702,776
1,629,957
1,569,223
1,498,644
1,889,264
1,422,736
1,323,274
1,350,968

Circulation.
$2,793,468
2,978,035
3,228,785
3,606,051
4,010,192
4,393,173
4,660,697
4,866,771
6.077,436
5,446,021
5,906,791
6,609,276
6,736,660

Deposits.
$39,845,963
41,001,803
43,121,208
40,186,513
59,822,860
38,4 96,337
37,340,531
37,141,900
89,011,100
88,391,622
38,655,908
38,678,804
39,117,258

Legal tenders.
$14,524,176
15.297,228
17,008,905
16,939,598
16,572,898
14,000,852
14,295,647
13,922,954
15,398,502
1 5,200,287
15,487,835
15,796,783
16,866,146

C H A N G E S IN C A P IT A L STOCK.

Feb. 27, $14,485,450

|

Mar. 6 , $14,494,050

|

Mar. IS, $14,495,550

The following are the returns of the banks of Boston, except those which have
reorganized under the National law. They make no returns. Their circulation*
* The items, except specie, would all show a decrease for the week but for the ad­
dition of two new National Banks, now first included in the totals.




,

,

Journal o f Banking Currency and Finance.

295

is, however, included in these figures. With the other National Banks, they
number about thirty institutions.
BOSTON BA N K S.
B

o sto n

B

a n k s

.

Date. 1865.
January 2 .........
“
9 .........
“
16.........
“
2 3 .........
“
30.........
February 6 .........
“
13.........
“
2 0 .........
“
2 7 .........
March
7 .........
“
1 4 ____
“
2 1 .........
“
28. . . .

( C a p i t a l , J a n . , 1863, $38,231,700 ;1 J a n . t 1865, $22,350,000.)
C ir c u la tio n .
L oans.
S p e c ie .
Deposits.
$46,312,701
$3,434,323
$7,766,888
$23,086,775
2,903,469
33,707,472
7,803,528
16,772,600
7,529,229
33,444,460
2,862,939
15,926,720
7,126,253
33,160,490
2,797,093
16,058,310
6,792,950
33,025,868
2,659,568
16,848,192
6,581,880
25,609,695
2,245 510
12,641,033
6,345,912
23,609,664
2,087,995
11,031,783
2,039,669
6,094.370
23,533,879
10,621.322
6,278,194
22,872,774
1.932,769
9,789,000
5,843,974
1,877,323
22,825,217
9,961,545
21,224,401
5,580,219
1,700,714
9,435,578
5,435.928
21,206,180
1,524,401
9,393.224
20,952,000
1,426,700
5,279,700
8,958,800

The following are the returns of the Bank of England :
T H E B A N K O F E N G L A N D R E T U R N S ( iN PO U N D S S T E R L IN G ).

Date. 1865.
Dec. 7 , . . .
1 4 ,...
« 21,...
u
2 8 ,...
Jan. 4 , . . .
U 11, . . .
(( 1 8 ,...
« 2 5 ,...
Feb. 1 , . . .
«(
8,...
« 15, . . .
«( 2 2 , . . .
Mar. 1 , . . .
8,...

Circulation.
20,118,116
19,669,832
19,669,007
19,810,455
21,007,215
21,012,778
21,223,848
20,614,794
20,998,478
20,743,805
20,399,763
20,101,978
20,381,080
20,281,455

Private
Public
Deposits.
Deposits.
6,468,544 12,666,764
7,161,719 12,267,474
7,694,616 12,927,807
8,601,125 13,04 0,643
8,500,269 13,874,977
4,445,535 16,174,166
4,186,614 14,658,015
4,836,799 14,553,933
5.541,452 14,447,994
6,252,892 13,814,063
6.572,512 13,969,659
6,665,364 14,140.885
6,854,409 14,158,331
7.677,728 13,904,702

Securities.
28,726,674
28,301,603
29,326,027
30,708,083
32,832,904
30,957,880
29,292,273
29,173,458
30,040,983
29,908,102
30,007,199
29,910,491
30,424,108
30,949,096

Coin and
Rate of
Bullion.
Discount
13,840,691 7 per ct.
14,122.711 6 “
14,307,760 6 «
14,100,974 6 “
13,933,592 6 “
14,097,390 5 i “
14,168,227 5 ) ‘
14,317,215 5 “
14,461,224 5 “
14,511,611 5 “
14,553,871 5 “
14,600,233 41 “
14,801,367 4 } “
14,758,607 41 “

This shows, for the week ending March 8th, a withdrawal of £253,629 from
the private deposits, and an addition of £524,987 to the private securities, as
compared with the previous week. The decrease in coin and bullion is £42,760.
The principal feature in the London market is a dullness in the Government
funds (British), and a decline of consols to 88}, in expectation of gold shipments
having to be made to this country. In view of the recent fall in gold on this
side, and the probability of the shipment of five-twenties, held in Europe, to this
market, in order to realize at the present handsome profit, the expectation of
gold shipments to this country may not be well founded.
BANK

December 8
“
15
«
22
u
29
5
January
U
U

12

19
26

Loans.
fr.566,921,053
586,521,733
561,603,376
597,157,830
690,129,269
677,690,909
667,121,414
642,779,237




OF FRA NCE.

Cash and Bullion.
Circulation.
fr.355,640,597 fr.722,291,475
351,562,024
789,383,125
364.008,378
721,487,475
726,212.275
359,969,767
830,071,913
790,526.625
314,771,593
806,825,675
817,443,275
318,170,064
322,119,477
808,283,926

Deposits. Interest.
fr.!78,9H8,028
5
161,270,492
5
153,193,615
171,321,867
190,488,131
4J
153,188,384
ii
142,120,960
4*
139,123,008

290

The New Tariff.

February

2

U

9
16
23

It

March
M

2

9

651,375,290
636,303,905
604,140,057
684,895,098
569,812,074
544,367,920

318,454,492
339,240,543
354,573,168
871,630,673
381,455,854
410,774,986

812,425,525
805,966,575
801,601,175
785,025,125
772,877,175
773,343,825

[April,
143,430,627
153,039,752
139.995,788
150,235.834
192,866,298
166,985,971

4*
4
4
4
4
Si

An increase of one hundred millions of francs in the stock of coin and bullion,
and a decrease of one hundred and fifty millions in the discount line, within two
months, are the principal features of this exhibit. They testify to a depression
in commerce which is really painful to contemplate. The stock of coin and bul­
lion now exceeds one-half of the notes in circulation. In consequence of this
plethora, the rate of interest has been lowered to 3J per cent.

THE NEW TA R IFF.
W e give below an official copy of the Tariff Act passed by Congress and
approved March 3,1865. I t takes effect the first of April. To understand this
law it will be necessary to refer to the tariff acts passed at the previous sessions
of Congress and approved July 14, 1862, and June 30, 1864. The former may
be found in vol. 47, page 157, (August, 1862,) and the latter in vol. 51, page
47, (July, 1864,) of the Merchants’ Magazine. In transmitting the act, the
Secretary of the Treasury accompanies it with the following circular giving a
liberal interpretation to its provisions:

March 11,1865.
S ir : I transmit herewith an act, amendatory of certain acts imposing duties
on imports, approved March 3,1865.
The second proviso in section 4 of this act does not repeal the 4th section of
“ the act to modify existing laws imposing duties on imports, and for other pur­
poses,” approved March 3,1863. Vessels trading “ to or from any port or place
south of Mexico, down to, and including Aspinwall and Panama,” will pay the
tonnage duty of thirty cents per ton, only once a year.
The 9th section enacts “ that this act shall take effect on and after the first
day of April, eighteen hundred and sixty-fiveconsequently, in the absence of
any provision of law to the contrary, you will cause the rates of duty imposed
by this act to be assessed only on such goods, wares, and merchandise as may be
imported on or after the 1st proximo. Goods imported prior to the 1st proximo,
whether under bond or otherwise, are not liable to the increased rates imposed
by this act.
Applications for relief under the 13th section of this act must be made in the
manner prescribed by articles 524, 525, 526, 527, 528, 529, and 530, of the
General Regulations; as that section extends the relief provided by the 8th sec­
tion of the act of March 28,1854, to the cases specified in said 13th section.




T reasury D e pa r tm en t ,

I am, very respectfully,
H ugh M c Culloch, Secretary of the Treasury.

1805 .]

The N ew Tariff.

297

OFFICIAL.

Laws of the United Stales passed at the second session of the Thirty-eighth Congress.
[ p u b l ic — n o . 58.]
A n act

a m e n d a to r y o f c e r ta in a c t s im p o s in g d u tie s u p o n fo r e ig n im p o r ta ti o n s .

Be it enacted by the Senate and House of Representatives of the United Slates
of America in Congress assembled, That section sis of an act entitled “ An act
to increase the duties on imports and for other purposes,” approved June thirty,
eighteen hundred and sisty-four, be amended so that paragraph second, third and
fourth of section six of said act shall read as follows:
Second. On all manufactures of cotton, (except jeans, denims, drillings, bed
tickings, ginghams, plaids, cottonades, pantaloon stuff, and goods of like descrip­
tion,) not bleached, colored, stained, painted, or printed, and not exceeding one
hundred threads to the square inch, counting the warp and filling, and exceeding
in weight five ounces per square yard, five cents per square yard ; if bleached,
five cents and a half per square yard ; if colored, stained, painted, or printed,
five cents and a-half per square yard, and, in addition thereto, ten per centum
ad valorem. On finer and lighter goods of like description, not exceeding two
hundred threads to the square inch, counting the warp and filling, unbleached,
five cents per square yard ; if bleached, five and a-half cents per square yard ; if
colored, stained, painted, or printed, five and a-half cents per square yard, and in
addition thereto, twenty per centum ad valorem. On goods of like description,
exceeding two hundred threads to the square inch, counting the warp and filling,
unbleached, five cents per square yard; if bleached, five and a-half cents per
square yard ; if colored, stained, painted, or printed, five and a-half cents per
square yard, and in addition thereto, twenty per centum ad valorem.
Third. On all cotton jeans, denims, drillings, bed tickings, ginghams, plaids,
cottonades, pantaloon stuffs, and goods of like description, or for similar use, if
unbleached, and not exceeding one hundred threads to the square inch, counting
the warp and filling, and exceeding five ounces to the square yard, six cents per
square yard; if bleached, six cents and a-half per square yard ; if colored,
stained, painted, or printed, six cents and a-half per square yard, and in addition
thereto, ten per centum ad valorem. On finer or lighter goods of like descrip­
tion, not exceeding two hundred threads to the square inch, counting the warp
and filling, if unbleached, six cents per square yard ; if bleached, six and a-half
cents per square yard ; if colored, stained, painted, or printed, six and a-half
cents per square yard, and in addition thereto fifteen per centum ad valorem.
On goods of lighter description, exceeding two hundred threads to the square
inch, counting the warp and filling, if unbleached, seven cents per square yard ;
if bleached, seven and a-half cents per square yard ; if colored, stained, painted,
or printed, seven and a-half cents per square yard, and, in addition thereto fifteen
per cent ad valorem. Provided, That upon all plain woven cotton goods, not
included in the foregoing schedule, unbleached, valued at over sixteen cents per
square yard, bleached, valued at over twenty cents per square yard, colored,
valued at over twenty-five cents per square yard, and cotton jeans, denims, and
drillings, unbleached, valued at over twenty cents per square yard, and all other
cotton goods of every description, the value of which shall exceed twenty-five
VOL. L II.----N O . IV 19




298

The N ew Tariff.

[April,

cents per square yard, there shall be levied, collected, and paid a duty of thirtyfive per centum ad valorem ; And providedfurther, That no cotton goods having
more than two hundred threads to the square inch, counting the warp and fill­
ing, shall be admitted to a less rate of duty than is provided for goods which are
of that number of threads.
Fourth. On spool thread of cotton, six cents per dozen spools, containing on
each spool not exceeding one hundred yards of thread, and in addition thereto,
thirty per centum ad valorem ; exceeding one hundred yards, for every additional
hundred yards of thread on each spool or fractional part thereof in excess of one
hundred yards, six cents per dozen, and thirty-five per centum ad valorem. On
cotton thread or yarn when advanced beyond single yarn, by twisting two or
more strands together, if not wound upon spools, four (4) cents per skein, or
hank of eight hundred and forty (§40) yards, and thirty per cent ad valorem.
Sec. 2. And he it further enacted, That from and after the day when this act
takes effect, in addition to the duties heretofore imposed by law on the importa­
tion of the articles mentioned in this section, there shall be levied, collected, and
paid the following duties and rates of duty, that is to say :
On brandy, rum, gin, and whisky, and on cordials, liquors, arrack, absynthe,
and all other spirituous liquors and spirituous beverages, 50 cents per gallon of
first proof and less strength, and shall be increased in proportion for any greater
strength than the strength of first proof.
On spun silk for filling in skins or cops, 10 per centum ad valorem.
On iron bars for railroads or inclined planes, 10 cents per 100 pounds.
On wrought iron tubes, one cent per pound.
Sec. 3. And he it further enacted, That from and after this act takes effect, in
lieu of the duties heretofore imposed by law on the importation of the articles
mentioned in this section, there shall be levied, collected, and paid the following
duties and rates of duty, that is to say :
On cotton, five cents per pound.
On illuminating oil and naphtha, benzine, and benzole, refined or produced
from the distillation of coal, asphaltum, shale, peat, petroleum, or rock oil, or
other bituminous substances used for like purposes, forty cents per gallon.
On crude petroleum, or rock oil, 20 cents per gallon.
On crude coal oil, 15 cents per gallon.
On tobacco stems, 15 cents per pound.
On ready made clothing of silk, or of which silk shall be a component material
of chief value, 60 per centum ad valorem.
On quicksilver, 15 per centum ad valorem.
Sec. 4. And be it further enacted, That section fifteen of an act entitled “ An
act increasing temporarily the duties on imports, and for other purposes,” approved
July fourteenth, eighteen hundred and sixty-two, be, and the same hereby is,
amended so as to impose a tax or tonnage duty of thirty cents per ton in lieu of
“ ten cents,” as therein mentioned : Provided, That the receipts of vessels pay­
ing tonflage duty shall not be subject to the tax provided in section one hundred
and three of “ An act to provide internal revenue to support the government, to
pay interests on the public debt, and for other purposes,” approved June thirtieth,
eighteen hundred and sixty-four, nor by any act amendatory thereof; Provided,




1865 .]

The N ew Tariff.

299

further, That no ship, vessel, or steamer having a license to trade between dif­
ferent districts of the United States, or to carry on the bank, whale, or other
fisheries, or on any ship, vessel, or steamer to or from any port or place in Mexico,
the British provinces of North America, or any of the West India Islands, or
in all these trades, shall be required to pay the tonnage duty contemplated by
this act more than once a year.
Sec. 5. And he it further enacted, That the term “ statuary,” as U3ed in the
laws now in force, imposing duties on foreign importations, shall be understood
to include professional productions of a statuary, or of a sculptor only.
Sec. 6. And he it further enacted, That there shall be hereafter collected and
paid on all goods, wares, and merchandise of the growth or produce of countries
[east] of the Cape of Good Hope, (except raw cotton and raw silk as reeled
from the cocoon, or not further advanced than tram, thrown, or organzine,) when
imported from places west of the Cape of Good Hope, a duty of ten per centum
ad valorem, in addition to the duties imposed on any such article when imported
directly from the place or places of their growth or production.
Sec. 7. And he it further enacted, That in all cases where there is, or shall be
imposed any ad valorem rate of duty on any goods, wares, or merchandise im­
ported into the United States, and in all cases where the duty imposed by law
shall be regulated by, or directed to be estimated or based upon the value of the
square yard, or of any specified quantity or parcel of such goods, wares, or mer­
chandise, it shall be the duty of the collector within whose district the same
shall be imported or entered, to cause the actual market value or wholesale price
thereof, at the period of the exportation to the United States, in the principal
markets of the country from which the same shall have been imported into the
United States, to be appraised, and such appraised value shall be considered the
value upon which duty shall be assessed. That it shall be lawful for the owner,
consignee, or agent of any goods, wares, or merchandise, which shall have been
actually purchased or procured otherwise than by purchase, at the time and not
afterwards, when he shall produce his original invoice or invoices to the collector,
and make and verify his written entry of his goods, wares, or merchandise, as
provided by section thirty-six of the act of March two, seventeen hundred and
ninety-nine, entitled “ A.n act to regulate the collection of duties on imports and
tonnage,” to make such addition in the entry to the cost or value given in th e
invoice as in his opinion may raise the same to the actual market value or whole­
sale price of such goods, wares, or merchandise, at the period of exportation to
the United States, in the principal markets of the country from which the same
shall have been imported, and it shall be the duty of the collector within whose
district the same may be imported or entered, to cause such actual market value
or wholesale price to be appraised in accordance with the provisions of existing
laws, and if such appraised value shall exceed, by ten per centum or more, the
value so declared in the entry, then, in addition to the duties imposed by law on
the same, there shall be levied, collected, and paid a duty of twenty per centum
ad valorem on such appraised value: Provided, That the duty shall not be
assessed upon an amount less than the invoice or entered value, any act of Con­
gress to the contrary notwithstanding : And provided, further, That the sections
twenty-third and twenty-fourth of the act approved June thirtieth, eighteen huu-




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The N ew Tariff.

[April,

dred and sixty-four, entitled “ An act to increase duties on imports, and for other
purposes,” and all acts andrirnps gin dut qeao fcsajtries to be assessed upon
commissions, brokerage, costs of transportation, shipment, trans shipment, and
other like costs and charges incurred in placing any goods, wares, or merchan­
dise on shipboard, and all acts or parts of acts inconsistent with the provisions
of this act are hereby repealed.
Sec. 8. And he it further enacted, That so much of an act entitled “ An act to
authorize protection to be given to citizens of the United States who may dis­
cover deposits of guano,” approved August eighteen, eighteen hundred and fiftysix, as prohibits the export thereof, is hereby suspended in relation to all persons
who have complied with the provisions of section second of said act, for two
years from and after J uly fourteenth, eighteen hundred and sixty-five.
Sec. 9. And be it further enacted, That this act shall take effect on and after
the first day [of] April, eighteen hundred and sixty-five.
Sec. 10. And be it further enacted, That so much of sections thirty-nine, forty,
forty-one, forty-two, forty-three, and forty-four of the act entitled “ An act to
regulate the [collection of] duties on imports and tonnage,” approved March
second, seventeen hundred and ninety-nine, as requires the branding or marking,
and certifying of casks, chests, vessels, and cases containing distilled spirits or
teas, be, and the same is hereby, revived, to be executed under such rules and
regulations as shall be prescribed by the Secretary of the Treasury,
Sec. 11. And be it further enacted, That flax and hemp machinery and steam
agricultural machinery, as designated in section 21 of the act, “ to increase duties
on imports and for other purposes,” approved June thirtieth, eighteen hundred
and sixty-four, may be imported free from duty for one year from the passage of
this act.
Sec. 12. And be it further enacted, That in all proceedings brought by the
United States in any court for due recovery as well of duties upon imports alone,
as of penalties for the non-payment thereof, the judgment shall recite that the
same is rendered for duties, and such judgment, interests, and costs shall be pay­
able in the coin by law receivable for duties, and the execution issued on such
judgment shall set forth that the recovery is for duties, and shall require the
marshal to satisfy the same in the coin by law receivable for duties, and in case
of levy upon and sale of the property of the judgment debtor the marshal shall
refuse payment from any purchaser at such sale, in any other money than that
specified in the execution.
Sec. 13. And be it further enacted, That the eighth section of the act of March
twenty-third, eighteen hundred and fifty-four, “ to extend the warehousing system
by establishing private bonded warehouses and for other purposes,” which author­
ized the Secretary of the Treasury, in case of the actual injury or destruction of
goods, wares, or merchandise by accidental fire, or other casualty, while in ware­
house under bond, &c., to abate or refund the duties paid, or accruing thereon,
be extended so as to include goods, wares,or merchandise injured or destroyed in like
manner, wh ile in the custody of the officers of the customs, and not in bond ; and also
to goods, wares, and merchandise, so injured or destroyed, after their arrival within
the limits of any port of entry of the United States, and before the same have
been bonded [landed] under the suspension [supervision] of the officers of the




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Amendments to the Internal Revenue Law.

301

customs: Provided, That this act shall apply only to cases arising from aud
after its passage, and to cases where the duties have not already been paid.
Approved, March 3, 1865.

AMENDMENTS TO TI1E UNITED STATES INTERNAL REVENUE LAW.
[W e give the following official copy of the Internal Bevenue act approved
March 3, 1865. The notes are inserted as the readiest mode of pointing out the
nature of the several amendments.]
( o f f i c i a l c o p y .)

A n a c t to amend an act entitled ‘ An act to provide internal revenue to support
the Government, to pay interest on the public debt, and for other purposes,’
approved June thirtieth, eighteen hundred and sixty-four.
Be it enacted by the Senate and House of Representatives of the United States
of America in Congress assembled. That the act entitled ‘ An act to provide
internal revenue to support the Government, to pay interest on the public debt,
and for other purposes,’ approved June thirtieth, eighteen hundred and sixtyfour, be, and the same is hereby, amended as hereinafter set forth, namely :
That ^section four be amended by striking out the word ' five ’ aud inserting
in lieu thereof the word 1ten.’
That fsection eight be amended by striking out, after the words ‘ within each
of which the,’ the ^>rds ‘ Secretary of the Treasury, whenever there shall be a
vacancy, or the public interest shall require, shall appoint, with the approval of
the said commissioner, one assistant assessor, who shall be a resident of the dis­
trict of said assessor,’ and inserting in lieu thereof the words ‘ assessor, when­
ever there shall be a vacancy, shall appoint, with the approval of said commis­
sioner, one or more assistant assessor^,] who shall be a resident of such assess­
ment district.’
That Jsection fourteen be amended by striking out the word ‘ fifty,’ and insert­
ing in lieu thereof the words ‘ twenty five.’
That ||section twenty-five be amended by inserting after the words ‘ four hun­
dred thousand dollars,’ the words ‘ and not exceeding one million of dollars, andone-eighth of one per centum on all sums above one million of dollars ;’ by in
serting after the words ‘ reasonable charges for,’ the word 1advertising;’ and by*
* This increases the number of revenue agents to ten.

f This amendment vests the appointment of assistant assessors in the assessor, and
provides for one or more assistants in each division, when necessary.
] The assessed penalty for failure to make return is reduced to twenty-five per
cent.
| Collectors are allowed commissions on the total amount collected, at the rates of
three per cent on the first hundred thousand dollars, one per cent on the next three
hundred thousand dollars, one-half of one per cent on the next six hundred thousand
dollars, and one-eighth of one per cent on all sums above one million dollars. The
five thousand and ten thousand dollar limitations are stricken out, so that statements
of expenses will be unnecessary, unless additional allowance is asked for. Collectors
are also allowed their reasonable charges for advertising in the same mauner as for
stationery.




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Amendments to the Internal Revenue Law.

[April,

striking out all of the first proviso ; and by striking out the word ‘ further,’ in
the second proviso.
That *section twenty-six be amended by striking out the word ‘ apportionment,’
and inserting in lieu thereof the word ‘ appointment.’
That -(-section twenty-eight be amended by striking out all after the enacting
clause and inserting in lieu thereof the words, ‘ That each of said collectors shall,
within twenty days after receiving his annual collection list from the assessors,
give notice, by advertisement published in each county in his collection district,
in one newspaper printed in such county, if any such there be, and by notifica­
tions to be posted up in at least four public places in each county in his collec­
tion district, that the said duties have become due and payable, and state the
time and place within said county at which he or his deputy will attend to re­
ceive the same, which time shall not be less than ten days after such notification.
And if any person shall neglect to pay, as aforesaid, for more than ten days, it
shall be the duty of the collector or his deputy to issue to such person a notice,
to be left at his dwelling or usual place of business, or be sent by mail, demand­
ing the payment of said duties or taxes, stating the amount thereof, with a fee
of twenty cents for the issuing and service of such notice, and with four cents
for each mile actually and necessarily traveled in serving the same. And if such
persons shall not pay the duties or taxes, and the fee of twenty cents and mile­
age as aforesaid, within ten days after the service or the sending by mail of such
notice, it shall be the duty of the collector or his deputy to collect the said duties
or taxes, and fee of twenty cents and mileage, with a penalty of ten per centum
additional upon the amount of duties. And with respect to all such duties or
taxes as are not included in the annual lists aforesaid, and all taxes and duties
the collection of which is not otherwise provided for in this act, it shall be the
duty of each collector, in person or by deputy, to demand payment thereof, in
the manner last mentioned, within ten days from and after receiving the list
thereof from the assessor, or within twenty days from and after the expiration of
the time within which such duty or tax should have been paid ; and if the annual
or other duties shall not be paid within ten days from and after such demand
therefor, it shall be lawful for such collector, or his deputies, to proceed to col­
lect the said duties or taxes, with ten per centum additional thereto, as aforesaid,
by distraint and sale of the goods, chattels, or effects of the persons delinquent
as aioresaid. And in case of distraint, it shall be the duty of the officer charged
with the collection, to make, or cause to be made, an account of the goods or
chattels distrained, a copy of which, signed by the officer making such distraint,
shall be left with the owner or possessor of such goods, chattels, or effects, or at
his or her dwelling, or usual place of business, with some person of suitable age
and discretion, if any such can be found, with a note of the sum demanded, and
the time and place of sale; and the said officer shall forthwith cause a notifica­
tion to be published in some newspaper within the county wherein said distraint
is made, if there is a newspaper published in said county, or to be publicly posted*
* The amendment to section 26 is merely verbal.
f Under section 28, as ameuded, the penalty of ten per cent for non-payment, so
far as the annual taxes are concerned, attaches only upon failure - to pay within tea
days after demand, instead of upon failure to pay at the advertised time.




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Amendments to the Internal Revenue L aw .

303

up at the post office, if there be one within five miles, nearest to the residence of
the person whose property shall be distrained, and in not less than two other
public places, which notice shall specify the articles distrained, and the time aud
place for the sale thereof, which time shall not be less than ten nor more than
twenty days from the date of such notification, [and] the place proposed for sale
not more than five miles distant from the place of making sueh distraint. And
*in any case in which any person, bank, association, company, or corporation re­
quired by law to make return to the Commissioner of Internal Revenue shall
refuse or neglect to make such return within the time specified, the amount of
circulation, deposit, and capital, or either, shall be estimated by the proper
assessor or assistant assessor, and shall be certified by him to the Commissioner.
And in all cases in which the person, bank, association, company, or corporation
required by law to make payment of taxes to the Commissioner shall neglect or
refuse to make such payment within the time required, the Commissioner shall
certify the amount of tax due by such person, bank, association, or corporation,
with all the penalties, additions, and expenses accruing to the collector of the
proper district, who shall collect the same by distraint and sale, as in other cases.
Andf the same proceedings may be had to enforce the collection of taxes which
have already accrued and which still remain unpaid. And]; if any person, bank,
association, company, or corporation liable to pay any duty shall neglect or re­
fuse to pay the same after demand, the amount shall be a lien in favor of the
United States from the time it was due until paid, with the interests, penalties,
and costs that may accrue in addition thereto, upon all property and rights to
property ; and the collector, after demand, may levy, or by warrant may authorize
a deputy collector, to levy upon all property and rights to property belonging to
such person, bank, association, company, or corporation, or on which the said
lien exists, for the payment of the sum due as aforesaid, with interest and penalty
for non-payment, and also of such further sum as shall be sufficient for the fees,
costs, and expenses of such levy. And in ail cases of sale, the certificate of such
sale by the collector shall have the same effect as is prescribed by the one hun­
dred and nineteenth section of the act to which this is an amendment. And||
all persons and officers of companies or corporations are required, on demand of
a collector or deputy collector about to distrain or having distrained on any pro­
perty and rights of property, to exhibit all books containing or supposed to con­
tain evidence or statements relating to the subject or subjects of distraint, or the
property or rights of property liable to distraint for the tax so due as aforesaid :
Provided, That in any case of distraint for the payment of the duties or taxes
aforesaid, the goods, chattels, or effects so distrained shall and may be restored
to the owner or possessor, if prior to the sale payment of the amount due or*
* This authorizes the assessor or assistant assessor to make the assessment in case
of failure to make the return required by section 1 1 0 ; and the next sentence pro­
vides for collection of the tax by distraint
| Taxes heretofore due and unpaid may be collected in the same manner as those
hereafter accruing.
[ Every tax is made a lien from the time it is due, and collectors are authorized
to distrain upon securities.
| All books containing evidence relating to property, or rights to property, liable
to distraint, must be exhibited to the collector upon demand therefor.




304

Amendments to the Internal Revenue Law.

[April,

tender thereof shall be made to the proper officer charged with the collection of
the full amount demanded, together with such fee for levying, and such sum for
the necessary and reasonable expense of removing, advertising, and keeping [the]
goods, chattels, or effects so distrained, as may be prescribed by the Commissioner
of Internal Revenue; but in case of non-payment or tender as aforesaid, the
said officer shall proceed to sell the said goods, chattels, or effects, at public auc­
tion, and shall and may retain from the proceeds of such sale the amount demandable for the use of the United States, with the necessary and reasonable
expenses of distraint and sale, and a commission of five per centum thereon for
his own use, rendering the overplus, if any there be, to the person whose goods,
chattels, or effects shall have been distrained : Provided, further, That there shall
be exempt from distraint the tools or implements of a trade or profession, one
cow, arms, and provisions, and household furniture kept for use, school books,
and apparel necessary for a family.
That *section thirty-eight be amended by striking therefrom tne words ‘ thirtyfive,’ and inserting in lieu thereof the words 1thirty-six.’
That fsection forty be amended by inserting after the words ‘ appointment of
a successor ’ the words : ‘ Provided, That in case it shall appear to the Secretary
of the Treasury that the interest of the Government shall so require, he may, by
his order, direct said duties to be performed by such other one of the said depu­
ties as he may in such order designate.’
That ^section fifty-two be amended by inserting before the words ‘ That all
assessors,’ the words ‘ And be it further enacted ;’ by inserting after the word
<deputies,’ the words ‘ revenue agents;’ and by striking out after the word
• charged ’ the word ‘ and,’ and inserting in lieu thereof the word ‘ or.’
That ||section fifty-three be amended by inserting after the word 1distiller,’
where it first occurs, the words ‘ before distilling any spirits,’ by striking out
after the word 1any,’ and preceding the words ‘ still or stills,’ the word ‘ addi­
tional ;’ by striking out after the word ‘ used,’ and preceding the words ‘ shall be
erected,’ the wordy ‘ as aforesaid,’ and inserting in lieu thereof the words ‘ for
distilling ;’ and by inserting after the words ‘shall be erected,’ the words ‘or
used.’
That l section fifty-four be amended by striking out the words ‘ the same,’ and
inserting in lieu thereof the words 4and owning the same, and owning the build-*§
* The amendment to section 38 is merely verbal.
•)• In case of a vacancy in the office of collector, the Secretary of the Treasury may
designate a deputy collector to act as collector.
[ Revenue agents are authorized to administer oaths, and the authority of assessors,
collectors, assistant assessors, deputy collectors, and inspectors, is extended to all cases
where oaths are required.
|1 The amendments to section 53 are merely verbal.
§ Section 64 as amended reads as follows: ‘ That the application in writing made
by any person for a license for distilling, as aforesaid, shall state the place of distill­
ing, the number and capacity of the still or stills, boiler or boilers, aud the name of
the person, firm, company, or corporation using and owning the same, and owning
the building used as a distillery, and the land on which the same is located, and if
the building or land is leased, the terms and conditions of the lease ; and any person
making a false statement in either of the said particulars shall forfeit and pay the
sum of three hundred dollars, to be recovered with costs of suit.’




Amendments to the Internal Revenue Law.

305

ing used as a distillery, and the land on which the same is located, and if the
building or land is leased, the terms and conditions of the lease ;’and by striking
out the word ‘ one,’ and inserting in lieu thereof the word ‘ three.’
That *section fifty-five be amended by inserting after the words ‘ said duties
shall be a lien,’ the words ‘ on the spirit distilled and and by adding at the end
of the first proviso the words f' except when made and used in the manufacture
of vinegar or acetic acid, in which case the duties shall be collected on the basis
of the actual proof.’
That ^section fifty-six be amended by adding at the end of the section the fol­
lowing words, to w it: ‘ and in all sales of spirits hereafter made, where not other­
wise specially agreed, a gallon shall be taken to be a gallon of first proof, accord­
ing to the standard set forth and declared for the inspection and gauging of
spirits throughout the United States'’
That ||section fifty-seven be amended by striking out the words ‘ twenty-five,’
in the last proviso, and inserting ‘ fifty ’ in its place ; and by adding to the said
proviso the following words, ‘ and distilled from apples or peaches, shall pay one
dollar and fifty cents per gallon.’
That gsection fifty-nine be amended by striking out the words ‘ so inspected
and,’ and also ‘ forthwith,’ in the last clause of the first sentence; and by adding
to the said sentence, after the word ‘ warehouse,’ the words ‘before the day pre­
scribed by law for making return of the same ;’ and by striking out the words
‘ one hundred,’ and inserting in lieu thereof the words *three hundred.’
That **section sixty-one be amended by striking out after the words ‘ and all,’
the words ‘ refined coal oil,’ and inserting in lieu thereof the words 1distilled or
refined coal-oil, distillate benzoine or benzole ;’ also by inserting after the word
‘ warehouse,’ and before the words ‘ and no drawback,’ the following words :
ff' and the same fees shall be paid for exports as are charged to exporters for like
services in the custom-house;’ andJJ by inserting after the words ‘ re-distilled’ and
before the words ‘ for export ’ the words ‘ or canned.’*§
* The tax is made a lien upon the spirits distilled as well as upon the distillery.
f Low proof spirits made and used in the manufacture of vinegar are to be taxed
on the basis of actual proof.
f This amendment relates merely to the contract between the purchaser and the
seller of spirits, and has no effect upon the amount of duty.
| The duty upon brandy distilled from grapes, is fixed at fifty cents per gallon,
and upon brandy distilled from apples or peaches, at one dollar and fifty cents per
gallon.
§ The clause, as amended, reads as follows: ‘ And the duty imposed by law shall
be paid on all spirits not removed to a bonded warehouse before the day prescribed
by law for making return of the same.’
If The penalty for changing or fraudulently using an inspection mark for the pur­
pose of evading the tax upon distilled spirits is raised from one hundred to three
hundred dollars.
** This amendment allows unrefined coal oil, distillate, benzine and benzole to be
placed in bonded warehouses and withdrawn therefrom, in the same manner as refined
coal oil.
f f See Treasury Regulations, edition of 185*7, article 593, page 326.
\ \ Distilled spirits and coal-oil may be withdrawn from warehouse for the purpose
of being canned for export.




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Amendments to the Internal Revenue Law.

[April

That *section sixty-eight be amended by inserting after the word *suits ’ the
words 1and shall be deemed guilty of a misdemeanor, and be subject to imprison­
ment for a term not exceeding one year and that the proviso to said section be
amended by adding after the words 1forfeiture shall have ’ the word 1been ;’ and
by striking out the word ‘ the ’ where it occurs the second time before the word
‘ nature.’
That fsection seventy-four be amended by striking out the word ‘ or ’ after the
word ‘ with,’ and inserting, in lieu thereof, the word ‘ one ;’ and by striking out
the words ‘ and hold the same until the license is produced,’ and inserting in lieu
thereof the words 1and the assessor of the district in which the seizure has
occurred may, on ten days’ notice, published in any newspaper in the district, or
served personally on the peddler, or at his dwelling-house, require such peddler
to show cause, if any he has, why the horses, wagon, and contents, pack, bundle,
or basket so seized shall not be forfeited ; and, in case no sufficient cause is shown,
the assessor may direct a forfeiture, and issue an order to the collector or to any
deputy collector of the district for the sale of the property so forfeited ; and onehalf of the same, after payment of the expenses of the proceedings, shall be paid
to the officer making the seizure, and the other half thereof to the collector for
the use of the' United States.’
That Jsection seventy-nine be amended by inserting in the first paragraph,
after the words ‘ claim agents,’ the words ‘ patent agents ;’ by striking out, in the
same paragraph, the words ‘ carrying on such,’ and inserting in lieu thereof the
words ‘ may carry on ;’ by striking out, in the same paragraph, the words ‘ may
transact such business;’ ‘ Provided, || That no license ^iall hereafter issue until
the managers of a lottery now existing shall give bond, in the sum of one thou­
sand dollars, that the person receiving such license shall not sell any ticket, or
supplementary ticket of such lottery, which has not been duly stamped accord­
ing to law;’ by inserting, in paragraph nine.? after the words ‘ other securities,’
the words ‘ for themselves or others;’ by striking from said paragraph the words
‘ and shall make oath or affirmation according to the form to be prescribed by
the Commissioner of Internal Revenue that all their transactions are made for a*§
* Brewers and distillers who neglect to comply with all the provisions of law in
that behalf, in addition to other penalties, are to be deemed guilty of a misdemeanor,
and be subject to imprisonment for a term not exceeding one year. The other amend­
ments to section 68 are merely verbal.
j The first amendment to section 74 is merely verbal; the second amendment pro­
vides for the disposition of goods which may be seized in the possession of a peddler
who fails to produce his license when demanded.
j; The sentence, as amended, reads as follows: ‘ Any number of persons, except
lawyers, conveyancers, claim agents, patent agents, physicians, surgeons, dentists,
cattle brokers, horse dealers, and peddlers, may carry on business in copartnership at
the place specified in their license, and not otherwise.’
|| This proviso is an addition to paragraph six, relative to lottery-ticket dealers.
§ Paragraph nine, as amended, reads as follows: ‘ Brokers shall pay fifty dollars
for each license. Every person, firm, or company, except such as hold a license as a
banker, whose business it is as a broker to negotiate purchases or sales or stocks, ex­
change, bullion, coined money, bank notes, promissory notes, or other securities, for
themselves or others, shall be regarded as a broker, under this act : P r o v id e d , That
any person holding a license as a banker shall not be required to take out a license
as a broker.’




1865.]

Amendments to the Internal Revenue Law.

307

commission by ^striking out the proviso at the end of paragraph 1twentyeight by adding to paragraph thirty-two the following proviso: ‘ Provided>
further, fThat no man between the ages of twenty and forty-five who is not en­
rolled for military duty, or regularly exempted from enrolment or draft for
physical disability, shall be entitled to a license as a peddler.’
By J striking out all of paragraph ‘ forty-nine,’ and inserting in lieu thereof the
following, to w it:
‘ Forty-nine. Miners shall pay for each and every license the sum of ten dol­
lars. Every person, firm, or company who shall employ others in the business of
mining for coal, or for gold, silver, copper, lead, iron, zinc, spelter, or other
minerals, not having taken out a license as a manufacturer, and no other; shall be
regarded as a miner under this a c t: Provided, That this shall not apply to any
miner whose receipts from his mine shall not exceed annually one thousand dol­
lars.
• Fifty. A license of ten dollars shall be required of every person, firm, or
company engaged in the carrying or delivery of money, valuable papers, or any
articles for pay, or doing an express business, whose gross receipts therefrom ex­
ceed the sum of six hundred dollars per annum. But one license fee of ten dol­
lars shall be required from any one person, firm, or company, in respect to all
the business to be done by such peison, firm or company on a continuous route,
and the payment of such license fee shall cover all business done upon such route
by such person, firm, or company, anywhere in the United States; and such
license fee shall be required only from the principal in such business, and not
from any subordinate.
1Fifty-one. Substitute brokers shall pay one hundred dollars for each and
every license, and in addition thereto ten dollars for each substitute procured by
him and actually mustered into the military service of the United States.
Every person who shall furnish or offer to furnish, for pay, fee, or reward, volun­
teers, representative recruits, or substitutes for men drafted or liable to be
drafted, for the military or naval service of the United States, shall be deemed
a substitute broker under this a c t: Provided, however, That persons appointed
by any State, county, city, township, or district, or the officers thereof, to pro­
cure the enlistment of volunteers or substitutes to fill the quota of such State,
county, city; township, or district, for the military service of the United States,
under the call of the President of the United States, shall not be considered sub­
stitute brokers : And provided, further, That such person or agent shall receive
no compensation except that which is given by such State, county, town, city,
or district.
‘ Fifty-two. Insurance brokers shall pay twenty-five dollars for each license.
Any person who shall negotiate or procure insurance in behalf of another person*
* This makes insurance agents or brokers liable to license without regard to the
amount of their receipts.
f The intention of this proviso is that every person physically qualified for mili­
tary duty shall be enrolled before procuring a license as a peddler.
% The paragraph repealed imposes a license fee upon every person, firm or cor­
poration, engaged in any business, trade, or profession whatsoever, for which no other
license is required, whose gross annual receipts therefrom exceed the sum of one
thousand dollars per annum.




308

Amendments to the Internal Revenue Law.

[April

or party, for which he shall receive any pay, commission, or compensation, shall
be regarded as an insurance broker under this act and the licenses herein pro­
vided for shall take effect on the first day of May next.
That ^section eighty-one be amended, by striking therefrom the words 1sev­
enty-three,’ and inserting in lieu thereof the words 1 seventy-four,’ and by striking
out the words ‘ to vinters,’ and inserting in lieu thereof the words ‘ nor to vintners.’
That fsection eighty-three be amended, by inserting after the words ‘ within
his district, monthly,’ the words ‘ within ten days from the twentieth day of
each month,’ and by inserting after the words ‘ such duties within’ the word
‘ said,’ and by striking out after the words ‘ ten days.’following the words ‘ after
demand in writing, delivered to him in person, or left at his house or place of
business, or manufactory, or sent by mail.’
'fhat ^section eighty-four be amended by striking out the words 1eighty-first,,’
and inserting in lieu thereof the words ‘ eighty-secbnd,’ and by striking out the
words ‘ eighty-fourth,’ and inserting in lieu thereof the words ‘ eighty-fifth.’
That ||section eighty-six be amended by striking out the words ‘ deposit at the
time of sale,’ after the words ‘ freight from the place of,’ and inserting in lieu
thereof the word ‘ manufacture,’ and in the next following paragraph by striking
out the word ‘ that,’ where it first occurs, and inserting in lieu thereof the word
‘ the.’
That |section eighty-seven be amended by striking out after the words ‘ accu­
rately setting’ the word ‘ for,’ and inserting in lieu thereof the word ‘ forth,’ and
after the words ‘ description of the manufactured article,’ by striking out the
words ‘ the proposed market for the 3ame, whether foreign or domestic,’ and by
inserting after the word ‘ assessor,’ and preceding the word ‘ assistant,’ the word
‘ or.’
That fsection ninety be amended by striking out all after the enacting clause,
and inserting in lieu thereof the following: “ That any person, firm, company,
or corporation, now or hereafter engaged in the manufacture of tobacco, snuff, or
cigars of any description whatsoever, shall be, and hereby is, required to make
out and deliver to the assistant assessor of the assessment district a true state­
ment or inventory of the quantity of each of the different kinds of tobacco, snuff,
flour, snuff, cigars, tinfoil, licorice, and stems held or owned by him or them on
the first day of January of each year, or at the time of commencing business*§
* The amendments to section 81 are merely verbal.
This amendment requires manufacturers to pay the tax within the last ten days
of the month, and imposes the penalty of ten per cent for failure so to do.
The amendments to section 84 are merely verbal.
Manufacturers are allowed to deduct freight from the place of manufacture to
the place of delivery from the sales price of their goods. The other amendment is
merely verbal.
§ These amendments are merely verbal, except that manufacturers of tobacco,
snuff, and cigars are not required to include the proposed market for their goods in
their statements to the assessor.
The weekly return required of the manufacturers of tobacco, snuff and cigars is
dispensed with, and the return is to be made monthly, as in the case of other manu­
factures ; the bond for transportation of tobacco to a bonded warehouse is to be taken
by the collector instead of the assessor and imported tobacco, snuff, and cigars may
be placed in bonded warehouse as well as domestic.

(




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.]

Amendments to the Internal Revenue Law.

300

under this act, setting forth what portion of said goods was manufactured or pro­
duced by him or them, and what was purchased from others, whether chewing,
smoking, fine-cut, shorts, pressed, plug, snuff-flour, or prepared snuff, or cigars,
which statement or inventory shall be verified by the oath or affirmation of such
person or persons, and be in manner and form as prescribed by the Commissioner
of Internal Revenue; and every such person, company, or corporation shall keep
in a book, in such manner and form as said commissioner may prescribe, an
accurate account of all the articles aforesaid thereafter purchased by him or
them, the quantity of tobacco, snuff, snuff-flour, or cigars, of whatever description
sold, consumed, or removed for consumption or sale, or removed from the place
of manufacture ; and he or they shall, on or before the tenth day of each month,
furnish to the assistant assessor of the district a true and accurate copy of the
entries in said book during the preceding month, which copy shall be verified by
oath or affirmation ; and in case the duties shall not be paid within five days,
after demand thereof, the said collector may, on one day’s notice, distrain for the
same, with ten per centum additional on the amount thereof, subject to all the
provisions of law relating to licenses, returns, assessments, payment of taxes,
liens, fines, penalties and forfeitures, not inconsistent herewith in the case of other
manufacturers ; and such duty shall be paid by the manufacturer or the person
for whom the goods are manufactured, as the assessor may deem best for the col­
lection of the revenue ; Provided, That it shall be the duty of any manufacturer
or vender of tinfoil or other material used in covering manufactured tobacco, on
demand of any officer of internal revenue, to render to such officer a correct
statement, verified by oath or affirmation, of the quantity and amount of tinfoil
or other materials sold or delivered to any person or persons named in such demand;
and in case of refusal or neglect to render such statement, or of cause to believe such
statement to be incorrect or fraudulent, the assessor of the district may cause an
examination of persons, books and papers to be made in the same manner as
provided in the fourteenth section of this a c t; Provided, further, That manufac­
tured tobacco, snuff, or cigars, whether domestic manufacture or imported, may
be transferred, without payment of the duty, to a bonded warehouse, established
in conformity with law and treasury regulations, under such rules and regula­
tions and upon the execution of such transportation bonds or other security, as
the Secretary of the Treasury may prescribe, said bonds or other security to be
taken by the collector of the district from which such removal is made; and may
be transported from such a warehouse to a bonded warehouse used for the storage
of merchandise at any port of entry, and may be withdrawn from bonded warehouse
for consumption on payment of the duty or removed for export to a foreign country
without payment of duty in conformity with the provisions of law relating to the re­
moval of distilled spirits, all the rules and regulations and conditions of which, so far
as applicable, shall apply to tobacco, snuff, or cigars in bonded warehouse. And
no drawback shall in any case be allowed upon any manufactured tobacco, snuff,
or cigars, upon which any excise duty has been paid, either before or after it
has been placed in bonded warehouse.’
That *section ninety-one be amended by striking out all after the enacting
* The section repealed required manufacturers of tobaeco, snuff, and cigars to make
a monthly declaration that their several returns had been in accordance with law.




310

Amendments to the Internal Revenue Law.

[April,

clause, and inserting in lieu thereof the following: “ That all manufactured
tobacco, snuff, or cigars, whether of domestic manufacture or imported, shall,
before the same is used or removed for consumption, be inspected and weighed
by an inspector appointed under the fifty-eighth section of the act to which this
is an amendment, who shall mark or affix a stamp upon the box or other paekage containing such tobacco, snuff, or cigars, in a manner to be prescribed by
the Commissioner of Internal Revenue, denoting the kind or form of tobacco, and
the weight of such package, with the date of inspection and the name of the
inspector. The fees of such inspector shall in all cases be paid by the owner of
the manufactured tobacco, snuff, or cigars, so inspected and weighed. And the
penalties for the fraudulent marking of any box or other package of tobacco,
snuff, or cigars, and for any fraudulent attempt to evade the duties on tobacco,
snuff, or cigars, so inspected, by changing in any manner the package or the
marks thereon, shall be the same as are provided in relation to distilled spirits by
existing laws. And all cigars manufactured after the passage of this act shall be
packed in boxes. And any manufactured tobacco, snuff, and cigars, whether of
domestic manufacture or imported, which shall be sold or pass out of the hands
of the manufacturer or importer, except into a bonded warehouse, without the
inspection marks or stamps affixed by the inspector, unless otherwise provided,
shall be forfeited, and may be seized wherever found, and shall be sold, one-half
of the proceeds of such sale to be paid to the informer, and the other moiety to
the United States. The Commissioner of Internal Revenue shall keep an ac­
count of all stamps delivered to the several inspectors; and said inspectors shall
also keep an account of all stamps by them used or placed upon boxes contain­
ing cigars, and of all tobacco, snuff, and cigars inspected, and the name of the
person, firm, or company for whom the same were so inspected, and return to
the assessor of the district a seperate and distinct account of the same ; and also
to return to the said Commissioner on demand all stamps not otherwise accounted
for, and shall give a bond for a faithful performance of all the duties to which he
may be assigned, and to return or account for all stamps which may be placed
in his hands.
That ^section ninety-two be amended by striking out the words ‘ by this act,’
and inserting in lieu thereof the words ‘ by law.’
That fsection ninety-four be amended by inserting after the words ‘ pea coal’
the words ‘ or coal that will pass through a five-eighth inch and over a threeeighth inch mesh ;’ in the paragraph relating to gas,| by adding after the words
‘ understood to be,’ in the first proviso, the words ‘ in addition to the gas consumed by said company or other party;’ by ||inserting in the last proviso
in the paragraph on gas, after the words ‘ coal tar,’ where they first*
* The amendment to section 92 is merely verbal.
| The first amendment to section 94 exempts from duty coal that will pass through
a five-eighth inch mesh.
| The sentence amended reads as follows: ‘ That the product required to be re­
turned by law by any gas company shall be understood to be, in addition to the gas
consumed by said company, or other party, the product charged in the bills actually
rendered by the gas company during the month preceding the return.’
|| Ammoniacal liquor and the products of the manufacture of ammoniacal liquor
produced in the manufacture of illuminating gas, are exempt from duty.




I 860.]

Amendments to the Internal Revenue Law.

311

occur, the words ‘ and ammoniacal l i q u o r a n d by inserting after the words
‘ coal tar,’ where they occur the second time in said proviso, the words ‘ and the
products of the manufacture of ammoniacal l i q u o r b y ^inserting after the word
‘ naptha,’ in the paragraph relating to coal illuminating oil, the word ‘ distillate
by inserting after the words ‘ returns, assessments,’ the words ‘ removing to and
withdrawing from warehouses ;’ by striking from the proviso relating to naptha,
after the word ‘ exceeding,’ the word ‘eighty,’ and inserting in lieu thereof the
word ‘seventy ;’ by -(-striking out of the first paragraph relating to ‘ sugar’ the
words ‘ brown or Muscovado ;’ and by striking out of the second paragraph re­
lating to ‘ sugar’ the wJTrds -‘ all clarified or refined ,’ and by striking out of the
third paragraph relating to ‘ sugar’ the words ‘ all'clarified or refined ;’ by Jstriking from the paragraph relating to gunpowder the words ‘ at twenty-eight cents
per pound or less, a duty of one cent per pound ; when valued above twenty-eight
and not exceeding thirty eight cents per pound, a duty of one and a half cents
per pound,’ and inserting in lieu thereof ‘ at thirty eight cents per pound or less,
five per centum ad valorem ;’ and by striking out, in the last line of said para­
graph, the.word ‘ eight,’ and inserting in lieu thereof the word ‘ ten by ||inserting in the paragraph relating to ‘ bill heads, printed,’ after-the word ‘ circu­
lars,’ the words ‘ law blanks, conveyancers’ blanks, and other printed forms ;’ by
padding at the end of the paragraph relating to printed books the words
‘ which shall be paid by the publish'ers thereof;’ by*1finserting in the paragraph
relating to photographs, after the words ‘ being copies of engravings, or works
of art,’ the words ‘ when the same are sold by the producer at wholesale at a
price not exceeding ten cents each, or are ;’ by **striking from the paragraph re­
lating to ‘ hulls, as launched,’ the word ‘ launched,’ and inserting in lieu theredf
the words1finished, including cabins, inner and upper works ;’ by -(-(-inserting after
the word ‘ sewing,’ in the proviso to the paragraph relating to ‘ sails, tents, awn­
ings, and bags,’ the words ‘ or pasting ;’ by inserting at the end of the paragraph
relating to stoves and hollow-ware the following :
* Distillate is made subject to the duty of twenty cents per gallon, and naptha of
specific gravity exceeding seventy degrees is to be treated as gasoline and subject to
the tax of five per cent, a d va lo rem .
f The rate of tax upon sugar produced directly from the cane is made to depend
solely upon the color.
j The paragraph, as amended, reads as follows: ‘ On gunpowder, and all ex­
plosive substances used'for mining, blasting, artillery, or sporting purposes, when
valued at thirty-eight cents per pound or less, five per cent, a d valorem ; and when
valued at above thirty-eight cents per pound, a duty of ten cents per pound.’
| The paragraph, as amended, reads as follows: ‘ On bill heads printed, printed
cards and printed circulars, law blanks, conveyancers’ blanks, and other printed forms,
a duty of five per centum a d v a lo r e m .’
§ Thp duty upon printed b’ooks, magazines, &c.t is to be paid by the publisher.
*|f The*paragraph, as amended, reads as follows: ‘ On photographs, or any other
sun-picture, being copies of engraving or works of art, when the same are sold by the
producer at wholesale at ajffrice not*exceeding ten cents each, or are used for the
illustration of books, and on’photographs so small in tizd^that stamps cannot be affixed
a duty of five per centum a d va lo rem .
** Ships, steamboats, <fcc , are made taxable upon the hulls as finished, including
cabins, inner and upper v^prks, instead of upon the hulls as launched.
f f Shades and bags are to be assessed on the increased value when made by past­
ing as wtell as when made by sewing.
'




Jr

312

Amendments to the Internal R e v ty ie Law .

[April,

‘ On ^railroad chairs, and railroad, boat ^nd ship spikes and tubes, made of
wrought iron, Stc dollars per ton by fstrikinV out, in the second proviso of the
paragraph relatingrof^nvets,’ the words 1upoff which no duty has been assessed
or paid,’ and inserting in lieu thereof the words ‘ the duty to which it was liable
and after the word *loonsAm the line fojlpwiugapiserting ‘ not having been paid ;’
by striking out the pattg^ap!Wrelating\o' steam engines, and inserting in lieu
thereof the follovting words ^fO n Jsteam, locomotive, and marine engines, in.
eluding the boilers and all tHeir
tneir ps
parts, a duty of five per centum ud valorem :
Prodded, That when such boilers shall have been onc^ssessed and a duty pre­
viously paid thereon, the anient so paid shall be deaircfed from the duties on
the finished engine. *' ’
\
«
‘ On boilers'of all kinds, water tanks, sugar tanks, oil stills, sewing machines,
lathes, tools, planes, planing machines, shafting and gearing, a duty of five per
centum ad valorem.
• On iron railings, gates, fenaft, furniture, and statuary, a duty of five per cen­
tum ad valorem,’ by addifigat the end of the paragraph relating to quicksilver,
the following^1 Piqvided, That quicksilver may be transferred, withd&trpayment
of the duty, to^fcfoonded warehouse established in conformity with law and
treasury regulations, under such rules anclregulations and upon the execution of
such transportation bonds or other security^ the Secretary of the Treasury may
prescribe; said iKmds or otheh security to be taken by the collector of the dis­
trict from which sufeh removal is made, and may be transported from such ware­
house to a bonded warehouse used for the storage of merchandise at any port of
*■' entry ; and quicksilver so bonded may be withdrawn from the -bonded warehouse
for consumption on payment of the duty, or „removed,’for*'export to a foreign
country without payment of duty, in conformity with the provisions of law rel'atjpg to the removal of distilled spirits,
rules, regulations, and conditions
of which, so far as applicable, shall apply t(^ quicksilver in bonded warehouse ;
and no drawback shall in any case be allowed upon any quicksilver upon which
w a^y-excise duty has been paid, either before oh kfter it has been placed in
bonded warehouse by [|adding at the encL*ff the paragraph relating to*copper
and lead ingots the following proviso : ‘ provided, however, That brqss made of
copper and spelter, on which a duty of three per centiun'ad valorem shall have
Seen assessed and paid, shall be assessed and pay a dMyift three per centum on
the increased value only thereof j’^by ginsejj*ing in theajmragraph relating to
rolled, brass, after the word ‘ sheets,’ the \fortk ‘ copper, feinc, and brass nails or
* These articles were subject to an a d va ioo jjr p n duty under the act of June thirtieth, eighteen hundred and sixty-four.
•j The proviso, as amended, reads as follow s P rom_ rfurther, That castings of
iron, and iron of all descriptions advances be
'd pig-iron,’SpomsJWafcs, ol^dbps, the
duty to which it was liable in the form of puf iron blooms, Slabs, or *kops, not having
been paid shall beaqaessed and pay, in acj^iwon Tc ^ \ e foregoing r*es of iron so
advanced, a duty of tliHe d^lars per ton.’,
J The duty on steam-CTu^a^ under the
th act of Jumrfilirtietb, eighteen hundred
' and siAy-four, was three per cfent.
The paragraph to which th$ proviso is'added readwbpfol
^follows : ‘ On copper and
lead ingots, pigs or bars, and spelter and brass, a duty-/ oR hree per centum a d valo-

vem.

vL-The duty on copper, line, and brasy^&s and rivets is reduced to threPfer'bent.
i

X

^




AV

1865.]

Amendments to the Internal Revenue Law.

313

rivets by *adding to the paragraph relating to patent, enameled, and japanned
leather the words ‘ Provided, That when a duty has been paid on the leather in
the rough, the duty shall be assessed and paid only on the increased value by
[striking out all of the first sentence of the proviso in the paragraph relating to
wines or liquors, and inserting in lieu thereof the words ‘ Provided, That the re­
turn, assessment, collection, and the time of collection of the duties on such
wines, and wines made of grapes, shall be subject to the regulations of the
Commissioner of Internal Revenue,’ by [inserting in the paragraph relating to
cloth, after the word ‘ felted,’ the words ‘ articles or after the word 1warps,’ in
the proviso of said paragraph, by striking out the word ‘ for,’ and inserting in
lieu thereof the words ‘ sold before;’ by ||inserting in the paragraph relating to
ready-made clothing, after the word ‘ dress,’ the words ‘ not otherwise assessed
and taxed as such,’ and by striking out of the same paragraph all after the words
‘ does not exceed the sum of,’ and inserting the words ‘ one thousand dollars per
annum shall be exempt from duty ;’ by § inserting in the paragraph relating to
manufactures of cotton, after the word ‘ cloths,’ in the first proviso, the words
‘ or articles,! and after the word ‘ fabrics,’ in the second proviso, the words ‘ or
articles ;’ by striking out the words ‘ as aforesaid,’ where they occur the second
time in said proviso, and by inserting at the end of said proviso the words ‘ and
when made wholly by the same manufacturer shall be subject to a duty only of
five per centum ad valorem ;’ by fstriking out in [the] paragraph relating to
diamonds, precious stones, and imitations thereof, and all other jewelry, the word
‘ ten,’ and inserting in lieu thereof the word ‘ five;’ by **striking out of said sec-*§
* The paragraph to which the proviso is added reads as follows: ‘ On patent
enameled, and japanned leather, and skins of every description, a duty of five per
centum ad valorem!
j This authorizes the commissioner to prescribe the mode and time for paying the
duties upon wine made of grapes as well as those upon manufactured wines
j; The paragraph, as amended, reads as follows : “ On cloth and all textile or knitted
or felted articles or fabrics of cotton, wool or other materials, before the same has
been dyed, printed, or bleached, and on all cloth painted, enameled, shirred tarred,
varnished, or oiled, a duty of five per centum ad valorem; Provided, That thread and
yarn, and warps sold before weaving, shall be regarded as manufactures, and be sub­
ject to a duty of five per centum ad valorem!
| Custom-made clothing is made subject to a duty of five per cent when the an­
nual product exceeds one thousand dollars.
§ The provisos, as amended, read as follows :
‘ Provided, That on all cloths or articles dyed, printed, or bleached, on which a
duty or tax shall have been paid before the same were so dyed, printed or bleached,
the said duty or tax of five per centum shall be assessed only upon the increased
value thereof: And provided, farther, That any cloth or fabrics or articles, as afore­
said, when made of thread, yarn, or warps, upon which a duty shall have been as­
sessed and paid, shall be assessed and pay a duty on the increased value only thereofand when made wholly, by the same manufacturer shall be subject to a duty only of
five per centum 'aAvalorem!
^ The duty orfjewelry is reduced from ten to five per cent.
** The paragraphs stricken out prescribed the duties upon manufactured tobacco,
snuff, and cigars, and required cigars to be inspected and stamped. The paragraphs
inserted establish the new rates upon those articles, except up >n cigarettes, made of
tobacco, enclosed in a paper wrapper, and valued at more than five dollars per hun­
dred packages of twenty-five cigarettes, the duty upon which is five per centum ad
valorem. The new provisions for the inspection of cigars are found in the amend­
ment to section 91.
T O L . U Iv — N O . IV .




20

314

Amendments to the Internal Revenue Law.

[April,

tion the several paragraphs from tho words 1on cavendish, plug, twist,’ down to
and including the words ‘and the other to the United States,’ and inserting in
lieu thereof the following :
‘ On snuff, manufactured of tobacco or any substitute for tobacco, ground dry
or damp, pickled, scented, or otherwise, of all descriptions, when prepared for
use, forty cents per pound.
' On cavendish, plug, twist, and all other kinds of manufactured tobacco, not
herein otherwise provided for, forty cents per pound.
‘ On tobacco twisted by hand, or reduced from leaf into a condition to be
consumed, without the use of any machine or instrument, and without being
pressed, sweetened or otherwise prepared, thirty cents per pound.
‘ On fine-cut chewing tobacco, whether manufactured with the stems in or
not, or however sold, whether loose, in bulk, or in rolls, packages, papers, wrap­
pers, or boxes, forty cents per pound.
‘ On smoking tobacco of all kinds, and imitations thereof, not otherwise herein
provided for, thirty five cents per pound.
‘ On smoking tobacco made exclusively of stems, and so sold, fifteen cents per
pound.
‘ On cigarettes made of tobacco, enclosed in a paper wrapper, and put up in
packages containing not more than twenty-five cigarettes, and valued at not
more than five dollars per hundred packages, five cents per package.
“ On all cigars, cheroots, and cigarettes, made wholly of tobacco, or of any
substitutes therefor, ten dollars per thousand cigars by inserting in the last
paragraph relating to cigars, after the words 1imprisonment not exceeding thirty
days,’ the words And any person furnished with such permit may apply to the
assistant assessor or inspector of the district to have any cigars of their own
manufacture counted; and on receiving a certificate of the number, for which
such fee as may be prescribed by the Commissioner of Internal Revenue shall be
paid by the owner thereof, may sell and deliver such cigars to any purchaser, in
the presence of said assistant assessor or inspector, in bulk, or unpacked, without
payment of the duty. A copy of the certificate shall be retained by the assistant
assessor, or by the inspector, who shall return the same to the assistant assessor
of the district. The purchaser shall pack such cigars in boxes, and have the
same inspected and marked or stamped according to the provisions of this act,
and shall make a return of the same as inspected to the assistant assessor of the
district, and, unless removed to a bonded warehouse, shall pay the duties on such
cigars within five days after purchasing them to the collector of the district
wherein they were manufactured, and before the same have been removed from
the store or building of such purchaser, or from his possession ; and any such
purchaser who shall neglect for more than five days to pack and have such cigars
duly inspected, and pay the duties thereon according to this act, or who shall
purchase any cigars from any person not holding such permit, the duties thereon
not having been paid, shall be deemed guilty of a misdemeanor, and be fined not
exceeding five hundred dollars, and be imprisoned not exceeding six months, at *
* This amendment prescribes the conditions under which alone cigars may be sold
before inspection.




1865.]

Amendments to the Internal Revenue Law.

315

the discretion of the court, and the cigars shall be forfeited and sold, one fourth
for the benefit of the informer, one fourth for the officer who seized or had them
condemned, and one half shall be paid to the government.’
That section ninety-six be amended by inserting after the words ‘ concentrated
milk,’ the words * ‘ cider and cider-vinegar, and sugar or molasses made from
other articles than the sugar-cane by -{-striking out after the words ‘ use exclu­
sively,’ the words ‘ materials prepared for the manufacture of hoop skirts exclu­
sively, and unfit for other use, such as,’ and inserting in lieu thereof the word
‘ and,’ and by striking out the words 1for joining hoops together,’ and inserting
in lieu thereof the words ‘ used in the manufacture of hoop-skirts.’
That [{section ninety-nine be amended by striking out the words ‘ gold and
silver bullion and coin,’ and by striking out the words ‘ of all contracts for such
sales,’ and inserting in lieu thereof the words ‘ upon any sales or contracts for
the sale of gold and silver bullion and coin, one-tenth of one per centum on the
amount of such sales or contracts.’
That ||section one hundred and three be amended by adding the following after
the word ‘ vehicle,’ where it occurs the second time in the section : 1 Provided,
That this section shall not apply to those teams, wagons and vehicles used iu the
transportation of silver ores from the mines where the same is excavated to the
place where they are reduced or worked.’
That section one hundred and three be further amended by inserting after the
words 1and any foreign port,’ the words ‘ but such duty shall be assessed upon
the transportation of persons and property shipped from a port within the United
States, through a foreign territory to a port within the United States, and shall
be assessed upon, and collected from, persons, firms, companies or corporations
within the United States receiving such freight or transportation.’ And that
section one hundred and three be amended by adding at the end of said section
the following : 1And provided, further, That no tax under this section shall be
assessed upon any person whose gross receipts do not exceed one thousand dol­
lars per annum.’
That l section one hundred and five be amended by striking out, at the end
thereof, the words ‘ for the quarter then next preceding.’
That j[ section one hundred and nine be amended by striking out, after the
words ‘ one hundred and,’ the word 1two,’ and inserting in lieu thereof, the word
1three.’*§
* The articles specified are exempt from duty.
■f The exemption of materials used in the manufacture of hoop-skirts is limited to
cut tapes and small wares.
\ The tax upon sales, and contracts for the sale, of gold and silver bullion and coin
is raised from one-twentieth of one per centum to one tenth of one per centum.
I] The amendments to section 103 exempt from duty the receipts of vehicles used
in the transportation of silver ores from the mines, and the receipts of persons receiv­
ing not more than one thousand dollars per annum, and impose the duty upon receipts
for the transportation of persons or property from a port within the United States
through a foreign territory to a port within the United States.
A clause in the amendatory tariff act of March 3, 1S65, exempts the receipts of
vessels paying tonnage duties from the tax imposed in section 103.
§ The amendment to section 105 is merely verbal.
•jf The amendment to section 109 is merely verbal.




316

Amendments to the Internal Revenue Law.

[April,

That * section one hundred and ten be amended by striking out, after the
words ‘ and redemption thereof,’ the words ‘ nor to any savings bank having no
capital stock, and whose business is confined to receiving deposits and loaning
the same on interest for the benefit of the depositors only, and which do no other
business of banking.’
That f section one hundred and sixteen be amended by striking out all after
the enacting clause and inserting in lieu thereof the following : ‘ That there shall
be levied, collected, and paid annually upon the annual gains, profits, and income
of every person residing in the United States, or of any citizen of the United
States residing abroad, whether derived from any kind of property, rents, inter-,
ests, dividends, or salaries, or from any profession, trade, employment, or voca­
tion, carried on in the United States or elsewhere, or from any other source
whatever, a duty of five per centum on the excess over six hundred dollars and
not exceeding five thousand dollars, and a duty of ten per centum on the excess
over five thousand dollars ; and in ascertaining the income of any person liable
to an income tax, the amount of income received from institutions whose officers,
as required by law, withhold a per centum of the dividends made by such insti­
tutions and pay the same to the Commissioner of Internal Revenue, or other
officer authorized to receive the same, shall be included ; and the amount so with­
held shall be deducted from the tax which otherwise would be assessed upon such
person. And the duty herein provided for shall be assessed, collected, and paid
upon the gains, profits and income for the yean ending the thirty-first day of De­
cember next preceding the time for levying, collecting and paying said duty :
Provided, That income derived from interest upon notes, bonds and other secur­
ities of the United States, and also all premiums on gold and coupons shall be
included in estimating incomes under this section. Provided, further, That only
one deduction of six hundred dollars shall be made from the aggregate incomes
of all the members of any family, composed of parents and minor children, or
husband and wife : And provided, further, That net profits realized by sales of
real estate purchased within the year for which income is estimated, shall be
chargeable as income ; and losses on sales of real estate purchased within the
year, for which income is estimated, shall be deducted from the income of such
year.’
That J section one hundred and seventeen be amended by striking out all after
the enacting clause, and inserting in lieu thereof the following : ‘ That in esti­
mating the annual gains, profits and income of any person, all national, State
* Savings banks are made subject to the duties imposed in section 110.
|T h e changes in section 116 are: first, in the rate of tax on income in excess of
five thousand dollars; second, income from dividends, Ac., from which a tax has been
withheld, is to be included, and the amount of tax withheld is to be deducted from
the tax assessed upon the entire income; third, there is a specific provision requiring
the return of premiums on gold and coupons; fourth, but one deduction of $600 is
allowed in any case from the aggregate incomes of any one family.
% The changes in section 11T are: first, the allowance of the national income tax as
a deduction from income; second, the repeal of the provision allowing the deduction
of income from dividends, Ac., from which a tax has been withheld, third, interest
accruing against the tax payer may be deducted; fourth, the increased value of live
stock on hand is not to be included, but merely the amount received for live stock
sold.




1 86 5 .]

Amendments to the Internal Revenue Law.

317

county and municipal taxes paid within the year shall be deducted from the
gains, profits or income of the person who has actually paid the same, whether
owner, tenant, or mortgagor ; also, the salary or pay received for services in the
civil, military, naval, or other service of the United States, including senators,
representatives, and delegates in Congress, above the rate of six hundred dollars
per annum : also the amount paid by any person for the rent of the homestead
used or occupied by himself or his family, and the rental value of any homestead
used or occupied by any person or by his family, in his own right or in the right
of his wife, shall not be included and assessed as part of the income of such per­
son. In estimating the annual gains, profits, or income of any person, the inter­
est received or accrued upon all notes, bonds and mortgages, or other forms of
indebtedness bearing interest, whether paid or not, if good and collectable, less
the interest paid by or due from such person, shall be included and assessed as
part of the income of such person for each year ; and also all income or gains
derived from the purchase and sale of stocks or other property, real or personal,
and of live stock, and the amount of live stock, sugar, wool, butter, cheese, pork,
beef, mutton, or other meats, bay and grain, or other vegetable or other produc­
tions, being the growth or produce of the estate of such person sold, not includ­
ing any part thereof unsold or on hand during the year next preceding the thirtyfirst of December, until the same shall be sold, shall be included and assessed as
part of the income of such person for each year, and his share of the gains and
profits of all companies, whether incorporated or partnership, shall be included
in estimating the annual gains, profits, or income of any person entitled to the
same, whether divided or otherwise. In estimating deductions from income, as
aforesaid, when any person rents buildings, lands, or other property, or hires
labor to cultivate land, or to conduct any other business from which such in­
come is actually derived, or pays interest upon any actual incumbrance thereon,
the amount actually paid for such rent, labor, or interest, shall be deducted ; and
also the amount paid out for usual or ordinary repairs, not exceeding the average
paid out for such purposes for the preceding five years, shall be deducted, but no
deduction shall be made for any amount paid out for new buildings, permanent
improvements, or betterments, made to increase the value of any property or
estate : Provided,, That in cases where the salary or other compensation paid to
any person in the employment or service of the United States shall not exceed
the rate of six hundred dollars per annum, or shall be by fees, or uncertain or
irregular in the amount or in the time during which the same shall have accrued
or been earned, such salary or other compensation shall be included in estimating
the annual gains, profits, or income of the person to whom the same shall have
been paid, in such manner as the Commissioner of Internal Revenue, under the
direction of the Secretary of the Treasury, may prescribe.”
That * section one hundred and eighteen be amended by striking out all after
the enacting clause, and inserting in lieu thereof the words, “ That it shall be the
duty of all persons of lawful age to make and render a list or return, in such
* The principal changes in section 118 are the reduction of the penalty for neglect
to make return to twenty five per cent., and the provision that the declaration per­
mitted by the proviso shall not be considered as conclusive of the facts. The other
changes are mainly verbal.




SI8

Amendments to the Internal Revenue Law.

[April,

form and manner as may be prescribed by the Commissioner of Internal Revenue,
to the assistant assessor of the district in which they reside, of the amount of
their income, gains, and profits, as aforesaid ; and all guardians and trustees’
whether as executors, administrators, or in any other fiduciary capacity, shall
make and render a list or return, as aforesaid, to the assistant assessor of the dis­
trict in which such guardian or trustee resides, of the amount of income, gains,
and profits of any minor or person for whom they act as guardian or trustee ;
and the assistant assessor shall require every list or return to be verified by the
oath or affirmation of the party rendering it, and may increase thfc amount of any
list or return, if he has reason to believe that the same is understated ; and in
case any person, guardian, or trustee shall neglect or refuse to make and render
such list or return, or shall render a false or fraudulent list or return, it shall be
the duty of the assessor or the assistant assessor to make such list, according to
the best information he can obtain, by the examination of such person, and his
books and accounts, or any other evidence, and to add twenty-five per centum as
a penalty to the amount of the duty due on such list in all cases of wilful
neglect or refusal to make and render a list or return, and, in all cases of a false
or fraudulent list or return having been rendered, to add one hundred per cen­
tum, as a penalty, to the amount of duty ascertained to be due, the duty and the
additions thereto as penalty to be assessed and collected in the manner provided
for in other cases of wilful neglect or refusal to render a list or return, or of ren­
dering a false and fraudulent return : Provided, That any party in his or her own
behalf, or as guardian or trustee, shall be permitted to declare under oath or
affirmation, the form and manner of which shall be prescribed by the Commis­
sioner of Internal Revenue, that he or she, or his or her ward or beneficiary, was
not possessed of an income of six hundred dollars, liable to be assessed according
to the provisions of this a c t; or may declare that he or she has been assessed
and paid an income duty elsewhere in the same year, under authority of the
United States, upon his or her gains and profits, as prescribed by law, and if the
assistant assessor shall be satisfied of the truth of the declaration, shall thereupon
be exempt from income duty in said district; or if the list or'return of any party
shall have been increased by the assistant assessor, such party may exhibit his
books and accounts, and be permitted to prove and declare under oath or affir­
mation, the amount of annual income liable to be assessed ; but such oaths and
evidence shall not be considered as conclusive of the facts, and no deductions
claimed in such cases shall be made or allowed until approved by the assistant
assessor. Any person feeling aggrieved by the decision of the assistant assessor
in such cases may appeal to the assessor of the district, and his decision thereon,
unless reversed by the Commissioner of Internal Revenue, shall be final, and the
form, time, and manner of proceedings shall be subject to rules and regulations
to be prescribed by the Commissioner of Internal Revenue.’
That * section one hundred and nineteen be amended by striking out the words
‘ for thirty days,’ and, after the words ‘ for ten days after,’ inserting the words
‘ notice and.’
*Tlie income tax is made payable immediately after the thirtieth of June, upon ten
days’ uotice.




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Amendments to the Internal Revenue Law.

319

That * section one hundred and twenty be amended by striking out, at the end
thereof, the word ‘ act,’ and inserting in lieu thereof the word ‘ section.’
That f section one hundred and twenty-five be amended by striking therefrom
the word ‘ and,’ following the word ‘ custody,’ and inserting in lieu thereof the
word ‘any.’
That J section one hundred and thirty-three be amended by adding, at the end
thereof, the following words : ‘Provided, That no duty shall be levied in respect
of any succession vesting before or subsequent to the passage of this act, where
the successor shall be the wife of the predecessor.’
That || section one hundred and thirty-five be amended by striking therefrom
the word ‘ extension,’ and inserting in lieu thereof the word ‘extinction.’
That | section one hundred and forty-nine be amended by striking out the
word ‘ assment,’ and inserting in lieu thereof the word ‘ assessment.’
That If section one hundred and fifty-eight be amended by striking out all
after the enacting clause, and inserting in lieu thereof the following, to w it:
‘ That any person or persons who shall make, sign or issue, or who shall cause to
be made, signed or issued, any instrument, document, or paper of any kind or
description whatsoever, or shall accept, negotiate, or pay, or cause to be accept­
ed, negotiated, or paid, any bill of exchange, draft, or order, or promissory note,
for the payment of money, without the same being duly stamped, or having
thereupon an adhesive stamp for denoting the duty chargeable thereon, with in­
tent to evade the provisions of this act, shall for every such offence forfeit the
sum of fifty dollars, and such instrument, document, or paper, bill, draft, order,
or note, shall be deemed invalid and of no effect: Provided, That the title of a
purchaser of land, by deed duly stamped, shall not be defeated or affected by the
want of a proper stamp on any deed conveying said land by any person from,
through, or under whom his grantor claims or holds title : And provided, further,
That hereafter, in all cases where the party has not affixed to any instrument re­
quired by the one hundred and fifty-first section of the act of June thirtieth,
eighteen hundred and sixty-four, or the schedule marked B, thereunto annexed,
and the stamp thereby required to be thereunto affixed, at the time of making or
issuing the said instrument, and he or they, or any party having an interest
therein shall be subsequently desirous of affixing such stamp to said instrument,
he or they shall appear before the collector of the revenue of the proper district,
who shall, upon the payment of the price of the proper stamp required by law,
and of a penalty of fifty dollars, and, where the whole amount of the duty denoted
by the stamp required shall exceed the sum of fifty dollars, on payment also of
interest, at the rate of six per cent, on said duty, from the day on which such
*This confines the exemption of return premiums paid by mutual life insurance
companies to the tax upon dividends.
fThe amendment to section 125 is merely verbal.
]l'his exempts real estate passing from a husbmd to his widow from succession tax.
| The amendment to section 135 is merely verbal.
gThe amendment to section 14 9 is merely verbal.
Down to and including the first proviso this is the old section, with the insertion
of the word ‘negotiate’ and the reduction of the penalty from two hundred dollars to
fifty dollars. The second and third provisos are new, and substantially take the place
of section 163.




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Amendments to the Internal Revenue Law.

[April,

stamp ought to have been affixed, affix the proper stamp to such instrument, and
note upon the margin of said instrument the date of his so doing, aud the fact
that such penalty has been paid, and such instrument shall thereupon be deemed
and held to be as valid to all intents and purposes, as if stamped when made or
issued : And provided, further, That where it shall appear to said collector, upon
oath or otherwise, to his satisfaction, that any such instrument has not been duly
stamped at the time of making or issuing the same by reason of accident, mistake,
inadvertence, or urgent necessity, and without any wilful design to defraud the
United States of the stamp duty, or to evade or delay the payment thereof, then
and in such case, if such instrument shall, within twelve calendar months after
the making or issuing thereof, be brought to the said collector of revenue to be
stamped, and the stamp duty chargeable thereon shall be paid, it shall be lawful
for the said collector to remit the penalty aforesaid, and to cause such instrument
to be duly stamped.’
That ^section one hundred and sixty be amended by inserting before the word
‘ injury,’ the word ‘ accidental,’ and by striking out the words ‘ while traveling ;’
also f by striking out after the words ‘ nor on certificates,’ the word ‘ or,’ and
inserting in lieu thereof, the word ‘ of,’ and J by striking out the words ‘ other
articles,’ and inserting in lieu thereof the word ‘ hay.’
That ||section one hundred and sixty-five be amended by striking out in the
proviso the words ‘act contained,’ and inserting in lieu thereof the word ‘ sec­
tion.’
That §section one hundred and sixty-seven be amended by striking out the
word *or,’ where it occurs the second time, and inserting after the word ‘ sell,’
the words ‘ expose for sale.’
That ^section one hundred and sixty-eight be amended by striking out the
words ‘ lucifer or friction matches, and cigar lights or wax tapers.’
That **section one hundred and sixty-nine be amended by inserting after the
words ‘ who shall offer,’ the words ‘ or expose;’ and by inserting after the words
‘ so offered,’ the words ‘ or exposed ;’ and ffby inserting in the proviso, after the
words ‘ imported articles,’ the words 1except lucifer or friction matches, cigar
lights, and wax tapers.’
That }J ‘ Schedule B,’ preceding section one hundred and seventy-one, be
amended in the paragraph marked ‘ receipts,’ by inserting after the word ‘ pro-*§
* This confers exemption from stamp duty upon contracts of insurance when limited
to accidental injury to persons.
f This amendment is merely verbal.
| This limits the exemption of certificates of weight or measurement to such as
give merely the weight or quantity of animals, wood, coal, or hay.
| Medicines compounded according to published formulae are made subject to ad
valorem duty.
§ This prohibits the manufacture of articles enumerated in Schedule C, from ex­
posing for sale any articles on which the proper stamp is not affixed.
«f Lucifer or friction matches, cigar lights, and wax tapers are not to be manufac­
tured in bonded warehouse.
** The first two insertions in section 169, prohibit the exposure for sale by any
dqaler of articles enumerated in Schedule C, on which the proper stamps are not affixed.
f f This prohibits the sale of imported matches without the proper stamp.
| | This exempts from stamp duty receipts issued by express companies on the
delivery of property for transportation.




I 860.]

Amendments to the Internal Revenue Law.

321

perty.’ the words ‘ except receipts issued by any persons, firms, or companies
doing business as an express or express company on the delivery of any property
for transportation,’ and * th a t1Schedule U,’ preceding section one hundred and
seventy-one, be amended in all the paragraphs concerning ‘ playing cards,’ by
striking out, wherever it occurs, the word ‘ retail.’ Add at the end of the
paragraph marked ‘ receipts,’ the following : ‘ Provided, f That when two or
more persons shall sign the same receipt, one or more stamps, equal in value to
the several stamps required by this act may be affixed to said receipts in lieu of
said several stamps.’
That J ‘ Schedule B,’ preceding section one hundred and seventy-one, be fur­
ther amended by striking out the word 1lease,’ in the proviso in the clause tax­
ing ‘ mortgages,’ &c.; and also by adding to said proviso the following : ‘ And
provided, further, That upon each and every assignment of any lease a stamp duty
shall be required and paid equal to that imposed on the original instrument, in­
creased by a stamp duty on the consideration or value of the assignment equal
to that imposed upon the conveyance of land for similar consideration or value.
That || section one hundred and seventy-one be amended by inserting before
the words • refined coal oil,’ the words 'crude petroleum or rock oil;’ and after
the words ' all descriptions,’ by inserting the words ‘ bullion, quicksilver, lucifer
or friction matches, cigar lights, and wax tapers.’
That ^section one hundred and seventy-nine be amended by striking therefrom
the words ‘ if a collector or deputy collector,’ and by adding at the end of the
words ‘ use of the United States,’ the words‘and where any penalty is paid
without suit, or before judgment, and a moiety of the same is claimed by any
person as informer, the Secretary of the Treasury, on application to him, under
such regulations as he shall prescribe, shall determine whether any claimant is
entitled to such moiety, and to whom the same shall be paid.
S ec . 2. And be it further enacted, That from and after the passage of this act,
the proviso to section one hundred and sixty nine of the act to which this act i3
an amendment, shall not be held to apply to lucifer matches, friction matches,
or other articles made in part of wood, and used for like purposes, nor the cigar
lights and wax tapers.
S ec. 3. And be it further enacted, That from and after the thirtieth day of
June, eighteen hundred and sixty-five, the gross amount of all duties, taxes, and
revenues, received or collected by virtue of the several acts to provide internal
revenue to support the government and to pay the interest on the public debt,*§
* The manufacturer of playing cards is allowed to affix the stamp appropriate
to the price at which he sells, and the subsequent vendor must affix the additional
stamp if the advance on price is such as to require it.
■j If the full stamp duty is paid, it is immaterial whether there be one or more
stamps.
j; Under the former law the duty on the assignment of a lease was the same as
that on the original instrument.
|| No drawback is to be allowed or paid upon crude petroleum or rock oil, bullion,
quicksilver, lucifer or friction matches, cigar lights or wax tapers.
§ A moiety of all fines, penalties and forfeitures is to be paid to the informer,
whether an officer of the revenue or a private citizen; and where penalties are paid
without suit, the Secretary of the Treasury is to determine to whom the moiety
belongs.




322

Amendments to the Internal Revenue Law.

and of any other act or acts that may now or hereafter be in force, connected
with the internal revenues, shall be paid by the officers, collectors or agents re­
ceiving or collecting the same daily into the treasury of the United States, un­
der the instructions of the Secretary of the Treasury, without any abatement or
deduction on account of salary, compensation, fees, cost, charges, expenses or
claims of any description whatever, anything in any law to the contrary not­
withstanding. And all moneys now directed by law to be paid to the Commis­
sioner of Internal Revenue, including those derived from the sale of stamps, shall
be paid into the Treasury of the United States by the party making such pay­
ment ; and a certificate of such payment stating the name of the depositor, and
the specific account on which the deposit was made, signed by the treasurer,
assistant treasurer, designated depositary, or proper officer of a deposit bank,
and transmitted to, and received by the Commissioner of Internal Revenue, shall
be deemed a compliance with the law requiring payment to be made to the com­
missioner, any law to the contrary notwithstanding : Provided, That in districts,
where from the distance of the officer, collector or agent receiving or collecting
such duties, taxes, and revenues from a proper government depositary, the Sec­
retary of the Treasury may deem it proper, he may extend the time for making
such payment, not exceeding, however, in any case, a period of one month.
S ec. 4. And be it further enacted, That so much money as may be necessary
for the payment of the lawful expenses incident to carrying into effect the vari­
ous acts relative to the assessment and collection of the internal revenues after
the thirtieth day of June, eighteen hundred and sixty-five, until the first day of
July, eighteen hundred and sixty-six, and not otherwise provided for, be, and the
same is hereby, appropriated from any money in the treasury not otherwise appro­
priated. And it shall be the duty of such of the colectors of internal revenue as the
Secretary of the Treasury may direct to act as disbursing agents to pay the afore­
said expenses without increased compensation therefor and to give good and suffici­
ent bonds and sureties for the faithful performance of their duties as such disburs­
ing agents, in such sum and form as shall be prescribed by the First Comptroller
of the Treasury, and approved by the Secretary.
S ec. 5. And be it further enacted, That in addition to the duties imposed in
section ninety-four of the act to which this is an amendment, as hereinbefore
amended, there shall be levied, collected, and paid upon the goods, wares, and
merchandise therein mentioned, except as hereinafter otherwise provided, an in­
crease of one-fifth or twenty per centum of the duties or rates of duty now pro­
vided in said section, whether ad valorem or specific : Provided, That the addi­
tional duties or rates of duty herein mentioned shall not apply to coal illuminat­
ing oil, refined, and naphtha, benzine, and benzole, wood-screws, paper of all de­
scriptions, printed books, magazines, pamphlets, reviews, and similar publica­
tions, cotton, manufactured tobacco, snuff, cigars, cigarettes, and cheroots.
S ec. 6. And be it further enacted, That every national banking association,
State bank; or State banking association, shall pay a tax of ten per centum on
the amount of notes of any State bank or State banking association, paid out
by them after the first day of July, eighteen hundred and sixty^six.
S ec. 7. And be it further enacted, That any existing bank organized under the
laws of any State, having a paid-up capital of not less than seventy-five thou*




1865.]

Amendments to the Internal Revenue Law.

323

sand dollars, which shall apply before the first day of July next for authority to
become a national bank under the act entitled ‘ An act to provide a national
currency, secured by a pledge of United States bonds, and to provide for the
circulation and redemption thereof,’ approved June third, eighteen hundred and
sixty-four, and shall comply with all the requirements of said act, shall, if stfch
bank be found by the Comptroller of the Currency to be in good standing and
credit, receive such authority in preference to new associations applying for the
same : Provided, That it shall be lawful for any bank or banking association
organized under State laws, and having branches, the capital being joint and
assigned to and used by the mother bank and branches in definite proportions,
to become a national banking association in conformity with existing laws, and
to retain and keep in operation its branches, or such one or more of them as it
may elect to retain ; the amount of the circulation redeemable at the mother
bank and each branch to be regulated by the amount of capital assigned to and
used by each.
S ec . 8. And he it further enacted, That there shall be levied, collected and
paid on all crude petroleum or rock oil that may be produced and sold, or re­
moved for consumption or sale, a duty of one dollar on each and every barrel of
not more than forty-five gallons ; and all petroleum or rock oil that may be in
possession of the producers at the place of production on the day when this act
takes effect, shall be held and treated as if produced on that day ; and the said
duty shall be paid by the owner, agent, or superintendent of the well from
which the petroleum or rock oil has been produced within ten days after the time
of rendering the account required to be rendered bylaw of petroleum or rock oil
so chargeable with duty ; and the said duty shall be a lien upon the same, and
on the well producing the same, with the buildings, fixtures, vessels, machinery,
and tools, and on the lot or tract of laud where the same may be until the said
duty shall be paid : and the person paying such duty, if other than the actual
owner of said petroleum, shall have a lien on such petroleum for the repayment of
the duties so advanced by him : Provided, That any person who shall produce
petroleum or rock oil, and use or refine the same without having paid the duty
as aforesaid, shall, in addition to all other penalties and forfeitures, be liable to
pay double the amount of duties as aforesaid thereon. Provided further, That
when casks, barrels or other vessels are used holding more than forty-five gallons,
the excess shall be paid for at the rate of one dollar for every forty-five gallons.
S ec. 9. And be it further enacted, That every person who shall be the owner of
any well producing petroleum or rock oil, or who shall have such well under his
superintendence, either as agent for the owner or on hi3 own account, and every
person who shall use any well as aforesaid, cither as owner, agent, or otherwise,
shall, from day to day, make true and exact entry, or cause to be entered in a
book to be kept for that purpose the number of barrels of crude petroleum or
rock oil barreled or removed for storage, or for sale, or for consumption ; which
book shall be opened at all times when required for the inspection of the assessor,
assistant assessor, collector, deputy collector or inspector, who may take any
memorandums, or transcript thereof; aud on the first, eleventh, and twenty-first
days of each and every month, or within five days thereafter, the owner, agent,
or superintendent shall render to the assessor of the district an account in dupli-




£24

Amendments to the Internal Revenue Law.

[April,

cate of the number of barrels of petroleum or rock oil sold, and of the number
i)f barrels removed for consumption or sale or storage, not before accounted for.
S ec. 10. And be it further enacted, That wherever, under the proviso to sec­
tion one hundred and three, the addition to any fares shall amount to a sum in­
volving the fraction of one cent, any person or company liable to the duty of two
and one-half per cent, as in said section provided, shall be authorized to add to
such fare one cent in lieu of such fraction.
S ec. 11. And be it further enacted, That lucifer or friction matches, and cigar
lights and wax tapers may be transferred, without payment of duty, directly
from the place of manufacture to a bonded warehouse established in conformity
with law and treasury regulations, and upon the execution of such transporta­
tion bonds or other security as the Secretary of the Treasury may prescribe, said
bonds to be taken by^fhe collector in the district from which such removal is
made; and may be withdrawn therefrom for consumption after affixing the stamps
thereto as provided by the act to which this act is an amendment, or may be re­
moved therefrom for export to a foreign country without payment of duty or
affixing stamps thereto, in conformity with the provisions of the act aforesaid,
relating to the removal of distilled spirits, all the rules and regulations and con­
ditions of which, as far as applicable, shall apply to lucifer or friction matches,
cigar lights, and wax tapers in bonded warehouse. And no drawback shall in
any case be allowed upon any lucifer or friction matches, cigar lights, or wax
tapers, upon which any excise duty has been paid, or stamps affixed, either be­
fore or after they have been placed in bonded [wjarehouse.
S ec . 12. And be it further enacted, That any person required by law to be
licensed as a manufacturer of tobacco, snuff, or cigars, before said license is issued,
shall give a bond to the United States in such sum as shall be required by the
collector, and with one or more sureties to be approved by the collector, condi­
tioned that he will comply with all the requirements of law in regard to any per­
sons, firms, companies, or corporations, engaged in the manufacture of tobacco,
snuff, or cigars ; that he will not manufacture nor employ others to manufacture
tobacco, snuff, or cigars, without first obtaining the requisite permit for such
manufacture; that he will not engage in any attempt by himself or by collusion
with others to defraud the Government of any duty or tax on any manufacture
of tobacco, snuff, or cigars ; that he will render truly and correctly all the re­
turns, statements, and inventories prescribed for manufacturers of tobacco, snuff,
and cigars, and will pay to the collector of the district all the duty or taxes
which may or should be assessed and due on any tobacco, snuff, or cigars, so
manufactured, and that he will not knowingly sell, purchase, or receive for sale
any such tobacco, snuff, or cigars, which has not been inspected, branded, or
stamped, as required by law, or upon which the tax has not been paid.
S ec . 13. And be it further enacted, That all persons and every person who shall
engage or be concerned in the business of a lottery dealer without having first
obtained a license so to do, under such rules and regulations as shall be prescribed
by the Secretary of the Treasury, shall forfeit and pay a penalty of one thousand
dollars, to be assessed by the assessor of the proper district and collected as
, assessed taxes are collected, subject, nevertheless, to the provisions of law relat­
ing to erroneous assessments, and shall, on conviction by any court of competent




1865.]

Amendments to the Internal Revenue Law.

325

jurisdiction, suffer imprisonment for a period not exceeding a year, at the discre­
tion of the court. And it shall be the duty of all managers and proprietors,
and their agents, to keep, or cause to be kept, just and true books of account
■wherein all their transactions shall be plainly and legibly set forth, which books
of account shall at all reasonable times and hours be subject to the inspection of
the assessor, assistant assessor, revenue agent, and inspector of the proper dis­
trict j and any manager, proprietor, agent, or vender under this act, who shall
refuse or prohibit such inspection of his or their books, as aforesaid, shall pay a
penalty of one thousand dollars or suffer imprisonment for a term not exceeding
one year for every such offence.
S ec . 14. And be it further enacted, That the capital of any State bank or bank­
ing association which has«eased or shall cease to exist, or which has been or
shall be converted into a National Bank, for all the purposes of the act to whidh
this is an amendment, shall be assumed to be the capital as it existed immedi­
ately before such bank ceased to exist or was converted as aforesaid. And when­
ever the outstanding circulation of any bank, association, corporation, company,
or person shall be reduced to an amount not exceeding five per centum of the
chartered or declared capital, existing at the time the same was issued, said cir­
culation shall be free from taxation. And whenever aDy State bank or banking
association has been converted into a national banking association, and such na­
tional banking association has assumed the liabilities of such State bank or bank­
ing association, including.the redemption of its bills, such national banking asso­
ciation shall be held to make the required return and payment on the circulation
outstanding, so long as such circulation shall exceed five per centum of the
capital before such conversion of such State Bank or banking association.
S ec. 15. And be it further enacted, That in any port of the United States in
which there is more than oue collector of internal revenue, the Secretary of the
Treasury shall designate one of said collectors to have charge of all matters re­
lating to the exportation of articles subject to duty under the law3 to provide
internal revenue ; and at such ports as the Secretary of the Treasury may deem
necessary there shall be an officer appointed by him to superintend all matters of
exportation and drawback, under the direction of the collector, whose compen­
sation therefor shall be prescribed by the Secretary of the Treasury, not exceed­
ing, however, in any case, an annual rate of two thousand dollars, which, together
with the office expenses of such superintendence, shall not be included in the
maximum of the aggregate expenses of the office of the said collector. And all
books, papers, and documents in the bureau of drawback in the different ports,
relating to the drawback of duties paid under the internal revenue laws, shall be
delivered to said collector of internal revenue.
S ec . 16. And be it further enacted, That all provisions of any former act in­
consistent with the provisions of this act are hereby repealed : Provided however,
That no duty imposed by any previous act, which has become due or of which
return has been or ought to be made, shall be remitted or released by this act, but
the same shall be collected and paid, and all fines and penalties heretofore incurred
shall be enforced and collected, and all offences heretofore committed shall be
punished as if this act had not been passed ; and the Commissioner of Internal
Revenue, under-the direction of the Secretary of the Treasury, is authorized to




326

Amendments to the Internal Revenue Law.

[April,

make all necessary regulations and to prescribe all necessary forms and proceed­
ings for the collection of such taxes and the enforcement of such fines and penal­
ties for the execution of the provisions of this act.
S ec . 17. And he it further enacted, That the privilege of purchasing supplies
of goods imported from foreign countries for the use of the United States, duty
free, which now does or hereafter shall exist by provision of law, shall be ex­
tended, under such regulations as the Secretary of the Treasury may prescribe,
to all articles of domestic production which are subject to tax by the provisions
of this act.
S ec . 18. And he it further enacted, That this act shall be in force and effect
on and after the first day of April, in the year eighteen hundred and sixty-five,
unless otherwise provided by this act.*
*
•S ec. 19. And be it further enacted, That the Secretary of the Treasury is
hereby authorized to appoint a commission, consisting of three persons, to in­
quire and report, at the earliest practical moment, upon the subject of raising, by
taxation, such revenue as may be necessary in order to supply the wants of the
government, having regard to, and including, the sources from which such re­
venue should be drawn, and the best and most efficient mode of raising the same,
and to report the form of a bill; and that such commission have power to inquire
into the manner and efficiency of the present and past methods of collecting the
internal revenue, and to take testimony in such manner and under such regula­
tions as may be prescribed by the Secretary of the Treasury. And such com­
missioners shall receive for their services three hundred dollars a month for the
time necessarily employed, and their necessary travelling expenses.
S ec . 20. And he it further enacted, That the Seeretary of the Treasury may,
at any time, prior to the first day of July, eighteen hundred and sixty-six, assign
to the office of the Commissioner of Internal Revenue such number of clerks as
he may deem necessary, or the exigencies of the public service may require ; and
the privilege of franking all letters and documents pertaining to the duties of his
office, and of receiving, free of postage, all such letters and documents, is hereby
extended to said Commissioner.
Approved, March 3, 1865.
* The provision requiring cigars to be packed in boxes! and that relating to import­
ed matches, (sec. 2,) take effect from the passage of the act. The amendment relat­
ing to licenses take effect May 1.

NATIONAL BANK CURRENCY.
B y an amendment to the National Currency Act, passed at the late session

of Congress, the amount of circulation contemplated by that act is to be appor­
tioned to the different States and Territories. In view of this fact, Mr. H dgh
M 'C ulloch, Comptroller of the Currency, issued a circular, saying :—“ All per­
sons, therefore, who contemplate the organization of National Banks, other than
those whose papers have been filed or whose applications have been approved,
are requested to suspend operations until the necessary data can be collected
and the required apportionment can be made. State banks contemplating a
change of organization can proceed without interruption.”




327

The Crops o f 1863 and 1864,

1865.]

TIIE CROPS OF 1S63 AND 1864.
Mr. I s a a c N e w t o n , the Commissioner o f Agriculture at Washington, has
published in advance of his report, the following tables, showing the amount, the
yield per acre, the whole average, the price per bushel, and the total value of
the crops of 1863 and 1864 :
AMOUNT

OF C R O PS .

1863.

1864.
B ushels.

B u c k w h e a t____
P o t a t o e s ...........

Bushels.
3 9 7 ,889,212
173,677,928
19,989,335
1 7 0 ,1 2 9 ,8 6 4
12,158,895
15,786,122
98,965,198

530,451,403
160,695,823
19,872,975
175 ,9 9 0 ,1 9 4
10,716,328
18,700,540
96,532,029

T o ta l....

88 8 ,5 4 6 ,5 5 4

1,012,959,292

141,386,939

163,353,082
18,346,730

197,460,229
18,116,691

34,107,147

I n d ia n c o r n . . .

T o b a c c o .............
H a y ...................

. .lbs.

Increase.
Bushels.
132,612,191

Decrease.
Bushels.
12,982,105
1 16,360

5,860,330
1,442,567
2,914,418
2,433,169
16,974,201

230,039

AVERAGE OF CROPS.
I n d ia n c o r n . . .
W h e a t ...............

B a r l e y ................
B uckw heat . . .
P o ta to e s ...........
T o b a c c o ............., . .lb s .
H a y ...................
T o ta l. . . .

15,312,441
13,098,936
1,439,607
6,68 6 ,1 7 4
557^299
1,054,060
1,129,804
2 1 6 ,423
15 ,6 4 1 ,5 0 4

17,438,752
13,158,089
1,410,983
6 ,4 61,750
540,317
1,051,700
902,295
239,826
1 5 ,034,564

2,126,311
59,153

5 5 ,136,248

5 6 ,2 3 8 ,2 7 6

2,208,867

28 624
004 . 4 0 4

16,982
2,360
227,509
23,403
606,940
1,106,839

VALUE OF CROPS.
I n d ia n c o r n . . .

O a t s .....................
B uckw heat . .
P o ta to e s . . . . ,
T o b a c c o ............

T o ta l. . .

$ 2 7 8 ,0 8 9 ,6 0 9
197,992,837
20,589,015
1 0 5 ,990,905
13,496,373
12,660,469
5 5 ,0 2 4 ,6 5 0
24,239,609
247,680,855

527,718,183
2 9 4 ,315,119
8 1 ,976,013
1 3 9 ,381,247
16,941,023
2 1 ,986,763
7 7 ,184,043
29 ,3 3 5 ,2 2 5
3 6 5 ,7 0 7 ,0 7 4

2 4 9 ,628,574
9 6 ,322,282
11,386^998
33^390,342
3 ,414 ,6 5 0
9 ,326,294
22 ,159,393
5 ,09 5 ,6 1 6
118 ,026,219

$ 9 5 5 ,7 6 4 ,3 2 2

1,50 4 ,5 4 3 ,6 9 0

5 4 8 ,779,368

TABLE OF COMPARISON BETWEEN 1863
T o ta l b u s h . .
T o b a c c o ...........
H a y ..................
A v e r a g e ____
V a lu e c r o p s .


*


88 8 ,5 4 6 ,5 5 4
1 6 3 ,3 5 3 ,0 8 2
18,346,730
6 5 ,1 3 6 ,2 4 8
$ 9 5 5 ,7 6 4 ,3 2 2

95 9 ,8 2 1 ,1 5 0
14 0 ,5 0 3 ,7 6 0
18,004,366
53 ,9 5 0 ,7 9 7
$1,4 4 0 ,4 1 5 ,4 3 5

and

1864.

2 1 ,274,596
2 2 ,849,322
342,264
1,186,451
$ 4 8 4 ,6 5 1 ,1 1 3

828

The Atlantic Telegraph Cable.

[April,

The value of crops, the market value of gold when the prices were taken, and
the per cent increase of the value of both are as follows:
Tears.

Value crops.

1862 .......................................
1863 .......................................
1864 .......................................

Per ct. inc. Per ct. inc.
Kate gold. Gold value. Value crops.

$706,887,495
965,764,322
1,440,415,435

131
147
227

12
54

35
50

The relative difference of 1863 and 1864 between the increase of gold value
and of the value of crops, shows that, of the advance in the value of crops in
1863, twenty-three per cent over the gold value was caused by the demand of
government for war purposes ; but in 1864, great as was the increase in the value
of the crops, being $484,651,113, it was four per cent less than the increase in
the value of gold. This proportional decrease was doubtless caused by the de­
crease of exports in 1864.

THE ATLANTIC TELEGRAPH CABLE.
new Atlantic cable, which is now in process of manufacture in England,
is to be about two thousand five hundred miles long, allowing four or five hun­
dred miles for all contingencies. Its core, through which the electricity passes,
is to be composed of seven strands of the best copper wire, making together over
seventeen thousand miles of copper wire ; this is to be enclosed in eight coats or
layers of insulating material; then follow ten coatings of jute, and ten iron
wires. Each wire is covered separately with five twists or strands of yarn.
About eight hundred miies of this cable is now ready, and is being placed on
board of the Great Eastern, and will fill one of three large tanks prepared to re­
ceive it. It is intended that in June next the whole two thousand five hundred
miles of the cable will be ready to pay out from the Great Eastern, and be sunk
“ down among the dead men,” who, for once, will have their connection with the
living world of humanity resumed wherever their bones come into contact with
the cable.
T he

THE NEW SPAPER TRADE.
T e n years ago, the whole amount of business done by the wholesale news­
agents did not probably exceed in amount the sum of $750,000 yearly. Now
the cash receipts of the American News Company of New York for the sale of
newspapers, magazines, books and stationery, for the eleven months ending with
the thirty-first of December last, have reached the sum of $2,226,372 83. We
learn from the office of that company, that probably forty millions of newspapers
were handled within that time by persons in the employ of the company, of whom
seventy were constantly occupied in getting them in, charging, distributing and
shipping them. For wrapping paper and twine, with which to pack this enor­
mous mass, the company paid twelve thousand dollars.

CONTENTS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.

OF

APRIL

NUMBER.

T h e H ouse of H apsburg in A m erica. By Professor A ndrew T e n B ro o k .................................... 249
T h e Legal T e n d er A ct. B y A lb ert S tickney, Esq............................................................................. 259
Hon. T h u rlo w W eed. B y M atthew H ale S m ith . . . ....................................................................... 268
N ational F in a n c e w ith L egal T e n d e r .....................................................................................................271
C om m ercial Law .—N o. 20. B an k ru p tcy an d Insolvency................................................................ 280
Com m ercial C hronicle and Review ............................................................................................................ 287
J o u rn al of B anking, C urrency, an d F in an c e.......................................................................................... 292
T h e N ew T ariff
....................................................................................................................................... 296
A m endm ents to th e U n ite d S tates In te rn a l K evenue L a w ............................................................. 301
N ational B ank C urrency.................................................................................................. ........................... 326
T he C rops of 1863 a n d 1864......................................................................................................................... 327
T h e A tla n tic T elegraph C able.................................................................................................................... 328
The N ew spaper T r a d e ............................................................................................................................... 328




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