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might actually turn out by this depreciation to be worth no more than an ordinary two or three per cent. stock, and it therefore enacted that the interest on the public debt should be paid in coin. This, of course furnished a strong inducement to invest in public securities, for the more paper depreciated the higher coin would go, and hence the higher the rate of interest would be. But the next question was, “Where shall the Government get this coin ?" To go into the market and buy it, would stimulate speculation so that it could be ob. tained only at ruinous rates. It was therefore decreed that all customs should be paid in coin. This was in effect enacting over again the old protective tariff; for importers being compelled to go into market and buy their gold, its rise would be inevitable. Practically, therefore, the duties would be increased indefinitely, causing a corresponding rise in the price of goods. This of course would stimulate home manufacture. As from the embargo of 1812, and the protective tariff afterward, New England was made a manufacturing country, so now, by this practically high tariff all her machinery was set in full motion.

Another ingenious device was adopted for obtaining money for present use. The war had locked up a vast amount of wealth ordinarily invested in trade. But the holders, like every body else, believed the war was to be a short one, and therefore preferred that their capital should lie idle for a while, so that with peace it could be employed again in the more remunerative way of trade and commerce, than by being invested in Government securities at a fixed rate of interest. To get hold of this, the Secretary of the Treasury was authorized to receive twenty-five million dollars on deposit to be paid on ten days' notice, and to bear interest at the rate of five per cent. per annum, payable in gold. The bait took, and the whole amount was so quickly taken, that Congress authorized the reception of one hundred mil

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lion dollars, interest payable in paper. Fruitful in all kinds of shifts, it also authorized the Secretary to issue certificates of indebtedness to the public creditors, bearing interest of six per cent.--at first payable in gold, but afterward in paper.

The Department had had for use during the year, two hun. dred and thirty-five million dollars--all but ten millions granted by the tariff law--being in seven and three-tenths three years

' bonds, legal tender, and certificates of deposit. It had besides, one year six per cent. certificates to issue to any amount it chose.

The debt at the close of the fiscal year, as ascertained, was five hundred and fourteen million, two hundred and eleven thousand, three hundred and seventy-one dollars, while gold was at ten per cent. premium. There should be added to this, however, probably over a. million dollars of arrears not yet audited. On this debt, twenty-two million dollars of interest in goid was to be paid. It had now become very evident that the war was not to be terminated speedily, and hence that these various expedients to raise money for present emergencies would not answer. No matter how unpopular a system of internal taxation might be for the power,

it must be resorted to or the war be abandoned for want of means to carry it on. Congress therefore resolved to pass an excise law that should tax the entire industry of the country, and levy a tax on all incomes over six hundred dollars. We had taunted England with her oppressive taxation, saying that the poor man was taxed even for the light of heaven, and after his eyes had closed on that light forever, the very nails in his coffin were taxed, little dreaming that our boasted Republic would so soon follow her example.

But there was 16 help for it. Under this law stamp-du

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ties were to be paid on all transactions and legal demands, and a three per cent. tax on all manufactures.

Such a law was something entirely new to our legislators, and it required time to perfect it-besides, the income tax was not to be collected till June of 1863. In the meantime, money must be had, for the Secretary had estimated that the expenditures, for the fiscal year of 1863, would be six hundred and ninety-three million, three hundred and forty-six thousand, three hundred and twenty-one dollars, independent of the public debt of ninety-five million, two hundred and twelve thousand, four hundred and fifty-six dollars.

This, however, was an under-estimate, for the military necessity, which soon after required the calling out of six hundred thousand men, swelled these expenditures so that Congress, instead of making an appropriation to meet the Secretary's estimate of nearly seven hundred million dollars, made one of eight hundred and eighty-two million, two hundred and thirty-eight thousand, and eight hundred dollars. To raise this amount, it authorized the issue of five hundred million dollars of six per cent. stock, redeemable in five to twenty years, and also an issue of notes for one hundred million dollars, which could be exchanged at par for the stock, making in all seven hundred million dollars. To make up the bala

the balance, the Secretary was empowered to issue fractional notes, under a dollar, to any amount.

This, apparently, reckless issue of Government paper, created general distrust, and gold, which only reached, the year before at any one time, one hundred and thirty-six and onehalf

per cont., touched, this year, oge hundred and seventytwo and one-half per cent. To keep up the public credit, it was ordered that the Five-twenty bonds should not be sold at less than market value, while the holders of Government notes were allowed to exchange them for the bonds at par.

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When Congress again met, the debt was stated to amount to fourteen hundred million dollars, without computing the enormous arrears that could only be guessed at, and whịch somehow must be met. In the beginning of the actual year the Secretary was authorized to issue one hundred million dollars of paper money, in order to meet the present obligations of the Government. He now asked Congress to amend the law respecting the sale of the Five-twenty bonds, fixing July as the limit, beyond whích Government notes could not be converted into them at par. A ļaw was also passed authorizing five hundred million dollars six per cent, stock to be issued, redeemable within forty years, but not till after ten-also, the issue of four hundred million dollars of notes, as low as ten dollars, to be legal tenders, bearing six per

cent. interest in paper, and redeemable in three years. To these were added one hundred and fifty million dollars more, into which the smaller interest-bearing notes could be converted,

The unbounded license given to the Secretary to issue fractional paper currency was now taken away, and the amount fixed at fifty million dollars.

This enormous issue of paper bewildered the public, and it seemed as though nothing short of a miracle could save the nation from hopeless bankruptcy. Abroad, there was not the slightest doubt that we were rushing headlong into financial ruin.

Another law was passed which caused great excitement, completely revolutionizing the whole banking system of the country. This was the NATIONAL BANKING LAW, authorizing Banks, in all the States, secured in Government stocks, to circulate notes redeemable in Government paper." This circulation was limited to three hundred millions of dollars, based on the same amount of Government securities. But there were already more Banks in the country than the wants




of the community required, and it was plain that these must be converted into National Banks, or be killed, or the system would fail of success. The change could be easily made, for it was only necessary to change the securities which they held into Government securities.

But many of the States preferred their own banking system, especially the great State of New York, which led its Banks, in the main, to be secured by the State stocks. It had so perfected its banking system, that should every Bank in the State fail, its notes would be redeemed dollar for dollar. Besides, by making its own stock the basis of banking, it enhanced the value of it, so that whenever it wished to make a loan, the Banks not only took all the stock with avidity, but the competition was so great to seoure it, that it was always at a large premium-its six per cent. stock, having a long time to run, going, in some instances, as high as seventeen per cent. above par. Thus its banking system not only made loans easy, but caused them to be taken at a premium that materially lessened the interest. To change it, therefore, was to depreciate at once the value of its own securities. This depreciation would, also, cause a great loss to the Banks, for the stocks held by them could not bring, in the market, the prices they had paid for them. Hence, in every way the law was distasteful to the State.

To force the State Banks to change into National Banks, Congress passed a law taxing their notes ten per cent. . As it had long ago been decided that Government securities were not taxable, the States could not retaliate by taxing the National Banks—at least, it was very questionable whether

any State legislation could offset this discrimination against the State Banks, and so the latter gradaally converted themselves into National Banks. This, of course,

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