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would be thought to warrant excise and direct taxes. (The idea of a direct tax was widely unpopular, because such a tax would be based upon population, and therefore would favor the capitalistic sections.) Before issuing treasury notes Walker used up much of the surplus lying in the banks. The notes were issued at par. They could not become a circulating medium. For redemption they went to the city banks. So long as these banks had deposits of public funds, they were accepted as cash. After that, their tendency was to fall. About Oct. 1, 1846, the notes were quoted at 985 in St. Louis. For a time the New Orleans banks would not receive the notes, but retaliation brought the banks round. Since only specie and treasury notes were to be receivable after Jan. 1, 1847, for dues to the government, the sub-treasury Act aided the notes. On the other hand the issuance of the notes offset the specie requirement of that Act, and therefore prevented or modified some of its anticipated consequences — particularly a drain upon the specie of the banks. One advantage of the notes was that, should the war suddenly end, they could be withdrawn and the interest on them stopped. This was not true of loans.

12. Ho. 6; 29, 1 (Walker, report, Dec. 3, 1845). Polk, Diary, Sept. 29, 1846. Gallatin, War Expenses, 14-6. Niles, Sept. 12, 1846, p. 17. De Knight, Currency, 69. N. Y. Herald (weekly), June 6; Aug. 15, 1846; Jan. 9, 1847; Jan. 29, 1848. Bankers' Mag., i, 193-4.

The authority to issue these notes was limited to one year; but on Jan. 28, 1847, the time was extended to six months after the ratification of peace with Mexico, with the proviso that the notes thus authorized should not exceed $5,000,000 in amount (§ 15, U. S. Stat. at Large, ix, 121-2). In his report of Dec. 9, 1846, Walker stated that $3,853,100 of these notes had been issued, $1,766,450 bearing interest at one tenth of 1 per cent (De Knight, Currency, 69), and the residue at 5 per cent per annum payable on redemption. Nov. 2, 1846, treasury notes of prior issues amounting to $412,283.97 were outstanding. The surplus, July 1, 1846, was $9,126,439. Sept. 29, 1846, the treasury contained "only a fraction over" four millions (Polk, Diary, Sept. 29).

13. 13Pakenham, nos. 127, Oct. 29; 180, Nov. 12, 1846. (Walker) Wash. Union, May 10; Dec. 9, 1847; N. Y. Express, Dec. 12, 1846; Welles papers; Boston Courier, Feb. 17, 1848; 345G. A. Worth to V. Buren, Dec. 16, 1847; 198Gallatin to Newboldt, Feb. 8, 1848; 198Id. to Rockwell, May 8, 1848; 181Buchanan to Donelson, May 13, 1847. Miss. Hist. Soc. Pubs., vi, 363. Dodd, Walker, 24, etc. Wash. Union, Nov. 16; Dec. 8, 1846. N. Y. Express, Nov. 18, 1846. Bankers' Mag., i, 321-2. N. Y. Herald (weekly), Sept. 19; Nov. 7, 14, 28, 1846. Bayley, National Loans, 71. De Knight, Currency, 70. Niles, Oct. 10, p. 81; Oct. 17, p. 97; Oct. 24, p. 128; Nov. 7, pp. 146-7, 1846. Sen. 105; 29, 2 (Walker to Dallas, Feb. 1, 1847). Polk, Diary, Oct. 1, 13, 15-7, 22, 30; Nov. 7, 1846. London Times, Oct. 27, 1846. Sen. 2; 29, 2 (Walker, report, Dec. 9, 1846). ''Cong. Globe,'' 29, 2, app., 124 (Ingersoll). Dewey, Financial History, 256.

Professor Tucker proved, it was said, that Walker's argument for free trade made an error of $1,000,000 per year in the productive industry of the United States. Stewart of Pennsylania charged him in Congress with a number of errors. Rockwell of Connecticut made a startling analysis of treasury statements (Cong. Globe, 30, 1, pp. 404-7); but it would lead us too far afield to enter upon such a discussion.