5 New York Times, money articles, March 9, 11, 12, 15, 1864.

226 History op the greenbacks

given him to sell gold, except as a last resort. He had

another plan. Importers with customs duties to pay had to

buy the necessary coin in the gold room or on the stock

exchange. Chase thought the premium might fall if this

demand were taken out of the market. Consequently he

announced that importers would be allowed to deposit paper

currency with the subtreasury, receive in return certificates

of deposit of gold at a rate a trifle below the current pre-

mium, and use these certificates in payment of customs. 1

The announcement of this plan caused a fall of gold from

169| On the 26th to 165f on the 29th of March. This day

certificates were sold at 165^, and for the 30th the price was

set at 164. The market quotation followed, and for the

next day the price of certificates was 163. But this time

the market did not yield, and in consequence the rate for

certificates had to be raised to 165 on April 1, and to 166 on

the 2d. This advance meant the defeat of the plan. Instead

of the treasury being able to dictate to the market what the

price of gold should be each day, it was obliged itself to

accept the dictation of the market. However, the plan was

kept in operation two weeks longer. The rate for certifi-

cates was set permanently at 165 ; but the market quotation

regardless of this rose to 175 on the 12th. The next day

Mr. Chase issued an order stopping the sale of certificates

after the 16th. 2

Balked in his first scheme, Mr. Chase went to New York

on the night of April 13 and ordered the surplus gold in the

subtreasury to be sold. 3 On the 14th the gold quotation

reached 177J. By selling about $11,000,000 of gold in

five days Chase forced the premium down to 66 on the 21st.

In comparison with the effort made, the result was trifling.

1 See official announcement in the New York papers of March 29, 1864.

2 Published in New York Tribune, money article, April 16, 1864. These operations

can all be followed best in the current money articles.

3SCHUCKEBS, op. dt., p. 358.

SPECIE VALUE OP THE PAPEB CURRENCY 227

The policy could not be continued indefinitely, because suf-

ficient gold had to be kept in the treasury to meet interest.

When the pressure was removed, the advance recommenced,

and by the 25th of April the premium was higher than ever. 1

At the outset of this campaign in the gold market Mr.

Chase seems to have been influenced by outside pressure

rather than by any conviction of his own that the expedients

adopted would produce a permanently beneficial result.

Many business men as well as many politicians, who had

become alarmed by the rapid leaps upward of the premium

In the spring of 1864, were urging him to suppress the gam-

bling in gold by any means in his power. 2 But even when

he was beginning the sales of gold Chase wrote to President

Lincoln: "The sales which have been made yesterday and

today seem to have reduced the price, but the reduction is

only temporary, unless most decisive measures for reducing

the amount of circulation and arresting the rapid increase of

debt, be adopted." 3 And after the sales were over he wrote

to Mr. S. D. Bloodgood, of New York: "I see that gold is

again going up. This is not unexpected. Military success

is indispensable to its permanent decline, or, in the absence

of military success, taxation sufficient upon state bank issues

and state bank credits to secure .... an exclusive national

currency ; and sufficient, also, to defray so large a proportion

of current expenditures as to reduce the necessity for bor-

rowing to the minimum." '

But neither this clear insight into the situation, nor his

1 Though these operations had but a fleeting effect upon the price of gold, they

produced a severe panic in the stock market. Money became exceedingly "close, 1 '

and speculators holding stocks for an advance were obliged to sell at heavy sacri-

fices. Cf. CORNWALLIS, The Gold Room, p. 8; MEDBEKRY, Men and Mysteries of Wall

Street, pp. 248, 249.

2 Cf, SCHUCKEES, op. cit., pp. 357, 358. Schuckers says that the plan of selling

customs-house certificates was adopted at the recommendation of the New York

chamber of commerce (p. 361).

3 Letter of April 15, ibid., pp. 358, 359.

* Letter of April 26, 1864, WARDEN, Life of Chase, p. 582.

228 HISTORY OP THE GREENBACKS

former failures, deterred Chase from trying a third plan

that of satisfying the export demand for gold by selling

exchange upon London at a rate below that prevailing in

the market. 1 This plan had still less effect than its pre-

decessors. It caused a fall of gold from 181-| on May 19 to

181 on the 20th. But the next day gold began to rise

again, and on the 24th the treasury was forced to raise its

price for exchange, 2 thus acknowledging another defeat.

Why all the attempts to reduce the premium on gold had

failed is not difficult to see. They were based on the

assumption that speculators had increased the value of gold

while the fact was rather that the government's notes had

fallen in common esteem. Neither increasing the market

supply of gold by selling the coin in the treasury, nor dimin-