298 



FINANCES OF THE UNITED STATES. 



Civil list $831,496.90 



Interior department 431,525.75 



War " 180,296,397.19 



Navy " 30,609,520.29 



Public debt 12,639,861.64 



Total extra $224,808,801.77 



Ordinary expenses 93,710,780.30 



Total for 1862 $318,519,582.07 



This was the sum Congress was called upon 

 to meet. According to the Secretary $80,000,- 

 000 might be raised by import duties and tax- 

 ation, and $240,000,000 by loans. Taxes on 

 coffee and tea were proposed, and higher rates 

 upon most other articles of consumption. Con- 

 gress immediately took the matter into con- 

 sideration, and, July 17, passed a law authoriz- 

 ing a loan of $250,000,000 in form as follows: 



Stock, 7 per cent., redeemable after 20 years $250,000,000 



" 6 " " " 20 " 



equal to par for 7 per cent 100,000,000 



Stock, 7 per cent., redeemable after 20 years, 



payable in Europe 



Treasury notes, 7 3 /j per cent., redeemable at 3 



years, convertible into 6 per cent, stock 



Treasury notes, 3 C5 / 100 , redeemable at 1 year, 



convertible into 3-years bonds 



Demand notes, issued as money, not less than 



$5, nor more than 50,000,000 



Treasury notes, 6 per cent., payable within 12 



months 20,000,000 



The whole amount of stock, treasury notes, 

 and demand notes was not to exceed $250,000,- 

 000, except the 6 per cent, notes left, which were 

 to be used as collaterals for temporary loans, and 

 were meant to legalize what the Secretary had 

 already negotiated in that shape. The per- 

 mission to issue $100,000,000 in foreign stock 

 was in the hope that a portion of it might be 

 placed abroad. The act, as it passed the House, 

 pledged the customs revenues for the payment 

 of the interest, but the clause was subsequent- 

 ly stricken out. The law of July 17 limited 

 the rate at which the 7 per cent, stock might 

 be sold, to par; but a supplemental act of Aug. 

 5 allowed the sale of a 6 per cent, at a rate 

 equal to par for a 7 per cent, stock. 



Having given this authority to borrow, Con- 

 gress proceeded to pass such laws as might im- 

 prove the revenues. A direct tax, an income 

 tax, and higher duties, were imposed. The di- 

 rect tax act provided for the levy of $20,000,000 

 upon all the States, which would give from the 

 loyal States $12,000,000, from which the ex- 

 penses of collection were to be deducted. The 

 income tax provided for the' payment of 3 per 

 cent, on incomes over $800, to be levied in 

 April, 1862, on the incomes of 1861. The in- 

 crease of duties embraced taxes on cocoa, coffee, 

 tea, sugar, which it was supposed would yield 

 $22,500,000. The Secretary remarked "that the 

 total revenue from imports during the present 

 year may be $57,000,000, to which may be added 

 the sum of $3,000,000, to be derived from the 

 sales of the public lands and miscellaneous 

 sources, making the total revenue for the year 

 $60,000,000. While, therefore, there is every 

 reason to believe that under a modified tariff, 

 when the prosperity of the country shall be 

 fully restored, an annual revenue of not less 

 than $80,000,000, and probably more, may be 



realized, it will be necessary, in order to sustain 

 fully the public credit, to provide for raising 

 the sum of $20,000,000 for the current year, at 

 least, by direct taxes, or from internal duties 

 or excises, or from both." 



"With these provisions the Secretary had now 

 to come into the market to raise the money, 

 and his prospect was not promising. The 

 law limited the sale of the stocks to a price 

 equal to par for a 7 per cent, stock, which was 

 89.32, and the 6 per cent, had been at 83 in 

 June, and were at the passage of this act, Aug. 

 5, 86f . The disaster at Bull Eun had placed 

 the whole country in peril. Washington was 

 in immediate danger of capture; Baltimore was 

 of doubtful loyalty, and several large States 

 now held by the armies, were then ready to 

 cast their influence into the preponderating 

 scale. Congress had adjourned after binding 

 the Secretary of the Treasury by law, to 

 obtain money at a minimum rate, and there 

 was no resort left but the issue of paper 

 money, based upon the faith and future re- 

 sources of a country discouraged, distracted, 

 and whose future was shrouded in gloom. 

 It was under these circumstances that the 

 Secretary visited New York, and after an 

 interview with the bank officers, it was 

 agreed that the banks of Boston, Philadel- 

 phia, and New York should take the 7/V 

 notes of $50 and upwards, three years to run, 

 in the proportions as follows : 



Total... 



$119,950,185l$145,795,478 



The Secretary to draw the money no faster 

 than he required it for his weekly expenses. 

 Hence as the notes all drew interest from the 

 date they were taken, the banks had the use of 

 the money a part of the time. 

 The amounts taken were as follows : 



Aug. 19. Notes to draw interest from date ...... $50,000,000 



Oct. 1. " " " " " ...... 50,000,000 



Dec. 1. Stock " " " " ...... 50,000,000 



This was a supply of $150,000,000 for three 

 months, in addition to which the Secretary had 

 the right to issue $50,000,000 of paper money; 

 but to the exercise of this power the banks 

 strongly objected, since the notes being made 

 redeemable in coin in. New York, and paid out 

 in the interim, might cause a drain of specie 

 from New York, which the department would 

 be compelled to meet under the law, by drawing 

 the coin from the banks, thus jeopardizing their 

 solvency. The Secretary, therefore, used them 

 very sparingly. It was also agreed that the 

 Secretary should make an appeal to the pub- 

 lic for the sale of the 7fV P er cent, notes, and 

 that he should appoint agents for the sale 

 in all prominent places ; but that all sales so 

 made should be supplied from those taken by 

 the banks, until the amount should be exhaust- 



