(Ed. Note:) FACT: the USA was OVER FLOWING with gold in 1836 due to General (President) Jackson's U.S. land sales. Although we know about the gold at Fort Knox today, did you know that the 26 states of the U.S.A. also received huge shipments of gold from the U.S. government in 1836 and 1837? So far, the fourth installment of the national gold surplus payment to the then 26 states of the USA, has never been made. Are the states complaining about that? I CAN'T HEAR YOU! I'm sure all that gold was spent. None of it is left, I'm sure.

—TREASURY NOTES OF THE PERIOD OF THE FINANCIAL CRISIS OF 1837. In anticipation of a large surplus, congress, by act of June 23, 1836, provided for the distribution of a large amount of government money among the states in proportion to their representation in the senate and house of representatives, and three installments amounting in all to $27,063,430, were so distributed. (See U. S. SURPLUS MONEY, DISTRIBUTION OF, AMONG THE STATES.) In the meantime, about May 1, 1837, specie payments were suspended, owing to the great depression in commercial circles. An extra session of the 25th congress was called in September of the same year. The charter of the second bank of the United States had expired on March 4, 1836, and on June 23, 1836, congress had passed an act authorizing and regulating the deposit of public moneys in state banks. No action was taken during the extra session toward rechartering the bank of the United States. The distribution of the fourth installment to the states was, however, postponed, but the secretary was prohibited from calling for any of the money already distributed without special authority from congress, which has not, up to the present date, been given.


—The revenues for the year (1837) were from six to ten millions short of the expenditures. The public funds already deposited with the states were unavailable, and there was another installment to be deposited on Oct. 1. The secretary recommended the withholding of this installment, and, in order to supply currency, an issue of treasury notes, the small denominations to bear no interest, and the large with interest.


—A large party in congress were in favor of rechartering the bank of the United States. The advocates of treasury notes urged the issue principally upon the ground of necessity, there being no currency upon which the government could rely to make and receive payments. Many were in favor of a substitute to be issued by the proposed new bank of the United States. A bill was presented and passed by the senate. When it came to the house, objection was made that it was a money bill, which the senate had no constitutional right to originate. This point was not discussed, but the committee of ways and means presented their own bill, by which the issue of ten millions in treasury notes was authorized. The bill encountered much opposition, particularly from those in favor of authorizing a new bank, but passed the house on Oct. 9, 1837, by a vote of 127 to 98, which was a strict party vote. In the senate, the next day, Mr. Benton moved to make the lowest denomination of notes $100, instead of $50, as provided in the bill. He presented strong objections to the issue of treasury notes. Nothing but the fact that the government must otherwise stop for want of funds, would induce him to vote for paper money in time of peace. He particularly objected to the policy of reducing the denominations of paper currency. It was the most dangerous feature of the system, and would drive all specie from circulation. Mr. Clay spoke in favor of Mr. Benton's motion, and characterized the whole measure to be, to all intents and purposes, a great bank experiment, and alluded to the inconsistency of issuing, in time of profound peace, ten millions additional notes after decrying the banks for enlarging their circulation. Mr. Webster favored Mr. Benton's motion. It was lost by a vote of 25 to 16. The bill then passed by a vote of 35 to 6, both Mr. Benton and Mr. Webster voting for it, and Mr. Clay against it. This bill authorized the issue of treasury notes to an amount not exceeding ten millions, and in denominations not exceeding fifty dollars. The interest was not to exceed 6 per cent.; and they were to be payable, principal and interest, after one year from date, and were, for the first time, signed by the treasurer and countersigned by the register. They were to be issued in payment of the debts of the United States to any creditor who would receive them, and were to be receivable in payment of all debts and dues to the government. They were not reissuable, and the authority to issue terminated Dec. 31, 1838. The ten millions authorized were issued by Secretary Woodbury previous to July 1, 1838. About two millions were issued at the nominal rate of interest of 1 mill per cent.; three millions at 2 per cent.; and over four millions at 5 per cent. On account of the low rate of interest upon a large portion of the notes, the object for which they were issued, namely, to supply a circulating medium, was thwarted, for they were soon presented in payment of taxes, and over five millions were retired before the whole amount had been issued.


—At the end of 1837 the secretary estimated that the balance in the treasury for July, 1838, would be $34,187,000, of which $28,101,644 was due from the states, $1,100,000 due chiefly from insolvent banks, and $3,500,000 from other banks, payment of which was postponed. These sums, and the bullion fund in the mint, reduced the estimated available balance in July, 1838, to about one million. This estimate was nearly correct, for congress was advised by the president, in May, 1838, that only $216,000 of available funds remained in the treasury. There were several propositions in the house, one of which was a bill for authorizing loan certificates, which should be a legal tender to public creditors, but not receivable for dues to the government. The question of the legal tender was not discussed. Mr. Cambreleng, of New Jersey, from the committee of ways and means, reported a short bill, authorizing the issue of treasury notes to the amount of the issue of October, 1837, which had been redeemed and canceled. The interest upon the issues already made under the laws of 1837 had been too small, and they had been immediately paid into the treasury when due. There were gratifying signs of a revival of prosperity. The northern banks had resumed specie payment sooner than expected. This he ascribed to the firmness of the president in refusing to allow dues to the United States to be paid in notes of banks not paying specie. He referred to the passage of the free banking act of New York as a presage of sound banking in future. He also urged the necessity of providing notes to enable the treasury to meet its payment. The objections to the bill were much the same as those urged in the debate during the previous session, though they were presented with more force and completeness, particularly by Mr. Caleb Cushing. He said that such issues were bills of credit not warranted by the constitution; that they were based only upon the faith of the government; that such measures were considered of doubtful and dangerous character by all the friends of democratic institutions; and that Madison and others had always been opposed to the issues of government paper founded not on funds or specie, but only upon faith or credit, and only consented to its expediency in remarkable exigencies. Experience had shown, that whatever interest they might bear, whether 1 mill or 6 per cent., they would not be above the value of the notes of good banks. It was said, that, if the United States under the constitution could issue these bills, so could the states. They were the same as continental money, although bearing interest. Much of the currency issued by the states, during the revolution, denominated bills of credit, bore interest. Chief Justice Marshall's definition of bills of credit was, "paper issued by the sovereign authority, and intending to circulate as money." These notes are issued by sovereign authority, and intended to circulate as money. They operate unequally, and afford no general relief: they are below par in New York, and at 5 per cent. premium in Charleston. The bill was amended to obviate some technical objections, and finally passed by a small majority, 106 to 99, on May 16, 1838. It came up in the senate on May 18. Wright of New York, Benton, Calhoun, Brown and Talmadge were in favor of it. Webster, Clay, Crittenden and Preston were on the other side. The discussion took a wide range, involving the causes of the condition of the treasury, and the constitutionality of the issue of treasury notes. It passed by a vote of 27 to 13, and was approved on May 21, 1838. Nearly five millions were issued within one month after the passage of the bill, which showed conclusively the pressing needs of the treasury. Under the previous acts of October, 1837, and May 21, 1838, the authority to issue treasury notes expired on Jan. 1, 1839. The whole issue was not to exceed ten millions, and the latter act permitted the reissue of those paid in.


—The whole amount which had been issued to December, 1838, was $15,709,801.01, and bore at different rates interest as follows: $6,888,809.60 bore interest at 6 per cent.; $4,280,273.72 bore interest at 5 per cent.; $2,784,844.73 bore interest at 2 per cent.; and $1,755,881.96 bore interest at 1 mill per cent. There had been redeemed, up to the same date, $7,955,250, leaving $7,754,560 outstanding. The authority to reissue expired with the year.