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which it bore, it was to sound the Washington Government on the question of peace. There could be no other proper conclusion, judging from the importance of the emissary, and the absurd futility of his going to Washington merely to protest against the enemy's cruelties in conducting the war.

The whole explanation of the affair is that Mr. Stephens was fully empowered in certain contingencies, to propose peace; that President Davis had sent him on this extraordinary visit to Washington, anticipating a great victory of Lec's army in Pennsylvania; that the real design of the mission was disconcerted by the fatal day of Gettysburg, which occurred when Mr. Stephens was near Fortress Monroe; and that it was in the insolent moments of this Federal success that he was so sharply rebuffed by the Washington authorities. Considering the conjuncture of the occasion and the circumstances in which the President of the Southern Confederacy sought to signalize what he supposed would be a great victory of his arms, by a distinct and formal proposition of peace at Washington, it may be said that, notwithstanding the disappointment of the event, and the jeer of the enemy, Mr. Davis occupied a proud position in this matter, and one that merited the applause of the Christian world.

CHAPTER XXV.

GETTYSBURG AND VICKSBURG TWIN DISASTERS FOR THE CONFEDERATES.-THEIR EFFECT ON THE CONFEDERATE CURRENCY.-THE FINANCIAL SYSTEM OF THE SOUTHERN CONFEDERACY. THE MODERN SYSTEM OF PUBLIC CREDITS AN ENCOURAGEMENT TO WAR.-REVIEW OF FINANCIAL EXPERIMENTS IN THE MODERN WARS OF EUROPE. THE THREE CONSPICUOUS EXAMPLES OF GREAT BRITAIN, FRANCE AND RUSSIA. THE GREAT FINANCIAL ERROUR IN THE AMERICAN WAR.-HOW A BANK OF EXCHEQUER WOULD HAVE OPERATED IN THE WAR.-THE RULE OF REFLUX IN CURRENCY.-BRIEF STATEMENT OF FINANCIAL CONDITION OF NORTH AND SOUTH AT CLOSE OF THE WAR.-SUSPENSION OF THE SOUTHERN BANKS IN THE FIRST YEAR OF THE WAR.-AMOUNT OF SPECIE IN THE SOUTH AT THE COMMENCEMENT OF THE WAR.-PRINCIPAL MEASURES OF CONFEDERATE FINANCE.-HOW THE SOUTHERN BANKS BECAME INVOLVED.-PRACTICAL RESULTS OF THEIR LOAN TO THE

GOVERNMENT.—"MAKING MONEY BY MACHINERY."-SALES OF CONFEDERATE BONDS.— SPECIAL OCCASIONS FOR THIS INVESTMENT.—UNEQUAL TO RELIEVE THE CURRENCY.RATES OF DEPRECIATION OF THE CONFEDERATE MONEY.-RICHMOND, THE CENTRE OF FINANCE AND TRADE.-GOLD NOT A MEASURE OF VALUE IN THE CONFEDERACY.-REASONS FOR ITS EXTRAORDINARY APPRECIATION THERE.-COMPARISON OF CONFEDERATE MONEY WITH THE CONTINENTAL CURRENCY IN THE REVOLUTION OF 1776.-TWO CAPITAL CAUSES OF THE DEPRECIATION OF THE CONFEDERATE MONEY.-THE INFLUENCE OF SPECULATION.HOW THE ENGROSSERS MANAGED IN RICHMOND.-SUMMARY OF THE MISMANAGEMENT OF THE CONFEDERATE FINANCES.

GETTYSBURG and Vicksburg were twin victories for the Federals-twin disasters for the Confederates. They marked the line where the war turned, and the fortunes of the Southern Confederacy declined. The dis aster of Vicksburg was a shock to the whole internal economy of the South; and this period of military disaster was coincident with a distress in material resources, in which some men already thought to discover signs of the fatal decay of the Confederacy. Money has been designated as "the sinews of war;" and when it is known that the Confederate currency declined a thousand per cent. on the news of these military disasters, it may well be comprehended what occasions of alarm and anxiety they were. The whole concern of the Confederate finances invites a studious consideration, which may well take place here at a period which affected so much

their virtue and integrity.

And the subject is so distinct that, without regard to any particular date of our narrative, we may extend our view of it through the whole period of the war.

THE FINANCIAL SYSTEM OF THE SOUTHERN CONFEDERACY.

The South was in a condition of complete isolation in the war. The laws of finance were less disturbed by extraneous influences than was ever the case in any country of equal extent, population and civilization before. The community consisted of several millions of people, occupying a large territory without a specie circulation, and compelled to establish a thoroughly artificial system of finance adapted to the condition of war. The case was anomalous. Very valuable lessons in finance might be learned from the history of the Confederate system, if space were allowed to trace its development, step by step, throughout its extraordinary career, and to mark the influence which it exerted upon the social condition, the public and private morals, and the fortunes of the Confederacy. It may be said generally that the result of the war was powerfully influenced by the condition of the Confederate finances, as much so as by any other cause.

It is the most striking peculiarity of modern wars that they are conducted chiefly by means of credit in the form of paper issues. The system was inaugurated by Great Britain; and its result is the mammoth debt of the British government. The revolutionary governments of France, as they succeeded each other in the various stages of transition between the autocracy of the Bourbons and the Empire, copied the British example, and created enormous debts which shared the fate of the ephemeral powers which incurred them. All the governments of Europe, with scarcely an exception, now labour under the burden of obligations incurred in expensive wars. In proportion with the facility of public credit, has been the magnitude of the scale on which modern wars have been conducted. And if in America the people have reason to boast of the stupendous magnitude of the armies which they brought into the field, and of the extent and costliness of their military operations, the marvellous exhibition will be found to have been due, not so much to the boundlessness of their resources, as to the lavish and reckless manner in which they employed a credit never before brought into requisition. Nor would it be over-stepping the bounds of truth to say, that the war spirit in either section was fed and stimulated, in a very great degree, by the profits which the heavy public expenditures brought to large classes of persons directly responsible for the war, and connected with its operations. This modern scheme of throwing the burden of debts incurred in war upon the shoulders of posterity has done more to stimulate costly and bloody conflicts between nations and peoples,

SYSTEMS OF CREDIT IN WAR.

417

than all the harmonizing influences of modern civilization and Christianity have done to restrain them. Until the system of credit is counterbalanced by some other scheme, by which the persons immediately connected with the public operations shall be impoverished rather than enriched by a state of war, we shall have no occasion to expect the Millennium.

The three most conspicuous examples of the abuse of credit for purposes of war, antecedent to those furnished by the two belligerents in the American conflict, were those of Great Britain, France, and Russia. The debt of the British government at the close of the Napoleonic wars, was eight hundred and eighty-five millions of pounds sterling. In March, 1863, after a lapse of nearly half a century, embracing the costly expenditures of the Crimean war, it had been reduced, by dint of resolute taxation, no lower than the amount of seven hundred and eighty million pounds sterling, or about thirty-nine hundred millions of dollars.

The amount of Assignats issued by the Revolutionary authorities of France, counting all the different series, reached the enormous amount of forty thousand millions of francs.* These were followed by a second species of paper money called Mandates, to the amount of twenty-four hundred millions of francs. The great bulk of both these forms of circulation, amounting in the aggregate to more than forty-two thousand millions of francs, or eighty-five hundred millions of dollars, proved a loss to their holders; a circumstance which is thought to have been fortunate for France rather than otherwise, in proving the means of divesting her, at the same time with the burden itself, of the spurious authorities that had imposed it.

The British debt was contracted almost altogether in the form of bonds at long dates, upon the faith of which the Bank of England put forth a proportionate amount of its own notes of circulation. It is true that the Exchequer bills issued by government for temporary purposes, went directly into the hands of the public; but they also soon found their way, for the most part, into the Bank of England; and constituted, like the bonds, a basis of additional circulation. In this respect, it will be observed, the English and French systems were essentially different. In England the circulation was not identical with the debentures of government, but was issued through the agency of a banking company, which made of the gov crnment bonds a basis for the security of the circulation. In France, the government itself put forth its obligations in the form of a currency, declared it to be the medium of exchange by law, and denounced heavy penalties against the refusal to accept it as money. The comparative merits of the two systems were strikingly exemplified by the result. The French issues, as we have seen, went on augmenting in volume until they reached

* The statement seems incredible; but it is made on the authority of the American Encyclɔpedia.

forty-two thousand millions of francs (in the aggregate of Assignats and Mandates), and continued to decline in value until the whole mass of circulation became utterly valueless. The volume of currency in England, on the other hand, never reached an unmanageable aggregate. The circulating notes of the Bank of England never aggregated quite thirty millions of pounds sterling, or one hundred and fifty millions of dollars Nor did the pound sterling, in proper form, ever experience a depreciation comparable with that which has generally attended the excessive issue of paper currency, during a state of war, in other countries; for the pound sterling note of England reached its maximum depreciation in 1814, when it sank to the value of £5 108. to the ounce, or about 1.55 to the unit in gold. We shall see that in the United States, during the war, the greenback dollar sank to the value of 2.85 for one in gold; and that the Confederate paper dollar sank at the end, to the low value of 60 for one.

During the protracted wars which the Russian Empire prosecuted for a long series of years upon its Circassian frontier, a large employment of credit was found to be requisite. An expedient similar to that employed by Great Britain was resorted to, in the establishment of an institution called the Bank of Assignats. This establishment furnished the proper currency of the Empire for many years, and its circulation is believed never to have exceeded in periods of the most pressing military exigency more than eight hundred and thirty-six millions of roubles. A most remarkable circumstance connected with the history of this circulation is, that it underwent a most excessive appreciation, above gold in value, during the winter of Napoleon's Russian campaign, rising in value as the invader approached the heart of the country, and receding as he retired.

Unfortunately for themselves, neither of the two belligerents in America took any measures for establishing a proper relation between the efflux and reflux of the currency, during the gigantic war which we have under consideration. If a Bank of Exchequer had been established at the beginning, endowed with functions like those exercised by the Bank of England during the first two decades of the present century, having entire control of the circulation, and acting as the principal factor of the government in the negotiation of its bonds, the evils of a ruinously depreciated currency might have been avoided. As it was, each new demand of the government for money, instead of being supplied by the sale of bonds, and the receipt of a part of the circulation already outstanding, was met by a new and additional issue of notes; those previously issued still remaining, for the most part not needed and not employed, in the hands of the public. There was thus a perpetual efflux of notes of circulation; and no returning influx, to keep up an active demand for them and to sustain their value. The public credit was made the prey of a multitude of sharpers and brokers, who could all have been kept in due subordination by a great bank

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