McCULLOCH’S FACULTY FOR ECONOMY
THE problems presented to Hugh McCulloch, when he succeeded to the headship of the Treasury in Lincoln’s second cabinet, were to reduce expenditures, to reorganize taxation, to systematize and consolidate the debt, and to restore stability to the currency. The country was fortunate in having such a man as Mr. McCulloch to perform these services. Of long experience as a practical banker, he had been made Comptroller of the Currency upon the reorganization of the national banking system, and was familiar with all branches of government finance. Fortunately, also, he was not a politician. He was a descendant of that small but prolific colony of Scotch and Scotch-Irish who settled in northern New England, whose sturdy courage enriched the blood of all other races with which it was mingled. His views of what was required to restore sanity to the national finances were not warped by fear of popular clamor; and if they went further than the condition of the country warranted in the direction of monetary contraction, they at least set a standard of national honor and obligation which was like a beacon set on a hill to the supporters of honest money.
Toward reducing expenditures, rapid progress was made as the million men who had sprung to arms at the call of the country were mustered out of the Grand Army and returned to their plows and workshops. Expenditures for the War Department, which were $1,030,000,000 in 1865, were brought down the next year to $283,000,000, and in 1867 to $95,000,000. On the side of reducing and simplifying taxation much was accomplished by the clear-headed young man who had been called into consultation by President Lincoln a few weeks before his death. This man, David A. Wells, tall, gaunt, and deadly in earnest, had perhaps a greater capacity for massing facts than any other American economist. At his suggestion, the war taxes, which had fettered production and exchange, began to drop from the limbs of industry. By the act of July 13, 1866, taxes on articles of common consumption were abolished, the income tax was suspended from and after June 30, 1870, and the foundations were laid of the existing system of internal revenue, taxing substantially only spirits and tobacco.
Of the elaborate operations of refunding, which converted obligations paying six and seven per cent. into five, four, and finally even into three per cent. securities, and raised American credit to the level of that of other powerful nations, it is not desirable, here, to set forth the details. It is enough to say that the funded debt was reduced within ten years after the war by nearly $500,000,000, and that interest payments upon it, which in 1867 were $143,700,000, had fallen in 1877 to $97,100,000. Even more remarkable in figures were the achievements of later years; but if it is by obstacles overcome that the greatness of a victory is measured, then the palm of achievement belongs to those earlier years when, in the language of Secretary McCulloch, “the industry of one third part of the country, by reason of the war and the unsettled state of its political affairs, has been exceedingly depressed, and the other two thirds by no means exerted their full productive power.”