shall be content to continue to their prisoners in our hands the humane treatment they have uniformly enjoyed." The report of Secretary Welles, of the Navy, exhibited an increase of 161 vessels and 1,175 guns during the year. When the vessels at present under construction shall be completed, the Navy will number 583 vessels, carrying 4,443 guns. Of these vessels 46 were ironclad steamers for coast service, and 29 for inland service; 203 side-wheel steamers; 193 screw-steamers, and 112 sailing vessels. The number of seamen in service on the 1st of July, including the Mississippi squadron, was about 34,000. The average monthly enlistments during the year was over 1,500. The number of vessels captured by the squadrons and reported by the Department on the 1st of November, was, exclusive of a large number destroyed on the Mississippi and other rivers, 1,045; of which 547 were schooners, 179 steamers, 131 sloops, 30 brigs, 26 barks, 15 ships, 117 yachts and small boats. The value of prizes sent to the courts for adjudication since the blockade was established, was estimated at not less than $15,000,000.

The financial report of Secretary Chase, a remarkably explicit and wellarranged document, exhibited in the statistics of the year a noticeable agrecment with his former calculations. The amount of debt had fallen short of the amount anticipated; while the receipts from all sources of income except internal revenue, exceeded the estimates. The debt on the 1st of July, 1863, was $1,098,793,181; its estimated increase it was now calculated would raise it on the 1st of July, 1864, to $1,686,956,641. It was further calculated that the whole debt will have reached on the 30th of June, 1865, the sum of $2,231,935,190. The leading ideas of the Secretary in the management of his Department were clearly stated by him. He had, he said, "kept four objects in view: moderate

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interest, general distribution, future controllability, and incidental utility." All of these had, in their several ways, been successfully attained. "Toward the accomplishment of the first object," said the Secretary, the nearest approach that seems possible has been made. The earliest negotiations were at the highest rates of interest; for it is a distinguishing characteristic of our financial history in this rebellion that the public credit, which was at the lowest ebb in the months which preceded its breaking out, has steadily improved in the midst of the terrible trials it has brought upon the country. The first loans were negotiated at seven and thirty-hundredths per cent.; the next at seven; the next at six; more recently large sums have been obtained at five and four; and the whole of the debt, which is represented by United States notes and fractional currency, bears, of course, no interest. The interest on the debt which exists in the form of treasury notes and certificates of indebtedness or of deposits, and is called the temporary debt, is paid in United States notes; while the interest on debt which exists in the form of bonds, and is called funded debt, is paid in coin-a discrimination which is intended to bring the payments of coin interest within moderate compass, and at the same time to offer special inducements to investments in bonds, in order to avoid a too rapid increase of circulating notes and consequent depreciation. The average rate of interest on the whole debt, without regard to the varying margin between coin and notes, was, on the 1st day of July, 1862, 4.36 per cent.; on the 1st day of January, 1863, 4.02 per cent. ; on the 1st day of July, 1863, 3.77 per cent.; and on the 1st day of October, 1863, 3.95 per cent. It will not escape observation, that the average rate is now increasing, and it is obvious that it must continue to increase with the increase of the proportion of the interest-bearing to the non

interest-bearing debt. And as the amount of the latter, consisting of United States notes and fractional currency, cannot be materially augmented without evil consequences of the most serious character, the rate of interest must increase with the debt, and approach continually the highest average. That must be greater or less, in proportion to the duration and cost of the war." "The general distribution of the debt had been accomplished by the universal diffusion of the United States notes and fractional currency, by the distribution of certificates among great numbers of contract creditors and temporary depositors, and by arrangements to popularize the loans by giving to the people everywhere opportunities to subscribe for bonds." Under this plan, nearly four hundred millions of dollars in fivetwenty bonds in denominations of fifty, one hundred, five hundred and one thousand dollars were distributed among all classes of the people. "The history of the world," adds the Secretary, "may be searched in vain for a parallel case of popular financial support to a national government.' The "controllability" of the debt had been provided for by limiting the periods and reserving certain times of payment of the bonds issued. "Incidental utility" had been secured by receiving large sums on temporary deposit and maintaining a fund for their reimbursement which had been used for the convenience of the public. The latter had been further provided for in the uniform currency secured by the issue of United States notes, by which the Government was also strengthened in the general distribution of the debt. As a further advantage in this direction, the Secretary urged anew his system of national banking, which we have already set forth, its great feature being "to make use of a portion of the national debt as security for the national currency." In providing for the nee is of the Treasury in the future, the Secretary

looked to interest-paying loans, thinking it "clearly inexpedient" to increase the present amount of United States notes or currency as tending inevitably to ruinous depreciations.

The evils of a depreciated currency were fully exhibited in the condition of the finances of the Confederate States. They were candidly admitted and set forth in the report of Secretary Memminger, and the annual message of Jefferson Davis to the Confederate Congress, in terms which were generally received as a virtual confession of the essential weakness of the rebellion and the prospect of its early collapse. President Davis reviewed the financial measures adopted for the support of the confederacy from the beginning of the war. Both he and Secretary Memminger admitted that at that time they even were far from anticipating the extent and duration of the conflict. They had relied upon tariff duties as the least onerous and most politic method of raising a revenue. The blockade had rendered this ineffective, and the magnitude of the war had created unprecedented demands. To support the credit of the bonds into which it was expected that the currency would be converted, a war tax had been imposed which had been received with so much disfavor that in only three of the States, South Carolina, Mississippi and Texas, was it actually collected from the people. About two-thirds of the entire taxable property of the Confederate States consisted of lands and slaves, which under a provision of the Constitution could not be reached until a census had been taken. They had thus far been exempt from taxation. An income tax and a tax in kind on the produce of the soil and licenses on business occupations and professions had been devised to supply the requisite resources. They could not however readily be made available. "In this state of affairs, superinduced almost unavoidably by the

fortunes of the war in which we are engaged," says Jefferson Davis, in summing up the result, "the issue of treasury notes have been increased until the currency in circulation amounts to more than $600,000,000, or, more than threefold the amount required by the business of the country." As previous attempts to avoid this ruinous increase by offering inducements to voluntary funding had been unsuccessful, President Davis now declared that "the evil had now reached such a magnitude as to permit no other remedy than the compulsory reduction of the currency to the amount required by the business of the country." This, it was proposed, should be effected by substituting for the outstanding notes interest-bearing bonds, which the holders of the currency would be obliged to take in exchange to render their property of any possible value. In the words of Mr. Memminger, "the Government finds itself unable to comply with the letter of its engagement. It endeavors, then, to comply with its spirit. It tenders the creditor payment of its debt before it is due in a security of greater value. It gives him time to accept the payment, and if he should prefer to retain the obligation, it allows the alternative upon the simple condition that he shall forego the privilege of demanding payment till after the war." The consequences of the non-acceptance of this offer were thus described by the Secretary: "The continuance of the notes as a circulating medium to their present extent involves the ruin of public and private credit, and will deprive the Government of the means of defending the lives and property of its citizens. If the currency remains in its present expanded state, no measure of relief can be made effectual. Prices must advance, and the means of the Government to pay these prices must daily lose efficiency. Taxes become fruitless, by reason of the depreciation of the money. The army can neither be paid, clothed. nor fed; arms

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and munitions of war can no longer be supplied; the officers of the Government cannot be supported, and the country must succumb." The entire debt of the confederacy was stated by the Secretary in round numbers at $1,000,000,000; of which $800,000,000 are treasury notes, with a prospective increase at the end of 1864 to about $2,500,000,000.

In closing the narrative of the year we have to mention various military events in several of the departments in addition to the more important campaigns and battles of which an account has been already given. The army of the Potomac, after General Meade's pursuit of Lee into Virginia, subsequent to the battle of Gettysburg, had settled down in front of the enemy on the line of the Rapidan. This position was held till October when General Lee setting his forces in motion northwardly from Madison Court House commenced a flank movement which seriously threatened to cut the Union army off from its communications with Washington. General Meade carefully watching the enemy, early ascertained their intentions by the cavalry reconnoissances which he sent out; promptly fell back from the Rap idan to the Rappahannock, and thence by a rapid forced march to the line of Bull Run and the old military position at Centreville. The military incidents of the movements of both armies are thus described by a correspondent: “On the night of Monday the 12th, when the retreat was determined on, the position. of the army was as follows: the Third Corps at Freeman's Ford; the Second, Fifth and Sixth, near Brandy Station the First at Kelly's Ford; Burford's cavalry at Brandy Station; Gregg at Fayetteville; Kilpatrick toward Hartwood. From Madison Court House Lee had pushed directly north to Sperryville; and on Monday night, while we were at the position just indicated, the rebels were advancing across the fords