of the currency
to the government. It had only increased the dangers of inflation
by the stimulus it imparted and the protection it afforded to the
circulation of State bank notes.

SECRETARY CHASE'S RECOMMENDATION.

Secretary Chase had grasped the situation earlier than the experienced
financiers who assumed to be his special advisers, and while he
was, in the opinion of unjust critics, completely in the hands of
the State banks, he surprised the country by recommending in his
report of December, 1861, the establishment of a National system
that should give the General Government complete control of the
currency. The State bank circulation in the loyal States he
estimated at $150,000,000. "The whole of it," he regarded as "a
loan without interest from the people to the banks." The secretary
thought "it deserves consideration whether sound policy does not
require that the advantages of this loan be transferred from the
banks, representing the interest of stockholders, to the government
representing the aggregate interest of the whole people." Attention
was called to the fact that "the existing circulation depends on
the laws of thirty-four States and the character of some sixteen
hundred private corporations." It was somewhat startling to learn
that "the circulation is usually furnished in greatest proportion
by institutions of least actual capital and is commonly in the
inverse ratio of solvency."

The bold and comprehensive recommendation of Mr. Chase was favorably
received by many of the leading men in Congress and by many of the
ablest financiers of the country. The committees of both Senate
and House were well disposed, but preferred time for consultation
and deliberation. The Secretary of the Treasury, with the aid of
Mr. E. G. Spaulding, Mr. Sherman, and Mr. Samuel Hooper, engaged
in the preparation of a bank bill which in due time was submitted
to the Committee of Ways and Means. The committee was at that
moment engaged on the Internal-revenue Bill, the important character
of which absorbed the attention of Congress. The adjustment of
the tariff duties to the excise taxes was also a serious labor
which left no adequate time to mature a bank bill in season for
its consideration at that session. Indeed the committee was not
able to report the bill to the House until the 12th of July, 1862,
when five thousand extra copies were printed for distribution among