Reporting promptly at the office of the Adjutant-General, he was told they had no orders for him, and knew nothing about his arrest.

He then applied to General McClellan, on the eve of the Antietam campaign, for permission to serve with the army. General McClellan on the 7th of September wrote to Secretary Stanton that he would be glad to avail himself of General Stone's services and that he had "no doubt as to his loyalty and devotion." No answer was returned by the War Department. On the 25th of September General Stone, still eager to confront his accusers, applied to General-in- Chief Halleck for a copy of any charges or allegations against him, and the opportunity of promptly meeting them. He reminded the general that two hundred and twenty-eight days had elapsed since his arrest, and that if he were to be tried for any offense those who had served under him must be the witnesses of his conduct, and that from battle and disease these witnesses were falling by hundreds and thousands; the casualties were so great indeed that his command was already reduced one-half. General Halleck replied that he had no official information of the cause of General Stone's arrest, and that so far as he could ascertain no charges or specifications were on file against him.

Several weeks later, on the 1st of December, 1862, General Stone applied to General McClellan, calling his attention to the Act of July 17, under which any officer arrested had the right to "a copy of the charges against him within eight days." He therefore respectfully requested General McClellan, as the officer who ordered the arrest, to furnish him a copy of the charges. General McClellan replied on the 5th of December that the order for arrest had been given him by the Secretary of War, who told him it was at the solicitation of the Committee on the Conduct of the War, and based on testimony taken by them. He further informed General Stone that he had the order, in the handwriting of Secretary Stanton, several days before it was carried into effect, and added the following somewhat remarkable statement: "On the evening when you were arrested I submitted to the Secretary of War the written result of the examination of a refugee from Leesburg. This information to a certain extent agreed with the evidence stated to have been taken by the Committee, and upon its being imparted to the Secretary he again instructed me to cause you to be arrested, which I at once did." This discloses the fact that General McClellan was cognizant of the character of the testimony submitted against General Stone, and so rigidly withheld from the knowledge of the person most interested. On receipt of General McClellan's note, General Stone immediately asked him for the name of the Leesburg refugee and for a copy of his statement. A member of General McClellan's staff answered the inquiry, stating that the general "does not recollect the name of the refugee, and the last time he recollects seeing that statement was at the War Department immediately previous to your arrest." General Stone, victim of the perversity which had uniformly attended the case, was again baffled. He was never able to see the statement of the "refugee" or even to get his name, though, according to General McClellan, the testimony of the refugee was the proximate and apparently decisive cause of General Stone's arrest.

General Stone applied directly to the President, asking "if he could inform me why I was sent to Fort Lafayette." The President replied that "if he told me all he knew about it he should not tell me much." He stated that while it was done under his general authority, he did not do it. The President referred General Stone to General Halleck who stated that the arrest was made on the recommendation of General McClellan. This was a surprise to General Stone, for General McClellan had but recently written him that he had full confidence in his devotion and loyalty. General Halleck replied that he knew of that letter, and that "the Secretary of War had expressed great surprise at it because he said that General McClellan himself had recommended the arrest, and now seemed to be pushing the whole thing on his [the secretary's] shoulders." The search for the agency that would frankly admit responsibility was rendered still more difficult by the denial of the Committee on the Conduct of the War that the arrest had ever been recommended by them, either collectively or individually. They had simply forwarded to the Secretary of War such evidence as was submitted to them.

RESPONSIBILITY FOR THE ARREST.

General Stone appeared before the Committee on the Conduct of the War on the 27th of February, 1863--nearly five months after his release from imprisonment. He was allowed to see the testimony which had hitherto been withheld from him, and answered all the accusations in detail with convincing candor and clearness. As he proceeded in his triumphant response to all the accusations against him, the committee said "Why did you not give us these explanations when you were here before?"--"Because," replied General Stone, "if the chairman will remember, the committee did not state to me the particular cases. . . . I gave general answers to general allegations."

General Stone stated further to the committee that he ought himself to have asked for a Court of Inquiry after the reverse at Ball's Bluff. "The reason why I did not," he continued, "was this: While General McClellan was at Edward's Ferry, he showed me a telegram which he had written to the President to the effect that he had examined into the affair at Ball's Bluff and that General Stone was entirely without blame." "After the expression of that opinion,"

said General Stone, "it would not have been respectful to ask for a Court of Inquiry. It was given by the highest authority and sent to the highest authority, and as a soldier I had no right to ask for justification except of my superiors." Subsequently, on the occasion of Mr. Conkling's speech "severely criticising" General Stone's conduct in connection with the affair at Ball's Bluff, the General applied to the aide-de-camp of General McClellan, as likely to be informed of the Commander's wishes, to know if he "should ask for a Court of Inquiry," and the reply was "No." He then asked if he should make a statement correcting the mistakes in Mr.

Conkling's speech. The reply was "Write nothing; say nothing; keep quiet." The committee asked General Stone, as a military man, "Who had the power to bring you to trial?" He answered "When I was arrested, the General-in-Chief, General McClellan, had that power.

I know I should claim that power if any man under my command were arrested."

GENERAL STONE'S RESIGNATION.

The responsibility for the arrest and imprisonment of General Stone must, according to the official record of the case, rest on Secretary Stanton, Major-General McClellan, and the Committee on the Conduct of the War. It is very clear that Mr. Lincoln, pressed by a thousand calls and placing implicit confidence in these three agencies, took it for granted that ample proof existed to justify the extraordinary treatment to which General Stone was subjected. General Stone is not to be cla.s.sed in that long list of private citizens temporarily confined without the benefit of _habeas corpus_, on the charge of sympathizing with the Rebellion. The situation of those persons more nearly a.s.similates with that of prisoners of war. It differs totally from the arrest of General Stone in that the cause of detention was well known and very often proudly avowed by the person detained. The key of their prison was generally in the hands of those who were thus confined,--an honest avowal of loyalty and an oath of allegiance to the National Government securing their release.

If they could not take the oath they were justifiably held, and were no more injured in reputation than the millions with whose daring rebellion they sympathized. But to General Stone the government permitted the gravest crime to be imputed. A soldier who will betray his command belongs by the code of all nations to the most infamous cla.s.s--his death but feebly atoning for the injury he has inflicted upon his country. It was under the implied accusation of this great guilt that General Stone was left in duress for more than six weary months, deprived of all power of self- defense, denied the inherited rights of the humblest citizen of the Republic. In the end, not gracefully but tardily, and as it seemed grudgingly, the government was compelled to confess its own wrong and to do partial justice to the injured man by restoring him to honorable service under the flag of the Nation. No reparation was made to him for the protracted defamation of his character, no order was published acknowledging that he was found guiltless, no communication was ever made to him by National authority giving even a hint of the grounds on which for half a year he was pilloried before the nation as a malefactor. The wound which General Stone received was deep. From some motive, the source of which will probably remain a mystery, his persecution continued in many petty and offensive ways, until he was finally driven, towards the close of the war, when he saw that he could be no longer useful to his country, to tender his resignation. It was promptly accepted. He found abroad the respect and consideration which had been denied him at home, and for many years he was Chief of the General Staff to the Khedive of Egypt.

It is not conceivable that the flagrant wrong suffered by General Stone was ever designed by any one of the eminent persons who share the responsibility for its infliction. They were influenced by and largely partook of the popular mania which demanded a victim to atone for a catastrophe. The instances in which this disposition of the public mind works cruel injury are innumerable, and only time, and not always time, seems able to render justice. Too often the object of popular vengeance is hurried to his fate, and placed beyond the pale of that reparation which returning reason is eager to extend. Fortunately the chief penalty of General Stone was the anguish of mind, the wounding of a proud spirit. His case will stand as a warning against future violations of the liberty which is the birthright of every American, and against the danger of appeasing popular clamor by the sacrifice of an innocent man.

Throughout the ordeal, General Stone's bearing was soldierly. He faced accusation with equanimity and endured suffering with fort.i.tude.

He felt confident of ultimate justice, for he knew that it is not the manner of his countrymen "to deliver any man to die before that he which is accused have the accusers face to face, and have license to answer for himself concerning the crime laid against him."

CHAPTER XVIII.

The National Finances.--Debt when the Civil War began.--Deadly Blow to Public Credit.--Treasury Notes due in 1861.--$10,000,000 required.

--An Empty Treasury.--Recommendation by Secretary Dix.--Secretary Thomas recommends a Pledge of the Public Lands.--Strange Suggestions.

--Heavy Burdens upon the Treasury.--Embarra.s.sment of Legislators.

--First Receipts in the Treasury in 1861.--Chief Dependence had always been on Customs.--Morrill Tariff goes into Effect.--It meets Financial Exigencies.--Mr. Vallandigham puts our Revenue at $50,000,000, our Expenditures at $500,000,000.--Annual Deficiency under Mr. Buchanan.--Extra Session in July, 1861.--Secretary Chase recommends $80,000,000 by Taxation, and $240,000,000 by Loans.-- Loan Bill of July 17, 1861.--Its Provisions.--Demand Notes.--Seven- thirties.--Secretary Chase's Report, December, 1861.--Situation Serious.--Sales of Public Lands.--Suspension of Specie Payment.-- The Loss of our Coin.--Its Steady Export to Europe.

When the civil war began, the Government of the United States owed a less sum than it owed under the administration of Washington after the funding of the debt of the Revolution. The population in 1861 was nine times as large, the wealth thirty times as great as in 1791. The burden therefore was absolutely inconsiderable when contrasted with our ability to pay. But there had been such gross mismanagement of the Treasury, either from incompetency or design, under the administration of Howell Cobb, that the credit of the government was injured. There was embarra.s.sment when there should have been security; there was scarcity when the most ordinary prudence would have insured plenty. So much depended at that moment on the ability of the government to raise money by pledging its faith, that Mr. Cobb perhaps thought he was dealing the deadliest blow at the nation by depriving it of the good name it had so long held in the money markets of the world. With unblemished credit at the opening of the war, the government could have used its military power with greater confidence, and consequently with greater effectiveness.

THE NATIONAL CREDIT INJURED.

At the beginning of the year 1861 it was necessary for the government to raise about $10,000,000 to meet Treasury notes outstanding and the interest secured upon them. Congress had pa.s.sed, on the 17th of December, 1860, a law authorizing the issue of new Treasury notes for this amount, bearing interest at the rate of six per cent., and redeemable after one year; but the Secretary of the Treasury was authorized to issue them, upon public notice, at the best rates of interest offered by responsible bidders. Before the close of the month negotiations were completed, after unusual effort, and it was found that the notes were issued at various rates, only $70,200 at six per cent., $5,000 at seven per cent., $24,500 at eight per cent., $355,000 at rates between eight per cent. and below ten per cent., $3,283,500 at ten per cent. and fractions below eleven per cent., $1,432,700 at eleven per cent., and by far the larger share, $4,840,000 at twelve per cent. The average for the whole negotiation made the rate of interest ten and five-eighths per cent.

The Treasury was empty, for the nominal balance was only $2,233,220 on the 1st of January. Obligations were accruing to such an extent that General John A. Dix, as Secretary of the Treasury, informed the Committee on Ways and Means of the House of Representatives, that the revenue exhibited, on the 1st of February, a deficit of $21,677,524. The committee estimated that the sum needed to carry on current operations was at least $5,000,000 in addition. A loan of $25,000,000 was proposed, to meet these demands. Secretary Dix, who felt the pulse of the financial centres, recommended in a letter to the Ways and Means Committee that the several States be asked to pledge the United-States "deposit funds" in their hands for the security of the loan. His immediate predecessor, Philip F. Thomas, had, in his annual report in the preceding December, urged that the "public lands be unconditionally pledged for the ultimate redemption of all the Treasury notes which it may become necessary to issue."

Such suggestions seem strange to the ears of those who were afterwards accustomed to the unbounded credit of the Republic. But these secretaries were called to hear from capitalists the declaration that the national debt had increased from $28,460,958 on the 1st of July, 1857, to $64,640,838 on the 1st of July, 1860, and that the figures were still mounting upward. In the mean time the revenues were falling off, the sales of public lands were checked, and the estimates of customs for the current year were practically overthrown by the secession of the Southern States and the denial of the authority of the Union.

The task of Congress might well strike some thoughtful legislators as that of making bricks without straw. As the Rebellion took form and organization, it became clear that the ability and willingness of the people to raise large sums of money were vital factors in the problem of the maintenance of the Union. It was well that no one knew just how great were the burdens which the loyal people must bear. It is no disparagement to the leading statesmen of that era, that they did not at first propose measures adequate to the emergency, because no standards existed by which the magnitude of that emergency could be estimated. If Congress had understood on the 1st of July, 1861, that the ordinary expenditures of the government would be, within the fiscal years 1863 and 1864, more than the entire expenditures of the National Government from the foundation of the nation to that day, paralysis would have fallen upon the courage of the bravest. If the necessity had been proclaimed of raising by loans before the 1st of July, 1865, two thousand millions of dollars more than the National Treasury had ever received from loans and revenue combined, the audacity of the demand would have forbidden serious consideration. If the Ways and Means Committee had been notified that before the end of 1865, the annual charge for interest on the national debt, for which provision must be made, would reach $150,977,697, much more than twice the total expenditure of the preceding year, skill and energy would have undergone the crucial test. But the surprise of legislators would have been equally great if they could then have unrolled the future records of the Treasury, and have seen that in the year in which the Rebellion would be suppressed, the receipts from customs would attain the vast sum of $179,046,651, while from internal revenue, a source not yet drawn upon, the enormous aggregate of $309,226,813 would be contributed to maintain the public credit.

We are so familiar with the vast sums which the war against the Rebellion caused the National Government to disburse, that it is difficult to appreciate the spirit with which the legislators of 1861 approached the impending burdens. They knew that their task was great. They were in imminent peril, not only from open hostility, but from doubt and fear. The resources of the Republic had not been measured, the uprising of popular patriotism had not yet astonished foreign foes and even the most sanguine of domestic partic.i.p.ants. With the information which was then before the world, it may be questioned whether a complete scheme for providing the money necessary for the struggle could have been pa.s.sed through Congress, or rendered effective with capitalists. The needs of each crisis were supplied as each arose. Congress did not try to look far into the future. It exerted itself to give daily bread to the armies of the Union, to provide munitions of war, to build and equip the navy.

NATIONAL FINANCES IN 1861.

The first receipts into the Treasury in 1861, other than from the ordinary revenues under preceding statutes, came from the loan of February 5, which authorized the issue of bonds bearing six per cent. interest, payable within not less than ten, or more than twenty years. The amount authorized was $25,000,000, and the secretary was able to negotiate $18,415,000 at the average rate of eighty-nine and three one-hundredths (89.03) per cent.

The Congress which closed its session of the 4th of March, 1861, among its final acts provided for a loan of $10,000,000 in bonds, or the issue of a like sum in Treasury notes; and the President was also empowered to issue Treasury notes for any part of loans previously authorized. Under this statute, notes were issued to the amount of $12,896,350, payable sixty days after date, and $22,468,100 payable in two years. This measure indicated the disposition to provide for pressing exigencies by devices which covered only the present hour, and left heavier responsibilities to the future. An incident of this period was the settlement of the debt incurred in the war in Oregon against the Indians, by giving to the claimants or their representatives six per cent.

bonds redeemable in twenty years. The bonds were taken to the amount of $1,090,850, showing that such securities were welcome to claimants even at par.

The chief dependence of the United States for revenue had always been upon customs. But no real test had ever been made of the sum that might be collected from this source. The aim had been to see with how small an amount the National Government could be supported, not how large an amount might be collected. The time was now upon us when this critical experiment was to be tried, and the initial step in that direction was the Morrill Tariff which went into effect on the first day of April. It radically changed the policy of our customs duties from the legislation of 1846 and 1857, and put the nation in the att.i.tude of self-support in manufactures. Although introduced before secession attained its threatening proportions, it was well adapted to the condition in which the country was placed at the time of its enactment. It was a measure carefully elaborated, and based upon principles which were applied with studious accuracy to all its parts. Under it the imposts which had averaged about nineteen per cent. on dutiable articles, and fifteen per cent. on the total importations, mounted to thirty-six per cent. on dutiable articles, and to twenty-eight per cent. on the total importations.

Thus, although the goods brought into the country fell off unavoidably by reason of the war, and especially of the difficulties encountered by our vessels from the rebel privateers, the customs duties rather increased than diminished, and something was thus secured in the way of a basis of credit for the immense loans which became necessary.

The measure, Mr. Sherman of Ohio stated, would in ordinary times produce an income of $65,000,000 a year to the Treasury.

The Morrill Tariff was found to meet the exigencies of the situation to such a degree that when Congress came together in response to the call of President Lincoln, Mr. Thaddeus Stevens, as head of the committee charged with the subject, informed the House that it had been determined not to enter upon a general revision. He reported a measure to extend the schedule of dutiable articles with the view of adding immediately to the revenue about $22,250,000 annually. After disagreement with the Senate his bill with slight alteration was enacted and became the tariff on Aug. 5, 1861. In Dec. 24, 1861, the duties on tea, coffee, and sugar were increased directly as a war measure. During the consideration of this bill, Mr. Morrill presented estimates showing that the revenue would be increased by about $7,000,000, and Mr. Vallandigham of Ohio took occasion to dwell on the falling off of importations, asking, "How are you to have revenue from imports when nothing is imported?

Your expenditures are $500,000,000, your income but $50,000,000."

He was much nearer the actual figures than political rhetoric is apt to be. Mr. Morrill's response was only to hope that the gentleman from Ohio had some proposition to offer more acceptable than the pending bill. That bill was indeed a reasonable, and, so far as it went, an effective measure, and Mr. Vallandigham had no subst.i.tute to offer.

NATIONAL FINANCES IN 1861.

In his annual report as Secretary of the Treasury, Howell Cobb had, on the 4th of December, 1860, estimated that the receipts of the Treasury for the fiscal year ending with June, 1862, would amount to $64,495,891, while he reckoned that the expenditures would be $68,363,726. With the prospect of peace and national unity he predicted a deficiency of $3,867,834 for that year. His figures were so preposterously incorrect as to justify the suspicion of intentional misstatement. The deficiency for the four years of Mr. Buchanan's administration had been, according to a statement by Mr. Sherman of Ohio in the House of Representatives, almost exactly $20,000,000 a year. This deficiency had been met by continual borrowing. On the 11th of February Secretary Dix reported to the Committee of Ways and Means that provision must be made before the 4th of March for a final deficiency of $9,901,118. This necessity was provided for by a clause in the Morrill Tariff Act; and the authority to issue Treasury notes to the full amount of loans previously permitted, gave to the administration of President Lincoln the means to start upon its difficult career.

With a revenue which no one estimated beyond $5,000,000 a month, with a credit at the low ebb which the sales of its bonds had already exhibited, the nation was to prepare for a war of untold magnitude. Mr. Chase, as Secretary of the Treasury, began to try the fruitfulness of the loan laws under which he must proceed.

April 2, 1861, he offered $8,000,000, but the prices were not satisfactory to him, and he sold only $3,099,000 at the rate of 94.01. Nine days later he received bids for $1,000,000 of Treasury notes bearing six per cent. interest, and with considerable exertion he secured the increase of this sum to $5,000,000 at par. A committee of the New-York Chamber of Commerce led in a movement, representing the banks of some of the chief cities, to a.s.sist the Treasury in borrowing the means required for its pressing exigencies.

By this co-operation Mr. Chase raised in May $7,310,000 on bonds at rates from eighty-five to ninety-three per cent. and $1,684,000 by Treasury notes at par.

When Congress met in special session under the call of Mr. Lincoln July 4, Secretary Chase found it necessary to declare that while the laws still permitted loans amounting to $21,393,450, the authority was unavailable because of the limitation that the securities, whether bonds or Treasury notes, should be issued only at par, on the basis of six per cent. interest. Practically therefore no power existed to borrow money. While, on the first of the month then current, there was a nominal balance in the Treasury of $2,355,635, charges by reason of appropriations for the account of the preceding fiscal year were outstanding to the extent of $20,121,880. The short loans already made, const.i.tuted also an immediate claim, and these amounted to $12,639,861. All these burdens were to be borne in addition to the demands of the year, which, as already demonstrated, would be one of extended military operations and of costly preparations and movements at sea. The total for which the secretary asked that Congress might provide resources, reached according to his estimates the sum of $318,519,581 for the fiscal year. Far-seeing men believed that even this enormous aggregate would fall short of the actual demand.

Mr. Chase proposed that $80,000,000 be raised by taxation, and $240,000,000 by loans. The suggestion was already urged that even a larger proportion of the money needed, should be raised by taxation. But unwillingness to create friction and opposition doubtless entered into the considerations which determined the recommendations of the secretary. He proposed to rely upon the tariff for a large share of the basis of credit, and, while adding to its provisions, to impose a direct tax, and to levy duties upon stills and distilled liquors, on ale and beer, on tobacco, spring- carriages, bank-notes, silver ware, jewellery, and legacies.

Congress made haste to consider and substantially to carry out the recommendations of Secretary Chase. The legislators were not inclined to go farther than the head of the Treasury suggested.

No practical proposition was made for a broader scheme of taxation.

The tariff, as has been indicated, was enlarged. A bill was pa.s.sed, levying a direct tax of $20,000,000, to be apportioned among all the States, of which the sum of $12,000,000 was apportioned among the States which had not seceded from the Union. Instead of the scheme of internal taxes which Mr. Chase had proposed, an income tax was subst.i.tuted, to be collected on the results of the year ending April 1, 1862, and a.s.sessed at three per cent. on all incomes in excess of $800; but before any collections were made under it, the broader internal-revenue system went into effect. Direct taxes had been tried in 1800 and again in 1814, but the receipts had always been disappointing. The results under Secretary Chase's proposition were altogether unsatisfactory; and on the 1st of July, 1862, an Act was pa.s.sed limiting the tax to one levy previous to April 1, 1865, when the law should have full force. The estimates of collections were set at $12,000,000 annually, or very near that sum. For four years, 1862-1865 inclusive, the receipts were only $4,956,657: in 1867 they became $4,200,233, and then dribbled away.

THE NATIONAL LOAN ACT OF JULY, 1861.

Inadequate as is now seen to be the legislation of 1861 with reference to actual revenue, the receipts fell far below the calculations of experts. For the fiscal year 1862 the customs amounted to only $49,056,397, and the direct tax to $1,795,331; and the total receipts, excluding loans, were only $51,919,261 instead of $80,000,000, as expected under the estimates of the Treasury. The plea may perhaps be pressed in defense of Congress, that financial legislation, laggard as it was, ran before popular readiness to raise money by taxes. There was a wide-spread opposition among the strongest advocates of the war, to all measures which would, at an early stage, render the contest pecuniarily oppressive, and hence make it unpopular.

President Lincoln in his message at the opening of the special session had called upon Congress for $400,000,000 in money, and 400,000 men. Mr. Chase's figures were $320,000,000. He doubtless deemed it wise to ask for no more than Congress would promptly grant. As the struggle proceeded, it was demonstrated that those calculated most justly who relied most completely on the popular purpose to make every sacrifice to maintain the national integrity.

This was however the period of depression after the first battle of Bull Run, of hesitation before casting every thing into the scale for patriotism.

The eloquent fact about the Loan Bill is that Congress made haste to enact it. It was introduced into the House of Representatives on the 9th of July. On the next day Mr. Stevens, chairman of the Ways and Means Committee, called up the bill, and, upon going into committee of the whole, induced the House to limit general debate to one hour. In the committee the entire time was occupied by Mr.

Vallandigham of Ohio, in criticism on the President's message and on the general questions involved in the prosecution of the war.

Mr. Holman of Indiana addressed to the gentleman from Ohio two inquiries bearing on the purpose of the latter to aid in maintaining the Union. No response was made to the speech of Mr. Vallandigham.

The committee rose, and the bill was pa.s.sed by a vote of 105 to 5.

In the Senate no discussion took place, certain amendments looking to the perfection of the measure were adopted, and the bill was pa.s.sed without division. The House at once concurred in the Senate amendments, and the act was consummated by which the first of the great war loans was authorized.

This Act became law on the 17th of July. Its provisions created a system by which the Secretary of the Treasury might offer bonds not exceeding $250,000,000 in the aggregate at seven per cent.

interest, redeemable after twenty years; or he might issue Treasury notes payable three years after date, and bearing seven and three- tenths per cent. interest,--the notes not to be of less denomination than fifty dollars. A separate section permitted the secretary to offer not more than $100,000,000 abroad, payable in the United States or in Europe. The same Act authorized for a part of the sum not exceeding $50,000,000, the exchange for coin or the use in payment of salaries or other dues, of notes of less denomination than fifty dollars but not less than ten dollars, and bearing interest at the rate of three and sixty-five one-hundredths per cent. payable in one year; or these might be payable on demand and without interest. This loan might therefore be in bonds for sale in this country or in a different form for sale abroad; or, second, it might be in Treasury notes of not less than fifty dollars each, bearing seven and three-tenths per cent. interest; or, third, a part of the loan not exceeding $50,000,000 might be in notes of even as low denomination as ten dollars at three and sixty-five one-hundredths per cent.; and, finally, this latter part might be in notes without interest payable on demand. The bonds were to run at least twenty years; the seven-thirties three years; and the three-sixty-fives were payable in one year, and exchangeable into seven-thirties at the pleasure of the holder. A supplementary Act was pa.s.sed Aug. 5, 1861, which permitted the secretary to issue six per cent. bonds, payable at the pleasure of the United States after twenty years, and the holders of seven-thirty notes were allowed to exchange their notes for such bonds. The minimum of the denominations of Treasury notes was reduced to five dollars, and all the demand notes of less denomination then fifty dollars were receivable for payment of public dues. By Act of Feb. 12, 1862, the limit of demand notes was raised to $60,000,000. In this modified form the statute directed the movements of the Treasury during the autumn of the first year of the Rebellion.

SECRETARY CHASE'S REPORT, 1861.

In his report, dated December 9, 1861, the Secretary of the Treasury related the steps which he had taken to raise money under these laws. Mr. Chase informed Congress that "his reflections led him to the conclusion that the safest, surest, and most beneficial plan would be to engage the banking inst.i.tutions of the three chief commercial cities of the seaboard to advance the amounts needed for disburs.e.m.e.nt in the form of loans for three years' seven-thirty bonds, to be reimbursed, as far as practicable, from the proceeds of similar bonds, subscribed for by the people through the agencies of the national loan; using, meanwhile, himself, to a limited extent, in aid of these advances, the power to issue notes of smaller denominations than fifty dollars, payable on demand."

Representatives of the banks of New York, Boston, and Philadelphia united to give moneyed support to the government. The secretary opened books of subscription throughout the country. The banks subscribed promptly for $50,000,000, paying $5,000,000 at once in coin, and agreeing the pay the balance, also in coin, as needed by the government. For this loan the banks received seven-thirty notes, and the proceeds of the popular loan were transferred to them. The sales to the public amounted to little more than half that sum; but the banks, when called upon, made a second advance of $50,000,000. By these and other agencies, Mr. Chase was able to present an encouraging summary of the Treasury operations.

He stated that "there were paid to creditors, or exchanged for coin at par, at different dates, in July and August, six per cent. two years' notes, to the amount of $14,019,034.66; there was borrowed at par. in the same months, upon sixty days' six per cent. notes, the sum of $12,877,750; there were borrowed at par, on the 19th of August, under three years' seven-thirty bonds, issued for the most part to subscribers to the national loan, $50,000,000; there were borrowed at par for seven per cent., on the 10th of November, upon twenty years' six per cent. bonds, reduced to the equivalent of sevens, including interest, $45,795,478.48; there have been issued, and were in circulation and on deposit with the treasurer on the 30th of November, of United-States notes payable on demand, $24,550,325,--making an aggregate realized from loans in various forms of $197,242,588.14." The loan operations had therefore been fairly successful, for they were still in progress; and President Lincoln was justified in stating in his message that "the expenditures made necessary by the Rebellion are not beyond the resources of the loyal people, and the same patriotism which has thus far sustained the government will continue to sustain it, till peace and union shall yet bless the land."