A School History of the United States

by John Bach McMaster

%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.