Autograph letter on letterhead stationery. John Sherman Papers, Library of Congress (micro 21:0406).
Treasury Department. June 30 1862
I have received the bill you were kind enough to send me exhibiting in Italics the proposed amendments of the Committee of Finance1.
The proposed reduction of the limitation upon small notes from 50 to 25 millions is unobjectionable. The question whether a large proportion of the whole issue should be made in these notes may be well enough referred to future experience and the next Session.
I should much prefer that the proposed reserve for protection of deposits should be made by striking out the limitation on these deposits and simply inserted "three fourths" for one third in the 15th line of the 3d. Section. This form of borrowing has proved extremely useful & the line, by raising the rate of interest if necessary to 5%, may be easily carried to $100.000.000 & maintained there or even raised above these figures.
I doubt the expediency of the new section.2 It may give occasion to importunities to multiply places of paying interest, compliance with which would sensibly impair the security of the government by facilitating frauds in presentation of fictitious coupons.
I beg leave to repeat what I have said verbally & in writing in respect to the convertibility clauses--namely the clause commencing at line 20 Sec. 1. & ending in line 31, and the whole of the sixth section. The bill is complete without this clause & this section. The whole effect of the clause & section is to engraft upon the bill the provision of the original bill making the notes convertible absolutely into bonds no matter to what price relatively to gold these bonds may rise. To me it seems quite clear that convertibility is sufficiently provided for by making these notes receivable for all loans made by the government as well as for all dues except customs, and that the interests of the public and of the Government will be better subserved by letting conversions be regulated by administration which can be adapted to circumstances than by establish an arbitrary par, which must necessarily affect the market values of all government bonds.3
Will you allow me to suggest the expediency of an amendment to this bill by which a fair proportion of the public burdens will be imposed on bank circulation.4 This is the only species of property which under the existing state of suspension costs the proprietors nothing or very little, which is exempt from taxation. The great increase of this