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mand, their hopes were dashed and their irritation very great. Though they seemed to think that foreign mediation must be resorted to, they deprecated it at present from an apprehension that it would, if proposed now, strengthen their opponents.

Lord Lyons stated that he avoided giving any opinion on the subject, but listened attentively to their plans; that he thought he perceived a desire to put an end to the war, even at the risk of losing the Southern States altogether, but it was plain that it was not thought prudent to avow that desire.

pean intervention.

He related what he understood to be the plan of the who desire Euro- Democratic leaders, and also that of the gov ernment; that the latter would reject any offer of foreign intervention, and it might increase the virulence with which the war was prosecuted; that, if the Democratic party were in power, they would be disposed to accept foreign mediation if it appeared to be the only means of stopping hostilities. They would desire that the offer should come from the great powers of Europe conjointly, and, in particular, that as little prominence as possible should be given to Great Britain.

Lord Lyons therefore inferred that it would be vain to offer mediation to the government in its existing mood, but that there was a prospect that a change of mood might take place should military reverses occur. He concluded that the immediate and obvious interest of Great Britain, as well as of the rest of Europe, was, that peace and prosperity should be restored to America as soon as possible, the point chiefly worthy of consideration appearing to be whether separation or reunion would be the more likely to effect this object.

The misapprehension conveyed in this communication consisted in the undue weight which it gave to the



wishes of the Democratic leaders referred to. Whatever their former influence might have been, they were now without support. The Democratic party, as a mass, would have rejected such suggestions with indignation.



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 wor thy 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





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 public credit, and founding a national debt.

Not without curiosity may we compare some of the ar Its supposed polit. guments used by the American Secretary of ical advantages. 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 disregard 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 be yond what was possible by the restricted supplies of each


In America, every one could see how powerfully a widespread interest in a common institution slavery had acted in unifying the South. It was not discontentment with the government, for there was no cause of discontent, but apprehen sions, 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

Analogous effect of

the slave system and




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.



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 decompose 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.

rect taxation.

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 influence in accelerating the fall of the Roman empire than the policy of the Emperor Constantine, who replaced the the customs Experience of the system of indirect taxation


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.

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