In this connection I received the following note:
"Treasury Department, February 6, 1861.
"Hon. John Sherman.
"Dear Sir:—I send a preamble and resolution, and a letter to your governor. Will you read and send them at once? You, as a Member of Congress, can say what I cannot with propriety—that no states which guarantee bonds of the United States to the amount of the public moneys in its hands, will be likely to be called on to repay these moneys—at all events during the twenty years the bonds of the United States will run.
"I am truly yours,
"John A. Dix.
"P. S.—I cannot put out my notice for a loan till your state acts,
and the time is very short."
Subsequently I received the following letter:
"Treasury Department, February 11, 1861, 7 p. m. "Dear Sir:—My plan for raising money to meet the outstanding liabilities of the government, and to enable the incoming administration to carry on its financial operations without embarrassment till it shall have time to mature a plan for itself, has met with an obstacle quite unexpected to me. The committee of ways and means in the House has declined to report a bill to authorize me to accept the guaranties voluntarily tendered by the states. Mr. Spaulding, of New York, and Mr. Morrill, of Vermont, I learn, have objections. Unless they withdraw their opposition the bill cannot be reported, and the plan must fail. In that case I shall not deem it proper to ask for a loan of more than two millions to meet the redemption of treasury notes, which fall due before the 4th of March. The state of the country is such that a larger amount thrown on the market would have a most disastrous influence on the public credit. I do not think I can borrow two millions at more than 90 per cent. With a guaranty such as the states have offered, I can get eight millions at par. The alternative is to authorize me to accept the guaranty, or leave the treasury with scarcely anything in it and with outstanding demands, some of them very pressing, of at least six millions of dollars, for you and your political friends to provide for. If anything is done it should be to-morrow, as I ought to publish the notice on Wednesday. Perhaps you can see the gentlemen referred to to-night and remove their objections. I am, very truly, your obedient servant,
"John A. Dix."
On the 8th of February, 1861, a bill became a law providing for the sale of $20,000,000 six per cent. bonds, and these were sold at the rate of $89.10 for $100, yielding $18,415,000.
Such was the humiliating financial condition of the government of the United States at the close of Mr. Buchanan's administration. The expenditures of the government for the fiscal year ending June 30, 1861, were $84,577,258.60, of which $42,064,082.95 was procured from loans and treasury notes, leaving a balance in the treasury, at the close of the fiscal year 1861, of $2,395,635.21. This condition still existed when Congress subsequently met in special session.
Under the sub-treasury laws then in force, the revenues of the government were received and held only in the treasury at Washington, and in sub-treasuries located in a few of the principal cities of the United States, and could be paid out only upon the draft of the treasurer of the United States, drawn agreeably to appropriations made by law. No money could be received into the treasury except gold and silver coin of the United States, and such treasury notes as were receivable for bonds. State bank notes were not received for government dues. This exclusion grew out of the general failure of banks after the War of 1812 and the panic of 1837, and had caused the outcry in 1840 of: "Gold for the office holders; rags for the people." But this policy of the government to receive only its own coin or notes was sustained by popular opinion.