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.—Embarrassment 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 embarrassment 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 passed, 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 participants. 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 passed 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 attitude 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 substitute 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 assist 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, constituted 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 passed, 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 substituted, to be collected on the results of the year ending April 1, 1862, and assessed 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 passed 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 passed 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 passed 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 passed 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 institutions of the three chief commercial cities of the seaboard to advance the amounts needed for disbursement 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."
But the shadows were growing thick, and the situation was very serious. Mr. Chase was compelled to report that his estimates of revenue must be reduced below the figures which he gave in July by $25,447,334: at the same time the expenditures must be reckoned at an increase of $213,904,427. Predictions as to the speedy close of the war had ceased. Provision must be made, not only for the deficiencies presented, but for the ensuing year, during which the secretary estimated that the expenditures would be $475,331,245. He proposed to amend the direct tax law, so as to collect under it $20,000,000; to establish a system of internal revenue as he had suggested in July, and to increase some of the customs duties. From these sources, united with the receipts from the public lands, the revenue would be $95,800,000. With this basis, reliance must be placed on loans for the enormous sum of $654,980,920, and under existing laws he could borrow only $75,449,675.
The sale of public lands had furnished some part of the resources of the nation from an early day. The annual product had not been large as a rule. In 1834 and 1835 the sales had been abnormal, amounting in the latter year to $24,877,179, and only about $10,000,000 less in the preceding year. They were $11,497,049 in 1855, but they had fallen until they were less than $2,000,000 in 1859. It was natural to consider whether any help could be derived from this quarter in the hour of national necessity. A forced sale of lands was impossible to any such extent as to affect the receipts of the Treasury in the ratio of its demands. The pledge of the domain as security for loans was suggested only to be rejected. As was natural, purchases of the public domain ceased almost entirely while the young men of the country were summoned to the national defense, and the better strength went into the field of battle. From the public lands therefore the Treasury could hope for little, and very little was in fact received from them during the Rebellion. Secretary Chase had estimated in July that $3,000,000 might be annually derived from this source; but the receipts from the sales of lands never reached even $1,000,000 a year until two years after the Rebellion had been suppressed. Practically the public lands passed out of consideration as a source of revenue. Unfortunately also the attempt to levy a direct tax was received by the people with grave manifestations of disapproval. Its enforcement was likely to prove mischievous. The close of the year 1861 was therefore heavy with discouragement to the government. The military reverses at Bull Run and Ball's Bluff had outweighed in the popular mind the advantages we had gained elsewhere; the surrender of Slidell and Mason, though on every consideration expedient, had wounded the national pride; and now the report of the Secretary of the Treasury tended to damp the ardor of those who had with sanguine temperament looked forward to an easy victory over the Rebellion.
SUSPENSION OF SPECIE PAYMENT.
It was felt by all that the National credit, which had been partially restored under Mr. Chase's administration of the Treasury, could not be maintained except from the pockets of the people, and that every man must expect to contribute of his substance to the support of the government in the great task it had assumed. Happily all considerate and reflecting men saw that, desperate as the struggle might be, it must be accepted with all its cost and all its woe. They could at least measure it and therefore could face it. On the side of defeat they could not look. That was a calamity so great as to be immeasurable, and it left to the loyal millions no choice. If the struggle then in progress had been with a foreign power, popular opinion would have overthrown any administration that would not at once make peace. But peace on the basis of a dissevered Union, a disintegrated people, a dishonored nationality, could not be accepted and would not be endured.
The discouragement in financial circles produced by the Treasury report of Mr. Chase, hastened if it did not cause the suspension of specie payment by the banks of New-York City. Many country banks had ceased to pay specie some time before; indeed, many had been only on a nominal basis of coin since the financial crisis of 1857. So long however as the specie standard was upheld by the New-York banks, the business of the country was securely maintained on the basis of coin. It was therefore a matter of serious moment and still more serious portent that the financial pressure became so strong in the last days of the year 1861 as to force the banks of the metropolis to confess that they could no longer maintain a specie standard. It had been many years since the government had paid any thing but coin over its counters, but Treasury notes had just been issued payable on demand, and many millions were already in circulation. They would now be presented for redemption, and if promptly met, the Treasury would be rapidly drained of its specie. There were twenty-five millions less of gold coin in the government vaults than Secretary Chase had expected. This fact of itself enforced a larger issue of demand notes than would otherwise have been called for, and had thus doubly complicated the financial situation. The Treasury had disbursed a large amount of demand notes and received a smaller amount of gold coin than the well considered estimates of the secretary had anticipated.
The presumption was in favor of our being much stronger in coin than we were found to be. The discovery of gold in California had resulted in an enormous product,—surpassing any thing known in the history of mining. But we had been encouraging the importation of goods from Europe which were confessedly somewhat cheaper than our own fabrics, and in amount largely in excess of our export of cotton and cereals. We were therefore constantly paying the difference in coin. The political economists who had been in control of our finances insisted upon treating our gold as an ordinary product, to be exported in the same manner that we exported wheat and pork. The consequence was that during the decade preceding the war our exports of specie and bullion exceeded our imports of the same by the enormous aggregate of four hundred and fifty millions of dollars. For that whole period there had been a steady shipment of our precious metals to Europe at a rate which averaged nearly four millions of dollars per month.
Advocates of protection had found the drain of our specie the proximate cause of the financial panic of 1857. They now believed that the same cause had produced a suspension of coin payment at a much earlier date than the war pressure alone would have brought it about. They did not lose the opportunity of demonstrating that a system of protection which would have manufactured more and imported less, and which would thus have retained many millions of our specie at home, would have enabled us to meet the trials of the war with greater strength and confidence. If the Morrill Tariff had been enacted four years before, it would have been impossible for Secretary Cobb to stab the national credit. He would have been dealing constantly with a surplus instead of a deficit, and could not have put the nation to shame by forcing it to hawk its paper in the money markets at the usurious rate of one per cent. a month. One of the wisest financiers in the United States has expressed the belief that two hundred millions of coin, which might easily have been saved to the country by a protective tariff between 1850 and 1860, would have kept the National debt a thousand millions below the point which it reached. Of all the arguments with which protectionists have arraigned free-traders, perhaps the most difficult to answer is that which holds them responsible for the weak financial condition of 1860-61 in that they had deliberately driven our specie from the country for the ten preceding years.