The Southwestern Historical Quarterly, Volume 52, July 1948 - April, 1949 Page: 298
512 p. : ill., maps ; 23 cm.View a full description of this periodical.
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Southwestern Historical Quarterly
Specie was in such sufficiency by this time that it was possible to
repeal the law which authorized the issue of the exchequer bills.
The need of funds by government, however, resulted later in the
authorization of a reissue of the bills to an amount not to exceed
$10,000.
The total of the exchequer bills issued was $150,490; that of
interest notes was $1,165,139, and that of red backs, $2,780,361.
These make a grand total of $4,095,990 of paper money issued
by the Republic.
The paper money of the Republic is entitled to a place among
the classic historical examples of "fiat money." It was a large-scale
overissue of irredeemable government credit money. This money
was not really a primary monetary standard, because that stand-
ard was de facto a gold and silver one, but it was of the nature
of a secondary standard of prices. Prices of goods were most often
quoted and itemized in bills rendered in terms not of paper
money but of par funds. Payments were made, however, in the
paper money at its depreciated value. For example, a bill of
$1,250.621/2 for furnishings for the president's residence was paid
by the Treasury in December, 1841, in red backs in the amount
of $12,506.25. This was on the basis of a specie rating of the
notes of io cents on the dollar. From the point of view of prices
in paper money this transaction showed a rise in prices of 900
per cent. This kind of price inflation existed during the period
1838-1841.
The inflation imposed a particularly great hardship upon
officials and employees of the government who received salaries
of fixed amounts in the paper money at its face value. The pay
of members of the Congress was said in 1840 not to be sufficient
to purchase their food. The newspapers and official reports of
the time contain no similar indictment of the paper money as
leading to profiteering by tradesmen or of hurting common
laborers and creditors by their being paid in money that had
little or no purchasing power. The notes were never made a
legal tender in the payment of private debts, and though cred-
itors received them, it was on the basis of their market value.
It is to be assumed that laborers received their wages on the
same basis. There could be losses to both classes through further298
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Texas State Historical Association. The Southwestern Historical Quarterly, Volume 52, July 1948 - April, 1949, periodical, 1949; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth101121/m1/307/: accessed May 3, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting Texas State Historical Association.