Comparing the income realized with that expected from Custom-house duties the Secretary found a considerable deficiency. He had calculated in the pre the employment of the force at hand had The report of the Secretary of the embraced three distinct lines of naval Treasury-delayed for a short time beoperations—namely, the blockade, the yond the opening of Congress-was anxfitting out of special expeditions, and iously looked for. In his previous rethe pursuit of piratical cruisers on the port, at the July session, he had calcuhigh seas. The first required "the clos-lated from the estimates of the several ing of all the insurgent ports along the departments, upon an expenditure for coast line of nearly 3,000 miles, in the the year beginning June, 1861, of about form and under the exacting regulations three hundred and eighteen and a half of an international blockade, including millions, eighty millions of which he exthe naval occupation and defence of the pected to receive from the income of the Potomac river, from its mouth to the year and the remainder by a series of Federal Capital, as the boundary line loans. between Maryland and Virginia, and also the main commercial avenue to the principal base of our military operations." The difficulty of guarding the shallow waters of the coast, with the in-vious June upon an income for the year ner channels of communication, and the energy of the Confederates in endeavoring to supply their wants from abroad, were admitted. The task, however, had been faithfully pursued and with no inconsiderable degree of success, one hundred and fifty-three vessels having been captured sailing under various flags, most of them while attempting to violate the blockade. Something was expected from the "stone fleet," or vessels laden with stone, sunk at Ocracoke Inlet and off the harbor of Charleston, as "the most economical and satisfactory method of interdicting commerce at those points." The command of Flag-Officer Stringham on the Atlantic Coast had been divided. Captain Louis M. Goldsborough having been appointed to guard the shores of Virginia and North Carolina, while the residue of the Southern Coast was intrusted to Captain Dupont. Captain Mc-ury notes recommended in the SecreKean had succeeded Captain Mervine in the command of the Gulf Squadron. Due honor was paid the achievements at Hatteras and Port Royal; Captain Wilkes was handsomely complimented for his seizure of the Ambassadors, and generally the "intrepidity, courage and loyalty of our naval officers, soldiers, and marines" were pronounced "never more marked than in this rebellion." from this source of fifty-seven millions. The returns for the first quarter showed that the aggregate for the year would not greatly exceed thirty-two millions, The duties imposed by Congress had been lighter than he had recommended, and he found "another and perhaps more potential cause of reduced receipts in the changed circumstances of the country, which have proved, even beyond anticipation, unfavorable to foreign commerce." More than half a million was to be deducted from the estimate of the land receipts. Including the direct tax imposed upon the States of twenty millions, the aggregate of revenue from all sources for the year might be estimated at about fifty-four and a half millions, about twenty-five and a half millions less than the estimate of July. The system of loans and issue of Treas tary's previous report, or adopted by Congress, had thus far yielded to the Government about one hundred and ninety-seven and a quarter millions of dollars, the loans having been chiefly negotiated through the banking institutions of the Atlantic cities without the contemplated appeal to European capitalists. The calculations for the year * Ante. vol. i. p. 361–3. had been originally made on an estimate demands of the nation during the war, of a quarter of a million of volunteers new loans would of course be required. in the field and a regular army of about fifty thousand; but as this number had been so greatly increased by the order of Congress, additional appropriations were of course necessary to meet the expenditures. Two hundred millions were asked for to meet the deficiency making the outlay for the year, from June, 1861, to June, 1862, about five hundred and forty-three and a half millions. In endeavoring to solve the problem of "obtaining the necessary means without unnecessary cost," the Secretary, looking at the vast aggregate paper currency of the country, devised a plan for making this, which was in reality "a loan without interest from the people to the banks," directly available to the wants of the national government. In fact he was disposed to consider the issue of bank notes by local institutions under To meet or facilitate the collection of State laws as prohibited by the Constituthis sum the Secretary enjoined re- tion; while the authority certainly betrenchment and reform with a rigorous longed to Congress "under its powers to system of responsibility in the national lay taxes, to regulate commerce, and to expenditure, justly representing that any regulate the value of coin, to control the saving effected in this way would be credit circulation which enters so largely "worth more in beneficial effect and in- into the transactions of commerce and fluence than the easiest acquisition of affects in so many ways the value of equal sums even without cost or liability coin." There were two methods, it was to repayment." He renewed his pre- urged, by which the end proposed might vious suggestion that the property of be attained,-one by the withdrawal of rebels both in the loyal and insurgent the notes of private corporations and States should be made to pay, in part at the issue in their stead of United States least, the cost of the rebellion. "Rights notes, payable in coin on demand; the to services," he added, "under State other contemplating under State other contemplating "the preparation laws, must, of necessity, form an excep- and delivery, to institutions and association to any rule of confiscation. Per- tions, of notes prepared for circulation sons held by rebels under such laws, to under national direction, and to be seservice as slaves, may, however, be just-cured as to prompt convertibility into coin ly liberated from their constraint and by the pledge of United States bonds made more valuable in various employ- and other needful regulations." The sements, through voluntary and compen-cond plan was recommended as the more sated service, than if confiscated as advantageous. It would provide a sound, subjects of property." Provision by direct taxation to the amount of fifty millions, in addition to forty millions expected from customs, was recommended to supply an adequate sum for ordinary expenditures, the payment of interest on the public debt, and for a sinking fund for the gradual extinction of the principal. This would require special taxes on stills, distilled liquors, tobacco, bank notes, carriages, legacies, paper evidences of debt, and instruments for conveyance of property and other like subjects of taxation. For the rapidly increasing convenient, uniform currency, in place of a very defective one in many instances, and it would promote the security of the Union by the distribution of the national stocks throughout the country. The notes thus issued should be receivable for all government dues except customs, which would be still payable in gold. This scheme, if carried out, would contribute at once one hundred and fifty millions, the estimated amount of bank circulation in the loyal States, to the national relief. Included in Mr. Chase's report was a THE CONFEDERATE ARMY. calculation of the probable wants of the fiscal year ending in June, 1863, at about four hundred and seventy-five millions, to provide for which, with the supply of the deficiencies of the previous year, would necessitate an aggregate of $655,000,000 in loans. On the first day of July, 1860, the public debt was less than sixty-five millions; on the first day of July, 1863, supposing the war to continue, it was estimated it would reach nearly nine hundred millions. "It is earnestly to be hoped, however," was the language of the report," and in the judgment of the Secretary, not without sufficient grounds, that the present war may be brought to an auspicious termination before midsummer. In that event the provision of revenue by taxation, which he has recommended, will amply suffice for all financial exigencies, without resort to additional loans; and not only so, but will enable the government to begin at once the reduction of the existing debt." Such was the expectation of Secretary Chase in regard to the suppression of the Rebellion in the month of December, 1861. 199 under Generals Lee and Floyd, thirty thousand. In Missouri, under Price and McCulloch. sixty thousand. In Kentucky and Tennessee, under General Albert S. Johnston, with his headquarters at Nashville, an aggregate of one hundred and twenty-five thousand. This included General S. B. Buckner's command at Bowling Green in Kentucky, of twenty thousand, and that of Generals Polk and Pillow at Columbus and Hickman of fifteen thousand. The defences of the lower Mississippi, including New Orleans, were maintained by some sixty thousand. To Charleston, Savannah, Mobile, and Galveston, were assigned some forty thousand." In the absence of official returns, not accessible at the North at the time, such an estimate, of course, could only be conjectural. Accepting it, however, as a rough calculation, subject to correction, there would probably remain a force sufficient, added to that reported by Secretary Cameron, to raise the aggregate of men enlisted or in arms in all parts of the country to the number of more than a million. What use could be made of We have seen the returns of the this immense host, the equipment of Union army, by the Secretary of War, which had largely drawn upon the workmade to exceed six hundred thousand shops of Europe, and supplied for the men, from which, however, a liberal de- last three months the chief manufacturduction was to be made to reduce the ing industry at home? Would it be number to the force ready for service in concentrated at various points, on the the field. An estimate made at this time Potomac, in Kentucky, on the Mississipby a Northern journal, with a show of pi, the Gulf of Mexico, and meet in particularity, set forth the Confederate deadly conflict on the soil of the Southforce in the field at nearly five hundred ern States, or would it be held spellthousand. To the Department of the Po-bound in mutual defiance till the sober tomac, under the command of General Jo- second thought of the insurgents would seph E. Johnston, with his headquarters prevail, arrest the impending desolation, at Manassas Junction, Major-General and bring both portions of the nation Gustavus W. Smith commanding the together in fraternal unity under the old left-wing, and General Beauregard the flag? right, were assigned one hundred and Such a result would at any moment. fifty thousand men. To the Department have been welcomed by the President, of the Chesapeake, with General Huger the Cabinet, the Northern States, and in command at Norfolk and Portsmouth, the whole civilized world; but the deand General Magruder at Yorktown, cision of the matter rested with the inforty thousand. In Western Virginia, *New York Herald, December 7, 1861. and peace under the same government. Of a similar tone, stronger, if possible, in its contempt of the North, was the surgents, and they had shown no disposition to bring about so acceptable an event. Their leaders had resolved upon Independence, and they would fight for it to the end. The voice of the Confederate Government was clear enough on this point, and there was no lack of zeal in the State authorities to second the resolution. Governor Letcher, of Virginia, a State which had most to lose by the continuance of the conflict, may speak for the rest. In his message to the legislature of his State at the time of which we write, the beginning of December, he reviewed the condition of affairs. With a coolness and imperturbability belong-language held in South Carolina the preing to the practiced politician, he spoke vious month to the legislature by Govas the representative of a cause which ernor Pickens. "As far as the Northhad only to be asserted to be successful. ern States are concerned, their GovernTaking for granted the proposition that ment is hopelessly gone, and if we fail, it was the intention of the Government with all our conservative elements to at Washington to subjugate the South, save us, then, indeed, there will be no and coerce its people to remain in a hope for an independent and free repubUnion, "the great aims and objects of lic on this continent, and the public mind which," he asserted, "had failed," he will despondingly turn to the stronger maintained that the struggle which had and more fixed forms of the Old World. been begun should not terminate "until Clouds and darkness may rest upon our our enemies shall recognize fully and beloved country, but if we are true to unconditionally the independence of the ourselves and just to others, looking Southern Confederacy." Whatever men with confiding faith up to that Provior money should be wanted, he promised, dence who presides over the destinies of should be cheerfully furnished. "There men and governments, we will surely can be and there will be no compromise. triumph and come out of our trials a We can never again live in harmony wiser and a better people." CHAPTER LI. MILITARY OPERATIONS IN KENTUCKY-BATTLE OF MILL SPRING, JANUARY 19, 1862. On the 9th of November, by a new ar- | Tennessee, while the portion of Kentucky rangement at Washington of the military Districts of the West, Brigadier-General Don Carlos Buell was placed in charge of the Department of the Ohio, consisting of the States of Ohio, Michigan, Indiana, the portion of Kentucky east of the Cumberland River, and the State of west of the Cumberland was included in the Department of the Missouri assigned to General Halleck. General Buell, a native of Ohio, about forty-two years of age, was a graduate of West Point of 1841, appointed to the 3d Infantry, and a few years after distinguish ZOLLICOFFER'S PROCLAMATION. ed himself in the war with Mexico, where he had risen from 1st Lieutenant to the brevet rank of Major. He was in the engagements at Monterey, Cerro Gordo, Contreras, and was wounded at Churubusco. He subsequently filled the office of Assistant Adjutant-General. He had been actively engaged in the organization of the army, and in command on the Potomac since the breaking out of the Rebellion. His appointment as the successor of General Sherman, was hailed as the promise of an energetic and decisive campaign. 201 eral Hardee from Southeastern Missouri, when that officer superseded General Buckner in his command. General Polk also received some additions to his force, already large, while General Zollicoffer, having secured the pass at Cumberland Gap, was taking up an important position in the midst of the rich mineral and agricultural district on the upper waters of the Cumberland. On the 16th of December, from his camp at Birch Grove, he addressed a Proclamation to the People of Southeastern Kentucky, assuring them that he came not to war upon KenThe inevitable moment of action was tuckians, but to repel "those armed Northnow approaching. The appointment in ern hordes who were attempting the subOctober of the Confederate general, jugation of a sister Southern State." Aloert S. Johnston, to the Department of Adroitly turning the evils he himself the Mississippi, had infused new vigor was creating to the charge of the supinto the operations of the rebels on the porters of the Government, whose whole Kentucky frontier. This officer was a object was the preservation of the peacenative of Kentucky, now in his fifty-ful relations he was seeking to destroy, ninth year. He had been educated at West Point, and was engaged in the Black Hawk war, acting as AdjutantGeneral when President Lincoln was a Captain of Volunteers. He resigned his commission at the close of the war, and resided first in Missouri, afterwards in Texas. On the war breaking out in that region he entered again into military service, and became Secretary of War. When the country was annexed, and war with Mexico followed, he raised a partisan troop and accompanied General Taylor to Monterey. When peace came he received from the Government the office of Paymaster. Jefferson Davis when Secretary of War made him Colonel of the 2d Cavalry, and he was subsequently appointed to the command of the Southwestern Military District. President Buchanan placed him at the head of the grand military expedition to Utah, from which he returned to join the Rebellion. Calling together considerable bodies of troops from various quarters, General Johnston now strengthened the force at Bowling Green by the division of Gen this ruthless invader, whose path was marked by devastation, proclaimed that he had come to "open again the rivers, restore the ancient markets and the accustomed value of lands and labor." With a consciousness of past misdeeds, he admitted that his force had been represented as murderers and outlaws. We have come to convince you," he said, "that we truly respect the laws, revere justice and mean to give security to your personal and property rights." With a liberal employment of the maxim that all is fair in war, in other words, with a total disregard of truth, he asserted that the openly avowed object on the part of the North was to set the slaves at liberty, while "the ensuing step will be to put arms in their hands. and give them political and social equality with yourselves. We saw these things," he added, "in the beginning, and are offering our heart's blood to avert those dreadful evils which we saw the Abolition leaders had deliberately planned for the South. must have the ballot or none; all men must have the bullet or none,' said Mr. 'All men |