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.