1861] The National Banking System 491 debt of the face value of two thousand eight hundred and fifty millions of dollars, or, including the outstanding paper currency or greenbacks, over three billion dollars. 341. The National Banking System. As the contest National deepened, it became more and more difficult to sell these banks. bonds, no matter what the rate of interest or the amount of depreciation of the currency which could be paid for them; the people had so little confidence in the stability of the government that they were not willing to lend money on any terms. Subscriptions to bonds fell off and a new expedient to dispose of them was invented. This was the national banking system, based on the New York state banking system. The first law on the subject was passed in February, 1863, and provided that any five or more persons with a minimum capital of one hundred thousand dollars in very small places even less - might organize a national bank on depositing with the government United States bonds to the amount of one third of their capital. In exchange for these bonds, the government issued to the depositing bank notes redeemable in greenbacks to the amount of ninety per cent of the value of the bonds deposited. A market for the bonds of the United States would be thus obtained, and a stable currency provided for the country. At first the response to this offer was not encouraging, but in March, 1864, Congress laid a tax of ten per cent on the circulation of the state banks, and they at once complied with the provisions of the act of 1863 and became national banks. 342. Increased Taxation. Irredeemable paper currency Taxation. and bonds, even when helped by the national bank act, did not meet the needs of the government. In 1862 the source of revenue which had been discarded by Jefferson was again brought into use: by the Internal Revenue Act of that year Congress established a comprehensive scheme of excise taxation: specific taxes were imposed on the production of iron and steel, coal oil, paper, leather, and countless other manufactured articles, and a general ad Southern finances, 1861-65. valorem tax on all manufactures not included in this category; licenses were required in many callings, and a general income tax was imposed; and steamboat, railroad, and express companies were also required to pay taxes on their gross receipts. Such a system of heavy taxes on goods manufactured in the country would have destroyed the protective nature of the tariff; it was necessary, therefore, to raise the duties levied on imports correspondingly. In CONFEDERATE STATES ALMANAC FOR THE YEAR OF OUR LORD 1864 BEING BISSEXTILE OR LEAP YEAR AND THE 4TH YEAR CALCULATIONS MADE AT PUBLISHED FOR THE TRADE BY...... BURKE, BOYKIN & CO., J. MCPHERSON & CO., 1864 the internal revenue system was enormously extended, and in connection with it another tariff act was passed which raised the duties on the protected articles out of all proportion to the new internal revenue taxes. The last act was passed after only five days' discussion, owing to the pressure of urgent need. It substantially remained in force for twenty years, although the high internal taxes which justified the high rates on protected goods were, meantime, largely lowered or entirely abolished. 343. Southern Finances, 1861-65.-The ever-strengthening flood of industry in the North made it possible to raise large amounts by taxation, and, in combination with the success of the Northern armies after 1863, gave a basis for credit upon which to float large issues of bonds. The South had no similar resources. There was slight commercial activity in the seceded states during peaceful times, and almost no industry save the cultivation and exportation of large crops of cotton and tobacco. The Northern blockade of Southern ports effectually stopped this export trade, and put an end to the inflow of goods needed in everyday life. 1861] Southern Finances 493 The Southern government was unable to raise any large amounts of revenue by taxation; it necessarily had resort to loans and to irredeemable paper money. The bonds were issued at ruinous rates of interest; but no rates of interest could procure buyers in a country where there was no capital seeking investment. This source of income was soon exhausted, and the Confederate government began the issue of treasury notes, redeemable six months "after the close of the war." Before long, as the Union armies seized state after state, these notes depreciated. Then the Confederate Congress authorized the seizure of food for the army at rates to be fixed every sixty days; these supplies were paid for in bonds or treasury notes. As the war progressed, the depreciation of the treasury notes made them almost worthless. Wages and salaries rose slowly, but not at all in proportion to the rise in the prices of food and clothing. The sufferings of those Southerners who neither lived on their plantations nor served in the armies are almost beyond description. Nothing contributed more to bring about this wrecking of the life of the Southern people than the closure of their ports by the Northern cruisers. Dodge's 344. The Blockade. - On April 19, 1861, President Lin- The coln proclaimed a blockade of the ports of the seceded blockade. states. At the moment, there were few vessels available for View, the patrol of the three thousand miles of Confederate sea- ch. viii. board. Before long, gunboats were improvised from coasting steamers, and even ferryboats were pressed into the service, while new war ships were built as rapidly as Northern shipyards could turn them out. Soon, the federal forces occupied important seaports, as New Orleans, and long stretches of coast, as the sounds of North Carolina. Month Mobile. by month the blockade became stricter and stricter, until Maclay's Navy, II, finally, after the fall of Mobile in 1864, Wilmington, North 445-504. Carolina, was the only port accessible in any degree to blockade runners. These were mostly British vessels, owned and manned by British men. The blockade runners took on board their cargoes at Nassau, New Providence, one of the Effects of the blockade on the South. Bahama Islands. The goods were brought to that place from Great Britain in ordinary merchant vessels. The story of many of these blockading vessels and of their fearless commanders is most thrilling, and shows to what extent men will peril their lives for gain. As the blockade became harder and harder to evade, the profits of the successful blockade runner grew larger. In the last year of the war, insurance on the vessels rose nine hundred per cent over the rates of 1861, and captains' wages increased from thirty pounds to one thousand pounds sterling per month. Blockade running, however romantic its story may be, was a purely business venture. Rates of freight were enormous, one hundred pounds sterling per ton. Of course useful, but bulky and cheap, goods could not be carried at this figure. The blockade runner's cargo consisted of small expensive articles, whose importation worked harm to the Confederacy. The Southern government endeavored to prevent this by forbidding the importation of luxuries, by fixing a maximum price on certain articles, and by reserving for its own use one half of the freight space on every blockade runner, at less than the ruling rates of freight. These measures reduced the profits of blockade running, decreased the number of vessels in that dangerous business, and thus greatly assisted the Northern government in its endeavor to cut off the people of the Southern states from intercourse with the outer world. A few examples will serve to show how well the Union government succeeded in that endeavor. In 1860 two hundred million dollars' worth of cotton was exported; in 1863 four million dollars' worth; toward the end of 1864, a pound of Sea Island cotton could be bought for four cents at Charleston and sold for two dollars and fifty cents at Liverpool. A ton of salt could be bought at Nassau for seven dollars and fifty cents, and sold at Richmond for seventeen hundred dollars in gold; a ton of coffee cost two hundred and forty dollars at Nassau, and five thousand five hundred dollars in gold at Richmond; finally, a bottle of brandy could be obtained at Liverpool 1861] Characteristics of the Conflict 495 for seventy-five cents, and sold for twenty-five dollars in gold at Richmond. of the theater of war. 345. Characteristics of the Conflict. The war was mainly Topography defensive on the side of the seceders, offensive on that of the Union soldiers. It is true that Southern armies occasionally invaded the loyal states; but they never advanced far, and were soon obliged to retire. The Northerners, on the other hand, undertook the conquest of the South and therefore were the attackers. Most writers on the art of war agree that defensive is easier than offensive warfare. Other writers are inclined to doubt the accuracy of this view, or, at all events, to maintain that the matter has been greatly overstated. They argue, for instance, that the invader can to a great extent choose his own time and place; he also can concentrate, while the defender is obliged to maintain many posts and be prepared to dispute several roads and passes. by which the attacker can penetrate into the heart of the attacked country. In the Civil War, whatever the case may have been as to other wars, the advantage lay very greatly on the side of the defenders. The Alleghany Mountains and the Mississippi River cut the theater of war into three great sections; deep and numerous streams flowing eastward and westward from the Alleghanies constantly impeded the march of the Northern armies. On the other hand, the conquest of the states between the Alleghanies and the Mississippi would have been vastly more difficult had it not been for the water communication afforded by many of these streams, which was utilized to the utmost. Overland marching, however, was very difficult in the South: the railroads were few in number, but they were always repaired and used to the fullest extent. The land itself was thinly settled, and frequently covered by vast forests through which led poor "dirt" roads, impassable for artillery and army trains in wet weather. These stretches of wilderness were penetrated by numberless unused roads known only to the few inhabitants of the vicinity, whose sympathies were almost entirely on the side of the Southerners. These |