Specie Payments
SUSPENSION nifying the regulation of currency during times of stress, as during a war. ing times of stress, as during a war. that the Government and the banks sus- Suspension of specie payments means that the Government and the banks suspend payments in metal coin, silver or gold, and issue instead "credit money," in paper. This was done in the United States in 1862, when the Government found itself compelled to borrow more money than could be raised by the banks of the country. In other words, the need of money by the Government, suddenly expended, found the money in circulation inadequate to meet that need. So paper money must be issued to fill the gap. When this is done recklessly and without restriction, as it was in 1862, this paper currency depreciates es in value. this paper currency depreciates in value. such a period of financial dislocation must necessarily be very gradual. In such a period of financial dislocation the above instance resumption was not begun till 1879, and then it was several years more before normal conditions were restored. During the Civil War the Government was again compelled to vast quantity of metal currency which large volume of Treasury notes were, therefore, issued and made to take the ce of metal money. It was 1879 beplace place of metal money. It was 1879 be- World War the United States was prac- World War the United States was pracwhich was not compelled to suspend specie payments, the result being that its currency is now at a premium in all other countries.