rise." Products rise and fall in price according to the laws of supply and demand. Foreign goods, however, the duties on which have to be paid in gold, are subject to a different standard of payment, and are governed in price largely by the price of gold. The price of gold is regulated by the laws of supply and demand, supplemented by the arts and efforts of speculators and gold gamblers. As long as the greenback was convertible at the will of the holder into a six per cent. gold interest bond, there was no danger of its becoming redundant, or in any way affecting the price of domestic products. But, as we have seen, this convertibility was taken away, in the face of the plighted faith of the government, after July 1, 1863. On March 3, 1864, an act of Congress was passed giving Secretary Chase still further discretionary power. It authorized him to issue $200,000,000 of bonds, bearing date March 1, 1864, or any subsequent date, redeemable after five years and payable in forty years, in coin, bearing interest not exceeding six per cent., subsequently known as 10-40 bonds. Under authority of this act, Secretary Chase, immediately after the 5-20 bonds bearing six per cent. interest had been disposed of, put 10-40 bonds bearing only five per cent. interest on the market. Very naturally the loan did not prove a success, and by the 1st of July, 1864, the sum realized from 10-40 bonds amounted to only $73,337,750. In order to defray the expenses of the government, the Secretary continued to issue evidences of indebtedness of the government in various forms calculated to circulate as a currency. By this time National Bank notes began to swell the volume of the currency. The following statement shows the amount and kinds of paper in circulation June 30, 1864: U. S. notes, greenbacks.... Postal, fractional currency. Interest bearing legal tender Treasury notes Certificates of Indebtedness. National Bank notes.... State Bank circulation about. Seven-thirty Treasury notes... $431,178,670 84 22,894,877 25 168,571,450 00 160,720,000 00 25,825,695 00 135,000,000 00 109,356,150 00 72,330,191 44 Temporary deposits for which certificates were issued.... $1,125,877,034 53 From the above table it will be seen that the country was flooded with paper securities of the government of every description, mostly bearing interest and issued in a form to circulate as currency. Now take into consideration the fact that over $700,000,000 of bonds bearing interest payable in gold had just been issued, and also that the military situation was very critical, and no one can fail to see into what a wretched condition the finances of the country had been brought. The "bulls" and "bears" of Wall street fairly rioted in the speculation and gold gambling which ensued. The premium on gold began to go up. On the 15th of January, 1864, it was 1.55; on the 15th of February, 1.59; on the 15th of April, 1.78; on the 15th of June, 1.79; on the 30th of June, 2.50; and on the 11th of July, 2.85. The business affairs of the country were of course greatly deranged, and distrust became general. The credit of the government suffered enormously-worse than if it had sustained a dozen defeats in the field. But the game had been carried too far, and it was no longer possible to deceive the public, so something had to be done to allay public feeling and restore confidence. Secretary Chase was compelled to resign June 30, 1864. No change, however, was made in the policy of the Treasury Department, and matters went on from bad to worse. BONDS, ETC., EXEMPTED FROM TAXATION.-GREENBACKS LIMITED TO $400,000,000. By the act of June 30, 1864, the amount of greenbacks issued or to be issued, was limited to $400,000,000, and "such additional sum, not exceeding $50,000,000, as may be temporarily required for the redemption of temporary loans." The Secretary was authorized to issue $200,000,000 legal tender Treasury notes bearing interest, payable in three years. By the same act all bonds, coupons, national currency, United States notes, Treasury notes, fractional notes, certificates of indebtedness, certificates of deposit, etc., were declared to be exempt from taxation by or under State or municipal authority. SENATOR FESSENDEN APPOINTED SECRETARY OF THE TREASURY. William P. Fessenden, United States Senator from Maine, was appointed to succeed Secretary Chase, and entered upon the duties of his office July 5, 1864. Secretary Fessenden raised the means to carry on the government to March 4, 1865, by issuing greenbacks, 7-30 Treasury notes, interest bearing Treasury notes, certificates of indebtedness, 5-20 bonds, etc. Secretary Fessenden, while in the United States Senate, had played a conspicuous part in mutilating the greenback, and the following paragraph from his annual report, in December, 1864, in view of his course, cannot fail to strike the reader as a singular admission. He said: "The experience of the past few months cannot have failed to convince the most careless observer that, whatever may be the effect of a redundant circulation upon the price of coin, other causes have exercised a greater and more deleterious influence. In the course of a few days the price of this article rose from $1.50 to $2.85 in paper for $1.00 in specie, and subsequently fell, in as short a period, to $1.87, and then again rose as rapidly to $2.50; and all without any assignable cause, traceable to an increase or decrease in circulation of paper money, or an expansion or contraction of credit or other similar influence on the market, tending to occasion a fluctuation so violent. It is quite apparent that the solution of the problem may be found in the unpatriotic and criminal efforts of speculators, and probably of secret enemies, to raise the price of coin, regardless of the injury inflicted upon the country,-or desiring to inflict it." No man living, except John Sherman of Ohio, was better able to explain how and through whose instrumentality these rascally speculators were enabled to prosecute their "unpatriotic and criminal efforts" than Mr. Fessenden himself. Under the circumstances Mr. Fessenden did not find the position of Secretary of the Treasury a very comfortable one; and at the beginning of Mr. Lincoln's second term he surrendered it with feelings of great relief. M'CULLOCH APPOINTED SECRETARY OF THE TREASURY. Immediately after President Lincoln entered upon his second term of office Hugh McCulloch, a banker, of the State of Indiana, was appointed Secretary of the Treasury. Mr. McCulloch was unknown to the public, but it was hoped that, being a banker and of course familiar with the manner in which the government and people were being robbed by the money power, and not identified with the corrupt political ring at Washington through which it operated, he would endeavor to restore the finances of the country to a more healthy condition. Never were a people doomed to be more bitterly disappointed. McCulloch not only entered into the designs of the money power, but became its most subservient tool, and retired with the reputation of being the first Secretary of the Treasury of the United States who had ever prostituted his high office for the purpose of enriching himself and his associates. Henry C. Carey, who had a conversation with him immediately after his accession to office, says that he expressed himself then as unfavorable to contraction, and quotes him as saying that he "should gladly see it (gold) at 1.75," meaning that he would not favor contraction for the purpose of reducing the premium on gold. "Three months later," says Mr. Carey, was instructing his representatives abroad to give assurances that we should have resumed specie payments before the 7-30's became due. Two months yet later came the destructive Fort Wayne decree (a letter from McCulloch in which he expressed himself in favor of the policy of contraction), and from that hour did the Secretary persist in the absurd and injurious policy therein announced." Mr. McCulloch, at the same time that he was giving instructions to his representatives abroad that we should have resumed specie payments before the 7-30's became due, was issuing 7-30 Treasury notes and compound interest bearing Treasury notes, made a tender at their face value, to an enormous amount. The payment of the army, which was mustered out of service during this period, alone required an immense sum, which was obtained by selling 7-30 Treasury notes through the agency of Jay Cooke. The amount of 7-30 Treasury notes outstanding October, 1865, which were convertible in less than three years into 5-20 six per cent. bonds, was $830,000,000. The following is a statement of the debt and circulation of the United States, as it stood October 31, 1865: |