The government guarantees
their payment, and so they circulate as well as the certificates issued
directly by the government. Thus a great deal of the paper money in
circulation is issued by the national banks, which must, on demand, be
redeemed with coin, and, in case of failure of the banks, are paid by
the government, which reimburses itself from the deposits. A bank-note
differs from a Treasury note in two particulars. The Treasury note or
"greenback" is a promise of the government, and is legal-tender in
payment of all private debts; the bank-note is the promise of a private
company, and is not legal-tender. A bank-note is said to be paid when
the bank gives a greenback or coin for it. A greenback is said to be
paid or redeemed when the government gives gold for it.
The following figures, taken from the report of the Secretary of the
Treasury for 1889, give the amounts of the various sorts of money
described in the foregoing, which were then in the Treasury, in the
banks, and in the hands of the people:
Gold coin and gold bullion, $680,063,505
Silver coin and silver bullion, 343,947,093
U.S. Treasury notes, 346,681,000
National Bank-notes, 211,378,963
Subsidiary coins, 76,601,836
It will be noticed that gold and silver certificates are not included,
for, as explained, they merely represent an equal amount of coin or
bullion on deposit.
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