Elbridge Gerry Spaulding History of the Legal Tender Paper Money
issued during the Great Rebellion
being a Loan without Interest and a National Currency

prepared by
Elbridge Gerry Spaulding
Chairman of
The Sub-Committe of Ways and Means
at the time the Act was passed

"a national bank, properly restricted, is highly necessary and proper to the establishment and maintenance of a sound currency, and for the cheap and safe collection, keeping, and disbursing of the public revenue." ---Abraham Lincoln, March 1, 1843.

"The bill, in all its essential features, is like the free banking law of the State of New York, which has been in successful operation in that State since 1838.  The free banking law is proposed by the Executive for the purpose of combining private capital with the credit of the Government in the issue of bank bills, similar in all respects to legal tender notes.  Legal tender notes issued direct from the Treasury constitute a loan to the Government without interestBank notes, under this bill, would be loaned to the Government and the people at six and seven per cent. interest.  We give to the banking associations the interest on the national currency issued by them, as an inducement to them to form these associations and become liable for its redemption.  Instead of the Government issuing this national currency direct to the soldiers and other creditors without interest, it sells its own six per cent. bonds to the banking associations, and takes its pay in legal tender notes;" --Spaulding's, Chase's, Hooper's, Lincoln's bright idea to benefit the nation.

The exact opposite of what Senator Calhoun asked in 1837 --why should the government gift its credit to bankers then borrow it back at 6% ?:
"Why should the Government mingle its credit with that of private corporations ?  Why should it mix it up with the less perfect credit of those institutions ?  Why not use its own credit to the amount of its own transactions ?  Why should the community be compelled to give six per cent. discount for the Government credit blended with that of the banks, when the superior credit of the Government could be furnished separately, without discount, to the mutual advantage of the Government and the community ?"


A Resource of War — The Credit of the Government made Immediately Available

In such a nation as this, there is one and only one resource for loans sufficient to carry through the expenses of a GREAT WAR, namely fundable Treasury Notes fitted for circulation as money, and based upon adequate taxation.

“ That in the interval between war and war, all the outstanding paper should be called in, coin be permitted to flow in again, and to hold the field of circulation until another war should require its yielding place again to the National Medium.”—JEFFERSON

Senators who voted for National Currency Bank bill
Anthony, Arnold, Chandler, Clark, Doolittle, Fessenden, Foster, Harding, Harlan, Harris, Howard, Howe, Lane (of Kansas), Morrill, Nesmith, Pomeroy, Sherman, Sumner, Ten Eyck, Wade, Wilkinson, Wilmot, and Wilson (of Massachusetts) --23

many of whom also voted for the legal-tender clause---
Zachariah Chandler(radical), Daniel Clark, James Doolittle, James Harlan, Ira Harris, Jacob Howard, Timothy Howe, Lot Morrill, Samuel Pomeroy, John Sherman, Charles Sumner(radical), John Ten Eyck, Benjamin Wade(radical), Morton Wilkinson, Henry Wilson(radical) of Massachusetts

Elbridge Gerry Spaulding, (1809-1897) Representative from New York; born in Summer Hill, Cayuga County, N.Y., on February 24, 1809; completed preparatory studies; studied law; was admitted to the bar in 1836 and commenced practice in Batavia, Genesee County, N.Y.; moved to Buffalo, N.Y., in 1834; mayor of Buffalo in 1847; member of the State assembly in 1848; elected as a Whig to the 31st Congress (March 4, 1849-March 3, 1851); was not a candidate for renomination in 1850; treasurer of the State of New York in 1854 and 1855;  elected as a Republican to the 36th and 37th Congresses (March 4, 1859-March 3, 1863);  was not a candidate for renomination in 1862 to the 38th Congress;  organized the Farmers & Mechanics' National Bank in Buffalo in 1864;  died in Buffalo, N.Y., May 5, 1897; interment in Forest Lawn Cemetery.