FINANCES OF THE UNITED STATES. 



397 



preparation against the crisis of bank suspen- 

 sions, and to place the finances of the country 

 in an almost imperial position, and forever 

 shut down the gates against an irredeemable 

 paper circulation. Thus the Secretary was 

 obliged to take the field practically crippled, 

 when he should have gone forth with the re- 

 sources of the country at his command, like 

 a master. Prompt and efficient taxation, by 

 the confidence which it would have inspired, 

 would have relieved the Secretary from the 

 necessity of issuing demand notes an Unu- 

 sual financial measure which had been the sub- 

 ject of considerable discussion. To add to 

 his embarrassment the military disaster at Bull 

 Bun had just occurred, which reawakened the 

 old fears and apprehensions of capitalists for 

 the future. 



The first efforts of the Secretary were made 

 to provide for immediate wants. This was 

 done by issuing fourteen millions six per 

 cent. Treasury notes, payable in two years, 

 and nearly thirteen million six per cent. Treas- 

 ury notes payable in sixty days. His next 

 care was to provide for the regular and continu- 

 ous disbursements of the war, under the acts 

 of the July session. He tells us "that his re- 

 flections led him to the conclusion that the 

 safest, surest, and most beneficial plan would 

 be to engage the banking institutions of the 

 three chief commercial cities of the seaboard 

 to advance the amounts needed for disburse- 

 ments, in the form of loans for three-year 7.30 

 bonds, to be reimbursed, as far as practicable, 

 from the proceeds of similar bonds, subscribed 

 for by the people through the agencies of the 

 national loan; using, meanwhile, himself, to 

 a limited extent, in aid of those advances, 

 the power to issue notes of smaller denomina- 

 tions than fifty dollars, payable on demand. 

 Upon this plan he hoped that the capital of the 

 banking institutions and the capital of the peo- 

 ple might be so combined with the credit of 

 the Government in a proper provision for ne- 

 cessary expenditures, as to give efficiency to ad- 

 ministrative action, whether civil or military, 

 and competent support to the public credit." 



Although Congress had bound the Secretary 

 by law to obtain money at a minimum rate, the 

 result was that the banking institutions of New 

 York, Philadelphia, and Boston subscribed at 

 once for a loan of fifty millions, of which five 

 millions were to be paid immediately in coin 

 as needed for disbursement, and to receive the 

 7.30 notes of $50 and upward, at three years. 

 When this loan was expended, another and 

 similar was to be made, to be followed by still 

 another. The two first were to be reimbursed 

 by the proceeds of the national loan. At the 

 same time books of subscription to the national 

 loan were opened by the Assistant Treasurers, 

 postmasters, and other designated agents in all 

 the cities and towns where subscriptions could 

 be expected. An enthusiasm for this loan was 

 soon awakened, and capitalists and laborers, 

 men and women, in crowds pressed forward to 



obtain a portion. As the investors were small, 

 the amount taken by December 1st was about 

 $38,000,000. Ultimately, however, when the 

 slow confidence of capitalists was more fully 

 recovered, more than eighty millions went 

 through the agents and first purchasers into 

 the hands of citizens who were then for the 

 first time in their lives holders of national 

 securities. In this manner the banks were 

 partly reimbursed the first loans before the 

 next was made. At the same time an amount 

 of demand notes was issued by the Secretary. 

 The banks had stipulated that none of these 

 notes should be issued, and also that the Secre- 

 tary should draw on them directly for the pro- 

 ceeds of these loans, thus using their paper for 

 public dues. The Secretary declined both stip- 

 ulations. He was not financially strong enough 

 to accede to the first and decline the second. 

 Congress had not confined its appropriations to 

 the estimates of the Secretary. The latter 

 were made for an army of three hundred thou- 

 sand men. But the action of Congress author- 

 ized a force of regulars and volunteers amount- 

 ing to five hundred and fifty thousand men, 

 and any number of major-generals, with suf- 

 ficient staff and brigadier-generals necessary to 

 insure its efficiency. This increase of expen- 

 ditures beyond estimates, unless made with 

 extreme care, is a source of inconceivable em- 

 barrassment to financial officers. By the use 

 of the demand notes the embarrassments were 

 relieved. When Congress assembled in Decem- 

 ber the Secretary was able to report that com- 

 plete success had attended the measures relating 

 to loans, and presented the following results : 



Six per cent. 2-year notes $14,019,084 



Sixty-day notes 12,877,750 



1st bank loan 50,000,000 



2d bank loan 50,000,000 



8d bank loan 45,705,479 



Demand notes issued.. 24,550,325 



Loans realized $197,242,587 



But while the loans had been successful, the 

 receipts of revenue from imports had not 

 equalled the estimates. This was ascribed to 

 the deviation by Congress in many respects 

 from the measures submitted, through consider- 

 ations of general policy, and more pai'ticularly 

 to the changed circumstances of the country. 

 The estimate for the fiscal year in July was 57 

 millions. Two quarters had now passed and 

 the estimate of receipts from imports fell to 32 

 millions. The aggregate of revenue from im- 

 ports, public lands and taxes for the year, it 

 was now estimated by the Secretary, would be 

 about 25 millions less than the estimates made 

 in July. In consequence of this decline in the 

 sources of revenue devoted to ordinary expen- 

 ditures, interest and sinking fund, and in con- 

 sequence of the expenditures authorized by 

 Congress exceeding the estimates, it was evident 

 the Secretary would come far behind at the 

 end of the fiscal year without new appropria- 

 tions at this session of Congress. 



The aspect of affairs financially, at this 

 time, was quite serious. The magnitude of 



