ebt, too, had been vastly reduced, having stood at $433,160,569 on
August 31, 1865.

To the bonded obligations of the country the policy of refunding was
early applied, bonds of high rates being called in so soon as callable,
and replaced by others bearing lower rates. The income of the Government
was so immense that it proved unfortunate to have set so late a date as
1891 for the time at which the 4-1/2's could be paid off. To fix the
date of maturity for the 4's in 1907 was, of course, worse still. The
three per cents. of 1882, which supplanted earlier issues, were
fortunately made payable at the Government's option, and on May 20,
1887, the Secretary of the Treasury issued a call for the last of them,
amounting to $19,717,500, interest to cease with the first of the next
July.

From this time there were no bonds subject to par payment at the
discretion of the Government, and as revenues were vast the surplus
began to pile up in the treasury. December 1, 1887, after every possible
obligation of the Government had been provided for, $55,258,701
remained, a sum increased by the end of that fiscal year, namely, June
30, 1888, spite of considerable amounts in long bonds purchased at high
rates, to $103,220,464, There was no method at once legal and economical
for paying this out. The Secretary could of course buy 4's and 4-1/2's
in the open market, and during 1888 this was to some extent done.
Obviously, if entered upon in a large way, it must have greatly carried
up the price of those bonds. The question how to limit the surplus, how
to keep the money of the country from becoming locked up in the treasury
and sub-treasuries of the United States, was thus a grave one, and
entered hotly into the political campaign of the last-named year.

[1890]

On June 30, 1890, $109,015,750 in the 4-1/2 per cent. bonds, redeemable
September 1, 1891, were still outstanding. By April 1, 1891, they had,
by redemption or purchase, been reduced to $53,854,250, of which
one-half in value was held by national banks, to sustain their
circulation. To avoid contracting this circulation the Secretary of the
Treasury permitted holders of these bonds to retain them and receive
interest at two per cent. About $25,364,500 was so continued. Interest
on the remainder ceased at their maturity, and nearly all were soon paid
off. The bonds continued at two per cent. were all along quoted at par,
though payable at the will of the Government, revealing a