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sequently by the union of Virginia, North Carolina, Tennessee, and Arkansas to the Confederacy. Thus stood the South at war against the North. Should the South make the war one of invasion? She had nothing to clothe, equip, or move an army with, unless it had been bought abroad, and imported within her territory. How could the Confederacy undertake a war of invasion, destitute of all facilities for a strong and sustained effort? These facts decided the character of the war on the part of the Confederacy. On the other hand the United States, composed of a commercial and manufacturing people, with every facility to raise and equip an ariny, and possessing the army and navy of the nation when undivided, was unable to commence a movement of invasion with success until months had passed away. How much less could such a movement be made by mere agricultural States? The character of the war on the part of the Confederacy was thus decided by circumstances. The true position of affairs was early seen by President Davis. "All we ask is to be let alone," are the words in his message to Congress. The attack upon Washington urged by many juvenile minds in the Confederacy was inpracticable from the outset. It served, how ever, to gratify a kind of contemptuous spirit which prompted its utterance, and to rouse the United States to the utmost activity and energy for its defence. The war therefore necessarily became a defensive one on the part of the Confederacy.

The leaders of secession in the Southern States who foresaw where their proceeding would end, had flattered themselves that when the war came they should derive advantage from numerous auxiliaries. They believed the demand for cotton in England and France would put a speedy end to any blockade the United States might attempt. They believed the great democratic party of the North would stand aloof from the Government in its attempt to repossess the forts and arsenals. They be lieved that the prowess of the North had degenerated, and that it would prove an inefficient foe. They saw, when it was too late, that England and France were bound by every principle of honor to respect an efficient blockade, which the navy and the commercial marine of the United States could establish. They now found the North united as one man in support of the Union, and were soon to bring to a test the energy of her prowess.

A proclamation was immediately issued by President Davis after the capture of Fort Sumter, calling a meeting of the Confederate Congress at Montgomery on the 29th of April. On that day this body assembled, and the President's message was delivered. (See PUBLIC DOCUMENTS.) It recommended such measures as were necessary to conduct a vigorous defensive war. The course to be pursued by the Confederate Government was soon fixed. The acquisition of Virginia made her a portion of

the Confederacy, and in assuming the obligations she became entitled to the protection of the Government. The instructions of the Seeretary of the Treasury to the collectors of revenue on the 12th of May were in these words: "Virginia is now one of the Confederate States. Of course no duties are to be collected on imports from thence. Suspend collections of duties from North Carolina and Tennessee."

On the 21st of May Congress adjourned to meet in Richmond, Virginia, on the 20th of July. The reasons for this change of capital are given by the President of Congress, Howell Cobb, in a speech at Atlanta, Ga., on the 224 of May. He also states the future intentions of the Government relative to the war:

"I presume that a curiosity to know what we have been doing in the Congress recently assembled at Montgomery, has induced you to to make this call upon me.

"We have made all the necessary arrangements to meet the present crisis. Last night we adjourned to meet in Richmond on the 20th of July. I will tell you why we did this. The 'Old Dominion,' as you know, has at last shaken off the bonds of Lincoln, and joined her noble Southern sisters. Her soil is to be the battle-ground, and her streams are to be dyed with Southern blood. We felt that her cause was our cause, and that if she fell we wanted to die by her. We have sent our soidiers on to the posts of danger, and we wanted to be there to aid and counsel our brave 'boys' In the progress of the war further legislation may be necessary, and we will be there, that when the hour of danger comes, we may lay aside the robes of legislation, buckle on the ar mor of the soldier, and do battle beside the brave ones who have volunteered for the defence of our beloved South.

"The people are coming up gallantly to the work. When the call was made for twelvemonths volunteers, thousands were offered; bat when it was changed to the full term of the war, the numbers increased! The anxiety among our citizens is not as to who shall go to the wars but who shall stay at home? No man in the whole Confederate States-the gray-haired sre down to the beardless youth-in whose veits was one drop of Southern blood, feared to plant his foot upon Virginia's soil, and die fight ing for our rights.

"But we not only need soldiers, we must have treasure to carry on the war. Private contri butions have been offered to a vast amount. I will mention an instance which occurred on the Mississippi a few days ago. An aged manwhose gray hairs and tottering limbs forbade his entering the ranks, and whose children of the first and second generations were in the ranks of his country's defenders-was asked how much he would give to carry on the war. The spirit of the old man rose up in him

Tell them,' he said, that my yearly crop of 1,000 bales of cotton they may have. Only give me enough to sustain me, and let the balance

go to my country!' Offers of this sort come pouring in upon the Government from all parts of the country.

"But the Government does not require contributions from individuals; she has the means within herself of sustaining this war. No donations are necessary, except for the equipment of your own volunteers, and those you can and will provide for. But I tell you what you may do. Those of you who raise large crops of cotton, when your cotton is ready for market, give it to your Government at its market value, receive in return its bonds, and let it sell your produce to Europe for the specie to sustain our brave boys' in Virginia. This was agreed on at Montgomery, and we promised to throw out the suggestion, that the people might think about it. I raise some cotton, and every thing above my necessary expenses my Government shall have. When this was proposed in Congress, a gentleman from Mississippi rose up and said that he did not raise cotton; it was his misfortune not to be able to help his country in that manner. But,' said he, I will go home and canvass my section, and every man that I meet, who raises cotton, sugar, and rice, I will persuade him to sell it to his Government." "

On the next evening the Vice-President, Mr. Stephens, being at Atlanta, also made an address, in which the plan of the Government is more fully unfolded:

"The time for speech-making has passed. The people have heard all that can be said. The time for prompt, vigorous, and decisive action is upon us, and we must do our duty. Upon the surface affairs appear to be quiet, and I can give you no satisfaction as to their real condition. It is true that threats of an attack on Pensacola have been made, but it is uncertain whether any attack will be made. As you know, an attack was made at Sewall's Point, near Norfolk, but the vessel making it was repulsed and disabled. But the general opinion and indications are that the first demonstration will be at Harper's Ferry, and that there, where John Brown inaugurated his work of slaughter, will be fought a fierce and bloody battle. As for myself, I believe that there the war will begin, and that the first boom of cannon that breaks upon our ears will come from that point. But let it begin where it will, and be as bloody and prolonged as it may, we are prepared for the issue!

"Some think there will be no war; as to that I know not. But whatever others wanted, the object of the Confederate Government is peace. Come peace or war, however, it is determined to maintain our position at every hazard and at every cost, and to drive back the myrmidons of Abolitionism.

"We prefer and desire peace if we can have it; but if we cannot, we must meet the issue forced upon us. We must meet Lincoln and his myrmidons on their own ground, and on their own terms-on constitutional principles.

"So far our progress has been all that we

could expect. A Government has been organized, executive departments and offices supplied, all needful laws passed, and all necessary arrangements made to meet any contingency. At the head of our Government is President Davis, who led the Mississippi Rifles at Buena Vista, and whose flag never yet trailed in the dust. This noble and true son of the South goes to Richmond to take command in person of our soldiers there, and to lead them upon the battle-field against all the military power and the talent they can summon-even to their veteran chieftain, Gen. Scott himself. Whether brought to a bloody conflict or not, we are prepared. Our people everywhere are full of enthusiasm, and strong in their determination never to submit to the rule of Lincoln."

The views of President Davis, expressed in his message to Congress on the 29th of April, were repeated in a letter to commissioners from Maryland. The Legislature of that State had appointed commissioners to visit Montgomery, and suggest to the Confederate Government the cessation of the hostilities now impending, until the meeting of Congress at Washington in July, in order that the Congress might, if possible, arrange for an adjustment of the existing troubles by means of negotiations rather than the sword. Similar commissioners were sent to Washington. The reply was dated May 25th, at Montgomery:

"The Government of the Confederate States is at a loss how to reply without a repetition of the language it has used on every possible occasion that has presented itself since the establishment of its independence.

"In deference to the State of Maryland, however, it again asserts, in the most emphatic terms, that its sincere and earnest desire is for peace, and that while the Government would readily entertain any proposition from the Government of the United States, tending to a peaceful solution of the present difficulties, the recent attempts of this Government to enter into negotiations with that of the United States were attended with results which forbid any renewal of proposals from it to that Government.

"If any further assurance of the desire of this Government for peace were necessary, it would be sufficient to observe, that being formed of a confederation of sovereign States, each acting and deciding for itself, the right of every other sovereign State to assume selfaction and self-government is necessarily acknowledged.

"Hence conquests of other States are wholly inconsistent with the fundamental principles and subversive of the very organization of this Government. Its policy cannot but be peacepeace with all nations and people."

The Confederate Congress, in compliance with the call of the President, assembled at Montgomery on the 29th of April. During its adjournment the Constitution, framed for the establishment of a permanent Government of the Confederate States, had been ratified by the

regular Conventions of each of the States, to which it had been referred. This was the first confirmation which the Government had received. It came only from the State Conventions, and its extent was to approve of the existence of the Provisional Constitution and Provisional Government, which were to remain in force for one year, then to be supplanted by a regular Constitution and officers duly elected under it.

At this session measures were taken to place the finances of the Confederacy upon such a basis as would enable it to meet the great struggle at hand. Treasury notes were adopted as a means of circulation. The first issue authorized was made payable at the expiration of twelve months. But at this session the time of payment was extended until six months after the close of the war. This currency drove all other out of circulation, and became the only medium of exchange in some of the Confederate States. The discount on these notes for specie was variable during the year, but often at thirty per cent., and even more. To give the stamp of value, and attract confidence to the financial movements of the Government, it was necessary to secure to it a substantial income. The revenue from imports under a stringent blockade could not be calculated upon, and probably would not equal the expenses of collection. Direct taxes, if laid, could not be collected in any amount sufficient to strengthen the credit of the Government. The deposits in all the banks of the Confederate States on the 20th of March amounted to $75,000,000. A people devoted to agriculture without the accumulations of commerce have no resources but the products of the land. Rich as the Southern States may be when their crops of cotton, rice, and tobacco are gathered and ready for market, yet without a market these crops are of no value. A strict blockade annihilated their market, and destroyed any immediate value these crops otherwise would have. Nothing but credit remained, and to improve it a plan was devised by Congress which proposed to make cotton a basis of security. The plan was that the planters should subscribe for the use of the Government a certain sum of money out of the proceeds of a certain number of bales of cotton when sold. The planter was to retain the cotton in his custody, and have the exclusive right of declaring when he would sell it and at what price it should be sold. By this plan the Government would get nothing at once, and there was room for many contingencies whether it would ever get any thing. The planter might become bankrupt and his cotton be seized by creditors, or it might be surrep. titiously disposed of. The Government received nothing but an order on the commission agent who might conduct the sale, to pay the Government the amount subscribed from the proceeds of sale, whenever he should receive the cotton and effect its sale. In consequence of the events of the last year there was not only

no sale for the cotton, but it was kept from the seaboard cities to prevent its falling into the hands of their enemies. On the 20th of July the subscriptions to the cotton loan merely, exceeded fifty millions of dollars. Other articles were afterwards included, and President Davis speaks of the plan in these words: "Scarcely an article required for the consumption of our army is provided otherwise than by subscription to the produce loan so happily devised by the wisdom of Congress." This plan, although it failed to produce money for the Government, served to supply it liberally with such articles as were necessary for the consumption of the army. In each district or county proper individuals were appointed to solicit subscriptions. The instructions given to them by the Secretary of the Treasury, Mr. Memminger, were as follows:

"Sir: The Congress of the Confederate States, at its last session, passed an act authorizing the issue of bonds for the proceeds of the sale of raw produce and manufactured articles.

"It has been deemed advisable, in carrying out this law, to circulate in advance lists for subscription, in which every planter can indicate the portion of his crop which he is disposed to lend for the support of the Govern ment. It is proposed that no disturbance shall be made of the usual arrangements of each planter for selling his crop, but that he shall simply indicate the portion he is willing to subscribe, the time and place of delivery, and the factor in whose hands it is placed for sale; and shall order the factor to exchange the proceeds of sale of the subscribed portion for Confederate bonds, bearing eight per cent. interest. Several of these lists are herewith sent you, and you are requested to act as commissioner in bringing the same to the attention of the people of your district or county. You will use your discretion as to the best mode of bringing the matter forward; but it is suggested that it would be desirable to use any public occasion, and to induce as many gentlemen as you can to make individual applications to their fellow-citizens. As soon as you shall have procured as many signatures as you can to any one list, you will please forward it to this Department. To provide against loss of any list, it is desirable that they should be signed in dupücate, and forwarded by different mails."

It remains to be seen what the fruits of this measure will be, so far as relates to placing in the hands of the Government actual resources, with which to pay its debts or to provide such munitions of war as can be obtained only with funds of value in foreign markets. The large amount of cotton and tobacco subscribed, are of no value unless they can reach a market outside of the Confederate States. The Confederate Congress subsequently recommended that all these articles should be burned as the Federal armies approach. The object of this rec ommendation was to prevent the seizure and sale of these articles by the Federal Government.

Further, as a State is recovered or brought under the control of the Federal arms, like Florida and Tennessee, there will be no opportunity to convert the subscriptions to the advantage of the Confederate Government, however favorably disposed the subscribers might continue. The ultimate loss of the amount subscribed must be complete, if the Federal arms are successful.

The views of the Government itself, on the character of this loan, were very fully explained by Vice-President Stephens, in an address to the cotton-planters at Augusta, Ga., on the 11th of July :

"I am here to-day to discuss before you the fifty million loan, but I am frank to tell you it may be one hundred millions, and I think it probably will be. The proposition that the Government makes is not to tax the people. The object of a wise and good Government is to make the burdens fall as light upon the people as possible to meet every exigency. The proposition the Government makes, therefore, is to take a loan in produce. In the graingrowing sections, the members of Congress solicit the loan in grain, army subsistence, meat, eorn, wheat, and flour. We are not a graingrowing country. Our supply is cotton. I address you, therefore, solely on the subject of

cotton.

"The object is to get along with as little tax as possible; but, my countrymen, do not suppose the Government will not tax you if necessary; for I tell you the Government does not intend to be subjugated; and if we do not raise the money by loans, if the people do not contribute, I tell you we intend to have the money, and taxation will be resorted to, if nothing else will raise it. Every life and dollar in the country will be demanded, rather than you and every one of us shall be overrun by the enemy. On that you may count. The Government, while it desires to carry on the war, establish your independence, and maintain the Government, at the same time wishes to do it in such a way as not to cripple industry; and while our men are in the field fighting the battles of their country, their brethren at home are discharging an equal duty, so that no serious detriment to public property will be sustained; and we have the element to do this that no other people in the world have.

"Now, then, if four millions of bales of cotton are made, upon an average price they will bring two hundred millions of dollars. If the cotton planter will but lend, not give-lend to the Government the proceeds of but one-half, that will be one hundred millions of dollars, double what the Government wants, or did want when we adjourned-quite enough to keep two hundred thousand men in the fieldthe balance you can use as you please.

"I now will read to you, just at this part of my address, the proposition upon which I shall make some comments, for I wish every gentleman to understand it. It is not asking a dona

tion; the Government simply wishes to control the proceeds of your cotton. The Government proposes to give you a bond bearing eight per cent. interest, paying the interest semi-annually. It is not at or donation, but simply your surplus cotton, as much as you can spare. This is the proposition:

"We, the subscribers, agree to contribute to the defence of the Confederate States that portion of our crop set down to our respective names; the same to be placed in warehouse or in the hand of our factors, and sold on or before the - next.'

"Fix the day of sale as soon as you please; the 1st of January, the 1st of February, or the 1st of March, if you please; though I am aware the Government wishes you to sell it as soon as convenient; but let each planter consult his interest, and in the mean while consult the market. But to proceed :

"And our net proceeds of sale we direct to be paid over to the Treasurer of the Confederate States, for bonds for the same amount, bearing eight per cent. interest.'

"There is the whole of it. The cotton-planter directs his cotton to be sent into the hands of his factor or his commission merchant. He only tells the Government in the subscription the portion he can lend. He directs it to be sold, and the proceeds to be invested in Confederate bonds. I understand that a committee will be appointed before this meeting adjourns, to canvass this county. Every planter, therefore, of Richmond County, will be waited upon and afforded an opportunity to subscribe. I wish, therefore, to say to that committee, and everybody, subscribe. I prefer your putting down first, your name; second, the number of bales; and I prefer you putting down the proportion of your crop. I want, especially, the number of bales, but would like also to know the proportion it bears to your crop. Let everybody, therefore, put down a portion of their crop, if it be two bales, or fifty bales, or one hundred bales, or five hundred bales.

"Inquiries have been made of me, and I take this opportunity to answer them: 'Whether these bonds will circulate as money-will they pay debts?' On this point I wish no mistake. They are not intended as currency; they are unfitted to answer the purpose of circulation. The bonds are larger than this paper, (a letter sheet.) The obligation is on the upper part of it, and the whole of the lower part is divided into forty squares or checks. In each one of these checks the interest is counted for each six months, or for twenty years. The checks are called coupons, and all the party holding them has to do is every six months to clip off the lower coupon, send it to the Treasury, and get his interest. The bond is not suitable to carry in your pocket-book and use. It would wear out. It is intended to represent a fixed capital or permanent investment-just so much as you can spare from your cotton crop. That is all. Instead of putting your surplus in lands, ne

groes, houses, furniture, useless extravagance, or luxuries, just put it in Confederate bonds. "But while I said it was not intended to circulate or to pay debts, I have not the least doubt that anybody who will se his crop entire for bonds, will find no difficulty in getting the money for them, for they draw interest, and are better than money; and any man holding a note, will give it up and take a bond, for a note draws but seven per cent., and this draws eight. I have no doubt that all minors' and trust property will soon be invested in it. The entire amount of private funds in the State of Georgia, on private loans, I suppose is ten or twenty millions of dollars, at seven per cent. All that amount will immediately find its way into these bonds; and hence a planter who sells his entire crop, and needs money, can get it from the money-lenders on these bonds.

"I have been frequently asked if these bonds were good. Well, I want to be equally frank upon that point. If we succeed, if we establish our independence, if we are not overridden, if we are not subjugated, I feel no hesitancy in telling you it is the best Government stock in the world that I know of. It is eight per cent. interest; and if we succeed in a short time, in a few years, if not more than one hundred millions or two hundred millions are issued, I have but little doubt they will command a considerable premium. The old United States stock (six per cent. bonds) five years ago commanded fifteen and sixteen per cent., and went as high as twenty per cent. Take the Central Railroad. The stock of that company commands fifteen per cent. premium now. These bonds pay eight per cent. semi-annually; therefore, if there is a short war, these bonds very soon will command fifteen or twenty per cent. But candor also compels me to state that if Lincoln overruns us if we are subjugated, these bonds will not be worth a single dime, and nothing else you have will be worth any thing. If we are overrun, they will be worth just as much as any thing else you have, and nothing else you have got will be worth any thing. So that is the whole of it."

To push forward the measure, a convention of cotton-planters was held at Atlanta, at which resolutions were passed expressing their willingness to aid the Government with the entire cotton crop, if the same should be needed for its use, and recommending to the planters to invest at least one-half of the proceeds of their entire crops in the eight per cent. bonds of the Confederate States, and to capitalists and others having money to lend, that they invest in like manner in these bonds. They also recommended to Congress to authorize the issue of Treasury notes of denominations suited for circulation as currency, for an amount equal to the exigencies of the Government, such notes to be paid out as money in payment of all Government dues, and made receivable for all taxes and duties, and convertible into eight per cent. bonds of the Confederate

States at the pleasure of the holder. Congress, at its session at Richmond, in July, authorized the issue of one hundred millions of Treasury notes, and laid a direct tax, estimated to produce about fifteen millions of dollars. The Government thus had at its control for financial purposes, a loan of fifteen millions, authorized in February, duties on imports, which yielded nothing worthy of consideration, the authorized issue of Treasury notes to the amount of one hundred millions, the direct tax of fifteen millions assumed by the States, and the loans on produce, of which cotton was calculated to be the chief. The cotton would not yield any thing until sold. These were the authorized resources previous to November, 1861, to carry on a war, requiring the equip ment, and transportation, and inaintenance of an army of three hundred thousand men, There was one source of help to the Confeder ate Government which has not been mentioned. The States undertook to raise, and equip, and pay, to a certain extent, the troops of each. For this purpose the Legislatures authorized loans, amounting from five hundred thousand to two millions of dollars. With several of them the prospect of borrowing on this authorized loan was hopeless. Arkansas authorized her loan to be made available by issuing notes of five dollars and upwards in amount. These were paid to her soldiers and others, and depreciated until, as one of the former observed, "a hatful was required to obtain a dollar in specie." Tennessee authorized an almost unlimited expansion by her bank, until its paper depreciated like Arkansas State notes. In Vir ginia, military officers of State troops took from the people whatever their forces required, and gave a certificate of indebtedness upon the State of Virginia. These measures strengthened the Confederate Government for a period, by reducing the demands upon it, but they rendered more certain its ultimate bankruptcy. They enfeebled the resources of the people, upon which all Governments must rely. Upon the people the operation was most disastrous. Specie disappeared. Paper money was issued by a multitude of corporations and cities. It de preciated thirty per cent, compared with specie. Nearly double in amount was now required to purchase food, clothing, and other necessary articles. Apart from the influence of the blockade in reducing the supply of such as were of foreign manufacture, charges of extortion were raised against dealers, and public meetings were held to denounce them, which were composed of citizens who were ignorant that the source of all the evil consisted in the worthless currency. The Governor of Tennessee sent a message to the Legislature, relative to the extortions introduced "by those who had at heart their own interests more than the good of their fellow-mortals and of the country." The subject was acted upon by the Legislature. The Governor of Alabama, in a message to the Legislature, denounced the speculation that had commenced in articles

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