public meeting was summoned, at which it was resolved that the terms offered by President Lincoln were an insult to the Southern people. A few days afterward another meeting was held, in which it was resolved that the Confederates would never lay down their arms until they had achieved their independence.

governments

Public policy is too often guided by considerations of interest. So long as there was a hope that the Alienation of foreign United States could be divided and neutralthe Confederacy. ized by the fragments being set in antagonism, the Confederacy had warm foreign friends. Its Presi dent was declared to be the founder of a new nation. That change of sentiment which the United States had vainly tried to bring about by an appeal to the principles of national morality at length occurred, but not until it was clear that the military affairs of the Confederacy were in a hopeless condition. When Mr. Davis plaintively exclaimed, "We have now no friends in Europe," he recognized the truth.

An incident had occurred well calculated to close the friendly relations between the British government and the Confederacy. We have already had repeated occasion to remark how indiscreet and unfortunate President Davis was in many of his public communications. In this case he spoke with more than his accustomed bitterness.

On the 1st of April, 1864, Lord Lyons addressed to Mr. Protest of the Brit- Davis a formal protest and remonstrance of ish government. her majesty's government against the efforts

of the authorities of the "so-called Confederate States" to build war vessels within her majesty's dominions to be employed against the government of the United States.

Mr. Harrison, replying to this by direction of President Davis, said

"that it would be inconsistent with the dignity of the position which Mr. Davis fills as chief magistrate of a nation comprising a population of more than twelve millions, occu

Reply of Mr. Davis to that protest.

pying a territory many times larger than the United Kingdom, and possessing resources unsurpassed by those of any other country on the face of the globe, to allow the attempt of Earl Russell to ignore the actual existence of the Confederate States, and to contumeliously style them 'so-called,' to pass without a protest and a remonstrance. The President, therefore, does protest and remonstrate against this studied insult; and he instructs me to say that, in future, any document in which it may be repeated will be returned unanswered and unnoticed.

He complains of

government

"With respect to the subject of the extract from Earl Russell's dispatch, the President desires me to state that the the course of that plea of neutrality, which is used to sustain the sinister course of her majesty's present government against the government of the Confederate States, is so clearly contradicted by their actions, that it is regarded by the world, not even excepting the United States, as a mere cover for actual hostility, and the President can not but feel that this is a just view of it. Were, indeed, her majesty's government sincere in a desire and determination to maintain neutrality, the President could not but feel that they would neither be just nor gallant to allow the subjugation of a nation like the Confederate States by such a barbarous, despotic race as is now attempting it. He can not but feel, with the history and traditions. of the Anglo-Saxon race before him, that, under a government faithfully representing the people of Great Britain, the whole weight and power of that nation would be unhesitatingly thrown into the scale in favor of the principles of free government, on which these states were originally formed, and for which alone the Confederate States are now struggling. He can not but feel that, with such a government, and with the plea of neutrality urged upon the people as it now is, no such pitiful spectacle could be witnessed as is now manifested by her majesty's present government in the persistent persecution of the Confederate States at the beck and bidding of officers of the United States, while a prime minister mocks and insults the intelligence of a House of Commons and of the world by excusing as being unjust to the permission to allow British subjects to go to the the Confederacy. United States to fight against us by the paltry subterfuge that it was the great demand for labor and the high rate of wages that were taking them thither. He can not but feel that a neutrality most cunningly, audaciously, fawningly, and insolently sought and urged, begged and demanded by one belligerent and repudiated by the other, must be seen by all impartial men to be a mere pretext for aiding the cause of one at the expense of the other, while pretending to be impartial; to be, in short, but a cover for treacherous, malignant hostility.

"As for the specious arguments on the subject of the rams advanced by Earl Russell, the President desires me to state that he is content to leave the world and history to pronounce judgment upon this attempt to heap injury upon insult by declaring that her majesty's government and law officers are satisfied of the questions involved, while those questions are still before the highest legal tribunal of the kingdom, composed of members of the government and the highest law officers of the crown, for their decision. The President himself will not condescend to notice them."

CHAPTER LXXXVI.

THE FINANCES OF THE REPUBLIC FROM THE BEGINNING OF THE

FISCAL YEAR 1863 TO THE CLOSE OF THE WAR.

The financial condition of the Republic up to the resignation of Mr. Chase.

The financial condition up to the resignation of Mr. Fessenden.

Mr. McCulloch's report for 1865.

The national debt at the end of the war was nearly twenty-seven hundred millions of dollars.

Condition of the

ginning of the fis

cal year 1863.

Ar the beginning of the fiscal year 1863 all demands on the Treasury had been discharged, and there Treasury at the be- remained a balance to the credit of the treas urer of thirteen millions ($13,043,546 81), as already mentioned, vol. ii., p. 570. The military reverses of the summer of 1862, and other causes, gave rise to a pressure on the Treasury, so that on the first day of the meeting of Congress there were unpaid requisitions to the amount of more than forty-six millions.

Provision for un

To provide for these requisitions and for current demands, Congress, on the 17th of January, 1863, paid requisitions. authorized an additional issue of United States notes to the amount of one hundred millions.

Repeal of restric

twenties.

On the last day of the session (March 3, 1863), the act to provide ways and means became law. In tions on the five- addition to various provisions for loans, it contained clauses repealing the restrictions af fecting the negotiation of the five-twenties, and thus dis engaged that loan from the embarrassments which had previously rendered it almost unavailable.

A week earlier, on the 25th of February, an act even more important to the credit of the government-the act to provide a national currency through a national banking system, had

The national banking system established.

received the sanction of Congress and of the President. The salutary effect of these two great acts was soon conspicuous. They were followed by an immediate revival of public credit. Success altogether beyond anticipation crowned the efforts to distribute the five-twenty loan in all parts of the country, and every other measure adopted for replenishing the Treasury succeeded equally well. The consequence was, that within two months after the adjourn ment of Congress the whole mass of suspended requisitions had been satisfied, all current demands promptly met, and full provision made for the payment of the army and navy. During the remainder of the fiscal year no embarrassments attended the administration of the finances except those inseparable from vast expenditures.

Receipts during the year.

The receipts during the year from all sources, including loans and the balance in the Treasury at its commencement, were about nine hundred and one millions ($901,125,674 86), and the aggregate disbursements about eight hundred and ninety-six millions ($895,796,630 65), leaving a balance on the 1st of July of $5,329,044 21. Of the receipts, there were, derived from customs, $69,059,642 40; from internal revenue, $37,640,787 95; from direct tax, $1,485,103 61; from lands, $167,617 17; from miscellaneous sources, $3,046,615 35; and from loans, $776,682,361 57; making, with the bal auce of last year, the aggregate $901,125,674 86.

Of the disbursements, there were, for the civil service, Disbursements dur- $23,253,922 08; for pensions and Indians, ing the year. $4,216,520 79; for interest on public debt, $24,729,846 51; for the War Department, $599,298,600 83; for the Navy Department, $63,211,105 27; for payment of funded and temporary debt, $181,086,635 07; making the aggregate $895,796,630 65, and leaving a balance of $5,329,044 21.

But sums borrowed during the year, and applied during the same time in payment of debts, affect only nominally