THADDEUS STEVENS IN THE DEBATE.

Thaddeus Stevens threw the whole weight of his influence in favor of the measure. To alternative propositions which had been submitted, he made strenuous objection. Certain bankers of New York had suggested that the immediate wants of the government might be supplied by pledging seven and three-tenths per cent. bonds with a liberal margin, payable in one year, to the banks, which would advance a portion in gold and the rest in currency. Mr. Stevens argued that "the effect of this would be that the government would pay out to its creditors the depreciated notes of non-specie-paying banks. And as there is no possibility that the pledges would be redeemed when due, they would be thrown into the market and sold for whatever the banks might choose to pay for them. The folly of this scheme needs no illustration." Another proposition, pressed very earnestly, was to strike out the legal-tender clause, and make the notes receivable for all taxes and public dues, but not to make any provision for redeeming them in coin on demand. Mr. Stevens did not "believe that such notes would circulate anywhere except at a ruinous discount. Notes not redeemable on demand, and not made a legal-tender, have never been kept at par." Even those who could use them for taxes and duties would, in Mr. Stevens's opinion, "discredit them that they might get them low." He was convinced that "if soldiers, mechanics, contractors, and farmers were compelled to take them from the government, they must submit to a heavy shave before they could use them. The knowledge that they were provided for by taxation, and would surely be paid twenty years hence, would not sustain them."

To two prominent amendments which had been submitted, Mr. Stevens manifested earnest opposition. He said "the one moved by the gentleman from Ohio (Mr. Vallandigham) proposes the same issue of notes, but objects to legal-tender, and does not provide for their redemption in coin. He fears our notes would depreciate. Let him who is sharp enough, instruct the House how notes that every man must take can be less valuable than the same notes that no man need take and few would, since they are irredeemable on demand." As to the constitutionality of the bill, he thought that whoever "admits our power to emit bills of credit, nowhere expressly authorized by the Constitution, is an unreasonable doubter when he denies the power to make them a legal-tender." "The proposition of the gentleman from New York" (Mr. Roscoe Conkling), continued Mr. Stevens, "authorizes the issuing of seven per cent. bonds, payable in thirty-one years, to be sold ($250,000,000 of it) or exchanged for the currency of the banks of Boston, New York, and Philadelphia. This suggestion seems to lack every element of wise legislation. Make a loan payable in irredeemable currency, and pay that in its depreciated condition to our contractors, soldiers, and creditors generally! The banks would issue unlimited amounts of what would become trash, and buy good hard-money bonds of the nation. Was there ever such a temptation to swindle? The gentleman from New York further proposes to issue $200,000,000 United-States notes, redeemable in coin in one year. Does he not know that such notes must be dishonored, and the plighted faith of the government be broken? If we are to use suspended notes to pay our expenses, why not use our own?"

The minority of the Ways and Means Committee, through Mr. V. B. Horton of Ohio, had submitted a plan, as Mr. Stevens characterized it, "to issue United-States notes, not a legal-tender, bearing an interest of three and sixty-five hundredths per cent., and fundable in seven and three-tenths per cent. bonds, not payable on demand, but at the pleasure of the United States. This gives one and three- tenths per cent. higher interest than our loan, and, not being redeemable on demand, would share the fate of all non specie-paying notes not a legal-tender." Mr. Stevens believed that the government was reduced to a narrow choice. It must either throw bonds at six or seven per cent. on the market within a few months in amount sufficient to raise at least $600,000,000 in money,—$557,000,000 being already appropriated,—or it must issue United-States notes, not redeemable in coin, but fundable in specie-paying bonds at twenty years; such notes either to be made a legal-tender, or to take their chance of circulation by the voluntary act of the people. The sturdy chairman of Ways and Means maintained that "the highest rate at which we could sell our bonds would be seventy-five per cent., payable in currency, itself at a discount, entailing a loss which no nation or individual doing a large business could stand for a single year." He contended that "such issue, without being made legal-tender, must immediately depreciate, and would go on from bad to worse. If made a legal-tender, and not issued in excess of the legitimate demand, the notes will remain at par, and pass in all transactions, great and small, at the full value of their face; we shall have one currency for all sections of the country, and for every class of people, the poor as well as the rich."

MR. LOVEJOY AND MR. CONKLING.

Mr. Owen Lovejoy of Illinois on the other hand marked out a very different plan. He advocated as the first step, "adequate taxation, if need be to the extent of $200,000,000." In the next place, he would so legislate as to "compel all banking institutions to do business on a specie basis. Every piece of paper that claimed to be money but was not, he would chase back to the man or corporation that forged it, and visit upon the criminal the penalties of the law. He would not allow a bank note to circulate that was not constantly, conveniently, and certainly convertible into specie." In the third place, he would issue interest-paying bonds of the United States, and "go into the market and borrow money and pay the obligations of the government. This would be honest, business- like, and in the end economical. This could be done. Other channels of investment are blocked up, and capital would seek the bonds as an investment." As contrasted with the measure proposed by the Ways and Means Committee, Mr. Lovejoy intimated that his represented "the health and vigor of the athlete;" the other, "the bloated flesh of the beer-guzzler."

Mr. Roscoe Conkling of New York expressed hearty agreement with Mr. Lovejoy. He agreed "with some other gentleman who said that his bill was a legislative declaration of national bankruptcy." He agreed "with still another gentleman who said that we were following at an humble and disgraceful distance the Confederate Government, as it is called, which has set up the example of making paper a legal-tender, and punishing with death those who deny the propriety of the proposition." Mr. Conkling declared that "insolvency is ruin and dissolution;" and he believed that "in passing this bill, as was said by the gentleman from Massachusetts [Mr. Thomas], we are to realize the French proposition about virtue,—that it is the first step that costs. Another and another and another $100,000,000 of this issue will follow. We are plunging into an abyss from which there are to be no resuscitation and no resurrection." Mr. Conkling thought "it right to learn of an enemy," and already "the London Times hails this $150,000,000 legal-tender bill as the dawn of American bankruptcy, the downfall of American credit." The public debt by the first of the ensuing July, within less than a year from the first battle of the war, was already estimated at $806,000,000. "Who can credit these figures," said Mr. Conkling, "when he remembers that the world's greatest tragedian closed his bloody drama at St. Helena leaving the public debt of France less than seventy million of pounds?" He believed that "all the money needed can be provided by means of unquestionable legality and safety." He believed the substitute he had offered would effect that result.

Mr. Hooper of Massachusetts, a man of large experience in financial and commercial affairs, spoke ably in support of the legal-tender clause. "No one," said he, "supposes for one moment that government notes will be sold for coined money, or that coined money will be borrowed on them. It is fair to suppose that the opponents of the administration well understand that this would be the effect of accepting the amendment to strike out the legal-tender clause from the bill; and that their object, while they talk about coined money to deceive some of our friends, is to oblige the government to give up the sub-treasury, and to use for its payment the depreciated bills of the suspended banks; thereby flooding the whole country with these irredeemable notes, and producing, in time, a state of financial confusion and distress that would ruin any administration. The proposed issue of government notes guards against this effect of inflating the currency by the provision to convert them into government bonds, the principal and interest of which, as before stated, are payable in specie."

Mr. Morrill of Vermont supported the bill proposed by the minority of the Ways and Means Committee. He described the legal-tender features as "not blessed by one sound precedent, but damned by all." As a war measure he thought "it was not waged against the enemy, but might well make him grin with delight." He would as soon provide "Chinese wooden guns for the army as paper money alone for the Treasury." Mr. Morrill declared that there never was a greater fallacy than to pretend that as "the whole United States are holden for the redemption of these notes, they will, if made a legal-tender, pass at par." He contended that, as currency, "no more of them can be used than enough to fill the demands of commerce." He directed attention to the fact that of the Treasury notes already issued, payable in specie on demand, "the government succeeded in circulating but $27,000,000 of the $50,000,000 authorized, and of these the banks had held $7,000,000." The sanguine feeling in regard to the length of the war was disclosed by Mr. Morrill. Speaking on the 4th of February, 1862, he ridiculed the suggestion that "the war would be prolonged until July 1, 1863." He declared that "we could close the war by the thirtieth day of July next, as well as in thirty years.' This opinion was the one commonly accepted at the time in Congressional circles, though discountenanced by the wisest among those holding important commands in the army.

Mr. Bingham of Ohio spoke earnestly in favor of the bill. He could not "keep silent" when he saw "efforts made to lay the power of the American people to control their currency, a power essential to their interest, at the feet of brokers and of city bankers who have not a tittle of authority save by the assent of forbearance of the people to deal in their paper issues as money." Mr. Bingham argued that as there "is not a line or word or syllable in the Constitution which makes any thing a legal-tender,—gold or silver or any thing else,—it follows that Congress, having 'the power to regulate commerce,' may determine what shall be a lawful tender in the discharge of obligations payable in money only." The "limitation of the power to impair the obligation of contracts," as Mr. Bingham pointed out, was "a limitation upon the States only, and did not restrain the action of Congress."

Mr. Sheffield of Rhode Island argued earnestly against the bill, and predicted the same fate for it, if enacted, that overcame a similar attempt in his State during the Revolutionary war "to make paper a legal-tender." The people would not submit to it, and "the courts set it aside as an unlawful exercise of legislative power."

ABLE SPEECH BY MR. PIKE.

Mr. Frederick A. Pike of Maine made one of the clearest and ablest speeches delivered in the House in favor of the bill. He regarded it as an experiment forced upon the country by necessity. "We issue $150,000,000," said Mr. Pike, "on a venture." We measure it "with population and wealth and existing currency. We compare it with the action of the past." The issue of Continental notes had reached $20,000,000 by the month of April, 1777, besides a large amount of currency by the States. "And yet," said Mr. Pike, "no marked signs of depreciation had appeared." The whole property of the country did not at that time in his judgment "exceed five hundred millions." From these facts he deduced our ability to stand the proposed issue of paper. Mr. Pike had little faith in the infallibility of any one's judgment as to the ultimate result of financial experiments. He recalled the circumstance that Sir Robert Peel's famous bank bill was introduced in Parliament in 1844 with the confident declaration by Her Majesty's Government that "inquiry had been exhausted." But in the "first mercantile pinch" the measure which was "the embodiment of financial wisdom" did not work favorably, and "the government was compelled to interpose on behalf of the bank and of the business community." "Tax, fight, and emancipate," Mr. Pike declared to be "the Trinity of our situation."

Mr. Valentine B. Horton of Ohio was opposed to giving the legal- tender quality to government paper. He said "the country was never so wealthy as to-day; never was so little due to foreign countries; never were the people so free from embarrassment. The one drawback is that the Treasury wants money to an immense amount." He believed that an appeal to the capitalists would call forth "gold in the utmost abundance." To pass the legal-tender bill would, in his judgment, be "a legislative declaration that the administration is not equal to the occasion for which it was elected." He thought "the time for oracular utterances about a great movement," by which bankers had been inspired with undue hope, had passed by, and that something practical and actual would soon be accomplished.

Mr. John B. Alley supported the bill by arguments which came from his own wide experience in business. The choice, he said, was between notes of the government and "an irredeemable bank currency, a great deal of which will be found, as it was after the war of 1812, utterly worthless."

Mr. Charles W. Walton of Maine spoke briefly but ably on the constitutional power of Congress to pass the bill. He contended that the authority to declare a legal-tender "was an implied and not a direct power;" that, admitting it to belong to the Government, it exists "without limitation." The question before the House, therefore, is "one of expediency only," and on that ground he earnestly supported the measure.

Mr. Shellabarger of Ohio answered the "charges of bad faith and injustice" which had been brought against the bill by its opponents. The cry of ruin to the country he compared with similar fears for England on the part of her economists, and showed how, in every case, they had been disproved by the rising power and growing wealth of that kingdom. He said the legal-tender notes would be "borne up by all the faith and all the property of the people, and they will have all the value which that faith untarnished and that property inestimable can given them."

Mr. John Hickman of Pennsylvania, having no doubt as to the power of Congress to pass the bill, supported it as a governmental necessity.

MR. FESSENDEN OPPOSES LEGAL-TENDER.

The debate in the House was able and spirited throughout. Judging by the tone and number of the Republicans who spoke against the bill, a serious party division seemed to be impending. The measure came to a vote on the 6th of February, the interest in the discussion continuing to the last. Mr. Owen Lovejoy sought occasion to give the measure a parting malediction, declared that "there is no precipice, no chasm, no yawning bottomless gulf before this nation, so terrible, so appalling, so ruinous, as the bill before the House," and Mr. Roscoe Conkling sought the floor to say that he concurred "in every word" Mr. Lovejoy had spoken. Mr. Conkling said the debate had been allowed to close "without pretext of solid argument by any member in favor of the constitutionality of the one feature of the bill."

The essential difference between the plan of the minority and that of the committee had reference to the legal-tender clause. In fact the other details of the Loan Bill could have been agreed upon in a single day's discussion, and the delay was occasioned solely by the one feature of legal-tender. On substituting the measure of the minority the vote was 55 yeas to 95 nays. The bill was then passed by a vote of 93 to 59. The yeas were all Republican. Among the nays—principally Democrats—were found some of the ablest and most influential members of the Republican party. Valentine B. Horton of Ohio, Justin S. Morrill of Vermont, Roscoe Conkling, F. A. Conkling, and Theodore M. Pomeroy of New York, Albert G. Porter of Indiana, Owen Lovejoy of Illinois, William H. Wadsworth of Kentucky, Benjamin F. Thomas of Massachusetts, and Edward H. Rollins of New Hampshire, were conspicuous for their hostility to the legal- tender clause.

The Senate received the bill on the next day, and on the 10th it was reported from the Finance Committee for immediate action. Mr. Fessenden explained the amendments which the committee had embodied in the House Bill. In the first section they provided that the interest on the national debt should be paid in coin. Upon this point Mr. Fessenden considered that the public credit, in large degree, depended. As to the legal-tender feature of the notes, he could not make up his mind to support it. "Will your legal-tender clause," he inquired, "make your notes any better? Do you imagine that because you force people to take these notes they are to be worth the money, and that no injury is to follow? What is the consequence? Does not property rise? You say you are injuring the soldier if you compel him to take a note without its being a legal-tender; but will not the sutler put as much more on his goods? And if the soldier sends the notes to his wife to be passed at a country store for necessaries for his family, what will be the result? The goods that are sold are purchased in New York; the price is put on in New York; a profit is added in the country; and thus the soldier loses just as much. You are not saving any thing for any body."

Mr. Fessenden then inquired, "What do we offer without the legal- tender clause? We are offering notes, with the interest secured beyond a question if the amendments proposed by the Committee on Finance of the Senate are adopted, based on the national faith, and with the power to deposit and receive five per cent. interest in any sub-treasury, and the power of the government to sell the stock at any price, to meet whatever it may be necessary to meet. Will notes of this kind stand better when going out, if you put the confession upon their face, that they are discarded by you, and that you know they ought not to be received, and would not be, unless their reception is compelled by legal enactment?"

The argument against this view, according to Mr. Fessenden, "is simply that the banks will not take the notes unless they are made a legal-tender, and therefore they will be discredited. It was thus reduced to a contest between the government and the banks; and the question is whether the banks have the will and the power to discredit the notes of the United-States Treasury." With all his objections to the legal-tender feature,—and they were very grave,—Mr. Fessenden intimated his willingness to vote for it if it were demonstrated to be a necessity. On the constitutional question involved he did not touch. He preferred, he said, "to have his own mind uninstructed" upon that aspect of the case.

In illustration of the doubt and diversity of opinion prevailing, Mr. Fessenden stated that on a certain day he was advised very strongly by a leading financial man that he must at all events oppose the legal-tender clause, which he described as utterly destructive. On the same day he received a note from another friend, assuring him that the legal-tender bill was an absolute necessity to the government and the people. The next day the first gentleman telegraphed that he had changed his mind, and now thought the legal-tender bill peremptorily demanded by public exigency. On the ensuing day the second gentleman wrote that he had changed his mind, and now saw clearly that the legal-tender bill would ruin the country. There can be no harm in stating that the authors of these grotesque contradictions were Mr. James Gallatin and Mr. Morris Ketchum of New York.

MR. COLLAMER AND MR. SHERMAN.

Mr. Collamer of Vermont followed Mr. Fessenden in an exhaustive argument against the bill as a violation of the Constitution. He believed "in the power of the government to sustain itself in the strife physically and pecuniarily." He was not willing to say to a man," Here is my note: if I do not pay it, you must steal the amount from the first man you come to, and give him this note in payment." He would not be governed in this matter, as Mr. Fessenden intimated he might be, "by necessity." He had taken an oath to support the Constitution, and he believed this bill violated it. He "would not overthrow the Constitution in the Senate Chamber while the rebels are endeavoring to overthrow it by war."

Senator Wilson looked upon the contest as one "between the men who speculate in stocks, and the productive, toiling men of the country." He believed "the sentiment of the nation approaches unanimity in favor of this legal-tender clause." He had received letters from large commercial houses in Massachusetts, representing millions of capital, and "they declare that they do not know a merchant in the city of Boston engaged in active business who is not for the legal- tender bill."

Senator Sherman of Ohio urged the adoption of the measure, because "all the organs of financial opinion in this country agree that there is a majority" for it; and he cited the New-York Chamber of Commerce, the Committee on Public Safety in New York, and the Chambers of Commerce of Boston and Philadelphia, as taking that ground. He proceeded "to show the necessity of it from reason." He stated that the government must "raise and pay out of the Treasury of the United States before the first day of July next, according to the estimate of the Committee of Ways and Means, the sum of $343,235,000. Of this sum $100,000,000 is now due and payable to soldiers, contractors, to the men who have furnished provisions and clothing for the army; to officers, judges, and civil magistrates." Mr. Sherman argued that "a question of hard necessity presses upon the government. This money cannot be obtained from the banks. With a patriotic feeling not usually attributed to money corporations, the banks have already exhausted their means. The aggregate capital of the banks of the three principal cities of the United States is but $105,000,000, and they have taken more than their capital in bonds of the United States." It was, therefore, idle to look to the banks for relief. "They have," continued the senator, "already tied up their whole capital in the public securities. They ask this currency to enable them to assist further in carrying on the government. Among others, the cashier of the Bank of Commerce, the largest bank corporation in the United States and one that has done much to sustain the government, appeared before the Committee on Finance, and stated explicitly that his bank, as well as other banks of New York, could not further aid the government, unless its currency was stamped by, and invested with, the legal form and authority of lawful money, which they could pay to others as well as receive themselves."

Senator James A. Bayard of Delaware argued that the proposed measure violated the Constitution. "No one," said he, "can deny the fact that in the contracts between man and man, and in government contracts to pay money, the obligation is to pay intrinsic value. If you violate that by this bill, which you certainly do, how can you expect that the faith of the community will be given to the law which you now pass, in which you say that you will pay hereafter the interest on your debt in coin? Why should they give credit to that declaration? If you can violate the Constitution of the United States, in the face of your oaths, in the face of its palpable provision, what security do you offer to the lender of money?"

Senator Sumner did not join his colleague in enthusiastic support of the bill. He was indeed much troubled by its provisions. "Is it necessary," he inquired, "to incur all the unquestionable evils of inconvertible paper, forced into circulation by Act of Congress, to suffer the stain upon our national faith, to bear the stigma of a seeming repudiation, to lose for the present that credit which in itself is a treasury, and to teach debtors everywhere that contracts may be varied at the will of the stronger? Surely there is much in these inquiries which may make us pause. If our country were poor or feeble, without population and without resources; if it were already drained by a long war; if the enemy had succeeded in depriving us of the means of livelihood,—then we should not even pause. But our country is rich and powerful, with a numerous population, busy, honest, and determined, and with unparalleled resources of all kinds, agricultural, mineral, industrial, and commercial. It is yet undrained by the war in which we are engaged, nor has the enemy succeeded in depriving us of any of the means of livelihood." But he concluded, "whatever may be the national resources, they are not now within reach except by summary process." He consented "reluctantly, painfully, that the process should issue." He could not however "give such a vote without warning the government against the danger of such an experiment. The medicine of the Constitution must not become its daily bread."

SENATE VOTES ON LEGAL-TENDER.

The bill came to a vote in the Senate on the 13th of February. The government exigency was so pressing that the Senate discussion was limited to four days. On the motion of Mr. Collamer to strike out the legal-tender clause, the vote stood 17 yeas to 23 nays. Anthony of Rhode Island, Collamer and Foot of Vermont, Fessenden of Maine, King of New York, Cowan of Pennsylvania, Foster of Connecticut, and Willey of Virginia, among the Republicans, voted to strike out. The vote to retain the legal-tender feature was Republican, with the exception of Garrett Davis of Kentucky, McDougall of California, Rice of Minnesota, and Wilson of Missouri. This question being settled, the bill, with the legal-tender clause embodied, passed by a vote fo 30 to 7. Mr. Anthony of Rhode Island stated that, having voted against the legal-tender provision, he "could not take the responsibility of voting against the only measure which is proposed by the government, and which has already passed the House of Representatives." Three Republicans, Collamer, Cowan, and King, and four Democrats, Kennedy, Pearce, Powell, and Saulsbury, were the senators who voted against the bill on its final passage.

The bill was returned to the House of Representatives the next day. The Senate amendments were taken up on the 19th. Mr. Spaulding objected to them generally, and especially to the provisions for selling the bonds at the market price and for paying the interest in coin. Mr. Pomeroy of New York advocated concurrence in the amendments of the Senate, as did Mr. Morrill of Vermont. Upon the amendment to pay interest in coin, the House divided, with 88 ayes to 56 noes. Upon the clause allowing the secretary to sell bonds at the market value, there were 72 ayes to 66 noes. A conference on the points of difference between the two Houses was managed by Senators Fessenden, Sherman, and Carlile, and Representatives Stevens, Horton, and Sedgwick. The report of the Conferees was agreed to in both Houses, and the Act was approved and became a law on the 25th of February. Its leading provisions were for the issue of legal-tender notes, on which the debate chiefly turned, and of coupon or registered bonds not to exceed $500,000,000 in the aggregate, bearing six per cent. interest, redeemable at the pleasure of the United States after five years, and payable twenty years after date. The bonds were to be sold at their market value for coin or Treasury notes, and the notes to be exchangeable into them in sums of fifty dollars, or any multiple of fifty. These securities became widely known and popular as the five-twenties of 1862. The fourth section allowed deposits of United-States notes with designated depositories to draw interest at five per cent., and to be paid after ten days' notice, but the total of such deposits was not to exceed $25,000,000 at any time. By the fifth section, duties on imported goods were required to be paid in coin, and the proceeds were pledged, first, to the payment in coin of the interest on the bonds of the United States; and second, to a sinking-fund of one per cent. of the entire debt for its ultimate payment.

Certificates of indebtedness were authorized by Act of Congress passed without debate and approved on the first day of March. These could be granted to any creditor whose claim had been audited, and they drew six per cent. interest, payable at first in coin, but by Act of March 3, 1863, lawful money was substituted for interest. By Act of March 17, 1862, these certificates could be given in discharge of checks drawn by disbursing officers, if the holders of the latter chose to accept them. The secretary was clothed with power by the Act of March 17, 1862, to buy coin with any bonds or notes on such terms as he might deem advantageous. The same Act gave legal-tender value to the demand notes previously authorized. The limitation upon temporary deposits was also raised to $50,000,000.

Mr. Chase, by a communication of June 7 (1862), asked for a further issue of legal-tender notes to the amount of $150,000,000, and he urged that the limit of five dollars be removed, and denominations as low as a single dollar be permitted. He declared that it was impossible to obtain coin necessary to pay the soldiers, and that the plan proposed would remove from disbursing officers the temptation to exchange coin for small bank notes. A reserve of one-third of the temporary deposits would take $34,000,000, and the replacement of the demand notes $56,500,000 more, so that for immediate use the Treasury would get only $59,500,000 of the sum asked for. Mr. Spaulding of New York on the 17th of June presented the measure as reported from the Ways and Means Committee. He argued that this form of loan was "so popular with the people and so advantageous to the government, that it should be extended so far as it could be done safely." Objections such as were offered to the original policy were presented to the additional notes. It was already suggested to authorize notes for fractions of a dollar, but the majority decided against it. The bill passed the House of Representatives on the 24th of June. In the Senate, Mr. Sherman of Ohio attempted to add a clause for the taxation of the circulation of banks, but it was not received with favor. With certain amendments the bill passed the Senate on the 2d of July. On a disagreement which ensued, the conferees were Senators Fessenden, Sherman, and Wright, and Representatives Stevens, Spaulding, and Phelps of Missouri. By their action the volume of notes of denominations less than five dollars was restricted to $35,000,000, and the reserve for meeting deposits was fixed at $75,000,000. While exchangeable into six per cent. bonds, the notes might also be paid in coin under the direction of the Secretary of the Treasury. The report was accepted by the Senate on the 7th of July, and by the House on the 8th. It became a law by the President's approval on the 11th of July.

SECRETARY CHASE ON THE BANKS.

On the 14th of July, Secretary Chase called the attention of Congress to the great evils arising from the issue by non specie-paying banks and unauthorized persons of depreciated currency, and the consequent disappearance of small coin. As a remedy an Act was passed, and approved July 17, for the use of postage and other stamps in payment of fractional parts of a dollar. These stamps were made exchangeable by assistant treasurers for United-States notes in sums not less than five dollars. Banks and persons were forbidden, from the first day of the ensuing August, to make or issue any note or token for a less sum than one dollar, intended to be used as money, under the penalty of a fine not exceeding $500, or imprisonment not exceeding six months, or both. "Shinplasters" had become almost like the frogs of Egypt for multitude. They were in every man's hand and were of all degrees of value. They were sometimes issued for purposes of fraud. Silver had become lost to view, and business houses resorted to the use of their own notes as a convenience. The government stamps were not well adapted to circulate as currency, and they soon gave way to notes of handsome design which came into universal use as the "small change" of the country.

The proper order of the leading measures of finance has always been a subject of contention. Grave differences of opinion exist, even to this day, concerning the necessity and expediency of the legal- tender provision. The judgment of many whose financial sagacity is entitled to respect is, that if the internal tax had been first levied, and the policy adopted of drawing directly upon the banks from the Treasury for the amounts of any loans in their hands, the resort by the government to irredeemable paper might at least have been postponed and possibly prevented. The premium on gold became the measure of the depreciation of the government credit, and practically such premiums were the charge made for every loan negotiated. In his report of December, 1862, Secretary Chase justified the legal-tender policy. He explained that by the suspension of specie payments the banks had rendered their currency undesirable for government operations, and consequently no course other than that adopted was open. Mr. Chase declared that the measures of general legislation had worked well. "For the fiscal year ending with June," he said, "every audited and settled claim on the government and every quartermaster's check for supplies furnished, which had reached the Treasury, had been met." For the subsequent months, the secretary "was enabled to provide, if not fully, yet almost fully, for the constantly increasing disbursements."

The political effects of the legal-tender bill were of large consequence to the Administration and to the successful conduct of the war. If it had been practicable to adhere rigidly to the specie standard, the national expenditure might have been materially reduced; but the exactions of the war would have been all the time grating on the nerves of the people and oppressing them with remorseless taxation. Added to the discouragement caused by our military reverses, a heavy financial burden might have proved disastrous. The Administration narrowly escaped a damaging defeat in 1862, and but for the relief to business which came from the circulation of legal-tender notes, the political struggle might have been hopeless. But as trade revived under the stimulus of an expanding circulation, as the market for every species of product was constantly enlarging and prices were steadily rising, the support of the war policy became a far more cheerful duty to the mass of our people.

This condition of affairs doubtless carried with it many elements of demoralization, but the engagement of the people in schemes of money-making proved a great support to the war policy of the government. We saw the reproduction among us of the same causes and the same effects which prevailed in England during her prolonged contest with Napoleon. Money was superabundant, speculation was rife, the government was a lavish buyer, a prodigal consumer. Every man who could work was employed at high wages; every man who had commodities to sell was sure of high prices. The whole community came to regard the prevalent prosperity as the outgrowth of the war. The ranks of the army could be filled by paying extravagant bounty after the ardor of volunteering was past, and the hardship of the struggle was thus in large measure concealed if not abated. Considerate men knew that a day of reckoning would come, but they believed it would be postponed until after the war was ended and the Union victorious.

The policy of the legal-tender measure cannot therefore be properly determined if we exclude from view that which may well be termed its political and moral influence upon the mass of our people. It was this which subsequently gave to that form of currency a strong hold upon the minds of many who fancied that its stimulating effect upon business and trade could be reproduced under utterly different circumstances. Argument and experience have demonstrated the fallacy of this conception, and averted the evils which might have flowed from it. But in the judgment of a large and intelligent majority of those who were contemporary with the war and gave careful study to its progress, the legal-tender bill was a most effective and powerful auxiliary in its successful prosecution.

THE INTERNAL-REVENUE SYSTEM.

Grateful as was the relief to the people from legal-tender notes, it was apparent to Congress that a government cannot, any more than an individual, maintain a state of solvency by the continuous issuing of irredeemable paper. Money must not merely be promised, it must be paid. The Government therefore required a strong, efficient system of taxation—one that would promptly return large sums to the Treasury. From customs, an increasing revenue was already enriching the Government vaults, but the amount derivable from that source was limited by the ability of the people to consume foreign goods, and wise economists did not desire an enlarged revenue the collection of which was at war with so many domestic interests. The country therefore turned by common instinct to a system of internal duties,—to incomes, to excise, to stamps. In the extra session of the preceding year, Congress had, by the Act of August 5, 1861, laid the foundation for a system of internal revenue by providing for a direct tax of twenty millions of dollars on the real estate of the country, and for an income tax of three per cent. on all incomes in excess of eight hundred dollars per annum. But the appointment of assessors and collectors under the bill had been postponed "until after the second Tuesday of February, 1862," which was practically remanding the whole subject to the further consideration of Congress before any man should be asked to pay a dollar of tax under the law. The intervening months had not decreased but had on the contrary largely developed the necessities of the National Treasury, and enhanced the necessity of a stable revenue system. The exigency had become so great that Congress was compelled for the first time in our history, to resort to the issue of government notes as a legal-tender currency. Promptness and decision were essential to the preservation of the National credit. The sources, the extent, the limitations of the taxing power were closely examined by Secretary Chase in his report and the subject was remanded to Congress for determination.

The Constitution gives to Congress to power to levy imposts, and prohibits it to the States. It gives also to Congress the power to levy internal taxes and excises, leaving to the States the right to do the same. It is one of the traditions of the Convention which met in Philadelphia in 1787 to frame the Federal Constitution, that Mr. Hamilton remarked in a conference of its leading members that if the power to levy impost and excise should be given to the new government, it would prove strong and successful. If the power were not to be given he did not desire to waste his time in repeating the failure of the old Confederation, and should return at once to New York. It was undoubtedly his influence which secured the wide and absolute field of taxation to the General Government. He well knew that direct taxes are onerous, and as the majority insisted on levying them in proportion to population, as in the old Confederation, their use as a resource to the General Government was practically nullified. Such a system involved the absurdity that men taken per capita average the same in respect to wealth, and that one hundred thousand people in New York should pay no more tax than the same number in Arkansas. Statesmen and financiers saw from the first that the direct tax clause in the Constitution would be valuable only in forcing the use of the excise. But for the dread of this, the States would not have yielded all the sources of indirect taxation to the National Government.

When appointed Secretary of the Treasury, Mr. Hamilton insisted upon the prompt levy of excises. He induced the first Congress to lay a tax on all distilled spirits. If made from molasses or sugar or other foreign substance, the tax should be from eleven to thirty cents per gallon according to the percentage above or below proof. If made from domestic products, the tax should be from nine to twenty-five cents per gallon. The first was practically a tax on rum, the second on whiskey. This excise was followed in subsequent years by duties on carriages, on snuff, on property sold at auction, on refined sugar, and by the sale of stamps. Other articles were in after years added to the list, and to aid the Treasury during the period of the second war with Great Britain, a heavy imposition of internal duties was resorted to as the most prompt and efficient mode of replenishing the hard pressed Treasury.

THE INTERNAL-REVENUE SYSTEM.

The excise was from the first unpopular. The men who insisted that "black quart-bottles" should be admitted free of duty when the first tariff bill was passed, did not relish the levying of a heavy tax on the whiskey that was to fill them. The exciseman was to their view precisely what Dr. Johnson had defined him in his dictionary: "an odious wretch, employed to collect an unjust tax." Revolutionary proceedings had been inaugurated by resistance to a tax on tea. But tea at that day was looked upon as a luxury in which only a few could indulge, while whiskey was regarded as a necessity, of universal consumption. Resistance went so far as to organize an insurrection in Western Pennsylvania against the official authority which attempted to collect the tax. The outbreak was promptly suppressed by the power of the General Government but the result of the agitation was a deep-seated prejudice against the Federal party. Pennsylvania sympathized with the more liberal views of Jefferson, and in the Presidential election of 1796 gave him fourteen of her fifteen electoral votes. John Adams received the other vote, and as he was chosen by a majority of one, his Pennsylvania support, small as it was, proved timely and valuable.

Resistance to internal duties was tried by legal methods. A heavy duty had been laid on carriages—two dollars per year for those of simplest form and fifteen dollars for the most costly. The tax applied to all carriages for the conveyance of persons, whether kept for private use or for public hire. One Daniel Lawrence Hylton of Virginia resisted the payment of the tax and the case was ultimately heard before the Supreme Court in the February term of 1796. Mr. Hamilton who had resigned from the Treasury Department the preceding year, argued the case for the Government in conjunction with the Attorney-General, Charles Lee. Mr. Campbell, Attorney for the Virginia District and Mr. Ingersoll, the Attorney-General of Pennsylvania, appeared for the plaintiff. The case turned wholly upon the point whether the tax, on carriages kept for private use, was a direct tax. If not a direct tax, it was admitted to be properly levied according to that clause in the Constitution which declares that "all duties, imposts, and excises shall be uniform throughout the United States." If a direct tax it was wrongfully levied because the Constitution declares that "no capitation or other direct tax shall be laid unless in proportion to the census or enumeration of the inhabitants of the United States."

The well-known decision of the court, delivered by Judge Samuel Chase, pronounced the tax to be constitutional. Justice James Wilson who concurred in the decision had taken a very prominent part as a delegate from Pennsylvania in the convention which framed the Constitution, and ranked at that time as one of the ablest lawyers in the Union. The opinion of the judges seemed to be, though no formal decision was rendered to that effect, that a tax on land, and a capitation or poll tax, are the only levies which within the terms of the Constitution are to be considered direct taxes. The decision was one of extraordinary interest to the Government, as, had it been the other way, one great resource for the raising of money, indeed the greatest resource, would have been taken from the Federal Government. The appearance of Mr. Hamilton was an indication of the dignity and importance which were attached to the case by Washington's Administration.

A singular feature of the proceedings was the allegation by Mr. Hylton that he "owned, possessed, and kept one hundred and twenty- five chariots for the conveyance of persons—exclusively for his own separate use and not to let out to hire, or for the conveyance of persons for hire." What particular necessity a Virginia gentleman of the last century had for that number of chariots "for his own separate use" is nowhere explained. It may have been the mere filling of the blanks in a legal declaration in which the declarant was permitted a free use of figures, but as it stands in the reports of Supreme Court decisions, it seems to be one of the odd incidents that make up the humor of the Law.

The system of internal duties and excises continued in various forms for thirty years, practically disappearing at last in 1821. But for the financial demands precipitated by the war of 1812 and the period of depression which ensued, the system would have been abolished at an earlier date. During the period of their existence, from 1790 to 1820, the internal taxes had yielded to the Government the gross sum of $22,000,000, an average of a little more than $700,000 per annum. It thus proved a very valuable resource to the Republic in the period of its early financial troubles.

COMPREHENSIVE SYSTEM OF TAXES.

Congress now determined under the recommendation of Secretary Chase to use this great source of revenue to the fullest practicable extent. Immediately after the passage of the Legal-tender Act the subject of internal revenue was taken up, elaborately investigated by committees, exhaustively discussed in both Senate and House. The final result was the enactment of a bill "to provide internal revenue to support the Government and to pay interest on the public debt," which received the President's approval on the first day of July (1862). It was one of the most searching, thorough, comprehensive systems of taxation ever devised by any Government. Spiritous and malt liquors and tobacco were relied upon for a very large share of revenue; a considerable sum was expected from stamps; and three per cent. was exacted from all annual incomes over six hundred dollars and less than ten thousand, and five per cent.—afterwards increased to ten per cent.—on all incomes exceeding ten thousand dollars. Manufactures of cotton, wool, flax, hemp, iron, steel, wood, stone, earth, and every other material were taxed three per cent. Banks, insurance and railroad companies, telegraph companies, and all other corporations were made to pay tribute. The butcher paid thirty cents for every beef slaughtered, ten cents for every hog, five cents for every sheep. Carriages, billiard-tables, yachts, gold and silver place, and all other articles of luxury were levied on heavily. Every profession and every calling, except the ministry of religion, was included within the far-reaching provisions of the law and subjected to tax for license. Bankers and pawnbrokers, lawyers and horse-dealers, physicians and confectioners, commercial brokers and peddlers, proprietors of theatres and jugglers on the street, were indiscriminately summoned to aid the National Treasury. The law was so extended and so minute that it required thirty printed pages of royal octavo and more than twenty thousand words to express its provisions.

Sydney Smith's striking summary of English taxation was originally included in a warning to the United States after the war of 1812 against indulging a marital spirit or being inflamed with a desire for naval renown. "Taxes," said the witty essayist in the Edinburgh Review, "are the inevitable consequences of being too fond of glory." He bade us beware of Essex, Porter, and Stephen Decatur. Even in the second year of the civil war in which we were struggling for life rather than for glory, we had come to realize every exaction ascribed to the British system. We were levying "taxes upon every article which enters into the mouth or covers the back or is placed under the foot; taxes on every thing which it is pleasant to see, hear, feel, smell, or taste; taxes upon warmth, light, and locomotion; taxes on every thing on earth and the waters under the earth; taxes on every thing that comes from abroad or is grown at home; on the sauce which pampers man's appetite and on the drug that restores him to health; on the ermine which decorates the judge and the rope which hangs the criminal; on the poor man's salt and the rich man's spice; on the brass nails of the coffin and the ribbons of the bride."

The system of internal revenue of which the foregoing is no exaggeration proved in all respects effective. Congress rendered the taxes more palatable and less oppressive to the producers by largely increasing the duties on imports by the Tariff Act of July 14, 1862, thus shutting out still more conclusively all competition from foreign fabrics. The increased cost was charged to the consumer, and taxes of fabulous amount were paid promptly and with apparent cheerfulness by the people. The internal revenue was bounteous from the first, and in a short period increased to a million of dollars per day for every secular day of the year. The amount paid on incomes for a single year reached seventy-three millions of dollars, the leading merchant of New York paying in one check a tax of four hundred thousand dollars on an income of four millions. Mr. Webster said that "Hamilton smote the rock of the National resources and abundant streams of revenue gushed forth." But Hamilton's Funding Bill was not more powerful in establishing the credit of the young Republic after the Revolution than was the Internal-revenue Act in imparting strength to the finances of the matured Nation in the throes and agonies of civil war. It was the crowning glory of Secretary Chase's policy, and its scope and boldness entitle him to rank with the great financiers of the world.

CHAPTER XX.

Elections of 1862.—Mr. Lincoln advances to Aggressive Position on Slavery.—Second Session of Thirty-seventh Congress adjourns.— Democratic Hostility to Administration.—Democratic State Conventions. —Platforms in Pennsylvania, Ohio, Indiana, and Illinois.—Nomination of Horatio Seymour for Governor of New York.—The President prepares for a Serious Political Contest.—The Issue shall be the Union or Slavery.—Conversation with Mr. Boutwell.—Proclamation of Emancipation.—Meeting of Governors at Altoona.—Compensated Emancipation proposed for Border States.—Declined by their Senators and Representatives.—Anti-slavery Policy apparently Disastrous for a Time.—October Elections Discouraging.—General James S. Wadsworth nominated against Mr. Seymour.—Illinois votes against the President.—Five Leading States against the President.— Administration saved in Part by Border States.—Last Session of Thirty-seventh Congress.—President urges Compensated Emancipation again.—Emancipation Proclamation, January 1, 1863.—Long Controversy over Question of Compensation for Slaves.—Test Case of Missouri. —Fourteen Million Dollars offered her.—General Pope's Campaign. —Army of the Potomac.—Battle of Antietam.—McClellan removed.— Burnside succeeds him.—Defeat at Fredericksburg.—Hooker succeeds Burnside.—General Situation.—Arming of Slaves.—Habeas Corpus.— Conscription Law.—Depressed and Depressing Period.

Popular interest in the summer of 1862 was divided between events in the field and the election of Representatives to the Thirty- eighth Congress. A year before, the line of partisan division had been practically obliterated in the Loyal States—the whole people uniting in support of the war. The progress of events had to a large extent changed this auspicious unanimity, and the Administration was now subjected to a fight for its life while it was fighting for the life of the Nation.

The conservatism which Mr. Lincoln had maintained on the Slavery question had undoubtedly been the means of bringing to the support of the war policy of his Administration many whom a more radical course at the outset would have driven into hostility. As he advanced however towards a more aggressive position, political divisions became at each step more pronounced. The vote on the question of abolishing slavery in the District of Columbia had been strictly on the line of party, and the same is true of the proposition for compensated emancipation in the Border States, and of the Act confiscating the property of Rebels. Not a single Democrat in the Senate or House sustained one of these measures. They were all passed by Republican votes alone, the Democratic minority protesting each time with increasing earnestness and warmth.

The second session of the Thirty-seventh Congress adjourned on the 17th of July, 1862, but long before that date the excitement prevailing in Congress had extended to the people, and political divisions were every day growing more earnest, partisan leaders every day more active, their followers every day more excited. The Slavery question was the source of the agitation, and by a common instinct throughout the free States, the Democrats joined in the cry against an Abolition war. They were as ready, they declared, as on the day after the firing on Sumter, to uphold all measures necessary for the defense of the Government and the maintenance of the Union, and they demanded that the Republicans should restrict the war to its legitimate ends—as defined by the supporters of the Administration in July, 1861, by the unanimous adoption of the Crittenden Resolution. They would not listen to any change of action based on change of circumstances, and they prepared to enforce at the ballot-box their opinions touching the new departure of Congress and the President.

The Democratic State Conventions in Pennsylvania and Ohio, both held on the 4th of July, reflected the feeling which so largely pervaded the ranks of the party throughout the North. In Pennsylvania the Convention unanimously declared that "the party of fanaticism or crime, whichever it may be called, that seeks to turn loose the slaves of the Southern States to overrun the North and to enter into competition with the white laboring masses, thus degrading their manhood by placing them on an equality with negroes, is insulting to our race and merits our most emphatic and unqualified condemnation." They further declared that "this is a government of white men and was established exclusively for the white race"; that "the negroes are not entitled to and ought not to be admitted to political and social equality with the white race."

DEMOCRATIC PLATFORMS IN 1862.

The Democratic Convention of Ohio made an equally open appeal to race prejudice. They avowed their belief that the Emancipation policy of the Republican party if successful "would throw upon the Border free States an immense number of negroes to compete with and under-work the white laborers and to constitute in various ways an unbearable nuisance"; and that "it would be unjust to our gallant soldiers to compel them to free the negroes of the South, and thereby fill Ohio with a degraded population to compete with these same soldiers upon their return to the peaceful avocations of life." It was not by mere chance that the Democratic party of these two great States held their conventions on the National Anniversary. It had been carefully pre-arranged with the view of creating a serious impression against the Administration.

The Democrats of Indiana went beyond their brethren of Ohio and Pennsylvania in the vigor with which they denounced the anti-slavery policy of the President. Their convention was held a month later, and unanimously demanded that "the public authorities of Indiana should see that the constitution and laws of the State are enforced against the entrance of free negroes and mulattoes," declaring that "when the people of Indiana adopted the negro exclusion clause in their constitution by a majority of ninety-four thousand votes they meant that the honest laboring white man should have no competitor in the black race; that the soil of Indiana should belong to the white man, and that he alone was suited to the form of her institutions." In Illinois the Democratic party adopted substantially the same platform as that proclaimed in Indiana. They made the distinct and unmistakable issue that a war for the abolition of slavery could not have their support; that the Government of the United States was made for white men, and that negroes could not be admitted to terms of equality in civil rights.

The most important election of the year was that to be held in New York, not merely because of the prestige and power of the State, but on account of the peculiar elements that entered into the contest. The Democratic party proceeded in the selection of candidates and in the definition of issues with great circumspection. They avoided the rancorous expressions used in Pennsylvania and Ohio, declared that they would continue to render the government their sincere and united support in the use of all legitimate means to suppress the rebellion, and cited the Crittenden Resolution, unanimously passed by Congress in July, 1861, as embodying the principles upon which they appealed for popular support. They expressed their "willingness to withhold their views upon all questions not rendered imperative by the imperiled condition of the country." The had not one word to say on the subject of slavery, and they avowed their readiness to act in the coming election with any class of loyal citizens who agreed with them in the principles embodied in their platform. This last clause related to a third party, the remnant of those who had supported Mr. Bell in 1860 and who had just held a convention at Troy. They had comprised their entire platform in "the Constitution, the Union and the enforcement of the laws," and had nominated Horatio Seymour for governor.

It was not difficult to see that politically the case was well managed, and that the most partisan of partisans in the person of Mr. Seymour, was enabled to appear before the voters of New York in the attitude of one who could graciously correct the errors of the Administration, and direct the course of the war in channels of patriotism that would harmonize the entire people. The nomination of Mr. Seymour was made with great enthusiasm by the Democracy, and the policy of the National Administration was thus challenged in the leading State of the Union. Mr. Lincoln looked upon the situation as one of exceeding gravity. The loss to the Administration, of the House of Representatives in the Thirty-eighth Congress, would place the control of the war in the hands of its opponents, and, as the President believed, would imperil the fate of the National struggle. The power of the purse controls the power of the sword. The armies in the field required a vast and constant expenditure, and to secure the money a rigorous system of taxation must be enforced. A House of Representatives controlling the power to tax and the power to appropriate could, if hostile to the war, neutralize and destroy all the efforts of the Executive.

The President measured the extent of the danger and prepared to meet it. He clearly read the signs of the times. He saw that the anti-slavery policy of Congress had gone far enough to arouse the bitter hostility of all Democrats who were not thoroughly committed to the war, and yet not far enough to deal an effective blow against the institution. He saw that as the Administration was committed to the partial policy which involved all the danger of a re-action and a retreat, it would be wise to commit it to the bold, far- reaching, radical and aggressive policy from which it would be impossible to turn without deliberately resolving to sacrifice our nationality. He determined therefore to lay before the people a choice between the Union and Slavery. He would persuade them that both could not be saved and that they must choose the one which they regarded as the more worthy of preservation. Slavery was not only the inciting cause of the rebellion but was its chief strength and support in the South and at the same time a weakening element to the Union cause in the Loyal States. No man had looked at the question in all its bearings so closely as Mr. Lincoln. He had studied the consequences of every step and had proceeded with the utmost caution.

THE PRESIDENT'S MONITORY PROCLAMATION.

The President kept his own counsels so closely, and relied so confidently upon his own conclusions, that it is not possible to say when he first seriously entertained the thought of general emancipation as a war measure. Mr. George S. Boutwell of Massachusetts who enjoyed Mr. Lincoln's confidence and who at this period of the contest was appointed Commissioner of Internal Revenue, is authority for some interesting statements. About the time that the anti- slavery legislation now under discussion was in progress Mr. Lincoln received a letter written by a loyal citizen of Louisiana, containing a strong argument against emancipation. He depicted in vivid colors the bad results to flow from it and appealed earnestly to the President not to take so dangerous a step. Without combating in detail the arguments of his correspondent who personally enjoyed his confidence, Mr. Lincoln said, "You must not expect me to give up this government without playing my last card."

During an interview with Mr. Lincoln after the adjournment of Congress in July, and when military disasters were falling thick and fast upon us, Mr. Boutwell suggested to the President that we could not hope to succeed until the slaves were emancipated. To which Mr. Lincoln answered, "You would not have it done now, would you? Had we not better wait for something like a victory?" The statement, widely made in the autumn of 1862, that Mr. Lincoln had been frightened or driven into the issuing of the proclamation by the meeting of the governors of the Loyal States at Altoona, had no foundation in fact. When the President's attention was called to it, he said, "The truth is, I never thought of the meeting of the governors at all. When Lee came over the Potomac I made a resolve that if McClellan drove him back I would send the proclamation after him. The battle of Antietam was fought Wednesday, but I could not find out until Saturday whether we had won a victory or lost a battle. It was then too late to issue it that day, and on Sunday I fixed it up a little, and on Monday I let them have it." This colloquial style was characteristic of Mr. Lincoln, and the frankness with which it was spoken disposes utterly of the claims made in behalf of Mr. Chase and Mr. Sumner that they contributed to the text of the Monitory Proclamation of 1862.

Two months before issuing the Proclamation Mr. Lincoln had urgently requested the senators and representatives of the Border States to give their effective co-operation in aid of compensated emancipation. In his letter of July 12 he said "Before leaving the Capitol, consider and discuss this subject among yourselves. You are patriots and statesmen, and as such I pray you to consider this proposition and at least commend it to the consideration of your States and people. As you would perpetuate popular government, I beseech you that you do in no wise omit this. Our common country is in great peril, demanding the loftiest views and boldest action to bring a speedy relief. Once relieved, its form of government is saved to the world, its beloved history and cherished memories are vindicated, its happy future assured and rendered inconceivably grand. To you more than to any others the privilege is given to assure that happiness, to swell that grandeur, to link your own names therewith forever."

The majority of the senators and representatives from the Border States did not concur with Mr. Lincoln's views and did not respond favorably to his earnest appeal. The Maryland delegation in Congress, the Kentucky delegation with one exception, and the Missouri delegation with one exception, entered into a long argument dissenting from the conclusions of the President. The West Virginia men (with the exception of Mr. Carlile), Mr. Casey of Kentucky, Mr. John W. Noell of Missouri, Mr. George P. Fisher of Delaware, together with Mr. Horace Maynard and Mr. A. J. Clements from Tennessee (not a Border State), expressed their readiness to co- operate with Mr. Lincoln. Mr. Maynard wrote a separate letter distinguished by breadth of view and strength of expression. It is impossible to comprehend the determination of the Border State men at that crisis. Having resisted in vain the aggressive legislation of Congress already accomplished, they could hardly fail to see that the institution of slavery was threatened with utter destruction. It seems absolutely incredible that, standing on the edge of the crater, they made no effort to escape from the upheaval of the volcano, already visible to those who stood afar off.

THE PRESIDENT'S ANTI-SLAVERY POLICY.

The Monitory Proclamation of Emancipation was issued on the 22d of September. It gave public notice that on the first day of January, 1863—just one hundred days distant—"all persons held as slaves within any State or designated part of a State, the people whereof shall be in rebellion against the United States, shall be then thenceforward and forever free." It was a final tribute to those engaged in rebellion that every agency, every instrumentality would be employed by the government in its struggle for self-preservation. It brought—as Mr. Lincoln intended it should bring—the seriousness of the contest to the hearts and consciences of the people in the Loyal States. He plainly warned them that every thing was at stake and that if they were unwilling to meet the trial with the courage and the sacrifice demanded, they were foredoomed to disaster, to defeat, to dishonor. He knew that the policy would at first encounter the disapproval of many who had supported him for the Presidency, and that it would be violently opposed by the great mass of the Democratic party. But his faith was strong. He believed that the destruction of slavery was essential to the safety of the Union, and he trusted with composure to the discerning judgment and ultimate decision of the people. If the Administration was to be defeated, he was determined that defeat should come upon an issue which involved the whole controversy. If the purse of the Nation was to be handed over to the control of those who were not ready to use the last dollar in the war for the preservation of the Union, the President was resolved that every voter in the Loyal States should be made to comprehend the deadly significance of such a decision.

The effect of the policy was for a time apparently disastrous to the Administration. The most sagacious among political leaders trembled for the result. Only the radical anti-slavery men of the type of Sumner and Stevens and Lovejoy were strong and unyielding in faith. They could not doubt, they would not doubt the result. For many weeks the elections in the North promised nothing but adversity. Maine voted a few days before the Proclamation was issued. Ever since the repeal of the Missouri Compromise the majorities against the Democrats in that State had varied from ten to nineteen thousand. Under the pressure of military reverses and the cry of an abolition war, the majority for Abner Coburn, the Republican candidate for governor, was a little over four thousand; and for the first time in ten years one of the districts returned a Democratic representative to Congress in the person of L. D. M. Sweat. Vermont, contrary to the tide of opinion elsewhere, increased her majority for the Administration—an event due in large part to the loyal position taken by Paul Dillingham who had been the leader of the Democratic party in the State.

The October elections were utterly discouraging. In Ohio the Democrats prevailed in fourteen of the Congressional districts, leaving the Republicans but five,—registering at the same time a popular majority of some seven thousand against the Administration. The extent of this reverse may be measured by the fact that in the preceding Congressional election Republican representatives had been chosen in thirteen districts. In Indiana the result was overwhelming against the President. The Republicans had held their convention early in the summer and had re-affirmed the Crittenden Resolution as embodying their platform of principles. They were not in position therefore to withstand the furious onslaught made by the Democrats on the Slavery question. Of the eleven Congressional districts the Republicans secured but three, and the Democrats had a large majority on the popular vote.—In Pennsylvania whose election was usually accepted as the index to the average public opinion of the country, the Democrats secured a majority of four thousand, and elected one-half the delegation to Congress. In November, 1860, Mr. Lincoln had received a majority of sixty thousand in Pennsylvania, and this change marked the ebb of popular favor created by the anti-slavery policy of the Administration.

Against the candidacy of Mr. Seymour for the governorship of New York, the Republicans nominated James S. Wadsworth, formerly a partisan of Mr. Van Buren and Silas Wright. He was a gentleman of the highest character, of large landed estate which he had inherited, and of wide personal popularity. He had volunteered for the war and was then in the service, with the rank of Brigadier-General. The convention which nominated him assembled after Mr. Lincoln's decisive action. They hailed "with the profoundest satisfaction the recent proclamation of the President declaring his intention to emancipate the slaves of all rebels who did not return to their allegiance by the 1st of January, 1863," and they urged upon the National Government "to use all the means that the God of battles had placed in its power against a revolt so malignant and so pernicious." Lyman Tremaine, a distinguished citizen who had been theretofore connected with the Democratic party, was nominated for Lieutenant-Governor.

The contest was extremely animated, enlisting the interest of the entire country. The result was a victory for Mr. Seymour. His majority over General Wadsworth was nearly ten thousand. His vote almost equaled the total of all the Democratic factions in the Presidential election of 1860, while Mr. Wadsworth fell nearly seventy thousand behind the vote given to Mr. Lincoln. The discrepancy could be well accounted for by the greater number of Republicans who had gone to the war, and for whose voting outside the State no provision had been made. No result could have been more distasteful to the Administration than the triumph of Mr. Seymour, and the experience of after years did not diminish the regret with which they had seen him elevated to a position of power at a time when the utmost harmony was needed between the National and State Governments.

REPUBLICAN DEFEAT IN ILLINOIS.

To the President the most mortifying event of the year was the overwhelming defeat in Illinois. Great efforts were made by the Republican party to save the State. Personal pride entered into the contest almost as much as political principle, but against all that could be done the Democrats secured a popular majority of seventeen thousand, and out of the fourteen representatives in Congress they left but three to the Republicans. They chose a Democratic Legislature, which returned William A. Richardson to the Senate for the unexpired term of Mr. Douglas,—filled since his death by O. H. Browning who had been appointed by the Governor. The crushing defeat of Mr. Lincoln in his own State had a depressing effect upon the party elsewhere, and but for the assurance in which the Administration found comfort and cheer, that the Democrats were at home to vote while the Republicans were in the field to fight, the result would have proved seriously discouraging to the country and utterly destructive of the policy of emancipation as proclaimed by the President.

In the five leading free States, the Administration had thus met with a decisive defeat. The Democratic representatives chosen to Congress numbered in the aggregate fifty-nine, while those favorable to the Administration were only forty. In some other States the results were nearly as depressing. New Jersey, which had given half its electoral vote to Mr. Lincoln two years before, now elected a Democratic governor by nearly fifteen thousand majority, and of her five representatives in Congress only one was friendly to the policy of the Administration. Michigan, which had been Republican by twenty thousand in 1860, now gave the Administration but six thousand majority, though Senator Chandler made almost superhuman efforts to bring out the full vote of the party. Wisconsin, which had given Mr. Lincoln a large popular majority, now gave a majority of two thousand for the Democrats, dividing the Congressional delegation equally between the two parties.

If this ratio had been maintained in all the States, the defeat of the war party and of the anti-slavery policy would have been complete. But relief came and the Administration was saved. The New-England States which voted in November stood firmly by their principles, though with diminished majorities. The contest in Massachusetts resulted in the decisive victory of Governor Andrew over General Charles Devens, who ran as a Coalition candidate of the Democrats and Independents against the emancipation policy of the Administration. New Hampshire which voted the ensuing spring had the benefit of a Loyal re-action and sustained the Administration. In the West, Iowa, Kansas and Minnesota cheered the Administration with unanimous Republican delegations to Congress, and on the Pacific coast California and Oregon stood firmly by the President.

The result in the Border slave States amply vindicated the sagacity and wisdom of the President in so constantly and carefully nurturing their loyalty and defending them against the inroads of the Confederates. They responded nobly, and in great part repaired the injury inflicted by States which were presumptively more loyal to the Administration, and which had a far larger stake in the struggle for the Union. Delaware's one representative was Republican, Missouri elected a decisive majority of friends to the Administration, and in the ensuing year Kentucky, West Virginia, and Maryland materially increased the strength of the government. The Administration was finally assured that it would be able to command a majority of about twenty in the House. But for the aid of the Border slave States the anti-slavery position of Mr. Lincoln might have been overthrown by a hostile House of Representatives. It is true therefore in a very striking sense that the five slave States which Mr. Lincoln's policy had held to their loyalty, were most effectively used by him in overpowering the eleven slave States which had revolted against the Union.

COMPENSATED EMANCIPATION URGED.

The third and last session of the Thirty-seventh Congress assembled four weeks after the close of the exciting contest for the control of the next House of Representatives. The message of Mr. Lincoln made no reference whatever to the political contest in the country, and unlike his previous communications to Congress gave no special summary of the achievements by our forces either upon the land or the sea. He contended himself with stating that he transmitted the reports of the Secretaries of War and of the Navy, and referred Congress to them for full information. He dwelt a length upon the total inadequacy of Disunion as a remedy for the differences between the people of the two sections, and quoted with evident satisfaction the declarations he had made in his Inaugural address upon that point. In his judgment "there is no line, straight or crooked, suitable for a National boundary upon which to divide. Trace it through from east to west upon the line between the free and the slave country, and we shall find a little more than one-third of its length are rivers easy to be crossed; and populated, or soon to be populated, thickly on both sides, while nearly all its remaining length are merely surveyor's lines over which people may walk back and forth without any consciousness of their presence. No part of this line can be made any more difficult to pass by writing it down on paper or parchment as a National boundary." In the President's view "a nation may be said to consist of its territory, its people, and its laws. The territory is the only part which is of certain durability. That portion of the earth's surface which is inhabited by the people of the United States is well adapted for the home of one National family, but it is not well adapted for two or more."

Mr. Lincoln was still anxious that the Loyal slave States should secure the advantage of compensated emancipation which he had already urged, and he recommended an amendment to the Constitution whereby a certain amount should be paid by the United States to each State that would abolish slavery before the first day of January, A. D. 1900. The amount was to be paid in bonds of the United States on which interest was to begin from the time of actual delivery to the States. The amendment was further to declare, that "all slaves who enjoyed actual freedom by the chances of war at any time before the end of the rebellion shall be forever free," but the individual owners, if loyal, shall be compensated at the same rate that may be paid to those in States abolishing slavery. The amendment also proposed to give to "Congress the right to appropriate money for the colonization of the emancipated slaves, with their own consent, at any place outside of the United States."

Congress had scarcely time to consider this grave proposition when the President issued on the first day of the new year (1863) his formal Proclamation abolishing slavery in all the States in rebellion against the Government, with the exception of Tennessee, and of certain parishes in Louisiana and certain counties in Virginia whose population was considered loyal to the Government. Tennessee was excepted from the operation of the Proclamation at the urgent request of Andrew Johnson who, after the fall of Nashville in the preceding spring, had resigned from the Senate to accept the appointment of military governor of his State. His service in the Senate, with his State in flagrant rebellion, was felt to be somewhat anomalous and he was glad to accept a position in which he could be more directly helpful to the loyal cause. He possessed the unbounded confidence of Mr. Lincoln who yielded to his views respecting the best mode of restoring Tennessee to the Union, and her inhabitants to their duty to the National Government. There is good reason for believing that both Mr. Lincoln and Mr. Johnson afterwards regarded the omission of Tennessee from the Proclamation of Emancipation as a mistake, honestly made in the first place by Governor Johnson and too readily acceded to by the President.

The recommendation of Mr. Lincoln for a system of compensated emancipation was taken up promptly and cordially by the Republican members of both branches of Congress. The House appointed a special committee on the subject. With but little delay a bill was passed appropriating to Missouri, the first State considered, ten millions of dollars with the restriction that the money should be paid only to the loyal slave-holders. The Senate increased the amount to fifteen millions of dollars and returned it to the House for concurrence in the amendment. The measure had been thus passed in both branches but with stubborn opposition on the part of some prominent Democratic leaders from Missouri. John B. Henderson in the Senate and John W. Noell in the House labored earnestly to secure the compensation for their State, but the bill was finally defeated in the House. By factious resistance, by dilatory motions and hostile points of order, the Democratic members from Missouri were able to force the bill from its position of parliamentary advantage, and to prevent its consideration within the period in which a majority of the House could control its fate. The just responsibility for depriving Missouri of the fifteen millions of dollars must be charged in an especial degree to Thomas L. Price, Elijah H. Norton, and William A. Hall, representatives from that State, who on the 25th of February, 1863, by the use of objectionable tactics deprived the House of the opportunity even to consider a bill of such value and consequence to their constituents. A large majority stood ready to pass it, but the determined hostility of the Democratic members from Missouri defeated the kindly and generous intentions of Congress towards their own State. At a later period in the session the attempt was made to pass the bill by a suspension of the Rules, but this motion though it received the support of a majority was defeated for the lack of two-thirds of the votes as required. The Democratic members of Missouri were again active in resisting the boon which was offered to their State and so earnestly pressed by the Republicans of the House.

MISTAKE OF BORDER STATE MEN.

The course of the Missouri representatives was sustained by the solid vote of the Democratic members from the free States, and received the co-operation of a majority of representatives from the Border slave States. If the bill for Missouri had passed, a similar relief would have been offered to Kentucky, West Virginia, Maryland and Delaware. Mr. Crittenden whose influence with the representatives from these States was deservedly great could not be persuaded to adopt the President's policy. The consideration which influenced him and other Border State men to the course which subsequent events proved to be unwise, was their distrust of the success of the Union arms. The prospect had grown steadily discouraging ever since the adjournment of Congress in the preceding July, and with the exception of General McClellan's success at Antietam there had been nothing to lighten the gloom which deeply beclouded the military situation. The daily expenditures of the nation were enormous, and the Secretary of the Treasury had at the opening of the season estimated that the National debt at the close of the current fiscal year would exceed seventeen hundred millions of dollars. The Border State men chose therefore to maintain possession of their four hundred thousand slaves, even with the title somewhat shaken by war, rather than to part with them for the bonds of a Government whose ability to pay they considered extremely doubtful.

They could readily have secured, indeed they were urged to accept, fifty millions of dollars, the equivalent of gold coin, in securities which became in a few years the favorite investment of the wisest capitalists in the world. Such opportunities are never repeated. The magnanimous policy of the President and the wise liberality of the Republican party were precisely adapted, if the Border State men could have seen it, to the critical situation of the hour. Subsequent events prevented the repetition of the offer, and the slave-holders were left to thank themselves and their representatives for the loss of the munificent compensation proffered by the Government. They could not believe Mr. Lincoln when at the pressing moment he pleaded with them so earnestly to accept the terms, and flavored his appeal with the humorous remark to Mr. Crittenden: "You Southern men will soon reach the point where bonds will be a more valuable possession than bondsmen. Nothing is more uncertain now than two-legged property."

After the unfortunate issue of the Peninsular campaign and in the fear that Lee might turn directly upon Washington, a new army was organized on the 27th of June, 1862, and placed under the command of Major-General John Pope. It included the forces which had been serving under Fremont, Banks and McDowell, and was divided into three corps with these officers respectively in command. General Fremont considering the designation below his rank asked to be relieved from the service, and his corps was assigned to General Rufus King, and soon after to General Sigel. General Pope took the field on the 14th of July with a formidable force. General McClellan was still within twenty-five miles of Richmond, and with Pope in front of Washington, the Confederate authorities were at a standstill and could not tell which way to advance with hope of success or even with safety.

If the army of Lee should move towards Washington he might be compelled to fight General Pope protected by the extensive fortifications on the south side of the Potomac, leaving Richmond at the same time uncovered, with the possibility that McClellan, re-enforced by Burnside's corps which lay at Fortress Monroe, would renew his attack with an army of ninety thousand men. But as soon as the Confederates ascertained that McClellan was ordered back to the Potomac, they saw their opportunity and made haste to attack Pope. Fault was found with the slowness of McClellan's movements. His judgment as a military man was decidedly against the transfer of his army from the point it occupied near Richmond, and it cannot be said that he obeyed the distasteful order with the alacrity with which he would have responded to one that agreed with his own judgment.

AGGRESSIVE COURSE OF THE CONFEDERATES.

No reason can be assigned why if the Army of the Potomac was to be brought back in front of Washington it should not have been transferred in season to re-enforce General Pope and give a crushing blow to Lee. General McClellan was directed on the third day of August to withdraw his whole army to Acquia Creek, and as General Halleck declares, "in order to make the movement as rapidly as possible General McClellan was authorized to assume control of all the vessels in the James River and Chesapeake Bay, of which there was then a vast fleet." General McClellan did not begin the evacuation of Harrison's Landing until the 14th of August—eleven days after it was ordered. General Burnside's corps was ordered on the 1st of August to move from Newport News to Acquia Creek, and an estimate of the transportation facilities at command of General McClellan, may be formed from the fact that Burnside's whole corps reached their destination in forty-eight hours. General Lee knew at once by this movement that it was not the design to attack Richmond, and he made haste to throw his army on Pope before the slow moving army from Harrison's Landing could re-enforce him. General McClellan did not himself reach Acquia Creek until the 24th of August. The disasters sustained by General Pope in the month of August could not have occurred if the forces of the Union, readily at command, had been brought seasonably to his aid. It was at this crisis that the unfortunate movements were made, the full responsibility for which, perhaps the exact character of which, may never be determined, but the sorrowful result of which was that the Union forces, much larger in the aggregate than Lee's, were divided and continually outnumbered on the field of battle.

Flushed with success the Confederate authorities pushed their fortunes with great boldness. General Bragg invaded Kentucky with a large army and General Lee prepared to invade Pennsylvania. The cruel defeat of General Pope disabled him for the time as a commander, and the Administration, fearing for the safety of Washington, and yielding somewhat to the obvious wishes of the soldiers, ordered General McClellan on September 2 to assume command of all troops for the defense of the Capital. General Lee avoiding the fortifications of Washington, passed over to Maryland, and prepared to invade Pennsylvania with a force formidable in numbers and with the added strength of a supreme confidence in its invincibility. General McClellan moved promptly westward to cut off Lee's progress northward. After preliminary engagements the main battle of Antietam was fought on the 17th of September, resulting in a Union victory. Lee was severely repulsed and retreated across the Potomac.

General McClellan fought the battle of Antietam under extraordinary embarrassment caused by the surrender of Harper's Ferry to the Confederates on the 13th, with a loss to the Union army of more than twelve thousand men. Could he have had the advantage of this force on the battle-field, under a competent commander, at the critical moment, his victory over Lee might have been still more decisive. His success however was of overwhelming importance to the National Government and put a stop to an invasion of Pennsylvania which might have been disastrous in the extreme. He was blamed severely, perhaps unjustly, for not following Lee on his retreat and reaping the fruits of his victory. He had the misfortune to fall into a controversy once more with the authorities at Washington. After a correspondence with the War Department he was peremptorily ordered by the General-in-Chief Halleck on the 6th of October in these words: "The President directs that you cross the Potomac and give battle to the enemy or drive him south. Your army must move now while the roads are good. . . . I am directed to add that the Secretary of War and the General-in-Chief fully concur with the President in these instructions." The order was not promptly obeyed. The Army of the Potomac—as those who spoke for General McClellan maintained—had been for six months engaged in a laborious campaign in which they had fought many battles and experienced much hardship. They needed rest, recruitment, clothes, shoes, and a general supply of war material before setting out on what would prove a winter march. The authorities at Washington asserted, and apparently proved on the testimony of Quartermaster-General Meigs, a most accomplished, able, and honorable officer, that the Army of the Potomac, when it received its first orders to move in October, was thoroughly and completely equipped. General McClellan thought however that if intrusted with the command of the army he should be allowed to direct its movements. He crossed the Potomac near Harper's Ferry in the last week of October, and began an advance through Virginia which effectually covered Washington. He had reached Warrenton, and, before the plan of his campaign was developed, received at midnight, on the 7th of November, a direct order from President Lincoln to "surrender the command of the army to General Burnside, and to report himself immediately at Trenton, the capital of New Jersey."

GENERAL McCLELLAN'S MILITARY CAREER.

The reasons for this sudden and peremptory order were not given, and if expressed would probably have been only an assertion of the utter impossibility that the War Department and General McClellan should harmoniously co-operate in the great military movements which devolved upon the Army of the Potomac. But the time of removal was not opportunely selected by the Administration. After General McClellan's failure on the Peninsula, a large proportion of the Northern people clamored for his deposition from command, and it would have been quietly acquiesced in by all. At the end of those disastrous days when he was falling back on the line of the James River, General McClellan had telegraphed the Secretary of War "If I save this army now, I tell you plainly that I owe no thanks to you or to any persons in Washington. You have done your best to sacrifice this army." Perhaps no such dispatch was ever before sent by a military officer to the Commander-in-Chief of the army—to the ruler of the nation. In any other country it would have been followed with instant cashiering. Mr. Lincoln, with his great magnanimity, had however condoned the offense, and after the defeat of Pope the Administration had enlarged the command of McClellan and trusted the fortunes of the country to his generalship. The trust had not been in vain. He had rolled back the tide of invasion by a great battle in which for the first time the army of Lee had been beaten. He was now marching forward with his army strengthened for another conflict, and without explanation to the country or to himself was deprived of his command. A large part of the people and of the public press and an overwhelming majority in the army were dissatisfied with the act, and believed that it would entail evil consequences.

This ended the military career of General McClellan which throughout its whole period had been a subject of constant discussion—a discussion which has not yet closed. The opinion of a majority of intelligent observers, both civil and military, is that he was a man of high professional training, admirably skilled in the science of war, capable of commanding a large army with success, but at the same time not original in plan, not fertile in resource, and lacking the energy, the alertness, the daring, the readiness to take great risks for great ends, which distinguish the military leaders of the world. For a commander of armies, in an offensive campaign, his caution was too largely developed. He possessed in too great a degree what the French term the defensive instinct of the engineer, and was apparently incapable of doing from his own volition what he did so well on the bloody field of Antietam, when under the pressure of an overwhelming necessity.