Holders of the government's legal tender notes anticipating this fact presented them for redemption.
The only legal tender is the Mexican dollar, and the British and Hong-Kong dollar, or other silver dollars of equivalent value duly authorized by the governor.
Part of the Union notes were redeemed, part replaced by 10 lire and 5 lire state notes, payable at sight in metallic legal tender by certain state banks.
At last their depreciation reached a point where their acceptance was generally refused and silver was imported for commercial needs, when the government suspended their legal tender quality and allowed them to disappear.
A bill went through both Houses of Congress providing that a silver dollar should be coined of the weight of 4122 grains, to be full legal tender for all debts and dues, public and private, except where otherwise expressly stipulated in the contract.
Foreign coins were formerly legal tender in the republic, but this has been changed by the exclusion of foreign silver coins and the acceptance of foreign gold coins as a commodity at a fixed value.
After nearly all the forty-six banks chartered by the legislature in 1818 had been wrecked in the financial panic of 1819, the legislature in 1820 passed a series of laws designed for the benefit of the debtor class, among them one making state bank notes a legal tender for all debts.
When the legal tender decision was reversed after the appointment of new judges,1871-1872(Legal Tender Cases, 12 Wallace, 457), Chase prepared a very able dissenting opinion.
He gave earnest support to the Legal Tender Act, and the substitution of the national for the state banking system.
Great opposition was raised by the representatives of the debtor class in congress to the suppression of the inconvertible paper money, but in the end President Montt carried the day, and on the 11th of February 1895 a measure finally became law establishing a gold currency as the only legal tender in Chile.