d again in October, 1866, cancelled $500,000
on the 24th, and issued anew the same sum on the 25th. On the
31st of January, 1867, he had issued anew $4,000,000, May 31
$2,500,000, and during December, 1867, $1,842,400. In answer to
remonstrance against this practice the Secretary maintained that the
authority to contract and to cancel the legal-tender notes did not
require him to do it, but left it within his discretion. This was
unquestionably the law of the case.

Mr. McCulloch in his official report insisted on the funding or payment
of the balance of interest-bearing notes, and upon a continued
contraction of the currency, as the first measure for promoting the
National prosperity; and he presented a strong argument in favor of
permanent specie payment. He reported that he had not always retired
notes in each month to the extent permitted, but he declared that
the effect of the policy as carried out had been salutary and that its
continuation would be obviously wise. Yet he feared that financial
views were inculcated, which if not corrected might lead to its
abandonment. The truth was that the Secretary's policy was counter to
the popular wish, and evidence was accumulating that Congress would not
sustain him in its continued enforcement. The Secretary had
confidently relied upon the bankers and commercial men of the country;
but the serious fact was now developed, that many of the most prudent
financiers had concluded that the changes in the volume of the currency
were causing mischief, and that the process of contraction had been
carried as far as was desirable.

The Secretary argued bravely and wisely in his report, in favor of
paying the principal and interest of the Government bonds in coin.
His argument was designed to meet heresies which had found favor in
unexpected quarters. The plea was urged by the new and short-lived
school of finance that the notes of the National banks should be
withdrawn and greenbacks substituted for them, that all payments by the
Government on the principal of the bonds should be in its own paper.
It was admitted by these novel theorists that the bonds on their face
promised coin for interest; but they maintained that the bonds had
been issued in large part when gold was at a heavy premium for paper,
and could rightfully be liquidated in paper at its advanced value.
Propositions were frequently presented to stop the issue of bonds and
to pay out notes for any obligations o