These influences touched the most careless observer. Special classes derived each a peculiar benefit. Mechanical invention was stimulated. Art received an impetus which can never cease to be felt. To our household art, especially, came much quickening from the sight of England’s beautiful display of home decorations.
The Exposition exalted the United States in the eyes of her foreign guests. Many were amazed at such proofs of the wealth, intelligence, and progressive spirit of the great republic. A correspondent of the London Times wrote, in 1876: “The American invents as the Greek sculptured and the Italian painted; it is genius.” We may hope that the exhibits were educators to Europe as well as to America.
Lastly, the American returned from the great fair with an opinion of his own country which, if more sober and just than he had previously entertained, was not less proud but far prouder. The Nation laid aside its holiday attire, and, despite manifest defects and dangers in our national life, settled down to another century of work with increased pride in its past and stronger confidence for its future.
CHAPTER VII.
ECONOMIC POLITICS
The enormous strides with which we paid off our war debt amazed the world. The debt had reached its highest point in August, 1865. At that date the figure was $2,844,649,626, or, for the interest-bearing part alone, $2,381,530,294, The total interest-bearing debt on April 30, 1888, was only $1,038,199,762. At the end of that fiscal year, June 30, 1888, the debt, less cash in the treasury, amounted to $1,165,584,656. Its items at this time were $222,207,050 in bonds at 4-1/2 per cent., payable in 1891; $714,315,450 in four per cent. bonds, payable in 1907; four per cent. refunding certificates amounting to $141,300; the three per cent. navy pension fund of $14,000,000, and the Pacific Railway six per cent. bonds, $64,623,512. Thus on June 30,1888, more than half of the largest total had been paid off, and the net debt, aside from the Pacific Railway bonds, which that corporation was to pay, having fallen to below a billion. The reduction proceeded for the entire twenty-three years between the first and last dates named, at an average rate of $62,906,975 yearly, or $5,225,581 each month, $174,186 each day, $7,258 each hour, and $120.47 each minute.
The interest-bearing legal tender notes were first paid off. Greenbacks, or non interest-bearing legal tenders were still, October 1, 1894, outstanding to the amount of $346,681,000; yet this division of the debt, too, had been vastly reduced, having stood at $433,160,569 on August 31, 1865.
To the bonded obligations of the country the policy of refunding was early applied, bonds of high rates being called in so soon as callable, and replaced by others bearing lower rates. The income of the Government was so immense that it proved unfortunate to have set so late a date as 1891 for the time at which the 4-1/2’s could be paid off. To fix the date of maturity for the 4’s in 1907 was, of course, worse still. The three per cents. of 1882, which supplanted earlier issues, were fortunately made payable at the Government’s option, and on May 20, 1887, the Secretary of the Treasury issued a call for the last of them, amounting to $19,717,500, interest to cease with the first of the next July.
From this time there were no bonds subject to par payment at the discretion of the Government, and as revenues were vast the surplus began to pile up in the treasury. December 1, 1887, after every possible obligation of the Government had been provided for, $55,258,701 remained, a sum increased by the end of that fiscal year, namely, June 30, 1888, spite of considerable amounts in long bonds purchased at high rates, to $103,220,464, There was no method at once legal and economical for paying this out. The Secretary could of course buy 4’s and 4-1/2’s in the open market, and during 1888 this was to some extent done. Obviously, if entered upon in a large way, it must have greatly carried up the price of those bonds. The question how to limit the surplus, how to keep the money of the country from becoming locked up in the treasury and sub-treasuries of the United States, was thus a grave one, and entered hotly into the political campaign of the last-named year.
On June 30, 1890, $109,015,750 in the 4-1/2 per cent. bonds, redeemable September 1, 1891, were still outstanding. By April 1, 1891, they had, by redemption or purchase, been reduced to $53,854,250, of which one-half in value was held by national banks, to sustain their circulation. To avoid contracting this circulation the Secretary of the Treasury permitted holders of these bonds to retain them and receive interest at two per cent. About $25,364,500 was so continued. Interest on the remainder ceased at their maturity, and nearly all were soon paid off. The bonds continued at two per cent. were all along quoted at par, though payable at the will of the Government, revealing a national credit never excelled in history. The national debt, less cash in the treasury, stood on July 1, 1894, after an increase during the previous fiscal year of $60,000,000, at $899,313,381.
The old tariff issue had emerged again soon after the end of the war. The Morrill tariff of 1861 about restored the rates of 1846, and even those rates had, on many things, been very decidedly increased during the war. Still further protective duties had been laid in the course of the war, called compensating duties, to offset the internal revenues which burdened manufacturers in various ways. After the war the internal taxes were nearly all swept away at the earliest possible moment, until, after July 1, 1883, only spirits, fermented liquors, tobacco, banks and bankers yielded internal revenue. Customs duties were also removed from nearly all so-called revenue articles, as spices, tea, and coffee, not produced in this country—the tax, therefore, not being of a protective nature. Slight reductions were, indeed, made in protective duties, first in 1872—replaced, however, almost entirely in 1875—and again in 1883. The act of 1883 lowered protection less than appeared, and its rates on woollens, high grade cottons, iron ore, steel, and a few other articles, were now made even higher than the same had previously borne. It will be seen that our policy during the years under survey was to limit national income sufficiently without lowering or removing any protective duties.