When the blockade was opened, by the skill and audacity of General Benjamin F. Butler, the two Ohio regiments were ordered to Washington and were there reviewed by President Lincoln, at which time a pleasant incident occurred which may be worthy of mention. I accompanied the President to the parade, and passed with him down the line. He noticed a venerable man with long white hair and military bearing, standing in position at the head of his company with arms presented, and inquired his name. I said it was General McLaughlin and hurriedly told him his history, his politics and patriotism. The President, as he came opposite him, stopped, and leaving his party advanced to McLaughlin and extended his hand. McLaughlin, surprised, had some difficulty in putting his sword under his left arm. They shook hands and Lincoln thanked him, saying when men of his age and standing came to the rescue of their country there could be no doubt of our success. McLaughlin highly appreciated this compliment. He afterwards enlisted for the war and died in the service of his country.
These two regiments were subsequently ordered to Harrisburg, to which place they went, accompanied by me, and there they formed a part of the command of General Patterson, which was to advance on Martinsburg and Winchester to aid in a movement of General McDowell against the enemy at Bull Run. I was serving on the staff of General Patterson as a volunteer aid without pay. While at Harrisburg it was suggested to me that ex-President Buchanan, then at his country home near that city, had expressed a wish to see me. As our personal relations had always been pleasant, though our political opinions were widely different, I called upon him, I think with Colonel Porter, and we were cordially received. I was surprised at the frankness and apparent sincerity of the opinions expressed by him in relation to the war. He said he had done all he could to prevent the war, but now that it was upon us it was the duty of all patriotic people to make it a success, that he approved all that had been done by Mr. Lincoln, of whom he spoke in high terms of praise. I believe he was sincere in the opinions he then expressed, and know of nothing said or done by him since that time that could create a doubt of his sincerity.
About the middle of June the command of General Patterson moved slowly to Chambersburg, where it remained several days under constant drill, then to Hagerstown and to the village of Williamsport on the Potomac. While at the latter place General Sherman, who had been at Washington and received his commission as colonel of the 13th United States infantry, then being recruited, came to visit me at my lodgings in a country tavern. He then met for the first time in many years his old classmate, Colonel, afterwards Major- General, George H. Thomas, who then commanded a regular regiment of the United States army in the force under the command of General Patterson. The conversation of these two officers, who were to be so intimately associated in great events in the future, was very interesting. They got a big map of the United States, spread it on the floor, and on their hands and knees discussed the probable salient strategic places of the war. They singled out Richmond, Vicksburg, Nashville, Knoxville and Chattanooga. To me it has always appeared strange that they were able confidently and correctly to designate the lines of operations and strategic points of a war not yet commenced, and more strange still that they should be leading actors in great battles at the places designated by them at this country tavern.
The next day General Thomas crossed the river into Virginia, but the order was soon countermanded, it is said, by General Scott, and General Thomas returned to the north bank of the Potomac. General Sherman returned to Washington to drill his raw troops for the battle of Bull Run. I soon after returned by stage to Frederick, Maryland, to take my seat in the Senate, Congress having been convened to meet in special session on the 4th of July.
To understand the measures to be submitted to Congress at its approaching session, it is necessary to have a clear conception of the condition of the treasury at that time, and of the established financial policy of the government immediately before the war.
On the meeting of Congress in December, 1860, the treasury was empty. There was not enough money even to pay Members of Congress. The revenues were not sufficient to meet the demands for ordinary expenditures in time of peace. Since 1857 money had been borrowed by the sale of bonds and the issue of treasury notes bearing interest, to meet deficiencies. The public debt had increased during the administration of Mr. Buchanan about $70,000,000. The Secretary of the Treasury, Howell Cobb, resigned on the 10th of December, 1860, declaring that his duty to Georgia required such action. He had aided in every possible way to cripple the department while in charge of it.
On the 16th of the same month Congress authorized the issue of $10,000,000 treasury notes, to bear interest at the lowest rate bid. On the 18th Secretary Philip F. Thomas, Mr. Cobb's successor, invited bids for $5,000,000 of treasury notes, part of the $10,000,000 authorized, at the rate of interest offered by the lowest bidder. Offers at 12 per cent. or less were made for $1,831,000 (the bulk of the offers being at 12 per cent.) which were accepted and additional offers were received at interest varying from 15 to 36 per cent., but were refused. Immediately after the decision of the department on these offers was announced, the assistant treasurer at New York advised the secretary that certain parties would take the residue of the $5,000,000 offered, through the Bank of Commerce, at 12 per cent. This proposition was accepted, on condition that the amount required to make up the five millions should be deposited without delay. The whole amount was applied to the payment of overdue treasury notes and other pressing demands on the treasury.
Secretary Thomas resigned on the 11th of January, 1861, and John A. Dix became Secretary of the Treasury. In answer to my inquiry Secretary Dix, in an official letter, dated January 18, 1861, stated the terms of the sale of treasury notes and that: "The amount required to meet the outstanding current and accruing dues before the close of the present fiscal year, besides any additional charges on the treasury created by legislation during the present session of Congress, is $44,077,524.63." He recommended a further issue of $25,000,000 of bonds, and suggested that the states which had received deposits under the act for the distribution of surplus revenue in General Jackson's time might be called upon to return such deposits, and added: "If, instead of calling for these deposits, it should be deemed advisable to pledge them for the repayment of any money the government might find it necessary to borrow, a loan contracted on such a basis of security, superadding to the plighted faith of the United States that of the individual states, could hardly fail to be acceptable to capitalists."
In this connection I received the following note:
"Treasury Department, February 6, 1861."Hon. John Sherman.
"Dear Sir:—I send a preamble and resolution, and a letter to your governor. Will you read and send them at once? You, as a Member of Congress, can say what I cannot with propriety—that no states which guarantee bonds of the United States to the amount of the public moneys in its hands, will be likely to be called on to repay these moneys—at all events during the twenty years the bonds of the United States will run.
"I am truly yours,"John A. Dix."P. S.—I cannot put out my notice for a loan till your state acts,and the time is very short."
Subsequently I received the following letter:
"Treasury Department, February 11, 1861, 7 p. m. "Dear Sir:—My plan for raising money to meet the outstanding liabilities of the government, and to enable the incoming administration to carry on its financial operations without embarrassment till it shall have time to mature a plan for itself, has met with an obstacle quite unexpected to me. The committee of ways and means in the House has declined to report a bill to authorize me to accept the guaranties voluntarily tendered by the states. Mr. Spaulding, of New York, and Mr. Morrill, of Vermont, I learn, have objections. Unless they withdraw their opposition the bill cannot be reported, and the plan must fail. In that case I shall not deem it proper to ask for a loan of more than two millions to meet the redemption of treasury notes, which fall due before the 4th of March. The state of the country is such that a larger amount thrown on the market would have a most disastrous influence on the public credit. I do not think I can borrow two millions at more than 90 per cent. With a guaranty such as the states have offered, I can get eight millions at par. The alternative is to authorize me to accept the guaranty, or leave the treasury with scarcely anything in it and with outstanding demands, some of them very pressing, of at least six millions of dollars, for you and your political friends to provide for. If anything is done it should be to-morrow, as I ought to publish the notice on Wednesday. Perhaps you can see the gentlemen referred to to-night and remove their objections. I am, very truly, your obedient servant,
"John A. Dix."
On the 8th of February, 1861, a bill became a law providing for the sale of $20,000,000 six per cent. bonds, and these were sold at the rate of $89.10 for $100, yielding $18,415,000.
Such was the humiliating financial condition of the government of the United States at the close of Mr. Buchanan's administration. The expenditures of the government for the fiscal year ending June 30, 1861, were $84,577,258.60, of which $42,064,082.95 was procured from loans and treasury notes, leaving a balance in the treasury, at the close of the fiscal year 1861, of $2,395,635.21. This condition still existed when Congress subsequently met in special session.
Under the sub-treasury laws then in force, the revenues of the government were received and held only in the treasury at Washington, and in sub-treasuries located in a few of the principal cities of the United States, and could be paid out only upon the draft of the treasurer of the United States, drawn agreeably to appropriations made by law. No money could be received into the treasury except gold and silver coin of the United States, and such treasury notes as were receivable for bonds. State bank notes were not received for government dues. This exclusion grew out of the general failure of banks after the War of 1812 and the panic of 1837, and had caused the outcry in 1840 of: "Gold for the office holders; rags for the people." But this policy of the government to receive only its own coin or notes was sustained by popular opinion.
Silver dollars were not in circulation in 1861. Their issue was provided for at the beginning of our government, but, as they were most of the time more valuable than gold coin of like face value, they were hoarded or exported. Their coinage was suspended by an order of President Jefferson in 1805, and after this order only 1,300 silver dollars were coined by the United States prior to 1836. From 1836 to 1861 silver dollars were coined in small quantities, the aggregate being less than one and one-half million, and they were generally exported. It is probable that when Mr. Chase became Secretary of the Treasury, there was not in the United States one thousand silver dollars. In 1853, and prior to that year, fractional silver coins were worth for bullion more than their face value, and, therefore, did not circulate. Small change was scarce, and fractional notes, called "shinplasters," were issued in many parts of the United States. Mexican coin, debased and worn, was in circulation. To remedy this evil Congress, by the act of February 21, 1853, during Pierce's administration, prescribed the weight of the silver half dollar as 192 grains instead of 206¼ grains, fixed by the coinage act of 1792, and the weight of the quarter, dime and half dime of silver was reduced in the same proportion. As these new coins were less valuable than gold at the rate coined, they were made a legal tender in payment of debts only for sums not exceeding five dollars. The silver bullion for these coins was purchased at market value, and the privilege theretofore granted to a depositor of silver bullion to have it coined for him was repealed. This law had the beneficial effect of driving out of circulation "shinplasters" and worn coins, and supplied in ample quantity new full weight silver coins of handsome device, the government receiving the profit of the difference between the market value of the silver and its coinage value. Under this law the coinage of silver rapidly increased, so that, within two years after the passage of the act of 1853, more silver was converted into fractional coins and was in active use among the people than was contained in all the silver dollars coined under "free coinage" from the beginning of the government to 1878.
While silver was thus made useful to the fullest extent possible, it was, from its weight and bulk, inadequate and inconvenient for the vast demands of the government during the war. Silver and gold together could not meet this demand. There was known to be in the country at that time, of specie in circulation, $250,000,000, of state bank notes, $180,000,000, in all $430,000,000. This amount, experience had shown, was necessary to meet exchanges in ordinary times of peace. The disturbance of a civil war would likely stimulate production for a time and require even more circulation for current business. This circulation, if drawn from its ordinary channels, would bring no end of confusion and distress to the people, and the government, to meet the demand occasioned by carrying on a war, must look elsewhere for a circulating medium with which to meet its enormous disbursements which must necessarily be made almost wholly in actual cash—checks being, from the character of payments, of little avail.
There was no escaping the issue of credit money in some form, and of whatever form adopted we knew that gold and silver would soon disappear under the shadow of war—that they would be hoarded or exported.
This is the universal result of great wars long protracted. It was our experience during our Revolution and the War of 1812, and of Great Britain and all European nations during the Napoleonic wars. What should take the place of gold and silver for currency? The only answer was to substitute for the time the notes of the United States, with all the sanction and credit which the republic could confer, in the place of coin. We could not, with safety, accept bank notes issued by state corporations, varying in terms and credit according to the laws of twenty-three separate states.
To establish a credit of our bonds and notes these measures at least were necessary: First, to increase largely the revenues from customs duties to be paid in coin; second, impose all forms of internal taxes authorized by the constitution; third, create a national currency redeemable in coin, with no fixed time for redemption, but made a legal tender for all debts, public and private, except customs duties; fourth, borrow any moneys needed on the most favorable terms possible.
On the 4th of July, 1861, the Senate convened in compliance with the proclamation of the President, from whom it received a message containing a clear statement of the events that followed his inaugural address. He described the attack upon Fort Sumter and said:
"By the affair at Fort Sumter, with its surrounding circumstances, that point was reached. Then and thereby the assailants of the government began the conflict of arms, without a gun in sight or in expectancy to return their fire, save only the few in the fort, sent to that harbor years before for their own protection, and still ready to give that protection in whatever was lawful. In this act, discarding all else, they have forced upon the country the distinct issue, 'immediate dissolution or blood.'
"And this issue embraces more than the fate of these United States. It presents to the whole family of man the question, whether a constitutional republic, or democracy—a government of the people by the same people—can or cannot maintain its territorial integrity against its own domestic foes. It presents the question, whether discontented individuals, too few in number to control administration according to organic law in any case, can always, upon the pretenses made in this case, or on any other pretenses, or arbitrarily, without any pretense, break up their government, and thus practically put an end to free government upon the earth. It forces us to ask: 'Is there, in all republics, this inherent and fatal weakness?' 'Must a government, of necessity, be toostrongfor the liberties of its own people, or tooweakto maintain its own existence?'
"So viewing the issue, no choice was left but to call out the war power of the government; and so to resist force employed for its destruction, by force for its preservation."
He closed with this appeal to the people:
"It was with the deepest regret that the Executive found the duty of employing the war power in defense of the government forced upon him. He could but perform this duty, or surrender the existence of the government. No compromise by public servants could in this case be a cure; not that compromises are not often proper, but that no popular government can long survive a marked precedent that those who carry an election can only save the government from immediate destruction by giving up the main point upon which the people gave the election. The people themselves, and not their servants, can safely reverse their own deliberate decisions.
"As a private citizen, the Executive could not have consented that those institutions should perish; much less could he, in betrayal of so vast and so sacred a trust as these free people have confided to him. He felt that he had no moral right to shrink, or even to count the chances of his own life, in what might follow. In full view of his great responsibility, he has, so far, done what he has deemed his duty. You will now, according to your own judgment, perform yours. He sincerely hopes that your views and your action may so accord with him as to assure all faithful citizens who have been disturbed in their rights of a certain and speedy restoration of them, under the constitution and the laws.
"And having thus chosen our course, without guile and with pure purpose, let us renew our trust in God, and go forward without fear and with manly hearts."
Secretary Chase also submitted to Congress, on the first day of the session, a clear statement of the financial condition of the United States. He estimated the sum needed for the fiscal year ending June 30, 1862, at $318,519,581. He recommended a large increase of duties on imports, especially upon such articles as were then free from duty; also a direct tax of $20,000,000, to be apportioned among the states according to population; also a tax on distilled spirits, ale, beer, tobacco, bank notes, and other articles of domestic production. He also suggested the property of those engaged in insurrection or in giving aid and comfort to insurgents should be made to contribute to the expenditures made necessary by their criminal misconduct. As the receipts from taxation would still be inadequate to meet the expenses of the war, he discussed the best mode and form of borrowing money, including bonds running for a long period with a fixed rate of interest, and treasury notes bearing interest, payable on demand.
Kansas having recently been admitted into the Union, twenty-three states were represented in the Senate by forty-six Senators. Eleven states being in open war against the United States, twenty-one of their Senators withdrew, but Andrew Johnson, of Tennessee, remained in the Senate, making the total of Senators forty-seven. Some of these Senators were new in congressional life, and some had been transferred from the House of Representatives. This transfer of a Member, though eagerly sought, is not for a time agreeable. However conspicuous the Member may have been in the House, he must take his place in the Senate at the bottom of the ladder, and, according to Senatorial usage, must be reasonably modest in expressing his opinions. The withdrawal of so many Senators in 1861, however, gave the new Members better positions than usual. I was assigned to the committee on finance and on naval affairs.
At that time the committee on finance had charge of all bills appropriating money for the support of the government, all tax or revenue bills, all loan and coinage bills, and, generally, all bills relating to the treasury department, and to the finances of the government. It was soon manifest that, in view of the war, and the enormous sums required to conduct it, the task of the committee would be a Herculean one, and that the labor required would fall chiefly on Mr. Fessenden, the chairman of the committee, and, I may with due modesty add, myself. My former position in the House of Representatives, as chairman of the committee of ways and means, and my personal association with Secretary Chase, with whom I was intimate, led to my taking an active part in financial legislation, which was considered my specialty. Congress, in substantial conformity with the recommendations of Secretary Chase, passed the act to authorize a loan which was approved July 17, 1861, providing for the issue of $250,000,000 of bonds running twenty years, bearing not exceeding seven per cent. interest, or treasury notes for not less than fifty dollars each, bearing interest at not less than seven and three-tenths per cent. annually, and payable in three years, and treasury notes of less denomination than fifty dollars, not bearing interest and not exceeding $50,000,000, payable on demand, and commonly known as demand notes. We knew that this act was entirely inadequate for the great struggle before us. The problem was not whether we could muster men, but whether we could raise money. We had to create a system of finance that would secure an enlarged revenue, unquestioned credit, absolute certainty of payment of interest in coin, a national currency, and such economy as is possible during war.
The first feeble attempt to create a national currency was the issue of demand notes under the act of July 17, 1861, described as follows:
"And the Secretary of the Treasury may also issue, in exchange for coin, and as part of the above loan, or may pay for salaries or other dues from the United States, treasury notes of a less denomination then fifty dollars, not bearing interest, but payable on demand by the assistant treasurer of the United States, at Philadelphia, New York or Boston."
The fatal defect of these notes was the promise to pay on demand. How could they be paid? In what kind of money? They could not be paid out of the current revenue, for that was insufficient to meet current expenses. No reserve was provided for their payment, and, when paid, there was no authority for their re-issue. All other forms of securities bore interest, and these notes, not bearing interest, were convertible into bonds and that was the end of them. If that was the process why issue them at all? They did not prevent, but rather expedited, the disappearance of gold. Of American silver dollars there were none. Even the new fractional silver coins rose to a premium, and were hoarded or exported. Still, the necessity existed for some form of paper money that would be available for circulation. The solution of this problem was properly left to the next regular session of Congress.
Congress did not act upon the recommendations for internal taxes, but this subject was also left over until the next session. It did provide, however, for a large increase of revenue from imports, mainly upon articles that were then free from taxation and upon articles regarded as luxuries; also for a direct tax on the states of $20,000,000, and for a graded tax, from and after the first day of January, 1862, upon the annual income of every person residing in the United States, from whatever source the income should be derived; if such annual income should exceed the sum of $800 a tax of three per cent. on the excess above that limit. A provision was made reducing the tax on incomes from treasury notes and other securities of the United States one-half. The tax on incomes of citizens of the United States residing abroad was placed at five per cent., except on that portion derived from interest on treasury notes and other securities of the United States, which was taxed one and one-half per cent.
While Congress was engaged in legislative duties in Washington, the military forces of the Confederate States were gathering in Virginia, with the principal force at Manassas, about twenty-five miles southwest of Washington, under the command of General Beauregard. The Union troops, composed mainly of three months' volunteers, were in camp occupying the region about Washington on both banks of the Potomac River, under the immediate command of General McDowell, but with Lieutenant General Scott in full command. I frequently visited the Union camps where the soldiers, fresh from civil life and confident of easy success over the "rebels," were being drilled. The cry was, "On to Richmond!" They could not foresee the magnitude of the task they had undertaken. I will not attempt to narrate the incidents of the Battle of Bull Run. I knew it was to be fought on Sunday, the 21st of July. Soon after noon of that day I mounted my horse, and with James Rollins, a Member of Congress from Missouri, called on General Scott, and inquired for news of the battle then going on. He told us he was quite sure of a favorable result, but feared the loss of his gallant officers as, the troops being raw, it would be necessary for their officers to lead them. We crossed the pontoon bridge from Georgetown, and then, passing by Arlington, we went to a new fort on the main road from the Long Bridge. As we approached we could hear the distant firing of cannon. We asked a sentinel on duty if he had heard the sound all day. He said, "Yes, but not so loud as now." This was significant but not encouraging. We returned to my lodgings on Fifteenth street. Everywhere there was an uneasy feeling. At eight o'clock in the morning I started for the residence of the Secretary of War to get information of the battle. As I approached I was seized by the arm, and, turning, saw Secretary Cameron. I asked about the battle, but, without answering, he hurried me into the house and said: "Our army is defeated, and my brother is killed." He then gave way to passionate grief. His brother, Colonel Cameron, had been killed, and the Union army was in full retreat. I was enjoined to say nothing until morning. I obeyed his injunction. At eleven o'clock that night I heard the clatter of a horse's feet in full gallop. My nephew, Robert McComb, a boy about nineteen, a private soldier in an Ohio regiment, but detailed as an orderly, had been sent to the rear with a message. He saw the army in retreat, and, being well mounted and believing that discretion was the better part of valor, rode rapidly to my lodgings in Washington. It is uncertain whether he or "Bull-Run" Russell, an English reporter, made the best time to the Long Bridge. McComb gave me a doleful account of the battle and retreat. The official reports from both armies show that it was a drawn battle. General Sherman, in his "Memoirs," gives a graphic history of the battle and expresses the same opinion.
Still, the battle of Bull Run was an important event. It dispelled the illusion of the people of the north as to the duration and gravity of the war. It demonstrated the folly of ninety days' enlistments. It brought also, to every intelligent mind, the dangers that would inevitably result from disunion. On the 22nd of July, the day after the battle, the bill to authorize the employment of 500,000 volunteers became a law.
On the 29th of July two bills, one for the increase of the military establishment of the United States, and one to provide for the suppression of the rebellion, were passed. On the 5th of August an act passed for the better organization of the military establishment. Armed with the largest military power ever conferred upon a President, with the almost unlimited power of taxation, the administration of Mr. Lincoln entered upon the task before it.
Having passed these provisions in aid of the government, the special session of Congress closed on the 6th of August, 1861.
I immediately returned to my home at Mansfield. Regiments were being organized but it seemed to me that the mode of enlistment was too slow. The people, though still resolute, were somewhat troubled by the failure of military operations. I felt this so strongly that I determined at once to adopt some plan to raise a brigade to be composed of two regiments of infantry, one battery of artillery and one squadron of cavalry. When I made application to Governor Dennison for the requisite authority, he feared my plan might interfere with existing organizations then being enlisted in the different parts of the state, and I was persuaded to wait until after the 15th regiment was recruited and in the field, and the 42nd was well under way. I also made up my mind to delay actual recruiting until after the election in October of that year, so that no political bias might enter into it.
On the 24th of September I addressed a letter to the Hon. SimonCameron, Secretary of War, as follows:
"Mansfield, Ohio, September 24, 1861."Hon. Simon Cameron, Secretary of War:
"Dear Sir:—I respectfully ask for an order granting me leave to recruit and organize, in this part of Ohio, a brigade of two regiments of infantry, one squadron of cavalry, and two companies of artillery. I know I can do it promptly. The squadron of cavalry authorized to Major McLaughlin may, if desired, be considered as part of the brigade.
"For reasons that are probably unjust the governor and state military authorities are less successful than I hoped, and I know that I can get you recruits that they cannot. I wish no rank, pay, or expenses for myself, and will freely act without compensation. I care not who are the field officers, so I know they are men of honor, honesty and experience. I will only ask of the department the usual rations, pay and armament and equipage for the men; I ask nothing for myself, will undertake upon my individual responsibility to purchase any of them desired, receiving in return government securities therefor.
"I will so execute the order as not to interfere with the state authorities, and will act in subordination to them. I will freely confer with the government as to details, but would rather be left as free as practicable in the selection of officers.
"I hope, my dear sir, this application will receive your sanction, and I will stake my reputation and property that what I offer shall be accomplished.
"Very truly yours,"John Sherman."
On the same day, in order to secure the active co-operation ofSecretary Chase, I wrote him as follows:
"Mansfield, Ohio, September 24, 1861."Hon. S. P. Chase, Secretary of the Treasury:
"My Dear Sir:—I have to-day written to General Cameron, asking an order allowing me to recruit a brigade in this part of Ohio. I know I can do it. I ask no office, rank, pay, or expenses for myself, and will undertake to recruit this force in subordination to the state and general government, and within such limits as may be allowed. Whatever may be the reason, it is manifest that voluntary enlistment needs the spur of active exertion and solicitation. This I am willing to give, and, from offers freely made to me by personal acquaintances, know that I can enlist hundreds whom the state authorities cannot reach.
"Can I ask your favorable influence and co-operation? I will pay my own expenses, and ask only rations, tents and armament for the men. Any of these I am willing to purchase upon my individual credit, receiving in payment government securities. I pledge you my reputation and all I am worth to accomplish what I offer.
"If it is objected that my operation will interfere with state enlistments, I will agree to subordinate my movements to the orders of the governor, but for the good of the service I hope to be left as free as possible. In the selection of officers I should want to be especially consulted, so as to insure the honor, probity and personal habits of such officers. Further than this I have no choice.
"If this meets your approbation promptly say so to General Cameron, and let him set me to work.
"Very truly yours,"John Sherman."
About the same time I had arranged with Governor Dennison for a plan of enlistment which enabled the recruits to select their officers, by allowing persons securing a certain number of recruits to be captains, a less number first lieutenants, and a less number second lieutenants. The governor very kindly agreed that he would commission the persons selected in this way, leaving the regimental organization to be composed of the best material that could be found anywhere. On the 28th of September I issued and distributed, mainly in the region near the line of the Pittsburg, Fort Wayne & Chicago railroad, this circular:
"I am authorized by the governor of Ohio to raise at once two regiments of infantry and a battery of artillery, and a squadron of cavalry.
"I am also authorized to recommend one lieutenant for each company, who shall at once receive their commissions and be furnished with proper facilities for enlisting. I am now ready to receive applications for such appointments, accompanied with evidence of good habits and character, the age of applicant, and his fitness and ability to recruit a company.
"Major Wm. McLaughlin will command the squadron of cavalry.
"The company officers will be designated by the soldiers of each company, subject to the approval of the governor.
"The field officers are not yet designated, but shall be men of experience, and, if possible, of military education.
"The soldiers shall have, without diminution, all they are entitled to by law.
"Danger is imminent. Promptness is indispensable. Let the people of Ohio now repay the debt which their fathers incurred to the gallant people of Kentucky for the defense of Ohio against the British and Indians. They now appeal to us for help against an invasion more unjustifiable and barbarous.
"Letters can be addressed to me, marked 'Free,' at Mansfield, Ohio.
"John Sherman."Mansfield, Ohio, September 28, 1861."
The matter thus rested until after the election on the 9th of October, when squads rapidly formed into companies, and within twenty days Camp Buckingham was opened near Mansfield.
In the performance of this self-imposed duty, I encountered but one difficulty, and at one time a very serious one, the selection of regimental officers, and especially of commanders of regiments. I knew that military warfare was an art, a trade, an occupation, where education, experience and preparation are absolutely essential to effective service. The materials for soldiers abound everywhere, but without discipline, order, obedience, and severe drilling men are not soldiers. It was my desire to secure for the commanders of regiments two graduates of West Point. I made application direct to Washington for various details of officers of the regular army, so that the soldiers in Camp Buckingham might have experienced drill masters from the beginning. I failed to receive an answer, and went to Washington, earnestly impressed with the importance of my mission, and determined, if possible, that these men enlisted by me should not be placed in the front of the enemy until they had had all the benefit they could derive from military discipline and drilling. When I arrived I found that Secretary Cameron was indisposed to interfere with the purely military details of the army, while General Scott, a brave old soldier whom I always loved and admired, was firmly of the opinion that the favorable result of the war depended upon strengthening the regular army, maintaining its force and discipline, and especially retaining its valuable officers. The regular army, almost disbanded at the beginning of the war, was gradually filling up upon the basis of a new organization and long enlistments, but it was idle, it seemed to me, to expect that the young men of the country would enlist in the regular service. While ready to respond to the call of their country in its actual peril, they had no purpose to become regular soldiers for life. It appeared to me, therefore, that the manifest policy of the government should be to allow the regular army to be gradually absorbed into the volunteer service, where the young officers educated at the expense of the government might impart instruction to regiments and brigades, instead of to squads and companies. I spoke to General Scott about this, and the result of my interview was very unpleasant. I fear we both lost our temper, though I never ceased to respect the old general for the great service he had rendered his country; but his day was past.
After consulting Major Garesche, Assistant Adjutant-General, as to the names of officers, I then applied to the President, explained to him fully the situation of affairs, my promise, the gathering of the soldiers in Camp Buckingham, their inexperience, and want of drill masters, their ardent patriotism, stated my interview with General Scott, and appealed to him to help me out of the dilemma.
I never shall forget the interview with Mr. Lincoln, for he did not hesitate, but sent for Major Garesche, and gave me the coveted order before I left him, directing the Secretary of War to detail two second lieutenants, James William Forsyth, of Ohio, and Charles Garrison Harker, of New Jersey, and Sergeants Bradley and Sweet, of the regular army, for service in the Ohio Volunteers, under my direction. This order was the key that unlocked the difficulty and gave to the force the elements of military discipline. At the same time the requisite orders were given for uniforms, arms of the best pattern, cannon, horses and various equipments.
I then procured the detail of Major Robert S. Granger, of the United States army, to command the camp and to organize the force. He had graduated as a cadet from Ohio, was one of the officers of the regular army surrendered by General Twiggs to the State of Texas before the beginning of the war, and had given his parole not to serve in the army until exchanged. Though this was not held to apply to the enlistment of volunteers he so construed his parole as to prevent him from serving in his regiment until duly exchanged. When this was done he entered the service and was rapidly promoted to Major General of Volunteers.
Within sixty days 2,340 young men of Ohio were formed into the 64th and 65th regiments, the 6th battery of artillery, and McLaughlin's squadron of cavalry, armed with the best arms then in the service, uniformed, equipped and partly drilled as soldiers, ready to march, and actually marching, to the seat of war. No better material for soldiers, and no better soldiers in fact, ever enlisted in any cause or any service.
I insert a letter from General Garfield written when he was in command of this brigade:
"Headquarters, 20th Brigade, }"In the Field, 6 Miles from Corinth, Miss., May 17, 1862.}"Hon. John Sherman, Washington, D. C.
"Dear Sir:—I am now in command of the 20th Brigade, composed of the 64th and 65th Ohio (the regiments raised by yourself) and the 13th Michigan and 51st Indiana Regiments. I have sent forward to Washington the name of Lt. D. G. Swain (65th Ohio) of Salem, O., for appointment as A. A. Gen. on my staff. He is an excellent officer, and his nomination has been approved by Gen. Buell. I will be particularly obliged to you if you will aid in securing his appointment as soon as possible. The whole army advances toward Corinth this morning.
"Very respectfully yours,"J. A. Garfield,"Brig. Gen. Vols. U. S. A."
When General Sherman was in Louisville in October, 1861, he was called upon by Secretary Cameron, and they engaged in a general discussion of the military situation. General Sherman said that for aggressive movements, the United States would require 200,000 men. This was so far beyond the ideas of the time that he was regarded as crazy, and was soon after relieved from his command by General Buell. Secretary Cameron was blamed for this, but his letter to me, here inserted, shows that he was absent from Washington when the order was made:
"War Department, Nov. 14, 1861. "Sir:—Your letter of the 10th inst. is received. General Sherman was recalled from the command in Kentucky during my absence at the north on official business. Since my return on the 11th, I have not had time to make any inquiries concerning the cause of the change, but I feel certain it was not from any want of confidence in the patriotism or capacity of your brother. He has been ordered to Missouri, under the immediate command of Major General Halleck, of the regular army, and the fact that he has been so assigned is evidence of the confidence reposed in him.
"Very respectfully, your obedient servant,"Simon Cameron, Secretary of War."
About this time I had an interview with Mr. Lincoln which may be of interest. In making the local appointments in Ohio he was naturally governed largely by his strong affinities for old Whig associates in Congress, of one of whom, General Schenck, he was especially fond. I thought some of his appointments in Ohio were not judicious, and concluded I would go to him and make a general complaint of the distribution of these offices. I felt that he failed to consider the fact that the Republican party contained many men who had not belonged to the Whig party. I requested an interview with him which was promptly granted, and called at his office one evening. He was seated in an easy chair and seemed to be in excellent humor. I proceeded to complain of some of his appointments in Ohio and as I progressed the expression of his face gradually changed to one of extreme sadness. He did not say a word, but sank in his chair, placing his feet upon the table, and looking, as I thought, the picture of despair. I proceeded with my complaint until I began mentally to reproach myself for bothering the President of the United States with so unimportant a matter as the choice of persons to fill local offices in Ohio, when the country was in the throes of revolution. Finally I told him I felt ashamed to disturb him with such matters and would not bother him again with them. His face brightened, he sat up in his chair and his whole manner changed, until finally he almost embraced me. He then told me many interesting stories of his short service in Congress and of the men with whom he was brought in contact. The close of the interview was very pleasant and I kept my promise to him about his appointments.
When Congress convened on the 2nd of December, 1861, the financial condition of the government was more alarming than at any other period during the war.
The Secretary of the Treasury had ample and complete authority, given him by the act of July, 1861, to borrow money on the credit of the government, but he could not deal with the system of state banks then existing in the several states. He was forbidden, by the sub-treasury act of 1846, to receive notes of state banks and was required to receive into and pay from the treasury only the coin of the United States; but by the act of August 5, 1861, he was permitted to deposit to the credit of the Treasurer of the United States, in such solvent specie-paying banks, as he might select, any of the moneys obtained from loans, the moneys thus deposited to be withdrawn only for transfer to the regularly authorized depositaries, or for the payment of public dues, including certain notes payable on demand, as he might deem expedient. He had, however, no authority to receive from individuals or banks any money but coin.
The coin received from the Boston, New York, and Philadelphia banks, in payment of their subscriptions to the government loans, to the amount of nearly $150,000,000, had to be sent to every point in the United States to meet public obligations, and, when thus scattered, was not readily returned to the banks, thus exhausting their resources and their ability to loan again.
The demand notes, authorized by the act of July 17, 1861, were also paid out by the treasury; but from time to time were presented for redemption in coin or in payment of customs duties to the exclusion of coin, and thus both the banks and the government were greatly crippled, the banks suspending specie payments on the 30th day of December, 1861.
At this time an army of 500,000 Union soldiers was in the field, and a powerful navy, with vast stores of artillery and ammunition, had been created. In providing for their sustenance, comfort and equipment the government had been obliged to incur expenses far exceeding in magnitude any which had been hitherto known in its history, aggregating nearly $2,000,000 per day.
It was apparent that a radical change in existing laws relating to our currency must be made, or the government would practically be unable to make the current disbursements on account of the war, and the destruction of the Union would be unavoidable, notwithstanding the immense resources of the country which had then hardly been touched.
The annual report of Secretary Chase reached Congress on the 10th of December, having been delayed by the press of business. So much of it as related to the currency was the basis of the long debates that followed. The circulation of the banks of the United States on the 1st of January, 1861, was reported at $202,000,767. Of this $152,000,000, in round numbers, was in the loyal states, including West Virginia, and $50,000,000 in the rebel states, the whole constituting a loan without interest from the people to the banks, costing the latter only the expense of issue and redemption and the interest on the specie kept in hand for the latter purpose. The secretary called especial attention to the organization and nature of these banks, and questioned whether a currency of banks issued by local institutions under state laws was not in fact prohibited by the national constitution. He said:
"Such emissions certainly fall within the spirit, if not within the letter, of the constitutional prohibition of the emission of 'bills of credit' by the states, and of the making by them of anything except gold and silver coin a legal tender in payment of debts. However this may be, it is too clear to be reasonably disputed that Congress, under its constitutional powers to lay taxes, to regulate commerce, and to regulate the value of coin, possesses ample authority to control the credit circulation which enters so largely into the transaction of commerce, and affects in so many ways the value of coin. In the judgment of the secretary, the time has arrived when Congress should exercise this authority."
He described with great force the weakness of the state banking system, and the repeated losses by the people of the United States on account of the failure of such banks. He recommended two plans by either of which he held that these banks might be absorbed, and a national currency be substituted in the place of their issues. One plan proposed the gradual withdrawal from circulation of the notes of private corporations, and the issue in their stead of United States notes, payable in coin on demand, in amounts sufficient for the useful ends of a representative currency. The other proposed a system of national banks authorized to issue notes for circulation under national direction, to be secured as to prompt convertibility into coin by the pledge of United States bonds and other needful regulations. He discussed these two plans at length, but concluded by recommending a system of national banks, the advantages of which would be uniformity in currency, uniformity in security, an effectual safeguard against depreciation, and protection from losses from discounts and exchanges. He expressed the opinion that such notes would give to the government the further advantage of a large demand for government securities, of increased facilities for obtaining the loans required for the war, a reduction of interest, and a participation by the government in the profit of circulation without risking the perils of a great money monopoly. It will be noticed that the secretary nowhere suggested the suspension of coin payments, or making the notes a legal tender in payment of public and private debts, or the redemption in coin of the bank notes to be issued.
These recommendations were referred to the committee of ways and means of the House, and by it to a sub-committee, of which Elbridge G. Spaulding, of New York, was chairman. Undoubtedly we owe to him, more than to any other individual Member, the important and radical changes made in our currency system by the act reported by him to the House and amended in the Senate. Mr. Spaulding perceived the objection to the recommendations of Secretary Chase that they did not provide for any payments but in coin, or call for a suitable provision that the notes when issued should be a legal tender for public and private debts, or for their reissue in case of payment, nor did they provide for the absorption of the demand notes outstanding, which were, on their face, payable on demand, an obligation that could not be ignored without severely impairing the public credit. It was also apparent that the system of national banks proposed by the secretary could not be organized and put in effective force for a year or more, and that in the meantime the state banks would be in a condition of suspension, without coin or the possibility of obtaining it, and, with no effective money which the people were bound to receive, or which the government could receive, it would have been difficult to carry on the operations of the war.
The first bill introduced by Mr. Spaulding, on the 30th of December, met some of these difficulties. It provided for the issue of $50,000,000 treasury notes, payable on demand, the notes to be receivable for all debts and demands due to or by the United States, to be a legal tender in payment of all debts, public or private, within the United States, and exchangeable at their face value, the same as coin, at the treasury of the United States, and the offices of the assistant treasurers in New York, Boston, Philadelphia, St. Louis and Cincinnati, for any of the coupon or registered bonds which the secretary was authorized to issue. It also contained this provision: "Such treasury notes may be reissued from time to time as the exigencies of the public service may require," the first authority ever given for the reissue of treasury notes after redemption.
On the 7th of January, 1862, Mr. Spaulding reported the bill to the House with some important changes, and it soon became the subject of a long and interesting debate. On the 22nd of January, Secretary Chase returned Mr. Spaulding's bill to him and suggested some modifications, referring to the legal tender clause as follows, being his first reference to that clause:
"Regretting exceedingly that it is found necessary to resort to the measure of making fundable notes of the United States a legal tender, but heartily desiring to co-operate with the committee in all measures to meet existing necessities in the most useful and least hurtful to the general interest, I remain," etc.
In a letter to the committee of ways and means, on the 29th ofJanuary, the secretary said:
"The condition of the treasury certainly needs immediate action on the subject of affording provision for the expenditures of the government, both expedient and necessary. The general provisions of the bill submitted to me seem to me well adapted to the end proposed. There are, however, some points which may, perhaps, be usefully amended.
"The provision making United States notes a legal tender has doubtless been well considered by the committee, and their conclusion needs no support from any observation of mine. I think it my duty, however, to say, that in respect to this provision my reflections have conducted me to the same conclusion they have reached. It is not unknown to them that I have felt, nor do I wish to conceal that I now feel, a great aversion to making anything but coin a legal tender in payment of debts. I has been my anxious wish to avoid the necessity of such legislation. It is, however, at present impossible, in consequence of the large expenditures entailed by the war, and the suspension of the banks, to procure sufficient coin for disbursements; and it has, therefore, become indispensably necessary that we should resort to the issue of United States notes. . . . Such discrimination should, if possible, be prevented; and the provision making the notes legal tender, in a great measure at least, prevents it, by putting all citizens, in this respect, on the same level, both of rights and duties."
On the 3rd of February the secretary wrote to Mr. Spaulding as follows:
"Mr. Seward said to me on yesterday that you observed to him that my hesitation in coming up to the legal tender proposition embarrassed you, and I am very sorry to observe it, for my anxious wish is to support you in all respects.
"It is true that I came with reluctance to the conclusion that the legal tender clause is a necessity, but I came to it decidedly, and I support it earnestly. I do not hesitate when I have made up my mind, however much regret I may feel over the necessity of the conclusion to which I come."
On the 5th of February the secretary became more urgent, and wrote to Mr. Spaulding the following brief note:
"My Dear Sir:—I make the above extract from a letter received from the collector of New York this morning. It is very important the bill should go through to-day, and through the Senate this week. The public exigencies do not admit of delay.
"Yours truly,"S. P. Chase."Hon. E. G. Spaulding."
It will thus be perceived that, whatever may have been the constitutional scruples of Secretary Chase in respect to the legal tender clause, he yielded to it under the pressure of necessity, and expressed no dissent from it until, as chief justice, his opinion was delivered in the case of Hepburn vs. Griswold, in the Supreme Court of the United States.
The bill, much modified from the original, passed the House of Representatives by the decided vote of yeas 93, nays 59. As it passed the House it contained authority to issue, on the credit of the United States, United States notes to the amount of $150,000,000, not bearing interest, payable to bearer at the treasury of the United States, at Washington or New York. It provided that $50,000,000 of said notes should be in lieu of the demand treasury notes authorized by the act of July 17, 1861, and that said demand notes should be taken up as rapidly as practicable. It provided that the treasury notes should be receivable in payment of all taxes, duties, imports, excise, debts and demands of all kinds due to the United States, and all debts and demands owing by the United States to individuals, corporations and associations within the United States, and should be lawful money and a legal tender, in payment of all debts, public and private, within the United States.
This bill came to the Senate on the 7th of February. It was followed on the same day by a letter from Secretary Chase to Mr. Fessenden, as follows:
"Sir:—The condition of the treasury requires immediate legislative provision. What you said this morning leads me to think that the bill which passed the House yesterday will hardly be acted upon by the Senate this week. Until that bill shall receive the final action of Congress, it seems advisable to extend the provisions of the former acts, so as to allow the issue of at least $10,000,000 in United States notes, in addition to the $50,000,000 heretofore authorized. I transmit a bill framed with that object, which will, I trust, meet your approval and that of Congress. Immediate action on it is exceedingly desirable."
The request for authority to issue $10,000,000 additional demand notes was immediately granted, and the bill was passed without opposition.
The currency bill was considered in the committee on finance of the Senate, and four important and radical amendments were reported by that committee. These amendments were as follows:
First—That the legal tender notes should be receivable for all claims and demands against the United States, of every kind whatsoever, "except for interest on bonds and notes, which shall be paid in coin."
Second—That the secretary might dispose of United States bonds, "at the market value thereof, for coin or treasury notes."
Third—A new section authorizing deposits in the sub-treasuries at five per cent., for not less than thirty days, to the amount of $25,000,0000, for which certificates of deposit might be issued.
Fourth—An additional section, No. 5, "that all duties on imported goods and proceeds of the sale of public lands," etc., should be set apart to pay coin interest on the debt of the United States; and one per cent. for a sinking fund, etc.
It was felt that if no provision was made for the payment of the interest on the bonds in coin, they would depreciate more and more, while such payment would tend, as it did, to maintain them nearer to their specie standard. In order to obtain coin for the payment of interest, provision was made that all duties on imported goods, and the proceeds of the sale of public lands, should be payable in coin and be set apart to pay coin interest on the debt of the United States, and one per cent. for a sinking fund to provide for ultimate redemption of the bonds. These amendments were considered of prime importance. It was felt that the duty on imported goods should not be lessened by any depreciation of our local currency. Such importations were based upon coin values, and the tax levied upon them was properly required to be paid in coin. This security of coin payment enabled the government to sell bonds at a far higher rate than they would have commanded without it, and tended also to limit the depreciation of United States notes. The bill and amendments were reported on the 12th, and became the subject of what was regarded as a very able debate.
There was decided opposition in the Senate to the legal tender clause, headed by Mr. Fessenden. Mr. Collamer, who also was opposed to it, made a motion to strike it out. Upon that subject I made my first lengthy speech in the Senate, a few extracts from which I insert:
"The motion of the Senator from Vermont now for the first time presents to the Senate the only question upon which the members of the committee of finance had any material difference of opinion, and that is, whether the notes provided for in this bill shall be made a legal tender in payment of public and private debts. Upon this point I will commence the argument where the Senator from Maine left it.
"In the first place, I will say, every organ of financial opinion —if that is a correct expression—in this country agrees that there is such a necessity, in case we authorize the issue of demand notes. You commence with the Secretary of the Treasury, who has given this subject the most ample consideration. He declares, not only in his official communications here, but in his private intercourses with the members of the committee, that this clause is indispensably necessary to the security and negotiability of these demand notes. We all know from his antecedents, from his peculiar opinions, that he would probably be the last man among the leading politicians of our country to yield to the necessity of substituting paper money for coin. He has examined this question in all its length and breadth. He is in a position where he feels the necessity. He is a statesman of admitted ability, and distinguished in his high opinion. He informs us that, without this clause, to attempt to circulate as money the proposed amount of demand notes of the United States, will prove a fatal experiment.
"In addition to his opinion, we have the concurring opinion of the Chamber of Commerce of the city of New York. With almost entire unanimity they have passed a resolution on the subject, after full debate and consideration. That resolution has been read by your secretary. You have also the opinion of the committee of public safety of the city of New York, composed of distinguished gentlemen, nearly all of whom are good financiers, who agree fully in the same opinion. I may say the same in regard to the Chambers of Commerce of the city of Boston, of the city of Philadelphia, and of almost every recognized organ of financial opinion in this country. They have said to us, in the most solemn form, that this measure was indispensably necessary to maintain the credit of the government, and to keep these notes anywhere near par. In addition, we have the deliberate judgment and vote of the House of Representatives. After a full debate, in which the constitutionality, expediency and necessity of this measure were discussed, in which all the objections that have been made here, and many more, were urged, the House of Representatives, by a large vote, declared that it was necessary to issue United States notes, and that this clause was indispensable to their negotiation and credit. . . .
"A hard necessity presses the government. $100,000,000 is now due the army, and $250,000,000 more up to July first. The banks of New York, Boston and Philadelphia, have exhausted their capitals in making loans to the government. They have already tied up their capital in your bonds. Among others, Mr. Vail, 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 finance committee, and stated explicitly that the Bank of Commerce, as well as other banks of New York, could aid the government no further, unless your proposed currency was stamped by, and invested with, the attributes of lawful money, which they could pay to others as well as receive themselves.
"Bonds cannot be sold except at a great sacrifice, because there is no money to buy them. As soon as the banks suspended, gold and silver ceased to circulate as money. You cannot sell your bonds for gold and silver, which is the only money that can now be received under the sub-treasury law. This currency made a legal tender was necessary to aid in making further loans. I insisted that the bill was constitutional. The Senator from Vermont has read extracts from the debates in the national convention, and from Story's 'Commentaries,' tending to show that Congress cannot authorize the issue of bills of credit. But I submit to him that this question has been settled by the practice of the government. We issued such bills during the War of 1812, during the war with Mexico, and at the recent session of Congress. We receive them now for our services; we pay them to our soldiers and our creditors. These notes are payable to bearer; they pass from hand to hand as currency; they bear no interest. If the argument of the Senator is true, then all these notes are unauthorized. The Senator admits that when we owe a debt and cannot pay it, we can issue a note. But where does he find the power to issue a note in the constitution? Where does he find the power to prescribe the terms of the note, to make it transferable, receivable for public dues? He draws all these powers as incidents to the power to borrow money. According to his argument, when we pay a soldier a ten dollar demand bill, we borrow ten dollars from the soldier; when I apply to the secretary of the Senate for a month's pay, I loan the United States $250. This certainly is not the view we take of it when we receive the money. On the other hand, we recognize the fact that the government cannot pay us in gold. We receive notes as money. The government ought to give, and has the power to give, to that money, all the sanction, authority, value, necessary and proper, to enable it to borrow money. The power to fix the standard of money, to regulate the medium of exchanges, must necessarily go with, and be incident to, the power to regulate commerce, to borrow money, to coin money, to maintain armies and navies. All these high powers are expressly prohibited to the states and also the incidental power to emit bills of credit, and to make anything but gold and silver a legal tender. But Congress is expressly invested with all these high powers, and, to remove all doubt, is expressly authorized to use all necessary and proper means to carry these powers into effect.
"If you strike out the legal tender clause you do so with the knowledge that these notes will fall dead upon the money market of the world. When you issue demand notes, and announce to the world your purpose not to pay any more gold and silver, you then tender to those who have furnished you provisions and services this paper money. What can they do? They cannot pay their debts with it; they cannot support their families with it, without a depreciation. The whole then depends on the promise of the government to pay at some time not fixed on the note. Justice to our creditors demands that it should be a legal tender; it will then circulate all over the country, and it will be the lifeblood of the whole business of the country, and it will enable capitalists to buy your bonds. The only objection to the measure is that too much may be issued. He did not believe the issue of $150,000,000 would do any harm. It is only a mere temporary expedient. . . .
"I have thus, Mr. president, endeavored to reply to the constitutional argument of the Senator from Vermont. Our arguments must be submitted finally to the arbitration of the courts of the United States. When I feel so strongly the necessity of this measure, I am constrained to assume the power, and refer our authority to exercise it to the courts. I have shown, in reply to the argument of the Senator from Maine, that we must no longer hesitate as to the necessity of this measure. That necessity does exist, and now presses upon us. I rest my vote upon the proposition that this is a necessary and proper measure to furnish a currency—a medium of exchange—to enable the government to borrow money, to maintain an army and support a navy. Believing this, I find ample authority to authorize my vote. We have been taught by recent fearful experience that delay and doubt in this time of revolutionary activity are stagnation and death. I have sworn to raise and support your armies; to provide for and maintain your navy; to borrow money; to uphold your government against all enemies, at home and abroad. That oath is sacred. As a Member of this body, I am armed with high powers for a holy purpose, and I am authorized —nay, required—to vote for all laws necessary and proper for executing these high powers, and to accomplish that purpose. This is not the time when I would limit these powers. Rather than yield to revolutionary force, I would use revolutionary force. Here it is not necessary, for the framers of the constitution did not assume to foresee all the means that might be necessary to maintain the delegated powers of the national government. Regarding this great measure as a necessary and proper one, and within our power to enact, I see plain before me the path of duty, and one that is easy to tread."
The motion to strike out the legal tender clause in the bill was defeated by a vote of yeas 17, nays 22. The amendments proposed by the finance committee were agreed to substantially as reported by the committee. The bill finally passed by a vote of yeas 30, nays 7. The House agreed to the amendment providing for the payment of the interest on bonds and notes in coin, and disagreed to the remaining amendments, and these were referred to a committee of conference, composed of Messrs. Fessenden, Sherman and Carlisle, of West Virginia, of the Senate and Messrs. Stevens, Horton, and Sedgwick, of the House. The conference met, and, after two or three days of full discussion, the material parts of the disagreements between the two Houses were settled. The provision that coin only be received for duties on imports, and that it be held as a fund to pay the interest on the bonded debt, was retained. The report of the conference was agreed to by both Houses, and on the same day the bill was approved by the President. Thus, the legal tender act, after a most able and determined opposition, became a law on the 25th of February, 1862.
It would be difficult to measure the beneficial results that rapidly followed the passage of this bill. The public credit was greatly strengthened by the provision for the payment of interest in coin furnished by duties on imported goods. The legal tender clause was acquiesced in by all classes, and we had, for the first time, in circulation national paper money as the actual standard of value. It was silent as to time of its payment, but each note contained a promise of the United States to pay a specific sum, and the implied obligation was to pay in coin as soon as practicable.
On the 11th of July, 1862, a further issue of $150,000,000 United States treasury notes (or "greenbacks," as they were commonly called from their color) of the same description was authorized, and subsequent issues increased the total amount to $450,000,000, the extreme limit. By the act of March 31, 1863, fractional currency was authorized to an amount not exceeding $50,000,000, to take the place of fractional silver coins, which had entirely disappeared from circulation, and this amount was issued.
The passage of the legal tender act was the turning point of our physical and financial history. Less than a year before the government was bankrupt; our bonds bearing six per cent. interest were sold at a discount; our national expenditures exceeded our receipts; loans could only be made upon the basis of coin, and this coin was disappearing from circulation. We had to appeal to the patriotism of bankers to accept the demand notes of the United States as money, with no prospect of being able to pay them. Our regular army was practically disbanded by the disloyalty of many of its leading officers. Washington was then practically in a state of siege, forcing me, in May, 1861, to go there at the heels of the 7th regiment of New York militia, avoiding the regular channels of travel. The city of Baltimore was decked under the flag of rebellion. Through the State of Maryland, loyal citizens passed in disguise, except by a single route opened and defended by military power. The great State of Kentucky, important as well from its central position as from the known prowess and courage of its people, hung suspended in doubt between loyalty and secession. In the State of Missouri, St. Louis was the only place of unquestioned loyalty, and even there we regarded it a fortunate prize that we were able to take the public arms from a government arsenal. The whole State of Virginia, with the single exception of Fortress Monroe, was in the possession of the revolutionary force.
But from the passage of the legal tender act, by which means were provided for utilizing the wealth of the country in the suppression of the rebellion, the tide of war turned in our favor. Delaware, after a short hesitation, complied with the proclamation of the President. Maryland had, by clear and repeated votes and acts, arrayed herself on the side of the Union. Her rebellious sons who fought against the old flag could not tread in safety on a single foot of the soil of that state. Western Virginia, the eastern peninsula, and many ports on the eastern coast, were securely reclaimed. The State of Kentucky had distinctly, by the vote of her people, and by the action of all her constituted authorities, proclaimed her loyalty, and her sons were fighting side by side with the soldiers of other states to expel traitors who, in her days of doubt, had seized upon a small portion of her soil, which they still occupied. In the State of Missouri the constituted authorities, organized by a convention of the people duly elected, were sustained by physical power in nearly all the state, and the rebellion there was subsiding into bands of thieves, bridge burners, and small parties of guerillas, who could soon be readily controlled by local militia. In nearly every rebellious state, the government had secured a foothold, and an army of half a million men, armed, organized and disciplined, impatiently awaited the word of command to advance the old banner of our country against every foe that stood in its way. Where does the history of nations present an example of greater physical weakness followed so soon by greater physical strength? When have results more wonderful been accomplished in eight months?