Another consideration is of great weight. An innocent third party was involved. Virginia owed a large debt, held in great part by loyal citizens of the North and by subjects of foreign countries. The burden was already as heavy as she could bear in her entirety, and dismemberment so crippled her that she could not meet her obligations. The United States might well have relieved Virginia and have done justice to her creditors by making some allowance for the division of her territory. Regarding her only as entitled to the rights of a public enemy so long as she warred upon the Union, we may confidently maintain that she is entitled at least to as just and magnanimous treatment as the National Government extends to a foreign foe. In our war with Mexico it became our interest to acquire a large part of the territory owned by that republic. We had conquered her armies and were in possession of her capital. She was helpless in our hands. But the high sense of justice which has always distinguished the United States in her public policies would not permit the despoilment of Mexico. We negotiated therefore for the territory needed, and paid for it a larger price than would have been given by any other nation in the world. The American Government went still farther. Many of our citizens held large claims against Mexico, and the failure to pay them had been one of the causes that precipitated hostilities. Our government in addition to the money consideration of fifteen millions of dollars which we paid for territory, agreed to exonerate Mexico from all demands of our citizens, and to pay them from our own Treasury. This supplementary agreement cost the National Treasury nearly four million dollars.
If the United State were willing to place Virginia on the basis on which they magnanimously placed Mexico after the conquest of that Republic, a sufficient allowance would be made to her to compensate at least for that part of her public debt which might presumptively be represented by the territory taken from her. If it be said in answer to such a suggestion that it would be fairer for West Virginia to assume the proportional obligation thus indicated, the prompt rejoinder is that in equity her people are not held to such obligation. The public improvements for which the debt was in large part incurred had not been so far completed as to benefit West Virginia when the civil war began,—their advantages being mainly confined to the Tide-water and Piedmont sections of the State. There is indeed neither moral nor legal responsibility resting upon West Virginia for any part of the debt of the old State.
In determining the relative obligations of the National Government and of the government of West Virginia, concerning the debt, it is of the first importance to remember that the new State was not primarily organized and admitted to the Union for the benefit of her own people, but in far larger degree for the benefit of the people of the whole Union. The organic law would not have been strained, legal fictions would not have been invented, contradictory theories would not have been indulged, if a great national interest had not demanded the creation of West Virginia. If it had not been apparent that the organization of West Virginia was an advantage to the loyal cause; if the border-State policy of Mr. Lincoln, so rigidly adhered to throughout the contest, had not required this link for the completion of its chain,—the wishes of the people most directly involved would never have had the slightest attention from the Congress of the United States. Strong and equitable as was the case of West Virginia, irritating and undesirable as her relations to the older State might be, advantageous to the people as the new government might prove, these considerations would not of themselves have offered sufficient inducement to engage the attention of Congress for an hour at that critical period. They would have been brushed aside and disregarded with that cool indifference by which all great legislative bodies prove how easy it is to endure the misery of other people. West Virginia indeed got only what was equitably due, and what she was entitled to claim by the natural right of self-government. The war brought good fortune to her as conspicuously as it brought ill fortune to the older State from which she was wrenched. West Virginia is to be congratulated, and her creditable career and untiring enterprise since she assumed the responsibilities of self-government show how well she deserved the boon. But the wounds inflicted on the mother State by her separation will never be healed until Virginia is relieved from the odium of having been specially selected from the eleven seceding States for the punishment that struck at once against her prosperity and against her pride of empire.
Nor should it be forgotten that the State of Virginia before the war might well be regarded as the creditor and not the debtor of the National Government. One of her earliest acts of patriotism as an independent State was the cession to the General Government of her superb domain on the north side of the Ohio River, from the sale of which more than one hundred millions of dollars have been paid into the National Treasury. A suggestive contrast is presented to-day between the condition of Virginia and the condition of Texas and Florida. It was the aggressive disunionism of the two latter States which aided powerfully in dragging Virginia into rebellion. But for the urgency of the seven original Confederate States, in which Texas and Florida were numbered, Virginia Loyalists would have been able to hold their State firm in her National allegiance. Since the war Texas has traveled the highway to wealth and power, founded on the ownership of her public lands, of which the National Government could have deprived her with as little difficulty as was found in dividing Virginia. Florida has likewise enjoyed general prosperity, and secured rapid development from the resources of land which the National Government had generously given her before the war and of which she was not deprived for her acts of rebellion. True-hearted Americans rejoice in the prosperity of these States which adorn the southern border of the Republic; but they cannot help seeing, and seeing with regret, how differently the ancient Commonwealth of Virginia has fared at the hands of the National Government.
EQUITABLE CONSIDERATIONS INVOLVED.
If the hurt to Virginia were of a general character, which could not be specified or defined, her case might be passed over with the plea of damnum absque injurid. But, unfortunately,—or it may be fortunately,—the detriment to her public credit can be stated with substantial precision, and can be traced directly to her despoilment. That took from her the power to pay her debt. If the harm resulting therefrom were confined to the State and to the holders of her securities, the National Government might the more easily disregard the equities of the case. But Virginia's embarrassment is of wide-spread concern, and injuriously affects the public credit of other States. Nor can it be said that the precedent of aiding Virginia could be quoted for aid to every State that might get into financial trouble. It could be quoted only for the case—which will perhaps never again occur—where the National Government shall strip the State of a large and valuable part of her territory, and thus take from her the ability to meet her obligations. The precedent might then be quoted, and should be unhesitatingly followed.
In the formal and necessarily austere administration of public affairs there is little room for the interposition of sentiment. Yet sentiment has its place. We stimulate the ardor of patriotism by the mere display of a flag which has no material force, but which is emblematic of all material force, and typifies the glory of the Nation. We stir the ambition of the living by rearing costly monuments to the heroic dead. It may surely be pardoned if Americans shall feel a deep personal interest in the good name and good fortune of a State so closely identified with the early renown of the Republic,—a State with whose soil is mingled the dust of those to whom all States and all generations are debtors,—the Father of his Country, the author of the Declaration of Independence, the chief projector of the National Constitution.
CHAPTER XXII.
National Currency and State Bank Currency.—In Competition.—Legal-
tender Bill tended to expand State Bank Circulation.—Secretary
Chase's Recommendation.—Favorably received.—State Bank Circulation,
$150,000,000.—Preliminary Bill to establish National Banks.—
Fessenden.—Sherman.—Hooper.—National Bank System in 1862.—
Discussed among the People.—Recommended by the President.—Mr.
Chase urges it.—Bill introduced and discussed in Senate.—Discussion
in the House.—Bill passed.—Hugh McCulloch of Indiana appointed
Comptroller of the Currency.—Amended Bank Act.—To remedy Defects,
Circulation limited to $500,000,000.—National Power.—State Rights.
—Taxation.—Renewed Debate in Senate and House.—Bill passed.—
Merits of the System.—Former Systems.—First Bank of the United
States.—Charters of United-States banks, 1791-1816.—National
Banks compared with United-States Banks.—One Defective Element.—
Founded on National Debt.
The Secretary of the Treasury had not failed to see that a constant conflict and damaging competition must ensue between the currency of the Nation and the currency of the State banks. It was the course of the banks more than any other agency that had discredited the "demand notes" and demonstrated to the Treasury Department and to Congress the absolute necessity of imparting the legal-tender quality to the paper issued by the government. As this paper took the place of gold and silver in the payment of every obligation, both corporate and individual,—except duties on imports and interest on the National debt,—it was made easy for the State banks to extend their circulation. It was quite practicable for them to keep a sufficient amount of legal-tender paper in their vaults to meet all the probable requirements of redemption, and they were thus tempted to expand their loans and issue their own bills to a dangerous extent. It was indeed hardly necessary to provide legal- tender notes to redeem their own bills. One kind of paper money, to a large proportion of the public, was practically as good as another. Coin redemption being abandoned, the banks in a certain sense lost all moral and legal restraint. The enactment of the Legal-tender Bill had not therefore given the control of the currency to the government. It had only increased the dangers of inflation by the stimulus it imparted and the protection it afforded to the circulation of State bank notes.