WHEN the wrack and waste of war are done, and ceased are the tumults and the shouting, the harder task lies before the statesman and the financier of paying the cost. A great war, at least down to very recent times, has usually carried with it haphazard and wasteful financing, an oppressive debt, unequal and burdensome taxation, and a depreciated currency. The aftermath of the Civil War was no exception. At its close all these evils lay heavy upon the people of the United States.
The public debt stood at $2,846,000,000, or about $80 per capita; and of this amount nearly $1,900,000,000 was paying interest at the rate of six per cent., or higher. The ordinary expenditures of the Government, including the support of the armies, were running at the rate of about $3,300,000 a day, while receipts from taxation and other sources than loans were falling below $1,000,000 a day. The man of business could not affix his signature to a check, a receipt, or a bill of exchange, receive a legacy or transfer a piece of real estate, without paying a tax. Cotton was taxed two cents a pound; salt, six cents a hundred pounds; sugar, from two to three and a half cents a pound. Manufacturers were paying licenses for the right to do business, and also taxes upon the value of their output whether a profit emerged or not; middlemen were taxed upon the volume of goods dealt in, irrespective of the fact that such goods had already paid several times. Among other taxes were those levied on matches, photographs, lottery tickets, perfumery, theaters, and carriages; and additions made by repairs to the value of a carriage or a machine paid their own distinctive tax. Incomes were taxed up to twelve and one half per cent. There existed, in short, to use the terse language of David A. Wells, “a system of internal taxation which for its universality and peculiarities has no parallel in anything which had theretofore been recorded in civil history.”
A FLOOD OF PAPER MONEY
THE currency consisted of irredeemable paper, a part issued by national banks, a part by State banks, and a part directly from the government printing-presses. Its value, which had been as low as $35.09 in gold for $100 in paper, in July, 1864, was still less than $70 in gold after the stimulus of Lee’s surrender. Prices of commodities, which had fluctuated even more wildly than the gold premium, showed an average for leading articles, in the first quarter of 1865, representing 2.62 times the corresponding average just before the war.
Brave and energetic as had been the policy of Salmon P. Chase as Secretary of the Treasury in grappling with the problems of the war, he made two economic errors which greatly added to the difficulties that confronted his successor. He continued too long the policy of borrowing instead of taxing, thereby impairing the public credit and adding to the cost of his borrowings; and he opened the Pandora’s box of legal-tender paper money, which left its mark upon our political history for nearly half a century.
From a photograph by W. Kurtz
DAVID A. WELLS