stood also in the presence
of defeat, constant and imminent, which fell upon our armies in
all parts of the country. It was before daylight was shed upon
any part of our military operations. We adopted the legal tender
clause then as an absolute expedient. Remembering the debate, I
know with what slow steps the majority of the Senate came to the
necessity of adopting legal tenders."

The debt of the United States on the 31st of August, 1866, when it
reached its maximum, amounted to $2,844,649,627. On the 1st of
March, 1870, the debt had been reduced to less than $2,500,000,000,
of which about $400,000,000 was in United States notes, for the
redemption of which no provision was made. It was the confident
expectation of Congress, which proved to be correct, that before
the refunding operations were complete, the debt would be gradually
reduced, so that the sum of $1,500,000,000, provided for in the
law, would be sufficient to refund all existing debts, except United
States notes, into the new securities.

The process of refunding progressed slowly, was confined to the
five per cent. bonds, and was somewhat interrupted by the financial
stringency of 1873.

By the act approved January 20, 1871, the amount of five per cent.
bonds authorized by the act approved July 14, 1870, was increased
to $500,000,000, but the act was not to be construed to authorize
any increase of bonds provided for by the refunding act.

Prior to the 24th of August, 1876, there had been sold, for refunding
purposes, the whole of the $500,000,000 five per cents. authorized
by that act, and on that day Lot M. Morrill, Secretary of the
Treasury, entered into a contract for the sale of $40,000,000 of
the four and a half per cent. bonds authorized by the refunding
act. By this process of refunding an annual saving had been made
of $5,400,000 a year, by the reduction of interest in the sale of
$540,000,000 bonds. On the 9th day of June, 1877, I, as Secretary
of the Treasury, terminated the contract made by Mr. Morrill, my
predecessor, and placed on the market the four per cent. bonds
provided for by the refunding act. The subsequent proceedings
under this act will be more appropriately referred to hereafter.

The more difficult problem remained of advancing United States
notes to par in coin. This could be accomplished by reducing the
amount of these notes outstanding, and, thus, by their scarcity,
add to their value. They were a legal tende