CHAPTER LXIII.

RESOURCES AND DEFENSES OF THE REPUBLIC IN 1862. ITS FI

NANCES, ARMY, AND NAVY.

Financial condition of the republic at the outbreak of the war.

The measures of Mr. Chase, Secretary of the Treasury, for 1861 and 1862. His financial recommendations to Congress. Financial condition of the republic at the close of 1862.

The war measures of Mr. Cameron. Accession of Mr. Stanton as Secretary of War. His report on the state of the Army and general military condition for 1862.

The navy measures of Mr. Welles. Complete enforcement of the blockade. Operations against the enemy, and condition of the Navy at the close of 1862.

No portion of the history of the republic is more worthy of attention than that which relates to the financial measures connected with the Civil War.

The financial bur

Until the great conspiracy of secession, taxation in America for national purposes had been al dens of the republic. most unfelt. After that event it rapidly became more and more oppressive, yet it was borne not only submissively, but with cheerfulness. In its unstinted appropriations of money, Congress only reflected the determination of the people.

There was a resemblance between the attitude assumed

Formation of a pub. by Congress and that exhibited by the Long lic debt in England. Parliament in England. No political purpose was permitted to fail through want of pecuniary supplies. The national income under Charles I. had barely amounted to five millions of dollars a year, but, in a period of nineteen years, under the Commonwealth, not less than four hundred millions were levied; yet it was held that the object gained was a full equivalent for the

cost.

Considering the population and the resources of England at that time, such a revenue must be regarded as very great; yet more than half of it was raised by direct taxation, sequestrations and the sales of forfeited land for the most part supplying the rest. It was not until the accession of the Orange dynasty that the government learned the dangerous secret of borrowing money on pub lic credit, and founding a national debt.

ical advantages.

Not without curiosity may we compare some of the arIts supposed polit- guments used by the American Secretary of the Treasury in support of his measures with those offered by English statesmen almost two centuries ago. In their opinion, a very great advantage must incidentally arise from the distribution of a public debt among many holders, since an influential body would thus be created, bound by the tie of individual interest to the existing government, and ever ready to defend it against its opponents, whose first act would be to disre gard or repudiate their claims. Nor was it overlooked that, through the means thus acquired by borrowing, the influence of the government might be increased far beyond what was possible by the restricted supplies of each year.

Analogous effect of

a national debt.

In America, every one could see how powerfully a widespread interest in a common institutionthe slave system and slavery-had acted in unifying the South. It was not discontentment with the government, for there was no cause of discontent, but apprehensions, real or imaginary, of peril to that common interest which had banded together the populations of so many states. If at the South slave property, sometimes valued at three thousand millions of dollars, had been made available as a lever to attempt to overturn the govern ment, a national debt of three thousand millions, held in portions scattered all over the North, might be made

CHAP. LXIII.]

DIRECT TAXATION.

551

equally available to sustain it. Should the slave system, in the issues of the war, be destroyed, and should, as indeed was inevitable, a national debt be created, the North would succeed the South in the possession of a principle of unification, the efficiency of which would not be impaired, as was that of slavery, by any moral or conscientious scruples.

opposition.

It is true that this principle of unification is not withBut a debt implies out a drawback. By direct or indirect taxation, and, in fact, by both, means must be raised to pay the interest which the debt requires. From this point of view the political effect is therefore to de compose society into two portions, one of which is antagonistic to the debt through the taxation it demands. But if the slaveholders of the South had found it possi ble to carry with them thoroughly the slaveless whites, so the bondholders of the North might reasonably expect that the influences of capital would draw all ranks of society to a general concord with them. It would be very difficult to resist capital and patriotism combined. Nevertheless, it ought never to be forgotten that there Disadvantages of di- will always be discontentment with direct taxation, and particularly if it implies espionage. Perhaps nothing exerted a more powerful influ ence in accelerating the fall of the Roman empire than the policy of the Emperor Constantine, who replaced the Experience of the system of indirect taxation-the customs and duties of former times-by the grind. ing direct taxation of Indictions. It was this that, under his successors, tore from the emperor the whole of North Africa, Egypt, Syria, Asia Minor. The tribute demanded by the Mohammedan Khalif was not one third of that which had been extorted by the emperor, and the provinces were unable to withstand the temptation of the advantages arising from a change of rulers.

rect taxation.

Romans.

Political effect of

In America, until the Civil War, indirect taxation had supplied the wants of the national government, and, so far as that purpose was involved, was not objected to in any part of the country; but very generally throughout the South, and to no small extent in the North itself, very serious objection was made to the heavy protective tariffs. burdens imposed in this manner for the avowed benefit of a single interest-the manufacturing. New England and Pennsylvania were the chief benefi ciaries of this dangerous system. The proffer of tariff enactments for the benefit of specified branches of industry had become as important an element in the deter mination of presidential elections as were the donatives to the legions of old in the exaltation of Roman emper

ors.

The cheerful manner in which the American people accepted every form of taxation during the tion of tax-burdens War must ever be regarded as a striking in

Cheerful assump

in America. cident in their history. Their zeal in this

respect outran the acts of the government. Not only did they bear these financial burdens with alacrity, but they dedicated large additional sums to secure the accomplishment of the purpose they had in view. There never has existed a more splendid example of organized benevolence than the "Sanitary Commission," and yet it was only one of many forms which voluntary contribution assumed.

for 1860.

For a clear comprehension of the financial condition The finance report and measures of the republic during the first two years of the war, it is necessary to present an abstract of the report of the Secretary of the Treasury for the year ending on the 30th of June, 1860. The American fiscal year commences on the 1st of July and ends on the 30th of the following June.

CHAP. LXIII.]

THE FINANCES IN 1861.

553

In that report the secretary, Mr. Cobb, stated that the aggregate means for the service of that year Means for the year. were more than eighty-one millions of dollars ($81,091,309 43).

the year.

following year.

The expenditures for that year were more than sevenExpenditures for ty-seven millions ($77,462,102 72). A balance therefore remained in the treasury of more than three and a half millions ($3,629,206 71). He farther estimated the means for the fiscal year next Estimates for the following, 1861, at more than eighty-four millions ($84,348,996 75), and the expendi ture at nearly the same amount ($84,103,105 17). He remarked, however, that in practice, for many years past, the sums drawn from the treasury during any year had been much less than the amounts estimated as required during such year, and, applying such deductions to the case before him, he came to the conclusion that there would probably remain in the treasury on the 1st of July, 1862, a balance of about eight millions of dollars.

During the year 1860 the country had been in a very State of the coun- prosperous condition. The crops had been try at that time. very abundant and prices very remunera tive. The exports of the preceding year had reached the enormous sum of four hundred millions of dollars ($400,122,296), the imports more than three hundred and sixty-two millions ($362,163,941), the revenue from customs having been fifty-three millions ($53,187,511 87). The exports of domestic produce for the current year, as far as they had been received, indicated an increase fully equal to that of preceding years, and probably surpass ing it, thus authorizing an estimate of increased revenue from that source.

But Mr. Cobb added that a threatened financial revulAn unfavorable fu- sion was impending, which threw uncertainty on the foregoing calculations. The causes

ture prospect.