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notes should be made. These notes had been rendered more valuable and reliable by the judicious action of Congress, making them receivable for the payment of troops, for loans, for internal duties, and as legal tenders for other debts, thereby saving large sums to the community in discounts and in exchanges. The President, however, contended that a return to specie payment should be kept in view. But he regarded it as doubtful whether a sufficiently large amount of United States notes could be permanently maintained to serve as a universal equivalent for coin, and payable therein. He therefore recommended as a remedy for this unavoidable difficulty the organization of banking associations, under a general act of Congress, to which the Federal Government might furnish circulating notes on the security of the United States bonds deposited in the Treasury. These notes being always convertible into coin, would protect the community from the evils of a vitiated currency, would facilitate commerce by cheap exchanges, and would diminish that part of the public debt which was employed as securities. The present condition of the Treasury was favorable. During the preceding year the virtual receipts had been $487,788,324 97. The entire expenditure in that period had been $474,744,788 16, thus leaving a small balance in the Treasury. So far the Government of the United States had sustained the colossal burden imposed upon it by the vast expenditures involved in the war with marvelous vigor, prudence, and success.

The President proceeded to say that a much more difficult and anomalous question than that of the national finances demanded the attention of the legislature. The irrepressible negro and his future fate had assumed more than their usual importance in connection with the prosecution of the war, and that great enigma must, if possible, soon be solved by the assembled wisdom of the nation.

Mr. Lincoln then referred to his preceding proclamation in regard to "compensated emancipation." He affirmed and demonstrated that disunion was no adequate remedy for the difficulties connected with the destiny of the slave. He proved that there were inseparable objections to the division of the Union; that the geographical features of the country forbade it; that the outlets of the Mississippi river, by an eternal law of nature, belonged in common and forever to all the inhabitants of that great valley through whose capacious and verdant bosom the father of waters rolled the mighty burden of his flood to the distant ocean; that there was no line, either straight or crooked, which the ingenuity of man could devise that would form a propitious boundary-line between the two hostile sections; that even the institution of slavery itself would be damaged and weakened by the establishment of such a dividing line; that disunion would entail countless evils and miseries on both communities; that slavery was the chief producing cause of the Rebellion; that the extinction of slavery would inflict a death-blow upon that Rebellion, and that there was

a plan of gradual, prudent, equitable emancipation, which, if adopted, would remove this tremendous evil gently, propitiously, and efficiently. That plan he then proceeded to reveal, to expound, and to commend. It was as follows:

manner.

He proposed so to amend the Federal Constitution that every State in which slavery existed at that time, which should abolish the same within its limits at any period before the 1st of January, A. D. 1900, should receive compensation therefor from the Federal Government; that the Presi dent should deliver to every such State bonds of the United States, bearing interest, in payment for each slave proved to have been living therein by the eighth census of the United States; these bonds to be delivered by instalments, or in one parcel, at the completion of the abolition of slavery within such State, according as the same may have been effected, gradually or immediately. Should any State, after having abolished slavery, and after receiving these bonds, introduce it again within its limits, the bonds delivered to it should be returned to the United States, and be valueless. The President suggested further, that all slaves whom the chances and vicissitudes of the war had at any time enfranchised should continue to be free, though their former masters, if they had remained loyal to the Union, should be compensated for their losses in a reasonable The President then set forth the advantages of this plan with great earnestness. He said the measure was to be made constitutional by a formal amendment of the Federal Constitution. To accomplish this it is necessary that the concurrence of two thirds of the members of Congress, and afterward of three fourths of the States should be obtained. The approval of three fourths of the States would involve the concurrence and consent of seven of the slave States. If they would co-operate now, that act would effectually terminate the war, and would restore the Union. He concluded this remarkable message with the following appeal, which was as impressive as it was original, both in thought and in language: "The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew. We must disenthrall ourselves, and then we shall save our country. We cannot escape history. We of this Congress and this administration will be remembered in spite of ourselves. No personal significance or insignificance can spare one or another of us. The fiery trial through which we pass will light us down in honor or dishonor to the latest generation. The way is plain, peaceful, generous, just-a way which if followed, the world will forever applaud, and God must forever bless."

This message was received by both houses of Congress with that respect which was due to it, and by the nation with very general admiration and applause. Even that portion of the loyal community who disapproved of any action on the subject of slavery, however moderate and conservative

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it might be, commended the unquestionable honesty, sincerity, and patriotism which illumined and adorned every line of this production.

Of the official reports made to the President by the members of the Cabinet on this occasion, the most remarkable was that of Mr. Chase, the Secretary of the Treasury. It displayed that profound financial ability for which that officer had already become distinguished. It set forth among other topics the state of the national finances as they then existed; and proceeded to the much more difficult task of expounding a method by which the immense exigencies of the future might be met. If the war continued until July 1st, 1863, a deficit of about two hundred and seventyseven millions of dollars would exist over the receipts from existing customs, excise, lands, and other income. If the war should be prolonged until July, 1864, a deficit of about six hundred and twenty-three millions over all existing revenues would have accumulated, and must be provided for. To accomplish this herculean task, Mr. Chase recommended the adoption of two important measures. The first was the passage of a general law authorizing the organization of banking associations. The other was the acquisition of money by loans, without increasing the issue of the United States notes beyond the amount fixed by law, unless an imperative exigency should demand it. This report indicated the line of policy which Mr. Chase pursued more minutely, and to its practical results, during the progress of the succeeding session, and was received by the Presi dent and by the members of the Federal Legislature with respect and at

tention.

While the several departments of the Government at Washington were engaged in the performance of their respective duties, the active operations of the war progressed in the field, and battles and slaughters still continued to occur between the armed champions and enemies of the Union.

On the 2d of December, 1862, a spirited skirmish took place near Franklin, on the Blackwater river, Virginia. On that day a detachment of Federal troops was sent out from Norfolk under Colonel Spear. It consisted of the eleventh Pennsylvania cavalry, four regiments of infantry, and a battery of artillery. Their orders were to proceed to a point within three miles of the Blackwater, as far as a building known as the Beaver Dam church, from which videttes should be sent out to reconnoitre the adjacent country, in which the enemy were known to have been posted in some strength. This order was promptly executed. The videttes soon encountered a body of Rebels who were out on a foraging expedition. They were the second Georgia regiment, commanded by Lieutenant-Colonel Towne. A brisk firing commenced, and the Federal videttes immediately sent to the main army for reinforcements. Three companies of the cavalry under Major Stratton were, in reponse to his command, ordered forward at a gallop. They soon reached the scene of conflict. A desperate com

bat then ensued. The Federal troops charged upon the enemy with great gallantry, and after a short collision the enemy broke and fled in confusion. The Federals then pursued the fugitives with cheers. They quickly overtook them, and cutting to right and left with their sabres among their disorderly masses, slew many of them. The chase was continued for two miles, with great excitement and disorder, until both sides reached the vicinity of Franklin, where the Rebels had erected strong fortifications. It then became expedient for the victors to retire and to return to Norfolk. The results of this engagement were the capture of twenty-two prisoners, two pieces of rocket battery, forty muskets, and ten horses. The most singular feature in the whole expedition was that not a single person on the Federal side received the slightest injury, although the fighting was at one time quite severe.

Very different was the result of a sudden surprise and assault which was inflicted by the Rebel guerrilla Morgan upon the thirty-ninth brigade of Union troops of Dumont's division, at Hartsville, Kentucky. These forces were commanded by Colonel Moore, and consisted of the hundred and fourth Illinois, the hundred and sixth and hundred and eighth Ohio, a small portion of the second Indiana cavalry, and Nicklen's battery. They were surprised by an unexpected charge at daylight on the 7th of December. Morgan's troops consisted of three regiments of cavalry and two of infantry. The fight continued over an hour. A portion of the Federal troops, notwithstanding the unfavorable circumstances of the case, fought bravely. But the remainder did not support their comrades with any alacrity, and at length broke up in confusion. The result was disastrous to the entire force, who were, after a short fight, surrounded and compelled in the end to, surrender to the enemy. Nearly the whole of the brigade were captured. The enemy then burnt the Federal camp and took possession of the teams and trains of the brigade. The loss of the Union troops during the battle was sixty killed and wounded. After the engagement closed, and when the disgrace and injury were complete, a body of troops under Colonels Harlin and Mellen were sent in pursuit of Morgan; but he had already crossed the Cumberland river with his usual promptitude of movement and was safely beyond their reach.

In the army of the Potomac there were some skirmishes and actions of no great moment, but which displayed in a creditable light the courage and daring of the Union officers. General Geary, commanding a division in Slocum's (twelfth) army corps, had throughout the war shown himself a skilful and able officer, and wherever he had been entrusted with responsibility, had acquitted himself with great credit. The corps to which he belonged had formed the rear-guard in crossing the Potomac subsequent to the battle of Antietam, and his division was for some time assigned to garrison duty at Harper's Ferry and the fortifications in its vicinity. On Friday, December 2d, he was ordered to make a reconnoissance in force,