296 



FINANCES OF THE UNITED STATES. 



Thus by far the largest portion of all the ex- 

 penses of the Government during its existence, 

 including war expenses, purchase of territories, 

 indemnities to Mexico, Texas, &c., was dis- 

 charged by the customs revenues. If we deduct 

 from the debt $90,867,828, that existed July 

 1, 1861, the amount of $28,101,644 deposited 

 among the States under the law of 1836 and 

 never returned, and also the debt made neces- 

 sary by the troubles in the latter part of the 

 fiscal year 1861, there will remain very little, 

 thus showing that all the expenses of the Fed- 

 eral Government from its origin have been paid 

 by customs revenues, leaving in the hands of 

 the Government an immense amount of proper- 

 ty acquired in land, and still at its disposal, sflso 

 vast military resources and public buildings, in 

 the whole Union. 



The magnitude of the civil war caused, 

 however, a complete change in the finances, in- 

 volving as it did an amount of expenditure 

 within the year, never before undertaken by 

 any nation. The capital of the country seemed, 

 however, equal to the exigency, although the 

 public mind was at first somewhat startled by 

 events. In June, 1860, Congress had author- 

 ized a loan of $20,000,000 ; of this, $10,000,000 

 was offered in the mouth of October in a 5 per 

 cent, stock, which was taken at a small pre- 

 mium. Inasmuch, however, as the Presidential 

 election of Nov. 6, 1860, intervened before the 

 instalments were paid up, the resulting inquie- 

 tude caused some of the bidders to decline the 

 stock, and $7,022,000 only was issued. The 

 same circumstances caused a great decline in 

 the customs revenues, and the means of the 

 Government in December were greatly cramp- 

 ed. The Secretary of the Treasury, Howell 

 Cobb, resigned December 10. On the 14th of 

 that month Congress passed a law, approved 

 on the 17th, permitting the issue of $10,000,- 

 000 treasury notes, payable in a year, at the 

 lowest rates of interest offered. The Secretary 

 offered $5,000,000 of the notes, bids to be 

 opened Dec. 28. When the time expired, how- 

 ever, but $500,000 had been bid, at 12 per cent. 

 There were some offers at 24 per ct., and some as 

 high as 36 per cent. The Secretary rejected all 

 over 12 per cent. It was highly necessary that 

 the money should be .had to meet the interest 

 on the Federal stocks due Jan. 1, and a num- 

 ber of banks and bankers offered for $1,500,000 

 at 12 per cent., on condition that the money 

 should be applied to the interest. On the 31st 

 the remainder was taken by the same associa- 

 tion at the same rate. It may be here stated 

 that the State of New York had offered for 

 $1,200,000 in a 7 per cent, stock, 3^ years to 

 run, and it was taken at 101.12 to!02.7l, average 

 10U, on the 26th December. 



General Dix was appointed Secretary of the 

 Treasury in January, and he offered the re- 

 maining $5,000,000 of the loan authorized. 



The bids were opened on the 19th, and the 

 notes awarded as follows : 



$10,000 at 8} per Wnt. 



30,000 at 9 



10,000 at 9J 



140,000 at 9J 



67,000 at 9f 



721,000 at 10 



265,000 at 10J 



543,000 at 10J 



1,267,000 at lOf 



1,947,000 at 11 



$5,000,000 Average rate, 10| per cent. 



The condition of the finances now seriously 

 engaged the attention of Congress. The ap- 

 parent discredit of the Government made some 

 vigorous means necessary to replenish the 

 treasury. The necessity of revising the tariff, 

 so that it would produce a larger revenue, was 

 obvious, and a bill to that effect was introduced. 

 Meantime a bill was passed, February 8, author- 

 izing a loan of $25,000,000, to bear 6 per cent, 

 interest, to run not less than ten nor more than 

 twenty years ; the stock to be sold to the high- 

 est bidder. The Secretary offered $8,000,000 

 of this stock. The bids were opened Feb. 27, 

 and the whole amount offered was $14,355,000, 

 ranging from 75 to 96 per cent. All bids below 

 90 were refused, and the stock, as awarded, 

 ranged at 90-J to 96 per cent. 



The tariff bill reported by the Committee of 

 Ways and Means under such circumstances had 

 been passed with little debate. It restored the 

 highest protective character to the tariff, re- 

 placed ad valorem duties with complicated 

 specific duties, and gave but 30 days' notice 

 before going into operation. It was passed 

 March 2, to go into operation April 1, and it 

 authorized a loan of $10,000,000. 'The imme- 

 diate effect of the tariff was to produce larger 

 entries at the custom-house, in order to avoid 

 the new tax. The consequently improved 

 customs revenue supported the Government 

 credit, and this, with renewed hopes of con- 

 tinued peace, caused the Government stock to 

 advance in the market. The new Secretary of 

 the Treasury, S. P. Chase, offered $8,000,000 

 more of the stock, for which bids were opened 

 April 2. It was found that for $3,000,000, 94 

 to 100 per cent, was offered, and 93|, or 3^ per 

 cent, higher than the bids in February, for an 

 amount equal to the balance of the loan. The 

 department thought proper to reject all bids 

 below 94, consequently only that part of the 

 loan was placed, $3,099,000, average 94.01, 

 netting $2,913,395. This decision was unfor- 

 tunately made at the moment when the ex- 

 pedition was about to sail from New York to 

 reenforce Fort Sumter, a fact not known to 

 the public. When it became known, much 

 uneasiness was created, and in the midst of 

 it the department offered $5,000,000 of the 

 balance of the loan in 6 per cent, treasury 

 notes, payable in two years, and convertible 

 into twenty-years stock. These bids were 

 opened on the llth April, when only $1.000,000 

 had been offered. Parties interested then pro- 

 cured a delay, in order that further effort in 

 favor of the stock might be made. The price 



