Изображения страниц
PDF
EPUB

Schwab,
Ch. VI, IX.

Sherman,
Recollections,
I, Ch. XI−

XII.

Wells,
Recent Fi-

nancial, etc.,
Experiences

of the U. S.

in payment of private debts. The issues of 1861 amounted to $30,000,000. By December, 1862, $450,000,000 had been forced into circulation. The output of 1863 was $150,000,000, and no less was issued in each of the last two years of the war. The sum of the issues of Confederate currency approximated one billion. To this appalling total were added millions of dollars by the unrecorded issues of the state governments, the banks, and private business firms. Depreciation followed inevitably, in part, because the currency was inflated, in part, because men lost confidence in its ultimate redemption. In January, 1863, a gold dollar was worth three dollars in Confederate paper; twelve months later gold exchanged for twenty-one, and in January, 1865, for fifty-three dollars in the debased currency. After the fall of Richmond, the Confederate money passed out of circulation. It was lost or destroyed or found its way into historical museums.

-

In her extremity the South was forced to various other financial expedients exploited during the Revolutionary War. Men who refused to receive Confederate money were denounced as traitors and condemned by the state legislatures to heavy penalties. Price conventions were held with a view to fixing fair rates of exchange; stay laws were passed suspending the collection of debts, notably in case of Confederate soldiers, till the close of the war; the sequestration of obligations owing to the Federal government and to Northern creditors was ordered. Confiscation of Union stores and the property of the United States to military uses was authorized by the Confederate Congress.

Federal Finances.

When the Charleston batteries fired

on Fort Sumter, the Federal government was entirely unprepared for war. The surplus revenues of 1857 were exhausted, and the treasury showed a deficit of $56,000,000. Customs receipts under the Democratic tariff proving inadequate to ordinary expenditure, the rates had been somewhat increased by the Morrill Act of 1861. In accordance with the recommendations of Secretary Chase, a further increase,

Ch. XII,

XIII.

notably in the revenue duties on salt, coffee, and tea, was Dewey, legislated in the first year of the war. The rates were raised from year to year, but the customs receipts did not wax in proportion. Commerce was seriously interrupted by the depredations of Confederate cruisers, and there was a Ch. I-III. marked decline in imports.

Bolles,

III, Bk. I,

[blocks in formation]

The Federal government then had resort to devices for raising internal revenue. Sumptuary taxes were laid on luxuries, such as carriages, yachts, billiard tables, and plate ; licenses were exacted of many occupations; manufacturing and transportation companies were assessed at five and six per cent; stamps were required on contracts, legal documents, etc.; and excise duties were collected from the producers of spirits, ale, beer, and tobacco. With a view to adjusting the burden to wealth, Congress, for the first time in its history, levied an income tax. In 1862 three per cent was laid on all incomes of more than $800 a year. In 1864 this tax was raised to four per cent, while five and ten per cent was required from men of ampler revenues. Since the Republican party was enthusiastically supported by the bulk of business men, there was little protest against these " war measures." Even the income tax was paid with no grumbling, and with but little attempt at evasion. The Federal revenues of 1865-1866 reached the unprecedented sum of $559,000,000. But military expenses augmented even more rapidly than income, and the government was obliged to borrow the money with which to carry on the war.

[blocks in formation]

Bolles,

III, Bk. I, Ch. IV, V, VIII.

Dewey, 354-358.

Mitchell,

Hist. of the
Greenbacks,
Pt. I.

Dewey, 360-367.

Mitchell,

Hist. of the Greenbacks, 405, 419.

Dewey, 317-328,

383-390.

1864
1865

1,153,307,000

In February, 1862, Congress authorized a loan of $500,000,000 in long term bonds at six per cent, and at the same time provided for the issue of $150,000,000 in noninterest bearing notes. The bonds sold but slowly, for the rate of interest was not high in view of the risk of ultimate repudiation. But $23,750,000 was secured from bond sales in the course of the first year. The government was forced again to have recourse to bills of credit. An issue of $150,000,000 was authorized in July, 1862, and equal amounts were ordered in January and March of 1863. The act of February, 1862, gave these "greenbacks" legal tender value, and the constitutionality of this provision was later sustained by the Supreme Court. The notes nevertheless declined in purchasing power. The amount of depreciation varied with the fluctuating fortunes of war. The nadir point was reached in July and August of 1864, when this paper dollar was worth but one third its face in gold. On June 30, 1864, further issues were forbidden, but the mischief was already done. The depreciated currency had driven gold from circulation (except on the Pacific coast), and prices of all commodities were doubled and trebled. It is estimated that the war debt was at least one fifth greater than if government purchases had been made in specie.

Industrial Transformation

[ocr errors]

The National Banking System. By legislation of February, 1863, amended in June, 1864, Congress provided for a national bank currency guaranteed by government bonds. Every banking association complying with the

III, Bk. I,

Ch. XI; Bk.

II, Ch. IV.

terms of the law was to be furnished by the comptroller of Bolles,
the currency with engraved notes to the amount of ninety
per cent of the market value of the securities subscribed.
A brisk demand for United States bonds speedily developed.
The sales of 1863 amounted to $400,000,000, and $600,-
000,000 additional were sold without difficulty during the
next two years. The political advantages of this policy
were no less than in Hamilton's day. Bank officials and
stockholders were naturally eager to maintain the solvency
of the Federal treasury, and all the business interests of the
North were firmly attached to the Union. The fiscal advan-
tages of the national banking system were equally important
and enduring. For the uncertainties of seven thousand vari-
eties of state bank notes issued by fifteen hundred private
banks that were chartered by twenty-nine state legislatures
of varying financial proclivities, was substituted a uniform
currency whose redemption was guaranteed by bonds of the
United States. The state banks could make but a losing
fight against such odds, but the retirement of their issues
was forced by a ten per cent tax (March, 1865).

[ocr errors]

III, Bk. II,

Ch. I, II.

Redemption of the Greenbacks. — The accumulated war Dewey, debt of the Federal government, represented in bonds, 329-330, 360-378. treasury notes, certificates of indebtedness, and greenbacks, amounted (September, 1865) to $2,546,000,000, and of this Bolles, enormous sum no part was repudiated. The taxpaying capacity of the country was ample to care for both interest and principal. An act of April, 1866, provided for the funding of the bond issues and for the redemption of the government notes. Greenbacks to the amount of $10,000,000 Dewey, were to be called in and exchanged for specie within the 378–382. first six months. The secretary of the treasury was authorized thereafter to redeem not more than $4,000,000 per month. Only $44,000,000 was cancelled in accordance with this plan, but the contraction in the volume of the currency was attended by a shrinkage in prices that proved cxxxi. disturbing to business interests developed under inflated conditions. The redemption of this part of the government debt was opposed, moreover, by the advocates of cheap and

Report of the Sec. of

the Treas.,

1897,

Taussig,
Tariff Hist.

of the U. S.,
155-193.

Rabbeno,

200-258.

Bolles,

III, Bk. II,
Ch. VII.

abundant money and by the enemies of the national banks. Congress yielded to pressure, and in February, 1868, the cancelling of the greenbacks was suspended, and the outstanding notes were allowed to form a permanent element in our circulating medium. The resumption of specie payments by the United States treasury in 1879 brought these legal tender notes to a parity with gold.

Revival of Protective Tariffs. The levy of import duties had been necessitated by the heavy taxes imposed on domestic industries, a tax amounting to eight and fifteen and, in some cases, to twenty per cent. Our factories, distilleries, and iron works, burdened by such requisitions, could not continue to produce in competition with untaxed imports. The excise paid on textiles, on iron and steel, petroleum, sugar, salt, paper, leather, etc., must be offset by Cong. Globe, corresponding import duties. Within a fortnight of the passing of the internal revenue act of 1862, Congress passed a tariff law raising the impost on salt from 12 cents to 18 cents per hundredweight, on glass and iron manufactures from 30 to 35 per cent, on cottons from 25 to 30 per cent, on silks from 30 to 40 per cent, on woolens from 25 to 30 per cent, with an added specific duty of 18 cents per pound. The average rate for the tariff schedule of 1862 was 37.2 per cent.

1861-1862,

1196, 2979.

cent.

In 1864 a second internal revenue act raised the excise and income taxes and greatly increased the list of industries subject to the levy. A tariff act immediately followed, by which the average rate on imports was raised to 47 per cent. The duty on glass manufactures mounted from 35 to 40 per Three dollars per ton was added to the duty on pig iron. Ten per cent was added to the import tax on silks. The specific duty on woolens was raised to 24 cents per pound, and the ad valorem rate to 40 per cent. The duties on raw wool imposed by the Morrill Tariff were doubled by the act of 1864. So urgent was the need of revenue, and so ready were loyal Republicans to strengthen the army and navy, that little attention was given to the industrial bearing of this extraordinary tariff schedule. The bill was accepted as it came from the Committee on Ways and Means without

« ПредыдущаяПродолжить »