A School History of the United States

by John Bach McMaster

CHAPTER XXIX

THE COST OF THE WAR

%464. The Cost in Money.%—When Fort Sumter was fired on in 1861 and Lincoln made his call for volunteers, the national debt was $90,000,000, the annual revenue was $41,000,000, and the annual expenses of the government $68,000,000. As the expenses were vastly increased by the outbreak of war, it became necessary to get more money. To do this, Congress, when it met in July, 1861, began a financial policy which must be described if we are to understand the later history of our country.

%465. Power to raise Money.%—The Constitution gives Congress power

1. "To lay and collect taxes, duties, imposts, and excises."

2. "To borrow money on the credit of the United States."

3. To apportion direct taxes among the several states according to their population.

%466. Raising Money by Taxation; Internal Revenue.%—Exercising these powers, Congress in 1861 increased the duties on articles imported, laid a direct tax of $20,000,000. and imposed a tax of three per cent on all incomes over $800. The returns were large, but they fell far short of the needs of the government, and in 1862 an internal revenue system was created. Taxes were now imposed on spirits and malt liquors; on manufactured tobacco; on trades, professions, and occupations; till almost everything a man ate, drank, wore, bought, sold, or owned was taxed. The revenue collected from such sources between 1862 and 1865 was $780,000,000.

%467. Raising Money "on the Credit of the United States."%—Money raised by internal revenue and the tariff was largely used to pay current expenses and the interest on the national debt. The great war expenses were met by borrowing money in two ways:

1. By selling bonds.

2. By issuing "United States notes."

%468. The Bonded and Interest-paying Debt.%—The bonds were obligations by which the government bound itself to pay the holder the sum of money specified in the bond at the end of a certain period of years, as twenty or thirty or forty. Meantime the holder was to be paid interest at the rate of five, six, or seven per cent a year. Between July 1, 1861, and August 31, 1865, when our national debt was greatest, $1,109,000,000 worth of bonds had been sold to the people and the money used for war purposes.

%469. United States Notes.%—The United States notes were of two kinds: those which bore interest, and those which did not. Those bearing interest passed under various names, and by 1866 amounted to $577,000,000.

United States notes bearing no interest were the "old demand notes," the "greenbacks," the "fractional currency," and the "national bank notes."

The greenbacks (a name given them from the green color of their backs) were authorized early in 1862, were in denominations from $1 up, bore no interest, were legal tender in payment of all debts, public and private, except duties on imports and interest on the public debt. In time $450,000,000 were authorized to be issued, and in 1864, $449,000,000 were in circulation.

%470. Fractional Currency.%—The issue of the demand notes in 1861, and the fact, apparent to every one, that Congress must keep on issuing paper money, led the state banks to suspend specie payment in December, 1861. As a consequence, the 3, 5, 10, 25, and 50 cent silver pieces (and of course all the gold) disappeared from circulation. This left the people without small change, and for a time they were forced to pay their car fare and buy their newspapers and make change with postage stamps and "token" pieces of brass and copper, which passed from hand to hand as cents. Indeed, one act of Congress, in July, 1862, made it lawful to receive postage stamps (in sums under $5) in payment of government dues. But in March, 1863, another step was taken, and an issue of $50,000,000 in paper fractional currency was authorized.

%471. The National Banking System.%—Yet another financial measure to aid the government was the creation of national banks. In 1863 Congress established the office of "Comptroller of the Currency," and authorized him to permit the establishment of banking associations. Each must consist of not less than five persons, must have a certain capital, and must deposit with the Treasury Department at Washington government bonds equal to at least one third of its capital. The Comptroller was then to issue to each association bank notes not exceeding in value ninety per cent of the face value of the bonds. It was supposed that the state banks, which then issued $150,000,000 in 7000 kinds of bank notes, would take advantage of the law, become national banks, and use this national money, which would pass all over the country. This would enable the government to sell the banks $150,000,000 and more of bonds. But the state banks did not do so till 1865, when a tax of ten per cent was laid on the amount of paper money each state bank issued. Then, to get rid of the tax, hundreds of them bought bonds and became national banks.

%472. The National Debt and State Expenditures.%—On the 31st of August, 1865, the national debt thus created reached its highest figure, and was in round numbers $2,845,000,000.

Besides the debt incurred by the national government, there were heavy expenditures by the states, and we might say by almost every city and town, amounting to $468,000,000. But even when the war ended, the outlay on account of the war did not cease. Each year there was interest to pay on the bonded debt, and pensions to be given to disabled soldiers and sailors, and to the widows and orphans of men killed, and claims for damages of all sorts to be allowed. Between July 1, 1861, and June 30, 1879, the expenditure of the government growing out of the war amounted to $6,190,000,000.

Many men who served in the army made great personal sacrifices. They were taken away from some useful employment, from their farms, their trades, their business, or their professions. What they might have earned or accomplished during the time of service was so much loss.

%473. The Cost in Human Life.%—While the war was raging, Lincoln made twelve calls for volunteers, to serve for periods varying from 100 days to three years. The first was the famous call of April 15, 1861, for 75,000 three-months men; the last was in December, 1864. When the numbers of soldiers thus summoned from their homes are added, we find that 2,763,670 were wanted and 2,772,408 responded. This does not mean that 2,770,000 different men were called into service or were ever at any one time under arms. Some served for three months, others for six months, a year, or three years. Very often a man would enlist and when his term was out would reenlist. The largest number in service at any time was in April, 1865. It was 1,000,516, of whom 650,000 were fit for service. In 1865, 800,000 were mustered out between April and October.

Of those who gave their lives to preserve the Union, 67,000 were killed in battle, 43,000 died of wounds, and 230,000 of disease and other causes. In round numbers, 360,000 men gave up their lives in defense of the Union. How many perished in the Confederate army cannot be stated, but the loss was quite as large as on the Union side; so that it is safe to say that more than 700,000 men were killed in the war.[1]

[Footnote 1: A table giving the size of the armies and the loss of life will be found in Battles and Leaders of the Civil War, Vol. IV., pp. 767-768.]

%474. Suffering in the South.%—The South raised all the cotton, nearly all the rice and tobacco, and one third of the Indian corn grown in our country, and depended on Europe and the North for manufactured goods. But when the North, in 1861 and 1862, blockaded her ports and cut off these supplies, her distress began. Brass bells and brass kettles were called for to be melted and cast into cannon, and every sort of fowling piece and old musket was pressed into service and sent to the troops in the field. As money could not be had, treasury notes were issued by the million, to be redeemed "six months after the close of the war." Planters were next pledged to loan the government a share of the proceeds of their cotton, receiving bonds in return. But the blockade was so rigorous that very little cotton could get to Europe. When this failed, provisions for the army were bought with bonds and with paper money issued by the states.

This steady issue of paper money, with nothing to redeem it, led to its rapid decrease in value. In 1864 it took $40 in Confederate paper money to buy a yard of calico. A spool of thread cost $20; a ham, $150; a pound of sugar, $75; and a barrel of flour, $1200.

%475. Makeshifts.%—Thrown on their own resources, the Southern people became home manufacturers. The inner shuck of Indian corn was made into hats. Knitting became fashionable. Homespun clothing, dyed with the extract of black-walnut bark or wild indigo or swamp maple or elderberries, was worn by everybody. Barrels and boxes which had been used for packing salt fish and pork were soaked in water, which was evaporated for the sake of the salt thus extracted. Rye or wheat roasted and ground became a substitute for coffee, and dried raspberry leaves for tea.

Quite as desperate were the shifts to which the South was put for soldiers. At first every young man was eager to rush to the front. But as time passed, and the great armies of the North were formed, it became necessary to force men into the ranks, to "conscript" them; and in 1862 an act of the Confederate Congress made all males from eighteen to thirty-five subject to military duty. In September, 1862, all men from eighteen to forty-five, and later from sixteen to sixty, were subject to conscription. The slaves, of course, worked on the fortifications, drove teams, and cooked for the troops.

%476. Cost to the South%.—Thus drained of her able-bodied population, the South went rapidly to rack and ruin. Crops fell off, property fell into decay, business stopped, railroads were ruined because men could not be had to keep them in repair, and because no rails could be obtained. The loss inflicted by this general and widespread ruin can never be even estimated. Cotton, houses, property of every sort, was destroyed to prevent capture by the Union forces. On every battlefield incalculable damage was done to woods, villages, farmhouses, and crops. Bridges were burned; cities, such as Richmond, Atlanta, Columbia, Charleston, were well-nigh destroyed by fire; thousands of miles of railroad were torn up and ruined. The loss entailed by the emancipation of the slaves, supposing each negro worth $500, amounts to $2,000,000,000.