shrunk one-half in value, and the bonds were being sold at less than one-half of their face value, measured by coin.

The receipts from taxation now began to give relief, but on March 3, 1865, an act was approved authorizing the issue of six hundred millions 7-30 treasury notes, redeemable in three years, and an indefinite amount of 6 per cent. 5-20 bonds, to be used in funding notes or other maturing obligations of the government. The receipts from loans for year ending June 30, 1865, available for current expenses, amounted to eight hundred and seventy millions, other receipts three hundred and forty-seven millions. They were all expended, but the war was at an end, and no further loans were necessary, the receipts from other sources being sufficient to meet current expenses. On the thirty-first of August, 1865, the public debt, as shown by the books of the treasury, reached its highest point, being then less the cash in the treasury $2,756,431,571.43, but there were many just claims arising from the war still to be paid, and the entire debt must have been not less than three thousand millions.

TAXATION.

To supplement the receipts from loans, congress proceeded somewhat slowly to impose taxes. In August, 1861, a direct tax was imposed, which in time yielded about fourteen millions. In the same month the Tariff act of March, 2, 1861, was amended, and further amendments were added December 24, 1861, July 14, 1862, March 3, 1863, June 30, 1864 and March 3, 1865, all increasing the rate and number of dutiable articles, and protecting manufactures of iron, steel and cotton to the prohibitory point, still producing in 1865 less than eighty-five millions of revenue, being, however, 434 per cent. of the value of the dutiable goods, the highest to that time in the history of the government. The total customs revenue from 1862 to 1865 amounted to three hundred and five millions. In 1862 an internal revenue tax was also imposed upon domestic manufactures of all kinds, yielding to the close of the war three hundred and fifty-six millions.

CURRENCY.

In 1861 sixteen hundred banks, organized and operated under the widely differing laws of the several states, provided the greater part of the circulation of the country. Their issues aggregated at that time about two hundred millions, their deposits two hundred and

fifty millions, and they held about one hundred and sixteen millions of specie or its equivalent. Their issue was far from satisfactory. Except in the amount of reserve held against them, the banks had a clear profit in their issue, and generally the weaker the bank the greater were its efforts to sustain itself by an excessive issue. Even the notes of unquestioned banks were at par only near the place of their issue, rates varying according to prices of exchange. Trustworthy reports from eighteen different states show that, in 1860, out of 1,230 banks 140 were broken, 234 closed and 131 worthless. There were in existence at that time 3,000 kinds of altered notes, 1,700 varieties of spurious notes, 460 of imitation and ever 700 of other kinds more or less fraudulent. Gold coin supplemented by the small silver coins also circulated freely, and constituted the only legal . tender money in circulation.

The banks in the city of New York suspended coin payments on the thirtieth of December, 1861. There seemed to be no reason for the suspension, but their example was followed by most of the banks throughout the country, and on January, 1862, the government dishonored its own paper-it stopped paying coin. Gold was immediately at a small premium in paper. Meanwhile, congress was seriously contemplating the issue of notes to be made a legal tender in payment of all debts, public and private, except duties on imports. To the legal tender feature of the measure much opposition was developed, but after making the notes convertible into 6 per cent. bonds par for par, the measure was accepted as an alleged necessity, and an act authorizing the issue of one hundred and fifty millions of the notes was approved February 25, 1862. No measure so far-reaching in its effects ever before became a law in this country. It changed the terms of all existing contracts, established as the monetary standard a unit which speculators in Wall street could enlarge or contract as suited their purposes, which unsettled prices, stimulated speculation, and strewed the country with the wrecks of fortunes. No one had claimed that the measure was otherwise than a temporary one, but this process of raising money seemed so easy, that in the July following, another issue of one hundred and fifty millions was authorized, and the right to convert the notes into bonds was limited to July 1, 1863. Their depreciation then became very rapid, but on March 3, 1863, another issue of one hundred and fifty millions was authorized.

The government now fully enjoyed the luxury of two kinds of money, for while its notes furnished the general circulation or a basis

therefor, gold was used in payment of duties and in payment of debts abroad. Enough of gold remained in the country for these purposes, as there undoubtedly would for all purposes had it been invited, but it was not, and so became a commodity to be dealt in like wheat, cotton and stocks. A gold board was opened in New York, and to it were turned the eyes of the Nation as eagerly as to the army at the front. The fluctuations in 1863 and 1864 were remarkable. On the twelfth of April, 1864, gold was quoted at 175 in notes. Mr. Chase yielded to the entreaties of "bear" operators, went to New York, opened wide the sub-treasury vaults, poured into Wall street eleven millions of solid gold, but the next day wrote the President that the sales did not seem to reduce the price, and on the twentieth of April gold reached 184.

Congress then took a hand in the game, and passed an act to “prevent gambling in gold," and it was thought this would put an end to dealings in that metal. The act went into effect June 17, and on the twenty-first sales were made at 198, on the twenty-fifth at 208, on July 1 at 280. On the sixth the act was repealed, but the mischief had been done. On the tenth gold reached its highest, 285, and perhaps no greater amount of evil was ever crowded into so brief a period by unfortunate legislation.

No more legal tender notes were issued, but under the act of June 3, 1864, National banks had been organized, and their issues secured by deposits of government bonds were received with favor, and circulated as freely as the United States notes, though not a legal tender in payment of debts. The banks were created largely to give a market for the bonds they would need to secure their circulation. Their use as public depositaries was also authorized, and the banking system growing therefrom has proved safe and satisfactory, and the bank issues uniform in value and secure from any possible default of the bank have furnished an admirable paper circulation. The old state banks, however, maintained their circulation with much persistency, and at the close of the war had in circulation one hundred and forty-three millions; but a law imposing a tax on their issue of 10 per cent. would take effect July 1, 1865, and under that tax the issues of state banks must disappear. At that time there were also in circulation of National bank-notes one hundred and forty-six millions, and of United States notes four hundred and thirty-three millions, the total coin value of which was about five hundred and fifty millions, not much if any in excess of the paper and coin in circulation at the outbreak of the rebellion, thus showing that nothing can be gained in

purchasing power by crowding the channels of the circulating

medium.

The financial operations of the government during this administration were of unprecedented magnitude and importance, but a great rebellion was suppressed and the armies paid off and disbanded. In the midst of general rejoicings, Mr. Lincoln, who had just commenced his second term, fell by the hands of a theatrical assassin, and was succeeded by Andrew Johnson, who had been chosen vice-president.

ADMINISTRATION OF LINCOLN AND JOHNSON—MARCH 4, 1865, TO MARCH 3, 1869.

In December, 1865, Mr. McCulloch, the secretary of the treasury, in his report to congress estimated the receipts of the government for the remaining three-quarters of the year at three hundred and five and a half millions, the expenditures at four hundred and eighty-five millions. The result was widely different: the receipts exceeded the estimates by ninety millions and the expenditures fell short two hundred and ten millions. Thus, instead of a deficit in the revenues to be provided for by a loan, there was a surplus of nearly one hundred millions applicable to the reduction of the debt. This surplus was in the highest degree encouraging. There were, however, large amount of loans maturing, and the necessary authority was given the secretary to fund them into the 6 per cents. authorized by the act of March 3, 1865. Among these was a loan of one hundred and forty millions of the legal tender compound interest notes. These notes were intended for circulation, but the National banks held them largely as part of the legal tender reserve the law required them to keep on hand to meet redemption of their own notes. By the withdrawal of the compound interest notes, the banks would be compelled to keep in their place non-interest bearing notes, and they raised a cry of contraction, and congress, in the interest of the banks, authorized the issue of seventy-five million 3 per cent. certificates, to partly take the place of the compound interest notes. These were the only new securities authorized during this administration.

The country, however, had been heavily taxed, and, as a partial relief, some of the internal taxes were removed. The protection interests, however, controlled tariff legislation, and rates and number of articles were increased by thirteen different acts until 1868, when they reached their highest points. An actual count shows the