asures adopted.

The Greenback party, as it was called, grew out of this policy of
contraction, and for a time threatened to carry the election of a
majority of the Members of Congress. It contended practically for
an unlimited issue of legal tender United States notes, and the
payment of all bonds and securities in United States notes. This,
however, did not disturb Secretary McCulloch. In his annual report
of December 3, 1866, he again urged the policy of a further reduction
of United States notes. He was not satisfied with the reduction
already provided for, and recommended that the reduction should be
increased from $4,000,000 a month, as contemplated by the act of
April 12, 1866, to $6,000,000 a month for the fiscal year, and to
$10,000,000 a month thereafter. He said:

"The _policy_ of contracting the circulation of the government
notes should be definitely and unchangeably established, and the
_process_ should go on just as rapidly as possible without producing
a financial crisis or seriously embarrassing those branches of
industry and trade upon which our revenues are dependent. That
the policy indicated is the true and safe one, the secretary is
thoroughly convinced. If it shall not be speedily adopted and
rigidly, but judiciously, enforced, severe financial troubles are
in store for us."

He insisted that the circulation of the country should be further
reduced, not by compelling the national banks to retire their notes,
but by the withdrawal of United States notes. When reminded of
the great saving of interest in the issue of $400,000,000 United
States notes, he answered:

"Considerations of this nature are more than counterbalanced by
the discredit which attaches to the government by failing to pay
its notes according to their tenor, by the bad influence of this
involuntary discredit upon the public morals, and the wide departure,
which a continued issue of legal tender notes involves, from the
past usages, if not from the teachings of the constitution itself."

He said:

"The government cannot exercise powers not conferred by its organic
law or necessary for its own preservation, nor dishonor its own
engagements when able to meet them, without either shocking or
demoralizing the sentiment of the people; and the fact that the
indefinite continuance of the circulation of an inconvertible but
still legal tender currency is so generally advocated indicates
how far we have wandered from old land