ch ordered
contraction. The compound-interest notes served the National banks as
a part of their reserve, and as rapidly as they were cancelled,
legal-tender notes were to be held in their stead. Their withdrawal
from circulation for this purpose led therefore to a direct and forcible
contraction of the actual currency of the country. By substituting the
certificates of indebtedness as available for reserve this contraction
was prevented, and by the concession of interest, even at three per
cent, the banks were induced to surrender the securities which cost the
Government a higher rate. The limit of these certificates was
subsequently raised to $75,000,000,--a limit which in fact was often
reached,--but as legal-tenders were needed the certificates were
surrendered to the Treasury.

This is substantially the history of contraction, or of attempts at
contraction made by the Thirty-ninth Congress. The successful effort
to parry its effect, as already described, shows how unwelcome it had
proved to the business community, and how Congress, without resorting
at once to an absolute repeal of the act, sought an indirect mode of
neutralizing its effect. Mr. McCulloch, in trying to enforce the
policy of contraction, represented an apparently consistent theory in
finance; but the great host of debtors who did not wish their
obligation to be made more onerous, and the great host of creditors who
did not desire that their debtors should be embarrassed and possibly
rendered unable to liquidate, united on the practical side of the
question and aroused public opinion against the course of the Treasury
Department. An individual, by an effort of will, can bring himself
to endure present inconvenience and even suffering, for a great good
that lies beyond, but it was difficult for forty millions of people
to adopt this resolve. Nor were the cases quite similar in motive
and influence, for although it might be admitted that the entire
nation would be benefitted by the ultimate result, the people knew that
the process would bring embarrassment to vast numbers and would reduce
not a few to bankruptcy and ruin. It was easy to see, therefore, that
as each month the degree of contraction was made public, the people
more and more attributed their financial troubles to its operation.
Perhaps, in large degree, this was the result of imagination, and of
that common desire in human nature to ascribe one's faults and
misfortunes to some su