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TH: critical condition of public affairs during the closing months of Mr. Buchanan's Administration, and the general apprehension that they must early culminate in civil war, had materially damaged the public credit some time before Mr. Lincoln's inauguration. The comparatively small necessities of the Government during the last session of the Thirty-sixth Congress were met with serious difficulty, and at rates and under circumstances which showed how extensive the loss of confidence was.

On the 17th of December, 1860, Congress authorized an issue of ten millions of one-year Treasury notes, to be disposed of at the best attainable rates.' Five millions of these were advertised to be awarded on the 28th of the same month. But a small aggregate sum was offered, and the rates varied from twelve to thirty-six per cent. The offers at twelve were accepted; they made a total, however, of only half a million dollars. An association of bankers—on condition that the proceeds be applied to the payment of interest on the then existing public debt—subsequently took one and a half million at twelve, and afterward the remainder of the five millions advertised at the same figure. In January, 1861, Secretary Dix disposed of the other five of the ten millions authorized, at an average of about eleven per cent.

* As early as June, 1860—four months before Mr. Lincoln's election—Secretary Cobb was borrowing money at twelve per cent. per annum.

On the 8th of February Congress authorized a loan of twentyfive millions of United States stocks, payable in not less than ten nor more than twenty years, to bear six per cent. interest. Secretary Dix advertised eight millions of these to be awarded on the 22d of the same month. Pending the advertisement, on the 11th of February, the Secretary addressed a letter to the chairman of the Committee of Ways and Means, apprising the committee that the liabilities of the Government due and to fall due before the 4th of March were about ten millions of dollars; that the revenues of the department would be entirely insufficient to meet them, and that not less than eight millions would have to be borrowed. He said that in the existing condition of the country it would be impossible to obtain this sum except at rates seriously damaging to the public credit, without some pledge in addition to that of the General Government. Some of the States had offered the pledge of their faith to the extent of the public moneys deposited with them under the act of the 23d June, 1836;' and the Secretary invited attention to these proposals with a manifest hope that Congress would act favorably upon them; but no action was had. The bids were opened on the 22d of February, as advertised; the aggregate of offers was about fourteen and a half millions, and ranged from 75 to 96.10. Eight millions were accepted at rates not less than 90.

* The 13th section of the act of 23d June, 1886 (5 Stat. at Large, 53), author. 1zed the Secretary of the Treasury to deposit with such States as should legalize their acceptance, in proportion to their congressional representation, such excess of the public moneys over five millions of dollars as should be in the United States Treasury on the 1st of January, 1837; to be returned to the Government in the manner prescribed by the act. The following table shows the distribution made, no portion of which has been returned to the national Treasury:

alne........... . . . . . . . . . . . . . $955,888 25
New Hampshire ....... 669,086 79
Massachusetts ....... 1,888,178 58
Vermont..... ................ 9,0S6 79
Connecticut 764,670 60

Rhode Island................. 882.835 80
New York.... .......... 4,014,520 71
New Jersey... . ... 764.670 60
Pennsylvania ... . 2,867.514 78 || |
Delaware.. . 286.751 49
Maryland... 955,833 25
Virginia...... 2,198,427 99
North Carolina.. 1,433,757 39



This brief sketch will illustrate the depressed state of the public finances during the three months ending about the 4th of March, 1861. Congress during the same period had been stormy and factious. The Southern Senators and Representatives effectually controlled the expressions and action of the venerable and timid President. Seven of the slaveholding States, professing a constitutional right to do so, and surrounding their acts with the most solemn official forms, had publicly declared their secession from the Federal Union, and were in the attitude of practical war upon the national authority. They had united in the organization of a confederated government, and had assumed and were exercising the functions of a separate and independent nation. To render the situation still more painfully cmbarrassing, a powerful body of the Northern people protested earnestly, and even passionately, against the existence of any constitutional right in the General Government to coerce by arms States which had formally withdrawn from the Union. And there were not wanting members of the great party which had elected Mr. Lincoln who declared peaceable secession preferable to the calamities and contingencies of civil war. But war was inevitable, as the more sagacious statesmen clearly foresaw.

Mr. Chase, unawed by the portentous aspect of the political elements, immediately entered upon the organization of his financial plans. Plutarch writes of Pericles that he was seen in public only in going to and coming from the senate-house. It may truly be said of Mr. Chase that he was seen only in going to and coming from the place of his official labors. His abilities and energy soon manifested themselves to the people. He reëstablished the public credit upon solid foundations. He created a currency which answered all the vast requirements of the war, and was, beyond all precedent in the history of the country, popular among the people, and this too before the suspension of cash payments. It is important to be remembered that that currency was not at first a legal tender. He projected a system of national banks, designed ultimately to supersede all similar institutions existing under State laws. The circulating notes of these banks, secured both by private capital and by ample deposits of Government bonds with the Treasurer of the United States, were intended to provide, in an emphatic sense, a sound and uniform currency, the benefits of which—embracing the whole country and extending into the far future—were to prevent the evils inseparable from disordered issues. Under the general operation of his measures, the loans of the Government were absorbed with great rapidity, not only by domestic purchasers but by foreign investors. And more important than any other consideration, the Administration was enabled to meet the prodigious expenditures entailed by the war promptly, surely, regularly. Mr. Chase did not depeive himself nor did he deceive the people as to the true basis of the extensive financial operations of the Government. He felt the force and necessity of a severe and comprehensive system of Federal taxation, and urged upon the early and earnest attention of Congress the adoption of an adequate scheme of revenue from this source as indispensable to a sound administration of the Treasury. On assuming office as Secretary of the Treasury, March 7, 1861, Mr. Chase found that he had power to negotiate loans under the acts of 22d June, 1860, and 8th February and 2d March, 1861. Under the first, which authorized a loan of twentyone millions of United States stocks at six per cent., Secretary Cobb had negotiated $7,022,000, leaving $13,978,000 for future negotiation; under the second, authorizing twenty-five millions six per cent. stock, Secretary Dix had disposed of $8,006,000, leaving $16,994,000; and under the third, authorizing a loan of ten millions of six per cent. stock (it was also a tariff act), no negotiation had been made or attempted. This last act gave power to the Secretary to exchange Treasury notes at par for coin to the amount undisposed of under the act of February 8th. These unsold loans made a total of $40,964,000. On the 22d of March proposals were advertised for eight millions of the loan of the 8th of February, to be awarded on the 2d of April following. Mr. Chase, entirely assured that this stock, payable in coin and bearing a coin interest of six per centum, was intrinsically worth par, resolved that there should be as little sacrifice in selling them as great and pressing public necessities would permit. The offers were more than twentyseven millions; the lowest bid being for $5,000 at 85, and the highest was for $1,000 at par. Eight millions were accepted at

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