purpose of currency.

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Two remedial plans were suggested by Secretary Chase in his report to Congress, in December, 1861:

First. The gradual retirement by destructive taxation of all bank-notes emitted by 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.

Second. The delivery to banking associations of notes prepared for circulation under national direction, and secured for prompt convertibility into coin, by pledge of United States bonds and other needful regulations. The secretary did not favor the first plan. He feared that the temptation to issue notes would overcome the caution which should be exercised to provide adequate means for their redemption. The second plan, with the taxing feature of the first, had his approval; and the national banking system was subsequently reared upon it. This was not altogether a new financial device. "It is not," said the secretary in his report, "an untried theory." In the State of New-York, and in one or more of the other states, it had been subjected, in its most essential parts, to the test of experiment, and was found practicable and useful. "The probabilities of its success," said he, "will not be diminished but increased by its adoption under national sanction and for the whole country." It is said that Eleazur Lord, of Piermont, New-York, was the first to propose the free banking system of that state. Millard Fillmore, when comptroller of New-York in 1849, suggested the issue of bank-notes secured by stocks of the United States, and receivable at the National Treasury for all public dues. The Hon. Orlando B. Potter, of the city of New-York, addressed a letter to Secretary Chase on Aug. 14, 1861, in which he submitted a plan for a national paper currency, which he says, in a recently published pamphlet, "was substantially adopted in the National Banking Act passed Feb. 25, 1863." However this may be, Salmon P. Chase, of Ohio, was Secretary of the Treasury at the time. To him must be given the credit of the plan for a national paper currency, based on the national stocks, and thus secured by the government itself. Whether he invented this plan, or whether he adopted it, matters not. It was through his great financial genius that by a single stroke of the pen, as it were, a bank-note currency as secure as the government credit could make it, was substituted for a paper currency which varied in value in every state, and fluctuated from par to nil, according to the value of the stock, if any, pledged for its redemption. The old currency was forced in by an excise tax that, while nominally a revenue measure, was in fact prohibitory of its circulation. The question as to the constitutional power to enforce such a tax was afterwards brought before the Supreme Court of the United States in the case of The Veazie Bank vs. The Collector of Internal Revenue. At that time Mr. Chase was Chief Justice. He delivered

the opinion of the Court, deciding the question in the affirmative: on the grounds, first, that there is no limitation on the power of Congress to impose excise taxes; and, second, that Congress has the power to provide a uniform paper currency. In effect, this decision denied the existence of sovereign power in the states to charter banks of issue,- a power which they had freely exercised almost without question from the formation of the Union until the year 1864. The fullest consideration was given to this question at the January Term of the Supreme Court of the United States in the year 1837, and it was then decided that there was no limitation in the Federal Constitution upon the sovereign power of the states to charter banks of issue. Three times thereafter this decision was affirmed by that Court. No question could have been better settled. Yet, as the result of war legislation and the innovations of the times upon the organic laws, the national banks were clothed with the exclusive privilege to issue paper currency. No judicial act of the Supreme Court has tended more to centralize power in the Federal Government than its decision in the Veazie Bank case. But whether the reader favors or opposes this system, he must admit that it strengthened the government credit, and created a currency of uniform value as stable as that credit could make it.

It is easy, now, to see why, irrespective of patriotic motives, capital came to avail itself of the vast loans negotiated for the maintenance of the Union. Without the Union, all capital would be swallowed up in future and not far distant wars. No two nations of such diverse interests and conflicting institutions as a Northern Union and a Southern Confederacy could remain at peace with each other. On the other hand, the maintenance of the Union would secure to capital the inexhaustible resources of the whole country. We were banking not only on the wealth of our northern and western agricultural and mining resources, our forests and grazing ranges, our factories and fisheries; but also on the cotton, tobacco, and other staples of the Southern States, whose annual yield is computed by hundreds of millions. History affords no parallel of a people blessed with such a wealth of resources, resources that enable us to add a billion in value to the credit side of our country's ledger each succeeding year! Vast as were our financial operations during the prosecution of the war for the Union, they were almost as nothing compared with what could have been accomplished had our full abilities been tested.

CHAPTER VIII.

THE LEADING MOVEMENTS OF THE WAR, 1861-1862.

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WHAT ARE ACTS OF WAR?-SEIZURE OF FEDERAL FORTS AND PROPERTY SUMTER AND ITS FATE - DIPLOMACY AND ITS FAILURE-JUDGE CAMPBELL AND MR. SEWARD - THE EXCITEMENT NORTH AND SOUTH-BLOOD SPRINKLING IMPULSES-JERRY CLEMENS AND HIS STORY – PRESIDENT LINCOLN'S PROCLAMATIONS—EXTRA SESSION, 1861 - PREPARATIONS FOR HOSTILITIES— BLOCKADE-RESPONSE TO CALL FOR TROOPS — BALTIMORE IN A FERMENT - MASSACHUSETTS AROUSED-THE MOUNTAIN UNIONISTS-BORDER STATES SECESSIONISTS - ELLSWORTH'S DEATH-THE ARMY ABOUT WASHINGTON – THE ADVANCE TO RICHMOND – BULL RUN, ITS HUMORS AND TRAGEDIES BALL'S BLUFF AND ITS DISASTER-MISSOURI CAMPAIGN-LYON'S HEROISM -GENERAL BAKER AND STONE PASHA -THE OUTRAGE UPON THE LATTER - EXPEDITIONS TO NORTH AND SOUTH CAROLINA - THEIR SUCCESSESBATTLE IN HAMPTON ROADS-THE MARVEL OF HISTORY.

T

" is a

HE adoption of an ordinance of secession, or of nullification, by a state convention has not been regarded in the light of a declaration of war against the United States; but when followed by the seizure of forts and arsenals, and other public property of the general government, it is so regarded. An attempt so to obstruct or hinder the execution of the laws of Congress, by the organized militia of a state, can be construed as nothing less than an act of war. But the word "war generic term. Such an act of hostility is defined in the Constitution as an act of "insurrection." Secession is Insurrection. Nine of the twelve states whose delegates framed and signed the Constitution, were made necessary to its enforcement upon themselves; and three-fourths of the states must concur in amendments. It would be unreasonable, therefore, to hold that one state may undo the work of three-fourths of the states. So thought President Jackson, in 1832. He then issued his celebrated Proclamation warning the people of South Carolina against the consequences of attempt

ing to enforce their ordinance which declared the tariff laws null and void. President Lincoln acted on this principle in 1861, with reference to the seizure of the custom house at Charleston, and the firing upon the forts by the state and Confederate forces.

The first overt act was the seizure of the revenue cutter Aiken. This was done by the state authorities, to whom it was surrendered by Capt. M. L. Coste. This act of war was followed by the seizure of forts, arsenals, custom houses, and other property of the government along the southern coast, from Beaufort in North Carolina, to western Texas. Only Fort Sumter at Charleston, Fort Pickens at Pensacola, and the fort at Key West remained, within the limits of the seven Confederate States, in the possession of the United States forces, at the close of Mr. Buchanan's administration. On the fifth day of January, 1861, the government dispatched the steamer Star of the West from New-York, with supplies and re-enforcements for Fort Sumter. It arrived off the harbor of Charleston on the 9th. It was fired upon and driven back to sea by the Confederate batteries. No further attempt was made during Mr. Buchanan's administration, to defend the public property in the Confederate States.

The convention of South Carolina sent commissioners to Washington. They were to negotiate for the peaceful surrender of the public property to the state. On the 28th of December, 1860, they addressed a note to the President. Copies of their full powers in the premises were enclosed. They also submitted the ordinance of secession. They thought that there would be little difficulty in settling the terms of the surrender. After their arrival in Washington, they were disenchanted. They learned of the dismantling and abandonment of Fort Moultrie by Major Anderson. They were advised of his occupancy of Fort Sumter. Until these circumstances should be explained they concluded to suspend further negotiations. They, however, urged the immediate withdrawal of the troops from the harbor of Charleston. They regarded their occupancy of the fort as a menace. While the Union flag floated over them negotiation was impossible. President Buchanan replied, in the language of his annual message, that, apart from the execution of the laws, "so far as it shall be practicable," the Executive has no power to decide what shall be the relations between the Federal Government and South Carolina. He held that the Constitution conferred no power upon the Federal Government "to coerce a state into submission, which is attempting to withdraw, or has actually withdrawn from the confederacy." President Lincoln, in his inaugural speech, assumed it to be his duty to enforce the laws; but he disclaimed the wish, and the power, to interfere with slavery in the states. He declared that he took the official oath with no mental reservations.

Early in March, 1861, Messrs. John Forsyth, of Alabama, Martin J. Crawford, of Georgia, and André Bienvenu Roman, of Louisiana, made

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their appearance in Washington. They came as commissioners representing the Confederate authorities. They were charged with the duty of negotiating a peace between the Confederacy and the United States. One condition to such a peace was the surrender by the latter to the former, of all forts, arsenals, and public property. This was to be accompanied by an adjustment of the proportions of the public debt to be borne by each. The Secretary of State, Mr. Seward, declined to see the commissioners. He returned a polite reply to their written communication. It was in the form of a memorandum. In this memorandum, the secretary rejects the assumption of the commissioners, that the Confederate States had established an independent government, de facto and de jure. He resents all the assumed consequences that would flow from such a relation. The memorandum bears date March 15, 1861. It states that the communication from the commissioners was received on the 13th. The memorandum was not sent to the commissioners until the 8th of April.

The commissioners were not as courteous as the secretary in their reply to his memorandum. They reply on April 9th. They call attention to the long delay of the secretary. They leave the inference that they regarded the delay as proceeding from a desire to gain time, while relief was being sent to Fort Sumter. They admit that they consented to the delay; but only upon the assurance, given by Mr. Seward to "a person occupying a high official position in the government "- meaning Judge Campbell of the Supreme Court," that Fort Sumter would be evacuated in a very few days." Judge Campbell, in a letter to Mr. Seward, dated April 13th, reiterates the statement, that he gave them the information, on the secretary's authority, that the fort would be evacuated within five days. He calls upon the secretary to explain the cause of the failure to carry out the promise. At the expiration of the five days, he calls on him again with a telegram from General Beauregard to the effect that Sumter was not evacuated, and that Major Anderson was at work making repairs. He then learned from Mr. Seward that the failure to evacuate was not the result of bad faith, but was attributable to causes consistent with the intention to fulfill the engagement; and that notice would be given of any design to change the status at Fort Pickens. Judge Campbell states that Judge Nelson of the Supreme Court was also present at these conversations. They were three in number. The communications to the commissioners had been shown to and sanctioned by that gentleman. Judge Campbell further states that, on the 1st of April, Mr. Seward gave him the written assurance that he was satisfied the government would not attempt to supply Fort Sumter without giving notice to Governor Pickens. On the 7th of April, Judge Campbell states that Secretary Seward wrote to him, "Faith as to Sumter fully kept; wait and see." The next morning he read in the newspapers that an authorized messenger from President Lincoln had informed Governor Pickens