1865] The War Debt 559 between the Revolution and the outbreak of the Civil War. 577-601. Reduction of the navy also went on apace. The men Maclay's were discharged and the ships were laid up at the govern- Navy, II, ment yards or were sold out of the service. For years the navy steadily declined in efficiency, until the government possessed no vessels able to cope with the modern ships of even the lesser American powers, as Chile. More recently, attention has again been paid to the building of serviceable ships of war, and a scheme of a naval militia has been devised and has begun to bear fruit. The Union soldiers and sailors returned to private life, Pensions. honored and respected by all. Mindful of its obligations, Congress, by law, has provided pensions for those veterans whose wounds or the inevitable hardships of military service incapacitated from earning a livelihood, and has also made provision for those dependent upon them. The expense of this pension system is now about one hundred and forty million dollars a year. The obligation of the American people to those who periled their lives and strength that the nation might live is unquestioned, but every effort should be made to see to it that the nation's money is justly distributed, for, it must be remembered, it is all raised by taxation that bears most heavily upon the working men and women. 377. The War Debt. At the close of the war the interest- The national bearing debt amounted to two thousand four hundred million debt. dollars, with an annual interest charge of one hundred and fifty millions. In addition, there was the non-interest-bearing debt to the amount of nearly five hundred millions more. This was in the form of paper money, issued directly by the government. The interest-bearing debt was in the form of bonds which had been floated at very high rates of interest and paid for in the government's own depreciated currency. The disbandment of the military and naval forces lessened the government's current expenditures, and enabled it at once to begin the extinguishment of the debt. Before The nation's credit. Resumption of specie payments, 1879. the end of 1865 thirty-five millions were paid off, and the process went steadily on. The internal revenue taxes bore heavily on industry, and, as soon as possible, they were either lowered or abolished. This, of course, reduced the income of the government and retarded the extinguishment of the debt. In 1869 Congress took up the matter in earnest. The old arguments of Washington's time were repeated. It was said that the obligations had not produced their face value to the government, and might be redeemed at less than par. But the necessity of protecting the government's credit prevailed, as it had in the earlier days (p. 288). Congress now passed an act "to restore the public credit." In this it pledged itself to redeem the public obligations in coin at their face value. The credit of the government at once improved and enabled it to replace the bonds bearing high rates of interest by those bearing much lower rates. This set free large sums with which to pay off bonds, and before 1880 more than eight hundred million dollars were devoted to this purpose. In 1890 the amount of the interest-bearing debt had decreased to a little over one thousand millions, and the total debt, including the paper money but minus the cash in the treasury, was about one thousand four hundred millions. The government also greatly increased its credit by resuming payments in gold (1879). Previously, in 1871, silver was demonetized. To many persons in the poorer sections of the country this seemed to be an act favoring the richer sections. In 1878 they secured the passage of a law requiring the coinage of silver dollars at the rate of two millions a month. Later on, this policy was extended, until the amount of silver has threatened to drive gold out of the country. 378. Lincoln's Southern Policy. When the war broke out, Lincoln, and the Republicans generally, had denied the possibility of a state seceding and leaving the Union. The people of the states which had passed secession ordinances were now beaten and crushed into subjection. Meantime, 1865] Lincoln's Southern Policy 561 tion of the seceded a new element had come into the question: the President, by virtue of the war power, had issued the Emancipation Proclamation which had certainly not abolished the institution of slavery in the states where it had a legal existence, although it had operated to free the negroes then in bondage in a large part of the South. To settle the slavery question forever, Congress had passed the Thirteenth Amendment, which was now (1865) before the state legislatures for adoption. What was the relation of the states which had at- Constitutempted to secede to the Union and to this amendment? tional posiWere “states " indestructible whether in or out of the Union? Or had insurrection reduced these states to the territorial states. status? If the former were the case, the consent of some of the states which had attempted to secede was necessary to the ratification of the amendment; if the latter were the case, might not Congress impose the amendment on the states as the price of readmission? The problem of reconstruction was still further complicated by the fact that the chief executive was no longer a man in whose judgment the Northern people had every confidence, or one who possessed an extraordinary faculty of dealing with men. On the contrary, the White House was now occupied by a Southern President man, who had not the slightest tact, and in whom the people Johnson. of the North had no confidence at all. This was due in great measure to faults in Johnson's character, rendered the more conspicuous because of their absence from Lincoln's. Johnson's motives were good, his patriotism unquestionable, and his judgment usually sound; but he obscured all those good points and ruined his influence with the people by coarse bitter invectives against all those with whom he could not agree. policy. In an address (April 11, 1865), Lincoln set forth his Lincoln's ideas on the subject of reconstruction. He thought that construct the "question whether the seceded states, so called, are in the Union or out of it" was "bad as the basis of controversy, and good for nothing at all-a mere pernicious abstraction." The states in question were "out of their proper |