the expenditure? Is not that exclusively the concern of the President and of Congress? I suppose I ought to shut my eyes and suppress my feelings, but really it is a little hard, when one thinks one sees how much might be economized of action, power, and resources, not to say something of what he thinks and feels.”

The thing to which almost above all others I have wished to lead the thinking of my gentle reader, is, that the whole public life of the man, who wrote those words to General Hooker, may be said to have led to or from the bloody, indescribably ravaging, and unutterably desolating struggle, in which the country, at that time, found the object of its thoughts and feelings, day and night, and in all the moods in which anxiety and pain may be discerned, in spite of every endeavor to conceal them.

Yes! the whole public life of Chase led to or from that fearful struggle. I have written this whole work, indeed, with reference to that consideration.

In a letter written to Mr. Trowbridge, Secretary Chase related in this fashion:

"I was indebted for my success, in great part, to the confidence and support, most generously given me, of a number of distinguished citizens having large influence in financial circles, and I endeavored to merit what they gave by frankness, fairness, and firmness.

→ Congress assembled on the 4th of July, 1861, and soon afterward passed an act to authorize a national loan, and for other purposes. Under this act, and acts amending it, I took measures to secure the funds necessary to carry on the war.

With this object, I invited representatives from the banking institutions of New York, Boston, and Philadelphia. to meet me in New York, and they promptly responded to my invitation.

"Our conferences were full and unreserved. I explained to them the situation of the country; the large, inevitable expenditure for the suppression of the rebellion; my hopes of vigorous prosecution of all measures necessary to that great end; my wishes for economy; my views of the inexpediency of high rates of interest. which might suggest a possibility of future inability to pay it. They, on their side, explained the position of the banks; their disposition to sustain the government; and their inability to take more bonds than their disposable capital allowed, without a prospect of an early sale and distribution. They thought my ideas as to interest rather too stringent; and, on some other points, they thought me rather illiberal— not sufficiently considerate, perhaps, of the interests they represented. I was obliged to be very firm, and to say, 'Gentlemen, I am sure you wish to do all you can. I hope you will find that you can take the loans required on terms which can be admitted. If not, I must go back to Washington and issue notes for circulation; for, gentlemen, the war must go on until this rebellion is put down, if we have

to put out paper until it takes a thousand dollars to buy a breakfast.'

"The result of the conference was an agreement by the banks of three cities to unite as associates, and advance to the government fifty millions of dollars at once, or as wanted, on the secretary's drafts in favor of the assistant treasurers; in consideration of which, I, on my part, agreed to appeal to the people for subscriptions to a national loan, on three years' notes bearing 7.30 per cent. interest, and convertible into twenty-year bonds bearing six per cent.; and to pay over the proceeds of the subscriptions to the banks, in satisfaction of their advances, so far as they would go, and to deliver to them 7.30 notes for any deficiency.

"This agreement was faithfully fulfilled. I opened books of subscription to the national loan in all parts of the loyal States, and the people responded with alacrity. About forty-five millions were thus subscribed and paid to the banks, and the remainer was made good by the delivery of the promised seven-thirties.

"This operation enabled the banks to make a second advance of fifty millions on nearly the same terms. It had become evident that the popular subscription would not continue as large and prompt as at first, and the inconveniences of its management by the department had proved to be very great. The accounts of the subscription agents were therefore closed, and the notes for the second loan were delivered directly to the bankers who distributed them, as best suited themselves. This simplified the transaction to the treasury; and the arrangement, though not quite so advantageous to the banks as the first, was every way more convenient.

"By these two loans I obtained one hundred millions of dollars, paying under the immediate exigency a rate of interest only one and three-tenths per cent. higher than the ordinary rate of six per cent., and that only for three years. The sums needed beyond the amounts thus obtained, were supplied by the negotiation of notes at two years and sixty days, and by issuing United States notes as circulation.

"The banks declined to make another loan of fifty millions for seven-thirty notes, and I was obliged by the absolute necessity of providing means for military and naval disbursement, to offer another description of securities. The act authorizing a national loan provided for the disposal of six per cent. bonds with such deduction from their face value as would make them equivalent to seven per cent. bonds, redeemable after twenty years, disposed of at par. I was extremely reluctant to avail myself of this power, but the emergency was great, and there was no other resource, and I submitted. Fifty millions in six per cent. bonds were equal to $45,795,478.48 in seven per cent. bonds, redeemable after twenty years; and accordingly I gave the banks fifty millions in six per cent. bonds for $45,795,478.48 in coin.

"The banks had constantly urged me to forego the farther issue of United States notes, and draw directly upon them for the sums subscribed, and placed on their books to the credit of the government. 'In what funds will my drafts be paid?' I asked. We in New York are entirely willing to pay in coin,' was the reply. But how

will it be in Boston? how in Philadelphia? How, if you in New York give the draft holder a check on Cincinnati or St. Louis, will the check be paid?' 'In whatever funds the holder of the draft or check is willing to receive.' 'That is to say,' I answered, 'in coin, if the holder insists on coin, and the bank is able and willing to pay; but in bank notes if he will consent to receive bank notes. I can not consent to this, gentlemen. You ask me to borrow the credit of local banks in the form of circulation. I prefer to put the credit of the people into notes and use them as money. If you can lend me all the coin required or show me where I can borrow it elsewhere at fair rates, I will withdraw every note already issued, and pledge myself never to issue another; but if you can not, you must let me stick to United States notes, and increase the issue of them just as far as the deficiency of coin may require.' This resolution, seen to be unalterable, was followed by important consequences.

"The negotiation of the seven per cent. loan (for such it really was) took place on the 16th of November. The bankers could not pay their subscription in coin unless they could find a market for their bonds, and prices declined instead of advancing. It soon became plain that the bank note circulation could not be sustained at the par of coin, unless made receivable by the Government, and that it could not be made so receivable without risk of serious and perhaps irretrievable financial embarrassment and disorder. In other words, it became plain that suspension was inevitable, except by sacrifices, which the banks would not make. The banks of New York suspended on the 30th of December, 1861, and their example was followed throughout the country. This suspension made it certain that the government could no longer obtain coin on loans in any adequate amounts; some of the banks, indeed, which had subscribed to the seven per cent. loan, declined to pay their subscriptions in coin, and even asked to be relieved from payment in notes of the United States. Under these circumstances I had no choice but to suspend payment of these notes in coin, and take measures to provide a currency in which loans could be negotiated and the transactions of the government carried on. I wished to avoid the necessity of making notes of any kind a legal tender; and proposed several modes of doing it. To none could the unanimous consent of the banks be obtained. Some of them manifested a disposition to discredit the national circulation wholly, whether issued in notes bearing interest, or issued in notes bearing no interest; and if possible, force upon the country the circulation of the suspended banks."

CHAPTER XXVII.

THE CIVIL WAR AND SLAVERY-PURSE AND SWORD THE TRENT AFFAIR.

L

ET us now turn away a little from the financial life of our hero. Here is, to me at least, a deeply interesting letter on another subject:

It

"WASHINGTON, November 6, 1861. "DEAR JUDGE: Let me thank you for your admirable article. teaches a necessary lesson. We must learn to imitate the grand patience of God; yet, in doing so, let us not shrink from the imitation of his justice and constant energy also.

"Hon. R. B. Warden.

"Sincerely yours,

S. P. CHASE."

The significance of the expression just distinguished by italics, can not be completely indicated without stating that the article it praises, attempted to expose the fallacy of Mr. Brownson's notions, that the Union had no battle-cry sufficiently responsive to the slogan of the South, and that some such battle-cry as Down with Slavery! was essential to success on the side of the North. The article which, as we have just seen, Secretary Chase called admirable, earnestly insisted that impatient and unconstitutional opposition to slavery could do no good and might work not a little evil; but, in the same piece, readers were counseled to prepare their minds and hearts for the downfall of slavery as a necessary incident of the civil war then raging.

On Monday, December 9, 1861, the secretary of the treasury talked with Messrs. Stevens and Vail about reimbursement. They contended that the banks were entitled to be reimbursed, in coin, for all two years bonds and sixty day notes, received in payment of subscriptions, whether paid by the banks themselves on account of deposits, or by individuals for bonds. The secretary denied the right of the banks to reimbursement for bonds paid by them, but promised to take the other into consideration.

On the next day, Mr. Haight, member of Congress, from New York, called, and stated the results of the bank meeting held on the 9th. He represented that Mr. Gallatin only opposed the payment

of the first installment, objecting that the secretary had recommended a tax on bank circulation, and so had broken his agreement.

December 9, 1861, Mr. Cisco telegraphed that the banks had paid the first installment of the seven per cent. loan.

On the same day, the annual report went to Congress. On the next, copies of it were sent to Messrs. Ketchum, Williams, Gallatin, and Coe, with letters expressing the hope of their concurrence in its views.

Mr. Hooper, member of Congress, from Boston, expressed a cordial approval of the report.

December 10, 1861, has the suggestive entry: "A number of gentlemen called at the office on applications for office and otherwise." The next day's record opens with the sentence, "A multitude of callers at the office this morning, among them Wade, of the Senate, and Ashley, of the House, Chairman of the Territorial Committees in their respective Houses." To both of them the secretary gave his views, in brief, as to the relations of the insurrectionary States to the Union.

It appears that he explained his views as follows: That no State or any portion of the people could withdraw from the Union or absolve themselves from allegiance to it; but that when the attempt was made, and the State government was placed in hostility to the Federal government, the State organization was forfeited, and it lapsed into the condition of a Territory, with which we could do what we pleased; that we could form a provisional government, as was done in Western Virginia, or, when we occupied any portion of a rebellious State, such as Beaufort, we could organize territorial courts, and, as soon as it became necessary, a territorial government; that those States could not properly be considered as States in the Union, but must be readmitted, from time to time, as Congress should provide.

It seems Messrs. Wade and Ashley expressed their concurrence. On the same day, conversation took place in the Cabinet in respect to organizing courts at Beaufort; and it was agreed that Secretary Chase should see certain southern gentlemen and then confer with Attorney-General Bates as to what should be done.

The same day it was proposed to invite General McClellan to a meeting of the Cabinet the next day, to learn his plans. But, objection being made by Mr. Blair, the President took it into consideration.