The suspension was not due to the neglect or
mismanagement of any executive officer, or to lack of foresight on the
part of Congress in providing the requisite legislation. It was simply
a case in which the money market for the time prevented the Secretary
of the Treasury from accomplishing any large proportion of the total
funding operations contemplated by the Government.

When the Forty-second Congress met in December, 1871, the gold premium
was 101-1/8 @ 110-3/8. The funding process was in its early stages.
Specie was going to Europe at the rate of $66,000,000 per annum, and
the balance of trade for that fiscal year was running against the
United States to the amount of $183,000,000. It was a period of
financial theories. The prejudice against National banks seemed to
increase, and the _fiat_ of a Government so rich and powerful as that
of the United States would, it was maintained, suffice to make all the
notes it might put out available for money, and the volume ought to
be abundant enough to stimulate every nerve of production and trade.

Against such appeals the more conservative sentiment of the country
held that honor and safety demanded the redemption of the United-States
notes in coin at the earliest practicable day. The steps proposed to
this end were extreme and therefore unwise. A large number of
financiers urged the repeal of the legal-tender clause, the funding of
the notes into bonds with some limitations, and further contraction of
their volume by direct withdrawal. The argument was presented that if
a man could not pay his overdue note he would deem it a privilege to
give a new obligation to run on interest for a longer period, and the
Nation ought to prove itself as honest as its citizens. This specious
plea assumed that the legal-tender note was simply a promise to pay,
with only the qualities of an individual obligation. It neglected to
consider its different and essential character as a circulating medium.
The advocates of the repeal of the legal-tender clause included many
able lawyers, who however did not meet the objection that this clause
was an element in the value of the currency, only less important than
that of positive redemption. Nor did they seem to perceive that the
abrogation of this feature in the contract between the Government and
the note-holders would lead to confusion and distress in commercial
circles, and would violate the obligations of common honesty.

The debat