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exhibited a summary of the results of his operations up to the 30th of November:

There were paid to creditors, or exchanged for coin at par, at different times in July and August, two years' six per cent. notes to the amount of . . $14,019,034 66 There was borrowed at par, in the same months, upon sixty days' six per cent. notes the sum of . - 12,877,750 00 There was borrowed at par, on the 19th of August, upon three years' seven-thirty bonds, issued for the most part to subscribers to the National Loan, . 50,000,000 00 There was borrowed, October 1st, on the like securities, 50,000,000 00 There was borrowed at par, for seven per cent., on the 16th of November, upon twenty years' six per cent. bonds reduced to the equivalent of sevens, including interest . . . . . . 45,795,478 48 There were issued, and were in circulation and on deposit with the Treasurer, November 80th, of demand notes . - - - - - - - 24,242,588 14

Making an aggregate realized from loans in various forms of - - - - - - - . $197,242,588 14

The receipts from the customs, which he had in July estimated at fifty-seven millions for the fiscal year 1862, he now stated would not probably exceed $32,198,602.55. The actual receipts for the first quarter of the year had been $7,198,602.55; the remaining three-quarters could not be expected to yield over $25,000,000. He reduced the estimated receipts from public lands and miscellaneous sources from $3,000,000 to $2,354,000. The aggregate revenue from all sources, therefore (including the direct tax of twenty millions), he reduced to $54,552,665.44, being $25,447,334.56 less than the estimate of July. He attributed this difference between his former estimates and the actual results to the fact that Congress had not adopted—at the July session—the scale of duties he had proposed upon tea, coffee and sugar, and more especially to the changed circumstances of the country, which had proved, even beyond anticipation, unfavorable to foreign commerce. But large as this reduction was, it would not—he said—have compelled him to ask additional powers for the negotiation of loans beyond those asked for in his July report, had appropriations and expenditures been con

ESTIMATES AND RECOMMENDATIONS. 233

fined within the estimates then submitted. Those estimates had been made upon the understanding that it would be necessary to bring into the field an aggregate of three hundred thousand men, volunteers and regulars; but after the estimates had been furnished to him and his report closed, the President had thought it expedient to ask for four hundred thousand men and four hundred millions of dollars. Congress went even beyond the recommendation of the President, and had authorized the acceptance of five hundred thousand volunteers. The large increase of the army and navy in men and officers—whose pay and rations had also been liberally increased—had augmented and would continue to augment the expenditures far beyond the limit indicated in the original estimates, and the limit would have to be still further extended by the sums required for the increase of the navy and other objects. Large additional appropriations were therefore necessary—of these $47,985,566.61 were in consequence of expenditures authorized at the last session, $143,130,927.76 were for future demands; making an increase, including $22,787,933.31 for indefinite appropriations and redemption of temporary debt, beyond the estimates, of July, of $213,904,427.68. To provide the sums needed, the Secretary proposed: The reduction of expenditure within the narrowest possible limits; contracts of every description to be subjected to strict supervision, and contractors to rigorous responsibility; the abolition of unnecessary offices and reduction of salaries; forfeiture of the property of rebels; that the duties on brown sugar should be increased to two and one-half cents per pound; on clayed sugar to three cents; on green tea to twenty cents per pound; and to five cents per pound on coffee; but thought no other alterations in the tariff would be expedient, unless changed circumstances should show their necessity. He proposed to increase the direct tax so as to produce from the loyal States an annual revenue of twenty millions of dollars; and to lay such duties on stills and distilled liquors, on tobacco, on bank-notes, on carriages, on legacies, on paper evidences of debt and instruments for conveyance of property, and other similar subjects of taxation, as would produce twenty millions; and some modification in the income tax, which he declared to be just in prin

ciple, would probably produce ten millions more—making an aggregate derived from internal taxation of fifty millions of dollars. He conceded that this sum was large, but as the public necessities were also great, he felt that he could not shrink from a plain statement of the demands of the situation. But the means of the people were extensive, and the objects to be attained by a consecration of a portion of them to the public service were priceless. The value of the real property of the loyal States he stated, in round numbers, at seven and a half thousands of millions; the personal property at three and a half thousands of millions; and their annual surplus earnings at not less than three hundred millions. Four mills on each dollar, or two-fifths of one per cent. on their real and personal property, would produce forty-four millions; to this sum the proposed income tax would probably add ten millions. The whole sum would be little more than one-sixth of the annual surplus earnings; and he thought such a tax could certainly be paid without inconvenience. However, the amount to be derived from taxes formed but a small portion of the whole sums required for the expenses of the war; the chief reliance was necessarily upon loans. But he made no recommendation as to the powers with which it might be expedient to invest him with respect to future negotiations. He referred that to the better judgment of Congress, but suggested that the rates of interest—whatever discretion might be otherwise given to him—should be fixed by law; and he submitted his views of a NATIONAL CURRENCY with great fullness, as appears elsewhere. Mr. Chase then summarized the estimated receipts and expenditures for the fiscal year ending June 30, 1862: the total of receipts from all sources—taxes and loans—being $329,501,994.38; and of expenditures, $543,406,422.06; showing the apparent amount for which recourse must be had to future loans of $213,904,427.68. In order to complete the view of the financial situation, he summarized the facts and probabilities of the PUBLIC DEBT:*

* The Secretary up to the date of this report had reimbursed to the States of Illinois, Indiana, Iowa, Maine, Massachusetts, Michigan, New Jersey, New Hampshire, Ohio, Pennsylvania, Rhode Island, and Wisconsin, the sum of $4,514,078.51, being 40 per cent of the sums they had severally advanced on account of war ex

STRENGTH OF ARMY AND NAVY JULY, 1861. 235

July 1, 1860, the debt was - - - . $64,769,708 08
July 1, 1861, the debt was . . . . 90,867,828 68
July 1, 1862, it would probably be . . . 517,872,802 93

The estimated strength of the army at the date of this report was as follows:

Wolunteers. Regulars. Aggregate. Infantry . . . . . 557,208 11,175 568,883 Cavalry . . . . . 54,654 4,744 59,898

Artillery . . . . . 20,880 4,808 24,688
Riflemen and sharpshooters . 8,895 - - - - 8,895
Engineers . . . - - - - - - 107 107

Total . . . . 640,687 20,884 660,971

These were for three years “or the war”—in addition were 77,875 three-months troops, making an actual aggregate of 718,512.

The increase in the naval forces was proportionate. On the 4th of March, 1861, the navy consisted of forty-two vessels, carrying five hundred and fifty-five guns and about seven thousand six hundred men. December 2, 1861, the number of vessels in the navy (including some in course of construction and some purchased vessels in course of equipment) was two hundred and sixty-four, carrying twenty-five hundred and fiftyfive guns and twenty-two thousand men.

An act was passed and approved December 24th, by which the duties on tea, coffee, sugar, etc., were fixed at the rates proposed by Mr. Chase. This was the only fiscal legislation of the second session of the Thirty-seventh Congress preceding the close of the year, and the suspension of cash payments, December 31, 1861.

penses. Before sending to Congress the report from which these figures are extracted, Mr. Chase was asked by some prominent financial gentlemen of New York to make the best showing he could, and very particularly to state the public debt and its probabilities at the lowest possible sum. To this Mr. Chase replied, that this would not be compatible with his views of duty; that he felt bound to state the facts as they were; and if the reader will take the trouble to compare his estimates with the results of the debt, he will see how nearly they approximate. On the 80th of June, 1862, it was $514,211,371.62; and on the 80th of June, 1868, it was $1,098,793,181.87—his estimate in his report of December, 1862, having been $1,122,297,408.24.

CHAPTE R XXVII.

MILITARY AND FINANCIAL SITUATION IN JANUARY, 1862—A HARDMONEY WAR IMPRACTICABLE - PROPOSAL OF MOR. THADDEUS STEVENS TO ISSUE LEGAL-TENDER PAPER MONEY-MR. CHASE's OPPOSITION TO THIS PROPOSAL–EXTRACTS FROM HIS LETTERS AND REPORTS ON THE SUBJECT-BIIS EFFORTS TO AWOLD THE LEGAL TENDER—FAILURE OF THESE EFFORTs, AND subMITs to AN. UNAVOIDABLE NECESSITY-OPINIONS OF REPUBLICAN REPRESENTATIVES AND SENATORS ON THE LEGAL TENDER - PASSAGE OF THE LEGAL-TENDER ACT-ONE HUNDEED AND FIFTY MILLION DOLLAR8 AUTHORIZED - A SECOND EMISSION OF ONE HUNDEED AND FIFTY MILLION DOLLARS, SANCTIONED BY CONGRESS - SUMMARY OF THE WHOLE ISSUES AUTHORIZEDEFFECTS OF THE LEGAL TENDER.

Th; situation, military and financial, at the beginning of the year 1862, was gloomy and inauspicious. The “Trent affair” had culminated that day in the release of the rebel envoys, Mason and Slidell, from their imprisonment in Fort Warren, and the recommencement of their journey, from Boston Harbor, toward England. The whole course of the Trent transactions had been a sore wound to the national pride. Men of all parties felt that England had conducted them in a characteristic spirit of insult and menace. The history of this “affair” is brief: On the 8th of November, 1861, Captain Charles Wilkes— commanding the sloop-of-war San Jacinto, then cruising in the Bahama Channel—forcibly detained the English mail-steamer Trent, and took from aboard of her James M. Mason and John

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