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CHAPTER XIII.

LEGAL TENDER.

Legal Tender of the Gold, Silver, and Minor Coins of the United States, and United States Notes, as prescribed in the Revised Statutes of the United States, 1874.

THE

HE following extracts from the Statutes are given for the purpose of showing what constitutes legal tender in the United States. The only change made since the revision of the Statutes is the repeal of the legal-tender quality of the trade dollar.

SEC. 3584. No foreign gold or silver coins shall be a legal tender in payment of debts.

SEC. 3585. The gold coins of the United States shall be a legal tender in all payments at their nominal value, when not below the standard weight and limit of tolerance provided by law for the single piece, and, when reduced in weight below such standard and tolerance, shall be a legal tender at a valuation in proportion to their actual weight.

SEC. 3586. The silver coins of the United States shall be a legal tender, at their nominal value, for any amount not exceeding five dollars in any one payment.

SEC. 3587. The minor coins of the United States shall be a legal tender, at their nominal value, for any amount not exceeding twenty-five cents in any one payment.

SEC. 3588. United States notes shall be lawful money, and a legal tender in payment of all debts, public and private, within the United States, except for duties on imports and interest on the public debt.

SEC. 3589. Demand Treasury notes authorized by the Act of July 17, 1861, chapter 5, and the Act of February 12, 1862, chapter 20, shall be lawful money and a legal tender in like manner as United States notes.

SEC. 3590. Treasury notes issued under the authority of the Acts of March 3, 1863, chapter 73, and June 30, 1864, chapter 172, shall be legal tender to the same extent as United States notes for their face value, excluding interest: Provided, that Treasury notes issued under the Act last named shall not be a legal tender in payment or redemption of any notes issued by any bank, banking association, or banker, calculated and intended to circulate as money.

CHAPTER XIV.

PAR OF EXCHANGE AND VALUE OF FOREIGN

COINS.

HE true or mint par of exchange, between two

THE

countries, is the exact equivalent of the standard money of one country correctly expressed in the money terms of the other; the basis of comparison being the quantity of pure metal declared by law to represent the unit of their moneys of account, respectively.

As it is upon this basis that trade between nations is conducted, international debts discharged, and remittances from one country to another made, it is important that the true or mint par, and not a technical par, should prevail. should prevail. A technical par of exchange between Great Britain and the United States prevailed prior to Jan. 1, 1874. It had its origin in colonial times, and was based on a comparison of the pound sterling, represented at the time by silver, with the Spanish dollar of 386 grains of fine silver.

This technical par became, of late years, objectionable in many respects, and, together with the undervaluation of different foreign moneys by various Acts of Congress, finally became the subject of discussion. The attention of the Secretary of the Treasury was first called to the defective system by the author in his Report of Nov. 19, 1872, as follows:

"Valuation of Foreign Coins.

"The correct valuation of foreign coins is a subject. which should receive consideration in connection with the revision of the coinage laws, and I venture to suggest for reasons herein stated, that provision be made by law to the effect that, in all customs transactions, the pound sterling, and other foreign gold coins, be computed and stated according to the intrinsic value in our money of account of the fine gold contained.

"The importance of this subject will be seen by reference to the existing mode of computing and adjusting exchanges between the United States and Great Britain. The sovereign, which represents the pound sterling, contains 113.0016+ grains pure gold, and is of the value of $4.865% in our money of account; but this is not the value at which it is computed in settlement of accounts between the two countries,

and in estimating, at the custom-houses, the duties to be paid on imports. In both cases it is undervalued more than two cents.

"This undervaluation of the sovereign entails a loss, not only on the American exporter, but on the Government.. If the exporter has £20,000 placed to his credit in London, he has there the equivalent of $97,330—each pound containing $4.861%, and assuming exchange on London to be at par, he ought to receive the sum stated.

"But such is not the case: as, when he makes a draft against the sum to his credit, he must, in accordance with commercial custom, compute the pound sterling at $4.841%, and consequently receive only $96,880, subjecting himself to a loss of $450 on the transaction.

"The banker, however, who cashes his draft remits it as cover to his own exchange, and receives the full pound in London.

"In the other case, an invoice of British merchandise amounting to £20,000, and subject to duty, being received, is converted into United States money, at the rate of $4.841% to the pound sterling (instead of $4.861%), and the duty levied on $96.880 instead of $97.330.

"The valuation of the pound sterling at $4.841% instead of $4.86% may be claimed to be proper, in

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