LIBRARY 
 
 oi i H ;-. 
 
 UNIVF^SITY OF CALIFORNIA 
 
 GIRT OR 
 
 9.9724... Class 
 
The History 
 
 OF THE 
 
 Confederate 
 Treasury 
 
 By ERNEST A5HTON SMITH, Ph. D. 
 
The History of the Con- 
 federate Treasury 
 
 A Dissertation Presented to the Board of University 
 
 Studies of the Johns Hopkins University for 
 
 the Degree of Doctor of Philosophy. 
 
 BY ERNEST ASHTON SMITH, PH. D., 
 
 M 
 
 Professor of History and Economics, Allegheny College, Meadville, Pa. 
 
 [From Publications of the Southern History Association for 
 January, March, May, 1901.] 
 
 1901. 
 
CONTENTS 
 
 Chapter I. Creation of the Treasury i 
 
 Chapter II. Over-Issue 23 
 
 Chapter III. Remedies 35 
 
 Chapter IV. Repudiation 64 
 
 Chapter V. Collapse 87 
 
 Chapter VI. Comparative Financiering 99 
 
 Chapter VII. Limitations of the Treasury 114 
 
 '*. 
 
 
The History of 
 Confederate Treasury 
 
 By Professor Ernest A* Smith, Allegheny College 
 
 CHAPTER I. CREATION OF THE TREASURY. 
 
 The history of war is not alone the account of the 
 movements of hostile men. Other agencies than bullet 
 and bayonet have their share in deciding the issue. Valor 
 and numbers are largely determining factors, yet eco- 
 nomic forces play a part whose importance needs to be 
 carefully measured. The war chest of a Frederick the 
 Great indicates one method of establishing an absolute 
 guarantee of victory. Modern conflicts cause to be levied, 
 when the emergency arises, more direct contributions 
 from the accumulations, possessions and transactions of 
 the nations' subjects. That people which has the full en- 
 listment of its financial resources and the mustering of its 
 complete industrial strength is well nigh thrice armed. 
 
 The Confederate States of America was naturally en- 
 gaged from its inception in a struggle for existence. The 
 creation of its Treasury and the establishment of a rev- 
 enue were a concern of vital consequence, which was to 
 be vastly emphasized by the mounting demands of a land 
 widely assaulted. Thus the test from the start was the 
 more severe in that the Treasury was engaged in deficit 
 financiering. Every device which opportunity or neces- 
 
 99724 
 
sity could urge was the subject of experiment by the De- 
 partment in its efforts to supply the sinews of war. 
 
 In addition to the ordinary fiscal operations there de- 
 volved on the officials the diverse and difficult problems of 
 loans, currency, taxation, commerce and produce pur- 
 chasing. The study of these activities suddenly thrust on 
 the Treasury will portray phases of public finance, profit- 
 able both for instruction and for warning. 
 
 The Provisional Congress of the Confederacy of six 
 Southern States met in Montgomery, Alabama, February 
 4, 1861. Within four days the Provisional Constitution 
 was drafted and adopted to remain in force one year. The 
 United States laws in operation on November I, 1860, and 
 not otherwise inconsistent with the new instrument were 
 enacted as binding on the Confederacy. The following 
 day brought the election of the President and Vice-Presi- 
 dent, while the interval until the inauguration on the i8th 
 of February was occupied by the organization of an army 
 and a navy, the adaptation 1 of the former national system 
 of revenue, the declaration 2 of a temporary internal free 
 trade, and other appropriate legislation. Cabinet officers 
 were to be appointed by the President for a term of six 
 years, and the choice of Mr. Davis for his Secretary of the 
 
 SECRETARY C. G. MEMMINGER. 
 
 Treasury was announced February iQth to be Mr. C. G. 
 Memminger, of Charleston, South Carolina. The experi- 
 ence of this gentleman consisted of a long service 3 in the 
 Legislature of his State, where as chairman of the Ways 
 and Means Committee he* had charge of the special finan- 
 cial measures, growing out of the crisis of 1837 and 1857, 
 
 "Act of Feb. 14, 1861. 
 
 'Act of Feb. 18, 1861. 
 
 8 Caper s's Life of Memminger, pp. 106-186. 
 
 * Christopher Gustavus Memminger was born at Nayhmgen, 
 Wurtemberg, in 1803, and came to Charleston at the age of four; 
 he was graduated from South Carolina College in 1819. 
 
relating particularly to banks, specie payments and note 
 issues. 
 
 Mr. Memminger was then in the Provincial Congress, 
 serving as chairman of the Committee on Commerce. As 
 the minister of finance he received his appointment before 
 the Congress had formally created the Department, for 
 not until February 21 st was the law framed 5 establishing 
 and defining the offices. Under the Secretary were Comp- 
 
 ORGANIZATION OF THE TREASURY. 
 
 troller, Auditor, Register, Treasurer and Assistant Secre- 
 tary. The Treasury 6 in embryo at once found a local 
 habitation for itself under the charge of the chief clerk of 
 the Secretary, Col. Henry D. Capers. The first requisi- 
 tion on it to provide blankets and rations for 100 men, 
 the first volunteers, a company from De Kalb county, 
 Georgia, had to be met by the personal credit of the 
 Secretary. The State of Alabama had offered Congress 
 a loan of half a million dollars, but the bonds were not 
 then available. 
 
 Within a short time the organization of the Treasury 
 Department in its several divisions was perfected on the 
 system devised by Alexander Hamilton. Several of the 
 officials had served in the United States Treasury 'and 
 had resigned to tender their services to the new govern- 
 ment. Notably was Philip Clayton, former assistant sec- 
 retary in Buchanan's administration, who now assumed 
 the same position at Montgomery. C. T. Jones came to 
 the register's office as chief clerk, well equipped 7 , bring- 
 ing from Washington copies of all the forms in use in the 
 several bureaus. The second auditor, W. H. S. Taylor, 
 had been twenty-five years in the employ of the United 
 States. He said in his first report of December 31, 1861, 
 
 8 Session I, Ch. VIII, Confederate Acts. 
 
 ' Capers's Memminger, p. 310. 
 
 T Capers's Life of Memminger, p. 319. 
 
that after taking the oath to the Confederacy, when he 
 went back to Washington to obtain books, forms and 
 precedents he was sternly denied all access. The first 
 auditor was Boiling Baker, who continued in his office to 
 the end. A. B. Clitherall was register and E. C. Elmore, 
 treasurer. There were assistant treasurers at New Or- 
 leans, Charleston, Savannah and Mobile. The deposi- 
 tories performed essential functions of the Treasury 
 mechanism. They were located in the larger cities at first, 
 their number being less than forty for two years, but in- 
 creasing during the great funding operations by three 
 hundred at a time. They were in a way the banking 
 branches of the Department without the discount provis- 
 ion. Here public moneys were received and disbursed, 
 government accounts kept, taxes prepaid for interest cer- 
 tificates, and the various Confederate bonds offered for 
 sale. Under the funding acts they were to furnish the 
 government securities in exchange for notes. 
 
 The Congressional provisions of the first session in- 
 dicate that the financial system then in view had customs 
 
 CUSTOMS THE CHIEF SOURCE OF REVENUE. 
 duties for its chief source of revenue. All United States 
 collectors who joined the new government were appointed 
 with the original powers and pay. Free admission until 
 March I5th had been extended to all meats, grains, pro- 
 visions and war material. Revenue depots 8 were placed 
 after that date in northern Alabama, Georgia and South 
 Carolina, but duties were generally suspended on goods 
 from border States expected to join the Confederacy. 
 Upon the accession of Tennessee and North Carolina the 
 interior customs offices were abolished. A provisional 
 tariff of 15% ad valorem on coal, iron, wood and paper 
 was adopted March I5th, and a duty of five cents per ton, 
 called light money, was ordered on all vessels entering 
 
 8 Order of March 21, 1861. 
 
ports. The Federal blockade early interfered with this 
 policy of relying upon import returns, for on July Qth the 
 collectors at all small ports were dismissed. 
 
 The first actual money came to the Treasury March 
 I4th, through the Bullion Fund 9 of $389,267.46, in the 
 hands of the State Depository of Louisiana, and $147,- 
 519.66, the balance from customs at New Orleans, which 
 sums were transferred to the Confederate Government 
 by the Convention of the State. 
 
 To meet rapidly developing emergencies, 
 
 THE FIRST FINANCIAL LEGISLATION 
 of Congress was the fifteen million dollar loan authorized 
 February 28th. The bonds were for ten years, bearing S% 
 coupons, payable semi-annually. This interest was de- 
 finitely guaranteed by the pledge of the duty of 1-8 of one 
 per cent, per pound on all . raw cotton exported after 
 August i, 1861. The interest coupons were receivable for 
 this export duty. This beginning was on a sound basis, 
 and the loan's success demonstrated the correct principles 
 of finance recognized. But more immediate funds were 
 needed for urgent disbursement and the second 10 financial 
 legislation provided for the issue of 
 
 ONE MILLION DOLLARS OF TREASURY NOTES. 
 These were to be one year notes, bearing $3.65 interest on 
 $100, similar to the issue by the United States under the 
 regime of Buchanan's Secretary of the Treasury, Howell 
 Cobb, of Georgia, now President of the Provisional Con- 
 gress. 11 They were made receivable for duties and taxes, 
 except export duty on cotton. 
 
 'This was coin kept at the New Orleans mint for the con- 
 venience of those bringing bullion; the fund had been $3,000,000 
 up to 1856. 
 
 10 Act of March 9, 1861. Session I, Chapter XXXII. 
 
 11 The absence of engravers in the South led to a contract for 
 preparing the issue with the American Bank Note Company, of 
 New York. There is a current tradition that these notes were 
 seized as contraband of war by the United States Government, it 
 
A 
 
 PLACING OF THK LOAN. 
 
 "A Loan for the Defense of the Confederate States," 
 subscriptions of five million dollars of the fifteen million, 
 was invited by Secretary Memminger the day Congress 
 adjourned, March i6th. Leading business men took 
 charge as commissioners of the loan, four from Louisiana, 
 three each from six other States. The Secretary worked 
 enthusiastically to place the investment 12 , hoping at first 
 to dispose of a million in New York. He wished to get 
 a subscription twice the sum named 13 , believing that such 
 an expression of confidence on the part of the people 
 must have marked influence on European diplomacy. 
 The loan indeed went well, for in two days after the books 
 were opened the five million dollars were taken in Savan- 
 nah, New Orleans and Charleston alone, while it seemed 
 the subscription would reach $8,000,000. The banks were 
 largely the investors and in addition furnished their notes 
 for the deposits on the loan and again paid them out on 
 the Treasurer's draft. All the banks except those of New 
 Orleans and Mobile had suspended specie payments in 
 March. Rates of exchange already varied in the several 
 States, and the agreement was to make all notes equiva- 
 lent to specie. The payments were due by May 1st, and as 
 the affair at Fort Sumter had brought definite hostilities 
 with increasing war estimates, the balance of the fifteen 
 million was called for May 7th. Prominent commercial 
 men were invited to suggest plans. The advice 14 of James 
 D. Denegree, president of the Citizens' Bank, of New Or- 
 
 having learned of the shipment by the telegraphic communica- 
 tions. However, on April 3, the letter book "B" of the Secretary 
 has the entry of 607 impressions of each denomination of fifty, 
 one hundred, five hundred and one thousand dollars, being sent to 
 the Treasurer, E. C. Elmore, and his receipt for them. The two 
 or three specimens extant are quoted extravagantly. 
 
 "To G. B. Lamar, Bank of Republic, N. Y. City, March 23, 
 1861, Letter Book "B." 
 
 "To Edw. Frost, of Charleston, S. C., April 2, 1861. 
 
 "Letter of May 4, 1861. 
 
/cans, a frequent counselor of Mr. Memminger's, was 
 against the reopening of the loan because the people had 
 no money and must wait for their crops. The suggestion 
 of this banker was an issue of $30,000,000 interest bearing 
 Treasury notes and a direct tax payable before March I, 
 1862. He particularly urged that there be "no half-way 
 measures at this time." The loan met with a tardy re- 
 sponse and on May 21 st the balance untaken was adver- 
 tised to be five million. A new appeal now included Vir- 
 ginia, Tennessee and North Carolina, lately come into the 
 Confederacy, and in some States public addresses were 
 made to induce subscriptions. 
 The first public expression of the 
 
 FISCAL POLICY OF THE GOVERNMENT 
 is found in the report of the Secretary of the Treas- 
 ury at the second session of Congress. More than 
 ordinary financiering was warranted by the situation 15 , in- 
 dicated in estimates for the year's expenditures of $54,- 
 129,464. The appropriations of the first session had been 
 $17,683,370, and, now within ninety days of the formation 
 of the nation, the provisions of the fifteen million loan, 
 when realized, of the million treasury note issue and of 
 the receipts of over a million dollars from customs and 
 the bullion fund would not be fully adequate. The past ex- 
 penditures had been $993,308. The deficit in view was 
 $38,000,000. The plans 16 presented fairly foreshadowed 
 the fiscal practice of the administration. There were four 
 chief recommendations ; a tariff of I2-|%, a war tax of 
 $15,000,000, an issue of $20,000,000 Treasury notes and a 
 loan of $50,000,000 at home and abroad. Such a program 
 appears comprehensive, but there were lacking esssential 
 elements of accuracy, vigor and definiteness. The cur- 
 tailment of the tariff resource by the possible success of 
 
 16 Report of May 10, 1861. 
 
 16 Capers's Life of Memminger, pp. 417-421. 
 
8 
 
 the blockade was admitted, yet it was none the less con- 
 fidently counted as an available asset. The arbitrary 
 figure of $235,000,000 was assigned to the exports of the 
 country and the value of the imports calculated to be the 
 same, upon which a tariff of $25,000,000 was apportioned, 
 one-half of it to be collected by February 18, 1862. 
 
 In this initial scheme, loans and direct taxes were recog- 
 nized as the chief sources of reliance, yet the practical 
 concern appeared to be to develop a resource that could 
 bring more speedy returns to the exchequer. The Secre- 
 tary stated that all the ready money of the country until 
 the fall crops were sold would be absorbed by the fifteen 
 million loan, and this induced him to urge on Congress 
 the issue of Treasury notes. The application of this prin- 
 cipal financial measure was to be a matter of experiment, 
 ascertaining how the public regarded the notes. The De- 
 partment purposed to use the issue at first to anticipate 
 other income, but the final aim was to familiarize the 
 people with this form of money until it had replaced every 
 other circulating medium and become a permanent loan. 
 
 The way for the general use of the government paper 
 was naturally prepared by making Confederate dues pay- 
 able in the notes. Thus, Mr. Memminger came to advo- 
 cate taxation, as a means to another financial end, rather 
 than as the main support of his whole system. He called 
 for the sum of $15,000,000, which was the estimated ex- 
 penditure up to October ist, and the implication was that 
 the collections could be made within four months. In 
 fact, the suggestion was to use the State machinery or by 
 a discount cause the States to pay the whole quota. There 
 was a suggestion to Congress that the tax levy might not 
 be needed in full, nor was the placing of the $50,000,000 
 loan on the market urged. Other sources of revenue and 
 readjustments through foreign aid were probabilities en- 
 tertained. This hope was expressed very strongly in a 
 
9 
 
 i 
 
 private report 17 of the Secretary to an official of Con- 
 gress. The same document contains a vigorous and note- 
 
 CORRECT PRIVATE VIEW OF TAXATION. 
 worthy appreciation of taxation which unfortunately was 
 not emphasized to the same degree in a paper of state 
 until a year later. It said "the most certain and most en- 
 during resources must be sought out by the Government 
 and taxes are the only sure reliance under all circum- 
 stances. Loans come from only a portion; duties reach 
 farther, yet not all; but direct taxes pervade the whole 
 body politic and bring forth the contributions of the will- 
 ing and the unwilling." Here spoke the political econo- 
 mist; his practice was that of an experimenting public 
 servant. 
 
 BONDS AND TARIFF. 
 
 The response of Congress to the report was the author- 
 ization 18 to issue $50,000,000 in &% bonds, or in lieu of 
 bonds $20,000,000 non-interest bearing Treasury notes. 
 The bonds might be sold for specie, military stores or 
 the proceeds of the sale of raw produce or manufactured 
 goods. The notes were receivable for all public dues ex- 
 cept cotton export. The desire of Mr. Memminger for 
 8% interest on the notes in order to have them withdrawn 
 from circulation as an investment "had been refused. The 
 guarantees of the issue were redemption in specie within 
 two years, convertibility into an 8% bond, provided ex- 
 pressly for the purpose, and a pledge of the faith of the 
 Confederate States to raise sufficient revenue to pay the 
 interest and redeem the stock. Congress named $10,- 
 000,000 as the necessary sum to be raised within the year 
 by direct taxation for a fund of ultimate redemption, yet 
 the sole evidence of a movement towards furnishing this 
 guarantee was instructions to the Secretary to ascertain 
 
 "To Howell Cobb, May i, 1861. 
 
 1$ Act of May 16. Session II, Ch. XXIV. 
 
IO 
 
 the valuation of all the property in the eleven States and 
 learn the nature of the revenue systems. A complete 
 tariff 19 measure was passed to take effect August 31, 
 1861. It was a tariff of seven schedules of duties, 
 comprising those on articles at 25%, 20%, 10% and 
 5%, specific duties and the free list. Compared with the 
 U. S. tariff of 1857, its rate was 15% on woolens, cotton 
 goods, oil, iron, coal and manufactured products, while 
 that of the United States was 24%. Congress adjourned 
 May 21, to meet in the new capital, Richmond, on July 21. 
 
 A NEW CURRENCY. 
 
 The Treasury Department was chiefly concerned about 
 the establishment of the system 20 of national currency and 
 comprehensive and persistent plans to that end were laid. 
 Upon the suggestion of Mr. Memminger, a convention 21 of 
 bankers was held in Atlanta, Georgia, in June. The ob- 
 ject of the meeting was expressed in the final resolution, 
 that all banks were recommended to receive for all dues 
 the Treasury notes soon to be issued. 
 
 The administration 22 anticipated a small requirement of 
 coin for its purposes and pronounced gold a matter of 
 merchandize and not a true standard of measure, unless it 
 flowed freely. Therefore new currency had to be devised 
 for the Confederacy. That want made imperative, accord- 
 ing to Mr. Memminger, the introduction and wide rise of 
 Treasury notes. He addressed 23 the banks individually, 
 citing the action of the Atlanta convention, and arguing 
 the advantage of a currency circulating everywhere and 
 sustained by the united credit of the Confederacy. He 
 
 "Act of May, 1861. Session II, Ch. XUV. 
 
 80 For the present Treasury needs and owing to difficulty in 
 printing the notes authorized, the banks furnished the Govern- 
 ment a temporary loan of $5,000,000 of their several note issues. 
 
 81 G. B. Lamar, of Savannah, Ga.. was president of the conven- 
 tion and J. S. Gibbs, of Columbia, S. C., secretary. 
 
 "To E. Starnes, of Augusta, Ga., May 24, 1861. 
 13 Circular to banks of June 17, 1861. 
 
II 
 
 assured them that the notes would be safeguarded by an 
 early levy of a direct tax and also be fundable in 8% 
 bonds, preventive of depreciation. 
 
 LOYALTY OF THE BANKS AND CAPITALISTS. 
 
 The banks of New Orleans and Mobile alone refused 
 to make the new money paramount, but in August Mobile 
 suspended specie payment and the Canal and Citizens' 
 banks of New Orleans were 24 besought by the Secretary, 
 and the aid of the Governor and Attorney General of 
 Louisiana was invoked to have them accept the Treasury 
 notes as the currency of the land. They were told that 
 they could keep their specie in their vaults, but the good 
 of the country demanded that they place their bank notes 
 and those of the Confederacy on the same footing. Ac^ 
 cordingly in Septembei they consented to do that to which 
 the stress of conditions would have eventually led. Their 
 patriotism is well indicated in the statement 25 of James D. 
 Denegree, that in a conflict between the credit of the 
 banks and of the Government, the banks must see their 
 own interests destroyed, but the credit of the nation must 
 not be restricted nor the banks incur the responsibility of 
 defeating the resolution. No authorities could ask for 
 more unquestioning support and the loyalty of the credit 
 organizations of the towns and cities manifested itself 
 largely irrespective of true economic considerations. 
 
 MATERIAL BASIS FOR TREASURY NOTES. 
 The third session of Congress, assembling in Richmond, 
 was met with the announcement of the purpose to estab- 
 lish a national currency. Expressed apprehensions of 
 danger were answered 26 by a reference to the banking 
 capacity of the South. From 1852-8, the circulation and 
 deposits in eight Confederate States where banks we're 
 
 "Letter of Sept. 11, 1861. 
 
 " Letter of Oct. 2, 1861, to Memminger. 
 
 " Special report of Memminger, July 20. 
 
12 
 
 located amounted to $85,000,000, with coin of $18,500,000. 
 There was estimated to be $200,000,000 on interest out- 
 side of the banks, whose capital aggregated $85,000,000. 
 The Secretary reasoned that the country could easily sus- 
 tain $100,000,000 of Treasury notes, especially if a large 
 portion of them being made interest bearing should come 
 to take the place of an investment. Their use as money 
 was conceived to increase their value by one-half and the 
 figure of safe absorption of notes was forthwith raised to 
 $150,000,000. The recommendation of the report was for 
 notes to bear two cents interest per day on the hundred 
 dollars. The demand was urgent since the one million of 
 March 9 had been issued and the fifteen million loan was 
 still going slowly with a balance of five million untaken. 
 For immediate claims one million more of the interest notes 
 of March 9 was ordered. 27 Congress was planning larger 
 legislation, which was guided by the statistics 28 submitted 
 by the Treasury as a result of the inquiry 29 directed to- 
 ward revenue raising in the previous session. By this 
 showing the gross valuation of property in the eleven 
 States, based on a previous general statement of the U. S. 
 Treasury, -was $5,202,176,109. Taking as a basis the arti- 
 cles taxed in- most of the States, the valuation of $4,632,- 
 160,541 was given. Instead of $10,000,000 as before, now 
 a tax of $25,000,000 was advised by means of a levy of 54 
 cents on the $100 of the value of slaves, real estate, mer- 
 chandise/ bank, railroad and other stocks and money at 
 interest. In this scheme an ad valorem was preferred to a 
 direct tax and a different basis than that of the revenue 
 systems of the States was advocated. 
 
 The extent of appropriations and estimates warranted 
 another appeal 30 from Mr. Memminger. $50,000,000 of 
 
 " Act of July 24, 1861. 
 
 M Report of State Auditors, July 24. 
 
 "Act of May 16. 
 
 * Special report of July 29. 
 
the amounts voted by the First and Second Sessions re- 
 mained to be met and the increase of the estimates to 
 $100,000,000 emphasized the defects of bonds as an avail- 
 able resource. This was the time and place to substitute 
 Treasury notes for the bank circulation in part ; at least 
 one-half ought to be replaced, the Secretary said, to the 
 extent of $43,000,000. He had proposed 31 to set apart 
 the crop subscriptions, now being taken, as additional 
 security for the notes, declaring the value of such a basis 
 was second to coin itself. But the banks in convention 
 assembled in Richmond, July 24, assured him that they 
 did not require the pledge of the proceeds of the produce 
 subscribed. This popular movement of the planters was 
 then used in another form for Treasury purposes and a 
 plan 32 outlined, which was to be worked extensively at a 
 later time, of issuing bonds in exchange for crop sub- 
 scriptions. 
 
 THE FIRST LARGE FINANCIAL LEGISLATION 
 The first large financial legislation of the war was the 
 One Hundred Million Loan of August 19, 1861. The 
 bonds were for twenty years, bearing S% interest, and the 
 shorter term bonds of May 16 were revoked in favor of 
 the new stock. They were to be issued for funding Treas- 
 ury notes, for exchange for the proceeds of the sale of raw 
 produce and for the purchase of military stores. The 
 notes were non-interest bearing and payable six months 
 after peace was declared. There was a limit placed, in- 
 cluding former issues, of $100,000,000. The loan was ac- 
 companied by the first war tax, which was expected to 
 pay the interest on the public debt and establish a sinking 
 fund to discharge the principal. The rate was fifty cents 
 on $100; the assessment was set for November i, 1861, 
 and collections by May I, 1862. This was a much longer 
 
 81 Report of July 20. 
 88 Act of August 19. 
 
14 
 
 period than the Secretary had once 33 calculated and the 
 realization was to extend it farther. The Department 
 
 RUNNING THE PRINTING PRESSES. 
 
 was now concerned with the printing of the Treasury 
 notes. The banks had been supplying the currency of the 
 Government since May, when the issue of $20,000,000 was 
 authorized, loaning their notes at 5%. 
 
 The intention had been to pay back the loan in its own 
 notes within three months. Contracts 34 had been made 
 with S. Schmidt, of New Orleans, 35 but he proved most 
 unsatisfactory and his output was very small, resulting in 
 his dismissal in October. Meanwhile Hoyer and Ludwig, 
 of Richmond, had been engaged on the notes, and by the 
 latter part of August 36 were furnishing almost $2,000,000 
 a week. The rapid increase of output was indicative of 
 the demand as well as of the workings of the policy of 
 note supply. On October I, a contract was let for 
 $600,000 a day, and by November the daily manufacture 
 of money was $800,000, yet the most serious difficulties 
 had confronted the Bureau of Engraving and Printing. 37 
 There had not been a single bank note engraver in the 
 South, nor was bank-note paper manufactured therein. 
 Lithographs were used in place of steel engravings, and 
 the first workmen came from Baltimore, as did the sup- 
 plies of paper. But the Federal pickets could not always 
 be evaded, and soon three local manufactories of paper 
 were started. The steady increase of requisitions on the 
 Treasury could not be met with sufficient notes from the 
 
 88 Report of May 10, 1861. 
 
 14 Letter to A. B. Clitherall, May 7. 
 
 88 The mint at New Orleans had coined in April four half-dollars 
 and then stopped for lack of bullion. On reverse were: Goddess 
 of Liberty, 13 stars, 1861; on obverse: shield with 7 stars, a liberty 
 cap and entwined around it stalks of sugar cane and cotton; in- 
 scribed with "Confederate States of America." 
 
 88 Reports of Thompson Allan, clerk of Bureau. 
 
 "The first bonds were prepared in Charleston and New Or- 
 leans. 
 
presses, so that by October 24, $12,000,000 of claims were 
 unpaid, and a second resort was had to the banks of South 
 Carolina and Georgia for a loan of ten millions of their 
 notes. 
 
 By the time of the installation of the permanent con- 
 stitution in February, 1862, this defect had been remedied 
 and Treasury notes held the field alone. 
 
 SUBLIME FAITH IN PAPER MONEY. 
 The dominance of the Government credit instruments 
 was hastened by the action of the fifth and last session 
 of the Provisional Congress, which met November 18. 
 Appropriations 38 had reached $124,301,038, although the 
 estimates of six months earlier were $71,812,834. Ex- 
 penditures had been $70,666,715, while receipts were $61,- 
 870,216 of which $18,000,000 was from loans. Up to this 
 date, $32,000,000 in notes had been issued and the Secre- 
 tary asked 39 for authority to issue $50,000,000 in excess 
 of the $100,000,000 of the Act of August 19. But, when 
 additional estimates for $99,000,000 were submitted on 
 December 10, he demanded 40 $100,000,000, boldly assert- 
 ing that the scheme of finance adopted by Congress 
 looked to Treasury notes as the supply of means for pub- 
 lic expenditures. He proposed no measures looking be- 
 yond April i, 1862, and expressed faith in the attempted 
 blockade being set aside and the present embarrassments 
 relieved. The attitude of Mr. Memminger is revealed in 
 a communication 41 to G. A. Trenholm, of Charleston, who 
 became his successor in the final year of the Confederacy. 
 He said, "our Treasury cannot be guided by experience, 
 since history furnishes no parallel of circumstances. It 
 must feel its way." His November report showed a reali- 
 zation of the perils of redundancy and sounded that help- 
 less warning which was the characteristic feature of sub- 
 
 38 Capers's Life of Memminger, pp. 422-428. 
 
 " Report of Nov. 20, 1861. 
 
 40 To Howell Cobb, Dec. 10, 1861.- 
 
 "Letter of Feb. 17, 1862, Letter Book "C." 
 
i6 
 
 sequent official utterances. Congress began in this last 
 session its oft repeated practice of -raising the limit, 42 vot- 
 ing $50,000,000 additional notes. 
 
 THE DELUSION OF FUNDING. 
 
 Among the measures adopted to sustain the value of 
 the notes, funding was judged an absolute specific from 
 the very start, nor was this delusion lost under changed 
 conditions and unfavorable experiences. The $20,000,000 
 notes of the Act of May 16 could be funded in ten year 
 bonds, bearing 8% interest which were re-exchangeable for 
 notes. This was an experiment and the banks were large- 
 ly induced to fund accordingly. The $100,000,000 note 
 issue of the Act of August 19 was fundable in 8% bonds, 
 running from three to eighteen years, excepting $20,000,- 
 ooo, which could be exchanged for ten-year bonds of J% 
 interest, reconvertible in notes. The demand for this J% 
 security was so strong, exhausting the amount, that in 
 the November Congress, the Department asked permis- 
 sion to lower the interest further, and a new device 43 took 
 the place of the bond, a 6% call certificate. The amount 
 of these was to be $30,000,000 and their operation was to 
 convert the depositories into savings banks, where Treas- 
 ury notes were deposited and drew 6% interest, until they 
 were again brought out into the circulation. In address- 
 ing 44 President Davis, the Secretary stated that the time 
 for the payment of these bonds was not material as their 
 exchange for currency would likely be required before 
 the time fixed for payment, and thus be a class of bonds 
 outside the general funded debt. Twenty years was fixed. 
 While the purpose avowed for these certificates was the 
 absorption of notes, yet at best it could furnish only a 
 temporary check on redundancy, since there was to be a 
 return sooner or later into notes. 
 
 42 Act of Dec. 24, 1861. 
 
 48 Act of Dec. 24. Session V, Chapter XXVI. 
 
 44 Letter of Jan. 7, 1862. 
 
17 
 
 STRENGTHENING PUBLIC CREDIT. 
 
 Another measure that had given credit to the Govern- 
 ernment paper was its acceptance 45 for all public dues ex- 
 cept the export duty on cotton, which was reserved to 
 sustain the fifteen million loan. It was particularly en- 
 joined that the war tax 46 should be paid in Treasury cur- 
 rency. The proposition to make the notes a legal tender, 
 which was to be a contention in vain for four years, was 
 early discussed. In its third session Congress 47 had re- 
 ferred the matter to its finance committee on the motion 
 of A. H. Garland, of Arkansas ; and two weeks later on 
 the motion of James A. Seddon, of Virginia to make 
 Treasury notes receivable in payment of any debt due 
 corporations or individuals, the vote was adverse. 
 
 A third plan to strengthen the credit of the Government 
 was devised out of the liberty allowed Mr. Memminger 
 to decide how he should pay the interest on the funded 
 debt. He announced on December 19 that coin would 
 be used, expecting thereby to increase the desire to fund 
 notes into bonds. He asked 48 a loan of $1,000,000 from 
 the New Orleans banks for this purpose. Although James 
 D. Denegree arranged to get the amount for him by Janu- 
 ary 16, 1862, it was done with a sharp protest 49 against 
 the method of financiering. The banker contended that 
 the coin received by bond holders would be put on the 
 market and go from the country. He said that such a 
 policy of payment could not be maintained over six 
 months unless the blockade was lifted. Then a resort to 
 the payment of interest in notes would make a worse con- 
 dition than the one sought to be avoided. The prediction 
 was confirmed and specie gathered later went for supplies 
 to preserve national existence. 
 
 48 Acts of March 9, May 16, August 19, 1861. 
 
 49 Act of August 19. 
 
 47 July 19. 
 
 48 Letter of Dec. 4, 1861. 
 48 Letter of Jan. 16, 1862. 
 
 2 
 
i8 
 
 The legislative and financial policy of the Provisional 
 Congress employed bonds and stocks mainly for the sup- 
 port of the Treasury notes. The initial fifteen million 
 loan was not completed 50 until October, the banks being 
 pressed into subscribing the balance. A very small por- 
 tion 51 of the one hundred million loan was placed within 
 the year. The safety fund provision attached to the 
 bonds promised an inviting guarantee. This divided the 
 principal into thirty-six installments, beginning January i, 
 1864, and a fixed sum was to be appropriated to pay semi- 
 annually the whole interest, together with the portion of 
 the principal. Though this stock had not been sold di- 
 rectly to the public, it was hoped that it would be largely 
 available through the agency of the produce loan. 
 
 CROPS AS A FINANCIAL BASIS. 
 
 The subscription of crops was a natural device for an 
 agricultural people, especially during the season when 
 there was little ready money. The second session of Con- 
 gress had looked towards this resource when it 52 provided 
 bonds to be sold for the proceeds of the sale of raw pro- 
 duce and of manufactured goods. Treasury circulars of 
 June 18 and 26 emphasized this use of bonds and called 
 for subscriptions. This notice was directed to reach the 
 growing crop of cotton and a response of 500,000 bales 
 was estimated. By August several sections began to 
 make liberal returns, the planters offering one-third to 
 one-half their yield. In other places, no support was 
 given and agents of the Treasury were sent to address the 
 people on the loan. Various conventions gave enthusias- 
 tic approval. James E. B. DeBow 53 was made clerk of the 
 Produce Loan Bureau, and in the November report 54 to 
 
 80 Circular of Oct: 10, 1861. 
 
 61 Letter to E. Stearns, Nov. 20. 
 
 " Act of May 16. 
 
 "August 3, 1861. 
 
 M Capers's Memminger, p. 425. 
 
19 
 
 Congress the subscriptions when paid were conjectured 
 to reach likely $40,000,000. The patriotism of this official 
 had led him to the work gratuitously, but on January 20, 
 1862, he turned over the office to a salaried chief clerk, 
 A. Roane. At that time the subscriptions were approxi- 
 mately placed at 418,000 bales of cotton, 7,000 hogsheads 
 of tobacco, 3*500 hogsheads of sugar, 3,500 barrels of mo- 
 lasses and $500,000 cash. But there had been no proceeds 
 realized by the bureau and sales depended upon the open- 
 ing of the markets, which was confidently expected 
 through the lifting of the blockade within the year. While 
 the organization for subscription had been fairly effective, 
 the system for collection required more detail and was 
 planned under the direction of the register's office, of 
 which the bureau remained a division until 1863. General 
 agents were located in the larger cities where subscrip- 
 tions were payable and their subordinates were scattered 
 through the adjoining territory to solicit signing of addi- 
 tional produce and attend to the collection. The practice 
 was for the planter to indicate the portion to be given, 
 name the place and time of delivery and allow his factor 
 to pay the proceeds to the agent, getting in turn a receipt 
 for the 8% bonds. 
 
 GOVERNMENT LOAN ON COTTON. 
 
 As nineteen-twentieths of the products offered was cot- 
 ton, this gave force to the sentiment in favor of Govern- 
 ment control of this resource. A common theory 65 of 
 subsequent years has been that the failure to seize the 
 cotton made the fatal economic error of the first year of 
 the war ; even in the second year certain newspapers urged 
 purchase by the Confederacy. But the early advocates of 
 a Government loan on cotton were of two classes, those 
 who favored it as a basis of the financial system and the 
 planters who wanted aid for themselves privately. The 
 earliest advocate of the first plan was C. T. Lowndes, of 
 
 "Joseph E. Johnston's Military Operations; Pollard's Lost Cause. 
 
20 
 
 Charleston, who urged 56 securing trie staple by an ad- 
 vance of five cents a pound and issuing notes on it as a 
 real source of value. The cotton was to be kept with the 
 Government loan on it until the close of the war, when 
 the advance would be refunded. Lowndes placed this plan 
 above the produce loan notion of that date, which could 
 yield no money until after the blockade unless there was 
 a forced sale. The Secretary promptly 57 opposed gov- 
 ernment purchase. His argument was that the circula- 
 tion just established would be ruined by the amount of 
 notes needed to buy cotton. Notes paid for a pledge of 
 cotton must be an exchange of cash for a lien, and when 
 the cotton was sold, the Government had its notes back 
 and was where it started. He judged there wa's no ad- 
 vantage in the control of cotton since notes were deemed 
 adequate for all demands. Again, 58 he said, the notes 
 were already currency by the banks' action and required 
 no exchange for cotton to sustain them. 
 
 The second class, which wanted advances on their staple 
 to promote commercial activity, was a very large one, 
 and in a communication 59 to General W. W. Hardie, of 
 Manor, S. C., Mr. Memminger seemed to incline to- 
 ward it. Shortly, though, he took a decided stand against 
 this plan, 60 asserting that the sooner planters learned to 
 rely on themselves, and not the Government, the quicker 
 their relief. The true remedy was to divert labor and 
 capital to raising supplies and furnishing food, and such 
 advances as were necessary could be obtained from pri- 
 vate sources. The New Orleans mentor 61 had spoken 
 against the scheme of public advances saying that was the 
 function of banks or States. A Treasury circular 62 was 
 
 89 Letter of June 13, 1861. 
 
 67 Letter of June 20. 
 
 " To W. C. Bibb, of Montgomery, Ala., June 21. 
 
 " Letter of July 9, Letter Book "C." 
 
 To R. D. Powell, of Columbus, Miss., Oct. g, 1861. 
 
 "Letter of Denegree, Oct. 2. 
 
 81 Oct. 15; published in Capers's Memminger, pp. 352-5. 
 
21 
 
 finally sent to the commissioners of the produce loan, 
 which announced the decision that such material aid as 
 Government purchase was unconstitutional, power exist- 
 ing only for borrowing and not lending. The one to two 
 hundred million of notes proposed for the advance must 
 disarrange all contracts and prices, making the Govern- 
 ment the largest loser. The history of all such public un- 
 dertakings was said to advise against the course. 
 
 COTTON THROUGH THE BLOCKADE. 
 A subsequent use made of cotton by the Confederacy 
 was to purchase it for shipment through the blockade to 
 furnish specie in Europe for absolutely essential war sup- 
 plies. This practice began as soon as specie was hoarded 
 and rates of exchange increased. John Frazer, of 
 Charleston, was directed, November 20, 1861, to buy cot- 
 ton and ship by the "Fingal" to Liverpool. In response 
 to an inquiry of Congress, February 12, 1862, as to this 
 purchase, it was learned that after the "Fingal" 63 was 
 loaded, it was so effectually blockaded at Savannah, that 
 the cotton was returned to the interior. Movements 64 
 were made looking to the purchase of cotton in Texas 
 and shipment to Mexico because of this failure in the 
 East. Afterwards, large operations were begun under 
 the plan established by the First Permanent Congress. 
 
 SUMMARY OF THE FIRST YEAR. 
 
 The change from the provisional constitution to the 
 permanent on February 18, 1862, was accompanied by 
 the assembling of a new congress of two branches instead 
 of one, but the administrative personnel of the Govern- 
 ment was not altered. President Davis in his message 85 
 said that the financial system of the first year had proven 
 adequate to supply all wants, although there had been a 
 
 "Afterwards was converted into ironclad Atlanta. 
 "Letter to Secretary of War Benjamin, Nov. 23, 1861. 
 "February 18, 1862. 
 
22 
 
 vast increase of expense for defense. He found much 
 gratification in an unimpaired credit and the absence of 
 a floating debt. Yet such a flattering condition was pos- 
 sible only because this was the year of the organization 
 of the Confederate finances. The issue of Treasury notes 
 was bordering on $125,000,000, with the limit of $150,- 
 000,000, set by Congress, not far away. The notes had 
 displaced the circulation of the banks, which on January 
 I, 1859, aggregated only $60,000,000, the total notes, 
 deposits and coin reserve in the South having been $100,- 
 000,000. Mr. Memminger's estimate in July had been 
 that the country could safely float $150,000,000 of notes, 
 and to that extent the financial policy thus far pursued 
 may be considered a positive gain. But the conduct of 
 the Department in the past year did not presage favor- 
 ably for the maintenance of the bounds appointed to the 
 paper issue. Depreciation began to show itself quite 
 plainly. In the early months, the paper money was at 
 actual par with gold ; in August it was at &% discount, at 
 15% in November, and 25% in February. The receipts 
 from loans were less than $40,000,000. The tariff law of 
 May 21 st, which had been carefully framed and was cal- 
 culated to bring in a revenue of $12,500,000, was practi- 
 cally inoperative on account of the blockade. The re- 
 ceipts 66 of duties from July 1st to December 3ist amounted 
 to $63,138, while the expenses of the custom houses for 
 the same period was $63,774. The total customs of the 
 year were $1,270,875, of which $742,475 came in within 
 two months after the formation of the Confederacy. The 
 war tax was not yet collectible and notes and bonds had 
 furnished 98 1-3% of the total receipts. The estimates 
 for this year had been $72,000,000, but the expenditures 
 had proven to be $165,000,000. The certainty of a steady 
 increase of demands with a protracted war and a con- 
 tinued blockade faced Congress and the Treasury Depart- 
 ment. 
 
 M Report of Jan. 13, 1862, Treasury Book "C." 
 
OF THE 
 
 UNIVERSITY 
 
 CHAPTER II OVER-ISSUE. V 
 
 The Secretary of the Treasury 67 formulated for the 
 new Congress after it had been in session almost a month 
 a financial program that was mainly an enlarged applica- 
 tion of his previously established policy. The expendi- 
 tures were estimated for the next nine months at $215,- 
 000,000. Authority was asked to increase the issue of 
 notes by $50,000,000, newly fixing a limit of $200,000,000. 
 The report recognized such issues as the most dangerous 
 of all methods of raising money 'and accurately described 
 the deplorable possibilities which in less than two years 
 were made real. Although a currency having value only 
 in its own country is peculiarly liable .to lose its security 
 against excess, every addition becoming permanent cir- 
 culation, the confidence of the administration was not 
 shaken in the efficacy of 8% bonds and call deposits to 
 keep down redundancy. However, it was plain that the 
 credit of the notes would be completely shattered if they 
 were used for all expenditures. 
 
 A leading recommendation then was that supplies 
 largely be procured in exchange for bonds. Loans were 
 not being placed directly with the public to any extent, 
 and both for investment and for payment on produce 
 Congress was shown there must be the certainty of pro- 
 vision for the interest. If loans were to be enlarged, the 
 
 SMALiv AND INEFFICIENT TAX. 
 
 taxes must be enlarged. The next recommendation then 
 was an increase of the present moderate tax rate of a 
 half-cent on the dollar, yet there was not that insistence 
 upon such a measure which the occasion warranted. A 
 possibly difficulty had now arisen in the fact that the per- 
 manent constitution 68 had a different clause on the tax- 
 
 * 7 Report of March 14, 1862, Capers's Memminger, pp. 429-437. 
 "Art. I, Sect. II, Par. 3. 
 
24 
 
 ing power from that of the provisional constitution, 69 
 whose only requirement was that the taxes should be 
 uniform. The new provision was similar to the one pre- 
 vailing in the United States Constitution, that direct taxes 
 and representation shall be levied according to population. 
 This difference could be met, the Secretary suggested, by 
 assuming the assessments already made under the war 
 tax of August, 1861, as a basis for the distribution of the 
 proposed increased tax, as soon as Congress decided what 
 aggregate amount must be raised. 
 
 The preparations for laying the war tax and the ma- 
 chinery for its collection were arranged with a hesitation 
 and lack of dispatch that marked a people not accustomed 
 to general government revenues. The auditors of the 
 several States had been asked May 21, 1861, to report the 
 value of their property to the Confederate States Treas- 
 ury. Two months later the results 70 were laid before 
 Congress. Of the total valuation of $4,632,160,500, real 
 estate and negroes were respectively $1,758,238,000, and 
 $2,142,635,000 constituting 85%. There had been no 
 revenue system of the States. Taxes on slaves were both 
 by poll and ad valorem. The assessment was adopted 71 of 
 $600 each on the three million and a half blacks. There 
 had been no returns of land in South Carolina since 1840, 
 so the listed property was assigned an increase in value 
 f 75%- The ad valorem tax was employed instead of the 
 direct, since it lightened the burden upon States less able 
 or willing to bear it. If the proposition had been levied 
 according to representation, the quotas of the richer 
 States of Louisiana, Georgia and South Carolina would 
 have been less than under the ad valorem by more than 
 half a million dollars each. The levy 72 of 50 cents on $100, 
 
 e 'Art. I, Sect. VI, Par. i. 
 
 70 Report of July 24, 1861, Treasury MMS. 
 
 71 Instructions of Sept. 24, 1861. 
 
 72 $500 worth of property was exempt in each family; also the 
 property of educational, religious and charitable institutions. 
 
25 
 
 passed August iQth, was estimated to produce $21,000,- 
 ooo. 
 
 DECAYS IN COLLECTION. 
 
 Assessments were to be made as early as November 
 ist, and collections were due May I, 1862. When the 
 measures looking towards a valuation of Confederate 
 property were taken, Congress passed a provision, four 
 months before the tax act was voted upon, that the sev- 
 eral States might anticipate the payment of the tax and 
 assume 73 their quotas, receiving a rebate of 10%. 
 
 The chief collectors 74 of the war tax, one for each State 
 were appointed September 24th, and the States were di- 
 vided into districts with subordinate collectors at their 
 head, who in turn appointed district assessors. But the 
 selection of all these officers was a work that required 
 time. Some of the chief appointees could not be prompt- 
 ly reached. Certain States, as Texas and Florida, had 
 laws forbidding their State collectors to serve the na- 
 tional system. The majority of the assessors could not 
 begin their duties until 1862, and extensions of time were 
 being constantly granted in addition to the supplementary 
 act of Congress of December 19, 1861, which fixed Feb- 
 ruary ist as the limit. Alabama through the unfortunate 
 selection of a chief collector had no assessment made 
 when collections were due. 
 
 Georgia made the best record, 75 reporting its assess- 
 There were seven schedules on which the levy was placed: real 
 estate, slaves, merchandise, bank and corporate stock, money 
 at interest or in securities other than Confederate bonds, cash 
 on hand, cattle and household goods. Under household goods 
 the objects taxed were gold watches, gold and silver plate, 
 pianos and pleasure carriages. 
 
 78 This was an American practice, having been used in the tax 
 bill of the War of 1812, and also in the Federal direct tax of 1861. 
 
 "The chief collectors were: H. T. Garnett. Virginia: E. 
 Stearnes, Georgia; R. M. Lusher, Louisiana; W. K. Lane, North 
 Carolina; J. D. Pope, South Carolina; A. Martin, Alabama; E. 
 E. Blackburn, Florida; John Handy, Mississippi; G. J. Durham, 
 Texas; J G. M. Ramsey, Tennessee, and W. H. Halliburton, 
 Arkansas. 
 
 75 Letter to E. Stearnes, collector 
 
26 
 
 ments fairly promptly. The State Legislatures were ex- 
 ceedingly slow in acting on the assumption of the tax, and 
 the period was extended from November to January and 
 then to February, 1862. Congress had to offer final en- 
 couragement, April 22d, to enable some of the States to 
 assume their quotas, the call certificates being taken by 
 South Carolina for that purpose. The collectors were 
 notified 76 to hold themselves in readiness to begin work, 
 for even after many of the Legislatures had voted to take 
 up the quota, there was much delay in attending to the 
 payment. Accordingly when May, the appointed time 
 for the receipts, had come there were few returns made, 
 but Mr. Memminger was expecting large relief for the 
 Treasury speedily. 77 
 
 In August one-half the contemplated returns, $10,000,- 
 ooo, was announced. 78 All the States but Mississippi and 
 Texas had assumed the tax. Thompson Allan, chief of 
 the War Tax Bureau, submitted his report January 6, 
 1863, showing the receipts to be then $16,664,573. ^he 
 rebate to the States had reduced the original levy*$i,- 
 700,000. Tennessee fell short $1,000,000 by the occu- 
 pancy of its territory, and other States had various de- 
 ficits. Congress had allowed 10% in case of State respon- 
 sibility for the tax, presumably to cover the expense of 
 collection, yet in Mississippi, where collected by the Con- 
 federate Treasury, the actual cost 79 had been 2%. The 
 several Legislatures had issued their own notes to pay the 
 assessments or borrowed on their bonds, so instead of a 
 real taxation, this operation resulted in swelling the gen- 
 eral indebtedness of the country. 
 
 Accordingly with such manifestation of the sentiment 
 against direct taxation, the first session of Congress, Feb- 
 ruary i8th to April 21 st, did nothing to increase the al- 
 
 76 April 2, 1862. 
 
 "To G. W. Randolph, Secretary of War, May 5th. 
 
 78 Report of Memminger, Aug. 2ist. 
 
 79 War Tax Report. 
 
27 
 
 HOSTILITY TO LEGAL TENDER. 
 
 ready small and inefficient tax. Yet much time was spent 
 in discussion of the adoption of a legal tender clause, the 
 question starting on February 25th, the date of the pas- 
 sage of the Federal legal tender act. A majority of 
 neither the House nor the Senate received the sugges- 
 tions favorably and the Secretary gave expression 80 to 
 L. J. Gartrell, chairman of the Judiciary Committee, of 
 the fixed hostile policy of the administration to the plan. 
 His argument was that the notes needed no aid to enable 
 them to perform the functions of a legal tender, and if 
 force were used suspicion would be aroused and credit 
 affected. He further urged that such a law would not 
 prevent depreciation, while the experience of all nations 
 attested to the utter failure of forcing notes at a penalty. 
 
 CURRENCY ACT OF APRIL, 1862. 
 
 The currency bill 81 added the $50,000,000 notes asked 
 for and a reserve of $10,000,000, to be kept for issuance 
 to holders of the deposit certificates upon any sudden 
 call. Besides, $5,000,000 in denominations of ones and 
 twos were ordered. All notes of former issues were of 
 larger denomination and it was thought this incon- 
 venience increased the depreciation. The full recommen- 
 dation of bonds, $165,000,000, was voted, but without the 
 accompanying additional guarantee of interest through 
 adequate taxation. These bonds were for a yet larger 
 period, 30 years, with right to be redeemed within 10 
 years. In the sum total voted, there were the various 
 forms of substitutes, brought into use during the year 
 past. The call certificates at 6% interest were allotted 
 $50,000,000 of the issue. In December this class of ab- 
 sorbents had been fixed at $30,000,000. The increased de- 
 mand for them was another sign of the depreciation of 
 the notes. 
 
 80 Letter of March 13, 1862. 
 
 81 Act of April 12, 1862, Statute I, Chapter XXVII. 
 
28 
 
 BONDS REFUSED, NOTES TAKEN. 
 
 A large share of the bonds was intended to be ex- 
 changed for supplies and subsistence. It was expected to 
 give an opportunity for investment to people who had no 
 surplus capital in money. From the first the railroads had 
 taken a portion of their pay for government transporta- 
 tion in bonds. The same bargain was to be struck with 
 the farmer for his produce and the manufacturer for his 
 clothing. This was an extension of the spirit of the pro- 
 duce loan, for the act of one of the parties to the trade 
 was yet left voluntary. If the public responded, that 
 mounting tide of notes could be stayed. 
 
 The purpose of the Department was to keep the notes 
 for the pay of the army, for the wages of mechanics and 
 such expenditures not able to be met by bonds. But it 
 was difficult 82 to get the War and Navy Departments to 
 cooperate in the new plan of payment. Previously, it had 
 been urged that requisitions be satisfied one-half in cash 
 and one-half in bonds. Now when the law 83 was tried, the 
 disbursing officers reported that the owners of supplies 
 would not part with them except for notes. Friction be- 
 tween the Departments arose and the Secretary was 
 thought to be unfavorably discriminating when he paid in 
 bonds. 
 
 In an appeal to President Davis on April Qth, Mr. Mem- 
 minger wrote that if the whole expense of the Govern- 
 ment was paid in notes, the $50,000,000 provided would be 
 exhausted in sixty days and the Confederacy brought to 
 a stand. The $181,000,000 of bonds was an asset which 
 no power or skill that he knew could convert into cash. 
 Still further harrassed, the Secretary 84 asserted that he 
 
 82 Letter to Secretary Randolph, March 27, 1862. 
 
 88 The requisitions of the War and Navy Departments were 
 much in advance of the means of the Treasury to pay, and Mr. 
 Memminger asked that note issues be reserved for the soldiers, 
 and creditors generally be tendered the bonds. 
 
 "To Col. Northrop, May 10, 1862, Letter Book "C." 
 
2 9 
 
 had not suggested the law of payment by bonds, but the 
 blame for it belonged to Congress. It was known that 
 New Orleans refused to take the bonds, as also in the 
 past it had made little use of the call certificates for fund- 
 ing. Wherever the sections were threatened by the 
 enemy, the people would accept nothing but notes in their 
 dealing with the Confederacy. By June the situation was 
 critical, only a few million dollars of notes remaining un- 
 issued of the prescribed $200,000,000. The bond measure 
 of Congress being a failure, the next device of the Treas- 
 ury was foreshadowed in a communication 85 to the Presi- 
 dent. The Secretary insisted that in the event of the calls 
 for notes exceeding the amount for which legislative au- 
 thority had been given, the Executive must meet the 
 emergency unless interest-bearing notes could be sub- 
 stituted for the many millions of bonds, which had few 
 takers. In the recent currency bill it had been provided 
 that one hundred dollar notes, bearing an interest of two 
 cents a day, commonly known as seven-thirty notes, 
 might be issued for the purpose of having notes of smaller 
 denomination exchanged for them, while the interest- 
 bearing notes at the same time would be kept out of cir- 
 culation for the sake of the investment. By addressing 8 * 
 the banks on this new form of note, which had been fre- 
 quently 87 advocated by Mr. Memminger, a considerable 
 demand was established, and within two months $23,000,- 
 ooo 88 were used. The original bill contained no provisions 
 for the time and means of paying the interest on this form 
 of credit, so that the following session of Congress 89 
 designated the use of non-interest notes annually for the 
 purpose. 
 
 88 Special report of June 7th. 
 
 86 To Savannah and Charleston banks. 
 
 81 Reports of May 10, July 20, 1861. 
 
 88 Report of Aug. 21, 1862. 
 
 89 Act of Sept. 23, 1862. 
 
30 
 
 FINAL RELIANCE ON PAPER. 
 
 The second session of the First Congress placed the 
 final seal of approval on the program of printing govern- 
 ment paper in response to every claim of its creditors. It 
 first granted 90 an additional $50,000,000 of the ordinary 
 circulation, then threw aside the limit of $250,000,000 by 
 authorizing notes to be put forth in such amounts as were 
 needed to meet appropriations. In the Treasury report 
 there seemed satisfaction in the workings of the financial 
 measures. Excessive note issue was held up as a disas- 
 trous evil, but no immediate danger was sounded. Never- 
 theless, for six months notes had continued the chief re- 
 source, $115,000,000 being used. Bonds available for the 
 conversion of notes and for the payment of supplies ag- 
 gregated $25,000,000. This stock having been placed on 
 sale with the depositories, found little demand. The call 
 certificates for deposits of notes at 6% was more accept- 
 able to the public, and since the passage of the act in 
 December, 1861, $37,585,200 had been taken. The Presi- 
 dent in his message of August iQth favored giving the 
 people what they wanted, notes and not bonds, saying that 
 the accumulated debt was insignificant compared with the 
 magnitude of the war. However sanguine the expres- 
 sions of the authorities, the small amount of bonds used 
 for funding, thereby possibly carrying off the money 
 stream that was being bid flow so freely, required some 
 remedial action. The seven-thirty note was designed 91 to 
 combine the features of funding and currency. The in- 
 terest was expected to cause it to be hoarded. The De- 
 partment hoped to attract $70,000,000 said to be in the 
 hands of private capitalists. But the interest-bearing 
 notes came to be used for current expenses along with 
 the non-interest notes. Thus the second device in credit 
 instruments of the year failed to attain the purpose for 
 
 90 Act. of Sept. 23, 1862. 
 
 91 Report of Aug. 21, 1862. 
 
which it was put forth, and the fancied barriers to over- 
 issue were proven insufficient. 
 
 SECRETARY'S ALARM AND REASON FOR IT. 
 
 The Secretary now evinced 92 the first serious alarm. 
 He acknowledged the unfavorable turn of the experiment 
 which he had planned 93 six months earlier, that "after the 
 issue of notes had been raised to $200,000,000, there 
 should be a pause in this direction, until we can see the 
 effects on the country." 
 
 At the same period he had written 9 * to Jas. D. Dene- 
 gree, of New Orleans, "I have endeavored to restrain the 
 issue of Treasury notes, so as not to have a currency of 
 assignats." But familiarity with French financial history 
 had not brought the Secretary through safely, and his 
 warning to Congress was that there are indications of 
 various kinds that some support of the currency will soon 
 be required. The new appropriations for the last quarter 
 of the year reached $150,000,000. To meet these the gov- 
 ernment printing presses contributed a monthly increase 
 of $40,000,000 of notes. The estimate on September 3Oth 
 was that the total circulation outstanding by January I, 
 1863, would be $433,000,000. The report 95 afterwards 
 made the actual amount $410,000,000, the general cur- 
 rency being $290,000,000. To the extent of $120,000,000 
 were the seven-thirty notes used for current purposes, be- 
 ing issued in practically equal sums with ordinary notes 
 in the last half year. In ten months there had been a 
 more than three-fold increase of Treasury paper over the 
 amount of the provisional year of the Confederacy ; while 
 in the first year there had not been an adequate concep- 
 tion of the size of the war; neither in the plans for the 
 second year were the provisions of the necessary propor- 
 
 02 To A. H. Stephens, Oct. 3d. 
 98 Report of March 14, 1862. 
 M Letter of April ist. 
 95 Jan. 10, 1863. 
 
32 
 
 tions. The estimates were submitted for an aggregate of 
 $298,000,000 by December ist; the expenditures on De- 
 cember 31, 1862, had reached $417,000,000, and there 
 were $81,879,913 undrawn appropriations, making a to'tal 
 of $498,851,648. 
 
 In the face of such demands government paper gave the 
 easiest answer. The administration cannot be charged 
 with ignorance of the results of such a policy, yet it cham- 
 pioned no comprehensive financial system. The economic 
 axiom that it is far more difficult to recover a failing cur- 
 rency than to sustain a sound one brought with its utter- 
 ance 96 no adequate solution of the growing perplexity. 
 
 THREE-FOU> OVER-ISSUE AND PRICES. 
 As the issue of notes was three-fold larger than the South 
 needed for its business transactions, by that degree were 
 prices being theoretically enhanced. The response was 
 not so immediate, and impaired transportation caused 
 great variations in localities. In December, 1862, wheat 
 in Richmond was selling at four dollars, corn at three 
 dollars, and oats at two dollars per bushel, and flour at 
 from $20 to $25 per barrel. Gold had risen from $1.70 
 in March to $3.00. The steady rise of general prices had 
 well entered on its ruinous course. 
 
 PRINTING AND COUNTERFEITING. 
 
 In view of the financial methods of this period the 
 preparation of notes and bonds was a most important de- 
 partment of the Treasury. Contracts with the Richmond 
 firms of Hoyer & Ludwig, and Keatinge & Ball, furnished 
 the material, and the registry and signing were done by 
 the government. In May, 1862, when McClellan waged 
 the James River campaign, for safety the issue division 
 was removed to Columbia, South Carolina. The delay 
 of two weeks and more caused an accumulation of unpaid 
 requisitions, already largely on the increase, and there 
 was serious embarrassment of the Treasury for a con- 
 
 " Report of Oct. 3, 1862. 
 
33 
 
 siderable period. At the same time the method of signing 
 the notes increased the difficulties, although a large force 
 of ladies and men was employed. The Secretary asked 
 Congress in vain to allow the signatures to be engraved. 
 The creation of a distinct bureau was advised in 1862, 
 but not until May I, 1863, was the act passed establishing 
 the Treasury Note Bureau, and S. G. Jamison became 
 chief, directing from Richmond. The plant at Columbia 97 
 was operated to the end, but as necessities increased, 
 lithographers and other skilled workmen were imported 
 from England. 
 
 The character of the note was susceptible J;o counter- 
 feiting, and in August, 1862, an epidemic of false money 
 was thought to threaten the South. Certain plates were 
 stolen from Hoyer & Ludwig, and the spurious issue was 
 started in the West. There was a popular 98 belief that 
 firms in the North 99 were engaged in introducing coun- 
 terfeits. Much indignation was aroused, and President 
 Davis gave official expression of it in a message. The 
 most vigilant measures were taken by the Department 
 and severe penalties enacted. One counterfeiter of Rich- 
 mond was hanged. During 1863 unsigned notes were 
 stolen from Columbia and sporadic cases of counterfeit- 
 ing came to light. Yet it is scarcely probable that suf- 
 ficient false notes were uttered to affect the depreciation 
 of the true. The best evidence was the amounts received 
 at the depositories. The proportion was quite small, an 
 extreme 100 case being at Charleston, where out of $2,- 
 000,000 the aggregate counterfeits was $2,340. Agents 
 
 97 C. F. Henckle was made chief clerk on June 3, 1862, and over- 
 saw the contract of Evan^s & Cogswell. 
 
 " Letter to P. C. Clayton, Asst. Sec'y. Sept. i, 1862. 
 
 " S. G. Uphem, 403 Chestnut St., Phila., advertised $20 Con- 
 federate bonds and 15 different fac-similes of bonds and notes of 
 1862 issue. 
 
 100 Return of Nov. 5, 1862. 
 
34 
 
 were not allowed to suffer for their receipt of bad money. 
 The currency of the land was no longer sound in 1862, 
 and in the first uncertainty of diagnosing the causes of im- 
 pairment, minor disturbing elements were likely to as- 
 sume undue importance. 
 
35 
 
 CHAPTER III. REMEDIES. 
 
 In the second year of the Confederacy the tendency of 
 the financial policy was variously interpreted. The prac- 
 tice of the Administration was to make cheerful reports 
 on the condition of the public credit. The press was in 
 the main conservative and loyal and not disposed as yet 
 to judge harshly the Treasury methods, excepting the 
 utterances 101 of the Richmond Examiner. There was a 
 popular notion of vast resources in the South, and none 
 but the ignorant or timid dared question whether its debts 
 could be paid, however enlarged. But the proposition 
 in Congress of a high rate of taxation brought forth very 
 divergent opinions on the economic measures feasible and 
 adequate. A bill was reported September 23 by Mr. 
 Kenner, of Louisiana, chairman of the Ways and Means 
 
 FORCED LOAN REJECTED. 
 
 Committee, which provided for the levy of a uniform in- 
 come tax of 20%. This was to be assessed on January I, 
 1863, on the gross products of the year 1862. All sources 
 of income were liable except bonds and Treasury notes. 
 The minimum exemption of total products and income 
 was $500. In return for paying this tax, the collectors 
 were to give bonds of the Treasury, called "Income Tax 
 Bonds," bearing 6% interest and the principal payable 
 from 10 to 30 years. 
 
 This plan was thus a forced loan under the name of a 
 tax. The line of support of the bill by Mr. Kenner gave 
 the type of the new resolute policy that would have re- 
 paired, earlier mistakes. His argument 102 was that things 
 
 101 Apr. 4, Apr. 11, .Sept. 16, 1862, etc. 
 
 102 Richmond Sentinel, Examiner, Sept. 23, 1862. 
 
36 
 
 had been going smoothly, but now the time had come for 
 vigorous action. With one slight exception the credit of 
 the South had been based on its future resources. The 
 printing presses could no longer carry on the war, but 
 well defined revenues must be created to sustain the gov- 
 ernment. It was not the business of Congress to lighten 
 the burdens of the people, but to devise measures that 
 will meet the heavy expenses of the present. Mr. Kenner 
 paid a high tribute to the confidence of the people in the 
 notes when he said they would receive them until it took 
 a barrel of notes to buy a barrel of flour, while meantime 
 inevitable financial law was working the nation's irretriev- 
 able ruin. There was hesitation on the part . of many 
 members to admit the serious depreciation of the currency 
 and sums ranging from $300,000,000 to $400,000,000 were 
 thought by some to be not excessive for the circulation. 
 
 The opposition to the tax measure was many-sided and 
 determined. Those who were working for a legal tender 
 law did not favor the system. The charge of unconstitu- 
 tionally was urged by Mr. Boyce, of South Carolina, and 
 Mr. Bridgers, of North Carolina, on the ground of its 
 being a forced loan. Other representatives denied that 
 the measure was expedient or necessary. Mr. Bruce, of 
 Kentucky, took the position that no tax could be relied 
 upon to pay the interest on the debt, which required for 
 its successive levies the action of future Congresses. It 
 was also declared that the proposed revenue could not be 
 applied to aid the currency. While some hailed the plan 
 as a satisfactory relief from possible impressment of mili- 
 tary supplies, yet the more general sentiment prevailed 
 that the country was not ready for such a measure. The 
 scheme was thought to have been arranged hastily and to 
 have not included all revenues. Mr. Chambers, of Mis- 
 sissippi, voiced the attitude of the House in his statement 
 that since the money could not be collected until April 
 there was no injury from waiting, and the House was not 
 
37 
 
 then prepared to perfect a plan of taxation. Accordingly, 
 in the face of the protests of Mr. Perkins, of Louisiana, 
 that they had passed appropriations increasing the ex- 
 penses for one month by $80,000,000, the measure of re- 
 lief was postponed 103 on October 9th to the next session 
 by a vote of 36 to 28. 
 
 LEGAL TENDER UNCONSTITUTIONAL. 
 
 The legal tender measure fared no better than in pre- 
 vious sessions. Mr. Foote, of Tennessee, by his advocacy 
 of it established his career as the notorious opponent of 
 the Administration. A motion to make the bill, introduced 
 by Mr. Gartell August i8th, a special order, was defeated 
 by a vote of 54 to 28. 
 
 The Judiciary would not report favorably then nor at 
 the third session in January, 1863, when Mr. Swan, of 
 Tennessee, offered a bill to grant an issue of $250,000,000 
 notes receivable for all debts. The amount of circulation 
 had reached such proportions that a legal tender act would 
 have either created two currencies or had an ex post facto 
 application. The view of the unconstitutionally of such 
 legislation continued to extend more widely, until a year 
 later, when under new currency plans the proposition being 
 again made, there were very few supporters. 
 
 101 The motion of Mr. Jones, of Tennessee, was that it is the 
 duty of Congress to pass a bill at its present session to raise 
 revenue by taxation and that the resolution for adjournment on 
 Monday. Oct. 13, be rescinded. The vote was yeas, Ashe. Bald- 
 win, Barksdale, Bonham, Boyce, Bridgers, Currin, Elliott, Farrow, 
 Foote, Goode, Graham, Gray, Harris, Hartridge, Hilton, Hoi- 
 combe, Holt, Jones, Kenner, Lyons, McRae, Menees. Miles, 
 Perkins, Russell, Sexton and Swan 28. Nays Atkins, Batson, 
 Bell, Boteler, Chambers, Chilton, Clapp, Clark, Clopton, Collier, 
 Dargan, Dupre, Foster, Freeman, Gardenhier, Garland, Garnett, 
 Gartrell, Hanly, Heiskell, Herbert, Johnson, Kenan of Ga., Kenan 
 of N. C, Lauder, McDowell, McQueen, Pugh, Rails, Royston, 
 Smith of Ala., Smith of N. C., Trippe, Wilcox, Wright of Texas, 
 and Wright of Tenn. 36. 
 
FATAL INACTION OF CONGRESS. 
 
 Congress did not escape condemnation for its failure to 
 pass a proper tax law. The Richmond Whig of October, 
 1862, said: "The country will not accept its leaving im- 
 portant public questions to settle themselves as duty done. 
 All know that the currency question imperiously demands 
 some sort of decision." The condition of the currency 
 received increasing public attention and the demand for 
 heavy taxation to secure the bonds which would relieve the 
 inflation came to be a national propaganda. But the evil 
 was wrought in the postponement of that which had been 
 almost fatally delayed, and scores of millions of notes were 
 to be added monthly before measures for relieving eco- 
 nomic mistakes would be ejiacted. The inaction of Con- 
 gress in October was an added blow to credit, reflected by 
 the increase of speculation and the desire to get rid of the 
 notes in all forms of investments. Manufacturers were 
 charged with unwarranted advance of prices and extortion 
 was not confined to place or party. 
 
 THE PRODUCE LOAN. 
 
 Although increased receipts from taxes were denied, the 
 Treasury worked diligently to render available other re- 
 sources than notes. The bonds had found comparatively 
 few direct purchasers, for they were allowed to be sold 
 only above par. After July, 1862, they were not thrown 
 open to general bids. The funding 104 of notes and ex- 
 change for produce did not exhaust during this year the 
 one hundred million loan of August 19, 1861, and the 
 bonds of the new loan of April 12, 1862, were not even 
 issued. However, foreign markets now offered an inviting 
 prospect for the sale of special cotton bonds. This oppor- 
 tunity arose out of changes in the Produce Loan. The 
 large subscription list of 1861 had not silenced objection 
 
 104 Report of Jan. 10, 1863. 
 
39 
 
 to this project. The collections, being at the discretion of 
 the planters, continued to be delayed, since the blockading 
 of the ports hindered the marketing of the produce. The 
 sentiment in favor of government control of cotton opposed 
 the double plan of exchange which put products into notes 
 and these proceeds in bonds. The Richmond Examiner 105 
 said the Produce Loan was a sham and a delusion, but if 
 all the cotton was delivered to the government and formed 
 the basis of a bona fide loan of money value, it would be 
 more desirable than gold or silver, and more valuable after 
 the blockade. 
 
 The First Congress favored a new adjustment and 
 passed a law on April 21, 1862, allowing the products to be 
 sold direct to the Treasury for 8% bonds, $35,000,000 be- 
 ing appropriated for the purpose. The produce loan con- 
 tinned to receive cotton and tobacco by subscription, but 
 this act gave much wider power to the Secretary for the 
 control of the staples. It looked to a possibly larger use 
 of bonds than had been gained up to this time by the pro- 
 duce subscriptions. This legislation was not radical 
 enough for those who advocated government purchase, 
 nor could the amount to be secured warrant the statement 
 that the cotton of the country created an actual guarantee 
 of all the Treasury notes issued. Yet the arguments for 
 entire ownership continued to be advanced intermittingly 
 in the newspapers. 
 
 THE SCHEME NOT SUCCESSFUL. 
 
 In his report of October 2, 1862, Mr. Memminger ad- 
 mitted the failure of the Produce Loan as a means of con- 
 verting currency into bonds. Nor as a collecting agency 
 was it bringing satisfactory results, though an order had 
 been issued under the new act that the subscribers at once 
 discharge their obligations and allow exchange for bonds. 
 
 m Apr. 11, 1862, 
 
40 
 
 The report of the chief clerk on January 9, 1863, gave 
 the first accurate gauge of the usefulness of the Bureau 
 The returns for 1861-2 were 431,347 bales of cotton, worth 
 $21,567,350, at $50 to the bale; other products worth 
 $895,180, cash $608,375, a total of $23,070,905. Of this 
 amount only $2,000,000 had been added in 1862, as the 
 result of the solicitations directed. The agency had not 
 been effective in drawing the support of the people during 
 the second year of the war, and had made only fair pro- 
 gress in realizing on the early pledges, whose payment 
 was no longer optional. The collections amounted to 
 $7,633,044, less than one-third of the total, at an expense 
 of one-third of one per cent. 
 
 The next report of Mr. Roane, the chief clerk, on No- 
 vember 30, 1863, placed the value of the old subscriptions 
 at $28,070,905, an increase of $5,000,000 being allowed for 
 the appreciation of cotton. Of this amount now $14,940,- 
 950 was collected and new subscriptions had been secured 
 to the sum of $i6,956,ooo. 106 The final report of the Pro- 
 duce Loan on November 10, 1864, showed that $11,173,095 
 of the original list could not be collected on account of 
 lost property and withdrawal of the 8% bonds. This was a 
 shrinkage of 40% of contributions pledged under the more 
 favorable conditions. The additional returns of 1863-4 
 were $17,579,400, raising the total receipts to $34,476,400, 
 secured during the war by this agency of the Treasury. 
 The Bureau, however, from May, 1863, had two other di- 
 visions, which were managed separately, the branch for 
 the purchase of cotton, and the branch to collect the tax 
 in kind. 
 
 Mr. Memminger did not at once employ the authority 
 Congress gave him to buy cotton with bonds. He was 
 only driven to such purchases when the possession of cot- 
 
 106 Of this South Carolina gave $11,171,250; Alabama $3,457,5oo; 
 Florida, $1,217,200; Georgia, $i, 110,100. 
 
41 
 
 ton furnished the sole means to secure the specie de- 
 manded for European supplies. The supply of coin in the 
 flood of paper issues rapidly disappeared, for the amount 
 in the Southern banks on January i, 1861, was estimated 
 at $27,000,000. 107 Preparations had been made at the New 
 Orleans Mint for the coinage of silver, but after four half 
 dollars were struck in April, 1861, the work was not re- 
 sumed. During the first year the depositories of the cities 
 bought sterling exchange for the Treasury, driving the 
 price to a steadily rising rate. Fraser, Trenholm & Co., 
 of Liverpool, were the foreign bankers, and to them in the 
 first three years some sum 108 less than $10,000,000 must 
 have been remitted. By June, 1862, the premium on ex- 
 change had passed 100%, and coin was difficult to secure. 
 At this time the military authorities seized $2,500,000 of 
 the coin of the New Orleans banks to prevent its capture 
 by the Federals. Blockade runners were beginning to take 
 
 SENDING COTTON ABROAD. 
 
 out cargoes of cotton to Nassau and to England, and the 
 Treasury saw here an opening for converting the staple 
 into the greatly demanded specie. John Fraser & Co., of 
 Charleston, the correspondent of the Liverpool house, was 
 one of the most trusted agents and assisted in the devel- 
 opment of this government shipping. A considerable 
 trade both for public and private purposes was carried on 
 until the ports were captured by the North. 
 
 In order to have stocks of cotton to ship the general 
 agents of the Produce Loan were instructed 109 to buy with 
 vigor; Phinzy & Clayton, at Augusta; J. S. K. Bennett, 
 at Charleston, and L. W. Lawler, at Mobile. But not until 
 the crop was being marketed did the activity begin. Then 
 J. E. B. DeBow had been sent to Mississippi, and this was 
 
 107 Eighth Census. 
 
 108 Reports of sub-treasurers. 
 1M May 28, 1862. 
 
42 
 
 the region from which the largest supplies were drawn ; 
 2,492 bales were first bought on September 9, 1862, and 
 by December 70,000" bales had been secured for $4,474,- 
 400, at 13-! cents per pound. The payment was almost 
 entirely in bonds, the cash outlay being only $46,026. 
 Texas was expected to be a good field for operations, but 
 at first the planters refused to sell for bonds, and the 
 transportation planned to Matamoras was thought too far. 
 A. W. McKee was afterwards placed in charge there, and 
 the larger share of the purchases was turned over to the 
 army of the Trans-Mississippi. The general report of 
 November 30, 1863, showed that 399,753 bales had been 
 bought for $30,314,766, bonds having been taken for five- 
 sixths of the amount. The average price per pound was 17 
 cents, ranging from 12 in Mississippi to 36 in South Caro- 
 lina. Alabama, Mississippi and Louisiana furnished 90 
 per cent, of the stock. 
 
 VALUE OF COTTON PURCHASE. 
 
 The report of November 10, 1864, gave an approximate 
 estimate of the value of government cotton purchase. 
 The number of bales had reached 430,724, at a cost of 
 $34,525,220. Of this amount 129,771 bales were lost by 
 capture, burned by the Confederacy and used for war pur- 
 poses; 67,653 were west of the Mississippi and subject to 
 military uses ; 6,961 were sold by the Treasury and 19,683 
 sent to England to pay the foreign debt, leaving a balance 
 yet available of 191,049 bales. When De Bow was engaged 
 in Mississippi, he estimated that he secured one-third of 
 the stock in that State. The yearly crop had been greatly 
 diminished during the war both from the necessities of the 
 times and because of agitation against growing it. The 
 Senate had recommended 111 that no planter produce more 
 than 3 bales to the man. At that time the limitation of 
 
 110 Produce Loan report of Jan. 9, 1863. 
 i. 13, 
 
43 
 
 cotton growing was yet expected to exert a political in- 
 fluence in drawing the support of Europe. The crop of 
 1862 was commonly put at 2,000,000 bales, and as the 
 tithes reported from the yield of 1863 were only 15,000 
 bales, the depression of agriculture is well indicated. It 
 was thought 112 that 2,000,000 bales remained in private 
 stocks in the South, November, 1864. The fact that 130,- 
 ooo 113 bales went to New Orleans that year shows that 
 prohibitions of exportation were not effectual. The Con- 
 federacy was able to control a fair proportion of the 
 staple within its borders, but only a small part of this was 
 utilized in furnishing the most important war supplies. 
 After the war, the United States disposed of this Confed- 
 erate cotton to the value of $29,500,000. 
 
 THE ERLANGER LOAN. 
 
 However, the possession of cotton by direct purchase 
 and the subscriptions to the Produce Loan gave effective 
 form to the effort to place a foreign loan. The plan 114 was 
 to issue cotton certificates on the purchases and hypothe- 
 cate them to contractors. They called for delivery at cer- 
 tain ports after peace, 20 bales constituting a certificate 
 worth $1,000; $1,500,000 of these were sent in November, 
 1862, to James Spence, the English agent. Through Com- 
 missioner J. M. Mason the firm of Erlanger & Co., of 
 Frankfort and Paris, was interested in the investment. 
 Negotiations were carried on in strict secrecy, and a con- 
 tract between the Secretary of the Treasury and Jules 
 Beeri for Emile Erlanger & Co. was signed Janu- 
 ary 8, 1863. The Secretary engaged to get full power 
 from Congress for raising in Europe 75,000,000 francs, 
 equal to 3,000,000. President Davis was told 115 the funds 
 were immediately required and prompt action must be 
 
 12 Report of Treasury, Nov. 7, 1864. 
 118 Report of Produce Loan, Nov. 10, li 
 114 To J. M. Mason, Oct. 24, 1862. 
 115 Letter of Jan. 9, 1863. 
 
44 
 
 taken. On January 29, 1863, Congress allowed the loan, 
 and C. J. McRae was sent as loan agent to Paris to sign 
 the bonds, together with Commissioner Slidell. 
 
 The bankers made their arrangements so that the bonds 
 were put on the market March igth. The loan was in 
 denominations of 100 to 1,000, with interest at 7%, 
 payable half yearly, and one-fortieth of the face value of 
 the loan was redeemable at half yearly drawings, com- 
 mencing March i, 1864. The 100 bond was made con- 
 vertible into 4,000 Ibs. of cotton at 6d. a pound at any time 
 not later than six months after peace. Notice of 60 days 
 to the Confederate foreign representative was required for 
 such exchange. If after peace, the delivery was to be at 
 the chief ports, but during the war at points within ten miles 
 of transportation. The conditions of the contract required 
 the price of the bonds to be 77%. The bankers received 
 5% commission on their sales and were allowed all excess 
 of 77%. Payments of the loan were to be made within six 
 months by fixed installments. 
 
 The bonds were floated in Paris, Frankfort, Amsterdam, 
 and London, and the full amount was subscribed at 90%. 
 Cotton was then quoted at 21 pence, promising heavy 
 profits, and over '300,000 bales were announced as the guar- 
 antee. Although the loan was taken with a rush, the dif- 
 ficulties of getting the cotton out seemed to come as a 
 later consideration. In April the price 116 began to drop, 
 and though fifteen per cent, of the amount had been paid, 
 it was feared that the whole transaction would be forfeited. 
 Erlanger & Co. were accordingly authorized by Mr. Mason 
 to buy back heavily of the bonds, but this bulling of the 
 market kept the rate up only for a time. A portion of the 
 repurchased stock v/as placed again, but 704,000 remained 
 untaken, and for two years there were frequent Treasury 
 orders 117 to dispose of this. Their rate greatly fluctuated 
 
 118 Report of Dec. 15, 1863, to the Senate. 
 
 117 To Gen. McRae, Sept. 15, Dec. 10, 1863, Aug. 2, 1864. 
 
45 
 
 in this time, declining sharply after the loss of Vicksburg. 
 and sinking to 37% in December, 1863. The following 
 year the increased shipments of cotton through the block- 
 ade caused a marked rise in quotations, closing again in 
 a fall to 57%. 
 
 The report of October I, 1864, gave the following state- 
 ment of the dealings : 
 
 Total amount of the loan, 3,000,000; bonds bought 
 back, 704,000; bonds of repurchase resold, 195,000; 
 whole amount actually sold, 2,491,000, par value; gross 
 proceeds, 1,772,855; commission and expenses, 173,792; 
 net proceeds, 1,599,063 or $7,675,500. 
 
 The bankers, in addition to their five per cent., had the 
 excess of 77% on the sales. This profitable venture in- 
 duced Erlanger & Co. to offer a new loan of 5,000,000, 
 September 23, 1863, on the same conditions 118 as the first, 
 except that the profits above 77% would be divided 
 equally. Mr. Memminger did not press this contract on 
 Congress, though it was renewed in December, 1864. A 
 balance of the first loan yet remained untaken, and on that 
 venture the government had realized a bare fifty per cent., 
 which in turn did not yield the best returns 119 upon its 
 investment abroad, yet the loan as establishing the for- 
 
 SUCCESS OF THE LOAN. 
 
 eign credit of the Confederacy may be considered a suc- 
 cess, in comparison with the other financial experiences 
 of the South. This was due to two reasons ; first, the con- 
 fidence of the holders of the bonds that they would get 
 cotton in any event ; second, the payments of interest semi- 
 annually and the drawings of one-fortieth of the principal 
 were faithfully redeemed. The first drawing was paid out 
 of the proceeds of the loan, March I, 1864, the second 
 
 "'Agreement of Memminger and Viscomte H. de St. Ronan, 
 Letter Book "E." 
 
 119 Bulloch. Secret Service of C. S. in Europe, i, VoL II, p. 245. 
 
4 6 
 
 from the Navy fund, and the third was made under act of 
 February 2, 1865, the total being 212,800. 
 
 The London Index of September 15, 1864, in comment- 
 ing on the fact that the Confederate cotton loan was 
 quoted at 73%, while that of the United States was 41%, 
 said that this superior credit abroad was derived from the 
 inestimable strength of the broad substratum of hypothe- 
 cated cotton. While the general bonds of the Confederate 
 funded debt represented a home currency more or less 
 deranged, the foreign credit was on a different basis. 
 However this condition was true when a relatively small 
 amount was involved, and it is highly problematic to say 
 what would have been the outcome of a broader financial 
 application, unless it had been made in the first year, al- 
 though then the economic magnitude of the struggle was 
 no better estimated than the military. 
 
 STATE GUARANTEE: OF LOANS. 
 
 Another possible means of strengthening the national 
 credit arose out of the constitutional relations of the States 
 to the Confederacy. State bonds on the market with the 
 Treasury loans rated at a higher premium, and it was con- 
 ceived that if the several legislatures would guarantee the 
 Confederate bonds, a readier sale would be commanded. 
 Virginia asked Congress on May 19, 1862, to devise a plan, 
 but the initiative belonged properly to the States. General 
 resolutions were passed by several legislatures, but when 
 it came to deciding on a definite sum the scheme failed. 
 South Carolina, on December i8th, agreed to underwrite 
 its quota of a total $200,000,000. But Mr. Memminger 120 
 saw such vast results from this plan through the reduction 
 of the interest to 6 per cent, by reason of the added se- 
 curity and "by the saving in interest being so great annu- 
 ally as to create 'a sinking fund to pay off the entire debt," 
 that he urged the amount be made $500,000,000. South 
 
 120 Report of Jan. 10, 1863. 
 
47 
 
 Carolina agreed to this sum if the other States assumed 
 their share. J. P. Boyce, of Greenville, was engaged by 
 the Treasury, March 10, 1863, to represent the movement 
 before other legislatures, but his address in Georgia was 
 negatived by the message 121 of Gov. Brown against any 
 guarantee at all, declaring that such action would make 
 the central government too strong. The Secretary severe- 
 ly blamed 122 Georgia for the failure of the scheme, and 
 declared that the guarantee would have created a sure 
 market in Europe; but any advantage gained from the 
 States' credits would have been temporary, for their finan- 
 cial affairs became equally involved with those of the na- 
 tional government. 
 
 FINANCIAL STATE IN JANUARY, 1863. 
 
 The message of President Davis on January 12, 1863, 
 to the third session of the First Congress contained brief 
 notice of the recommendations of the Treasury report, 
 expressing a belief that all the measures would be readily 
 adopted, so that the redundancy would be easily and 
 promptly relieved. The estimates for the half year were 
 submitted 123 in fairly relative proportion to the size of 
 * the expenditures. An aggregate of over $300,000,000 em- 
 phasized the extent of revenues that must be definitely pro- 
 vided. One item of the budget was the provision for the 
 public debt at $30,000,000; the estimate of the previous 
 year had been $1,500,000, but interest and redemption of 
 certificates and notes had cost $41,000,000 in 1862. The 
 public debt was now, in bonds and stocks, $145,475,370, 
 and in Treasury notes $410,629,692, a total of $556,105,062. 
 Ten months earlier it had been a matter of congratulation 
 that there was no floating debt, but the other obligations 
 now had proportions not so satisfactory. One of the 
 
 121 April 2, 1863. 
 
 1!2 To H. Tutwiler of Havana, Ala., Sept. 29, 1863. 
 
 "'Report of Jan. 10, 1863. 
 
48 
 
 earliest acts 124 of the session was to pass an appropriation 
 of $20,000,000 to pay interest on the debt. The problem 
 submitted by the Secretary was to reduce the volume of 
 Treasury notes from $450,000,000 to $150,000,000. A cur- 
 rency measure again took precedence of taxation, and the 
 immediate present was provided for in the usual manner. 
 The act of March 23, 1863, limited the issue of notes to 
 $50,000,000 a month. It also contained a complexity of 
 refunding provisions which established the new policy for 
 the withdrawal and discrediting of the excessive issues. 
 
 THE DEMAND FOR TAXATION. 
 
 On the subject of taxation, Mr. Memminger in his re- 
 port of January 10, 1863, had spoken with a resoluteness 
 and insistence not found in his previous recommendations. 
 He said: "Ample means in the form of a permanent tax 
 must be provided to secure and pay the principal and in- 
 terest of the securities in which the holders are required to 
 invest. Such a tax is the corner-stone of the whole fabric. 
 Without it the scheme has no foundation and can secure 
 neither public confidence nor success." The President had 
 said the people will freely meet adequate taxation. The 
 popular tide was now running strongly towards such a k 
 measure. The press demanded that the nation be bled 
 heavily. The Richmond Enquirer 125 called for a tax of 
 $200,000,000. The delay of action by Congress was bit- 
 terly arraigned. The burden of the charge was that the 
 South had "representation without taxation." The House 
 was said to have shamefully neglected its duty to originate 
 a bill. The Revolutionary note issues had depreciated be- 
 cause there was no central power to lay revenues, but in 
 the' Confederacy the right of ample taxation was held as a 
 power of last resort. 
 
 124 Feb. 2, 1863. 
 
 125 Feb. 17, 1863. 
 
49 
 
 The plan 126 of the Secretary was to follow the system 
 used in the War Tax and make the levy upon property and 
 income. He thought that the vexatious and expensive 
 machinery incidental to a system of stamp duties, excises 
 and licenses precluded the use of such sources. A tax on 
 property alone was too great a burden, and while the in- 
 comes might partly evade assessment, yet profits had been 
 so large, it was deemed imperative that by some device 
 they be made to contribute. The size of the revenues was 
 gauged by the interest demands of the Treasury notes and 
 the funded debt, a total charge then of $48,000,000. A 
 property tax of one per cent, was estimated to yield $36,- 
 000,000, with deductions -for occupied territory, based on 
 the War Tax returns for 1862. The possible yield of in- 
 come tax was arrived at by rating the property of the 
 South at $4,000,000,000, and allowing J% interest on that 
 sum, then fixing the levy at 10%, returning $28,000,000. 
 Thus would be furnished a tax of $60,000,000, less contin- 
 gencies, and the excess was to be applied to making re- 
 demptions of the principal of the debt yearly. Such re- 
 demption was a condition of the one hundred million loan, 
 but had been omitted for subsequent bonds. 
 
 On January 13, 1863, a bill to levy a War Tax was sub- 
 mitted, but other matters than currency engrossed first 
 attention, the House engaging in debates on exemption, 
 and the Senate on a judiciary, neither of which measures 
 was adopted. The Ways and Means Committee reported 
 a bill on- February 25th, which provided for a tax of one 
 per cent, on all property, an income tax and a system of 
 licenses. The bill was debated a month and then passed 
 with minor changes. The Senate took a strong stand 
 against the property tax, declaring that it was unconstitu- 
 tional, for direct taxes must be laid according to represen- 
 tation, and the limit of taking the census had been placed 
 
 126 Capers's Memminger, pp. 447-451; Records of War of the Re- 
 bellion, Series IV, Vol. II, pp. 317-322. 
 
50 
 
 at February, 1865. The Senate changed the system of 
 income taxation, which had been little graded in the House 
 bill. Instead of 14% on incomes up to $10,000, and 24% 
 on excess of $10,000, the proposal was 5% on incomes 
 from $500 to $1,500, 10% on incomes from $1,500 to $10,- 
 ooo, 12%% on $10,000 to $15,000, and 15% on excess. The 
 Senate also inserted the provision for the tax in kind or 
 the tithe of one-tenth of the products of the farm. This 
 plan was advocated in order to avoid the policy of impress- 
 ment, 127 regulations for which had been adopted by Con- 
 gress. 
 
 In a special communication 128 Mr. Memminger argued 
 strongly for the tithe. With so many changes the confer- 
 ence committees of the Houses had a labor of adjustment, 
 and their agreement was pushed through in the last ten 
 days of the session. 
 
 TAX ACT OF APRIL, 1863. 
 
 The Act 129 of April 24, 1863, was planned to be exhaus- 
 tive, property in realty and personalty and negroes being 
 excepted. There were four chief sources of revenue; an 
 ad valorem tax on surplus products, the specific taxes and 
 licenses on occupations, trades and business, the graded 
 income tax and the tax in kind. The tax on surplus pro- 
 ducts was made retroactive in order to levy on the output 
 of 1862, and was in operation for one year, its place after- 
 wards being taken by the tithe. It required a payment of 
 8% on naval stores, liquors, cotton, sugar, rice, and flour 
 held July, 1863. The gains of speculation, which was so 
 popularly denounced, and so universally practiced, were 
 aimed at in a fashion similar to the surplus products by the 
 section of the Act, that placed a 10% tax on profits by pur- 
 chase or sale in 1862 of flour, corn, bacon, oats, hay, rice, 
 
 727 Mch. 26, 1863. 
 118 April 2, 1863. 
 
 120 Confederate Acts, Statute III, Ch. 38, Sec. i-iS, Records of 
 War of the Rebellion, Series IV, Vol. II, pp. 513-24. 
 
salt, iron, sugar, leather, woolens, shoes, etc. This did not 
 apply to the retail trade. 
 
 Though personal property was exempt, a tax of one 
 per cent, was placed on moneys. In many of the occupa- 
 tions 13 there was a double levy of a license and a percent- 
 age on gross sales for 1863. Each business was required 
 to register within 60 days after the Act, and thereafter on 
 January 1st, at which time the license was payable. The 
 taxes on occupation and business were to be in force two 
 years. The income tax was a modification of the plan of 
 the two Houses and a further grading. Incomes under 
 $500 were exempt; those from $500 to $1,500 were as- 
 sessed 5%; those from $1,500 to $3,000 paid $% on the 
 first $1,500, and 10% on the excess; $3,000 to $5,000 paid 
 10% ; $5,000 to $10,000 paid I2j%, and those above $10,- 
 ooo paid 15%. These assessments were to be collected 
 July i, 1864. Salaries were required to contribute in the 
 following proportion: After an exemption of $1,000, there 
 was a tax of one per cent, on the first $1,500, and two per 
 cent, on the excess. These levies were payable January 
 i, 1864. The tax in kind was one-tenth of the produce, 131 
 and must be delivered within two months after the esti- 
 mates at a depot not more than eight miles from the place 
 of growth. The obligation could be commuted for cash. 
 
 180 On the following simply a license was placed: bankers, $500; 
 brokers, pawn and otherwise, $200; doctors, dentists, jugglers, law- 
 yers and liverymen, $50 each. The combined license and tax on sales 
 applied to the following: auctioneers, apothecaries, confectioners, 
 photographers and tobacconists paid $50 each and 2.%% on gross 
 sales, butchers and bakers with i% on sales. Retail dealers gen- 
 erally were taxed $50 and 2%% on sales, while wholesale dealers 
 paid $200 and 2%%; wholesale liquor dealers, $200 and 5%; retail 
 liquor dealers, $100 and 10%; distillers, $200 and 20%; brewers, 
 $100 and 2%%; hotels and inns were assessed on the yearly rental, 
 those bringing $10,000 paid $500; $5,000 at $300; $2,500 rentals at 
 $200; $1,000 rentals at $100; less than $1,000 at $30. Theatres were 
 rated at $500 and 5% of the receipts. 
 
 181 The tithe applied to oats, rice, sugar, cotton, tobacco, 
 molasses and slaughtered animals, in addition to the following 
 products where an initial exemption was allowed to the planter 
 of 50 bu. of sweet potatoes, 50 bu. of Irish potatoes, 100 bu. of 
 corn, 50 bu. of wheat and 20 bu. of peas or beans. 
 
52 
 
 APPROVAL AND OBJECTIONS. 
 
 The law received popular approval because it was ex- 
 pected to yield heavy returns and bring relief from depre- 
 ciated currency. Later it was found to be a complex sys- 
 tem of many valuations and of many times of payments. 
 The taxation was thought to be equitable in that it did 
 not place a tax on land, then largely unremunerative, but 
 the burden was to come upon the actual products in hand. 
 Yet with all this the farmer was not satisfied, and be- 
 lieved 132 that the tax should have been on the profits of his 
 crop, and not on the gross value. He would have the 
 graded principle applied to the amount of his products as 
 well as to incomes. His proportion looked large in com- 
 parison with the two per cent, on salaries above $1,500. 
 The licenses and taxes on sales were commended in that 
 the incidence came on the consumer. 
 
 The assumption of the license power by the national 
 government was a distinct encroachment 133 on the reserved 
 rights of the States. In this matter, as in others, the sov- 
 ereignty of the central government was fixed by the stress 
 of practical conditions. In the tax on the occupations the 
 range of discrimination was slight, and the assessment on 
 gross sales was by no means in accordance with the ability 
 and real profits of the business. A very large share of the 
 tax: returns was expected from a year that was past. The 
 surplus products and profits of trade were very difficult to 
 measure, and the probabilities of evasion were very great. 
 The entire system as one of direct taxation was not pos- 
 sible to be equalized. 
 
 The revenues from the Act were expected to be ample. 
 The Senate Finance Committee announced that it would 
 raise one-third of the expense of the war and have no 
 parallel in history. There was a vagueness in the esti- 
 mates, although the tax on surplus products and profits 
 
 132 Richmond Sentinel, Apr. 27, 1863. 
 "'Richmond Enquirer, Mch. 8, 1863. 
 
53 
 
 was listed to yield $35,000,000. After the law began to 
 operate so as to allow a reasonable conjecture, the Com- 
 missioner expected a total sum of $100,000,000. 
 
 MACHINERY OF ADMINISTRATION. 
 
 A comprehensive Assessment Act 134 accompanied the 
 Taxation Bill. A Commissioner of Taxes was created, 
 and Thompson Allan was promoted, July 2, 1863, to this 
 position from that of chief of the War Tax Bureau. The 
 machinery of the War Tax of 1861 was utilized to some 
 extent, six 135 of the State Collectors being reappointed for 
 the larger work. But collections and not assessments 
 alone now engaged the national concern, and collection 
 districts were constructed in ten of the States, not pre- 
 viously admitting the Treasury agents. It was provided, 
 that appraisements of property submitted would be open 
 to appeal for fifteen days. Then notices of the times and 
 the places of collection were given and the assessed taxes 
 were a statutory lien for two years. Fines and penalties 
 were to be recovered in the name of the Confederate States 
 of America. 
 
 The Department promptly appointed its new forces and 
 sent out portions of the printed forms, so that general 
 instructions could be issued by July 23d. But the new 
 undertaking was vastly different from the earlier taxing, 
 when there was a simple form for a uniform tax on twelve 
 objects. Now there were hundreds of subjects embraced 
 under different classes. The object 136 of the schedule was 
 to reach things of which no tangible evidence of liability 
 existed; only the taxpayer having the knowledge. The 
 different times of making returns and receiving collections 
 formed an involved system. A portion of the Act called 
 
 '"May i, 1863. 
 
 135 The new collectors were T. C. Green, Va.; E. G. Cabaniss, 
 Ga.; G. F. Neill, Miss.; D. N. Kennedy, Tenn.; A. B. Greenwood, 
 Ark. 
 
 "'Allan B. E. G. Cabaniss, July 30, 1863. 
 
54 
 
 for almost immediate assessment, the date of July 1st for 
 the produce on hand from 1862, and for the profits on 
 purchases and sales in 1862. These taxes were to be col- 
 lected October I, 1863. Payments on retail and wholesale 
 business were to be made quarterly, while many other col- 
 lections were postponed to 1864. 
 
 THE TAX IN KIND. 
 
 The tax in kind was the novel feature of the system and 
 was conducted under a separate organization. Its esti- 
 mates were to be additional to those of the money return. 
 It was planned to provide supplies for the army mainly, 
 and was capable of very efficient contribution, appealing 
 strongly to the highest patriotism of the people. It fur- 
 nished what the government needed and lessened the use 
 of currency, although the magnitude of its operations 
 made it liable to great abuses. Also in subsequent taxa- 
 tion it served as an instrument to prevent the Treasury re- 
 ceiving vital pecuniary support. In Secretary Memmin- 
 ger's advocacy 137 of the plan, he had placed the possible 
 receipts from the tithe at an aggregate value of $83,000,000. 
 The estimate of the Senate Finance Committee in advance 
 was $135,000,000. It was confidently expected that the 
 cotton tenth would materially supplement the Produce 
 Loan stock. 
 
 COLLECTION BY THE ARMY. 
 
 After the assessment of the products of the planters, the 
 collection was given over to the army, unless commuta- 
 tion was elected by the owner. Col. Larkin Smith, A. Q. 
 M. G., was appointed, May 23, 1863, to have supervision 
 
 137 He used the crop statistics of 1860, although in 1863 agricul- 
 ture was greatly diminished. On the other hand his estimate of 
 prices was lower than the market rate, the chief items being 
 28,000,000 bu. of corn at $1.50 per bu., 100,000 bales of cotton at 
 $120 each, 3,000,000 bu. of wheat at $2 per bu., 4,000,000 bu. of 
 potatoes at $i per bu., meats to value of $8,000,000 and 10,000,000 
 Ibs. of tobacco at 40 cts. 
 
55 
 
 of this tithe, and a corps of 68 assistants were put in the 
 eleven States. Quartermasters and commissaries serving 
 with the troops were authorized to take the produce and 
 give receipts. Upon reports by these officers to the dis- 
 trict collector, credits for the amounts were entered on the 
 assessor's estimates. After March, 1864, the Tax Bureau 
 of the Treasury transferred the entire management of the 
 tithe to the War Department. The yield of these resources 
 
 YIELD FROM THE TAX. 
 
 can be known only by indirect measure, reckoning from 
 the deductions for tithes, entered against the total tax 
 assessments. 
 
 The progress of the ingathering is indicated for the first 
 five months by a statement 138 of produce/worth $6,000,000, 
 the main portion of which was corn, wheat, cured hay 
 and fodder. The report announced that the tithe had 
 largely supported the armies in Virginia after September 
 ist. The record 139 to March i, 1864, placed the value of 
 the tenth at about $40,000,000, using the current market 
 prices. North Carolina, 140 Georgia and Alabama were the 
 chief sections from which large supplies were drawn. 
 From entire States nothing was realized, and the fertile 
 area of others was curtailed by the enemy. Moreover, 
 transportation was attended with increasing difficulties, 
 giving cause for complaints against the efficiency of the 
 tax. Its thorough management was a highly responsible 
 and complex undertaking in its- provisions for collecting, 
 parceling, storage and protection. It is not strange that 
 large quantities of the produce were lost, aside from the 
 neglect and incompetency charged. 141 The expense of the 
 
 138 Report of Col. Smith, Nov. 30, 1869. 
 
 139 Richmond Enquirer, Mch. 8, 1863. 
 
 40 N. C. gave in 8 months, 517,687 bu. of corn, 3,950,000 fbs of 
 cured hay, 10,280,000 ibs of cured fodder, 919,000 bu. of oats. 1,500,- 
 ooo Ibs of tobacco. 
 
 141 Echols of Ga., December 21, 1864, Richmond Enquirer; 
 Stephen's Const. View, Vol. II, p. 572. 
 
 
 HE 
 
 RSSTY 
 
 OF 
 
56 
 
 collection was borne by the army, and for six months of 
 1864 the appropriation was $12,250,000. In the first opera- 
 tions of Col. Smith the cost had been 7%. From reports 
 of the Tax Bureau and Secretary Trenholm 142 the probable 
 yield of the tax in kind may be placed at $145,000,000. 
 
 PRICE COMMISSIONS. 
 
 The tithe was of service in postponing and lessening the 
 necessity of the impressment of supplies for the army. 
 This practice had been resorted to in 1862, and the planters 
 were so dissatisfied with the prices assigned, that the crops 
 were decreased. As an arbitration of the dispute, Con- 
 gress, on March 26, 1863, created a Board of Commission- 
 ers in each State, whose duty it was to publish a schedule 
 of prices every two months. Beginning in May with 56 
 articles, the list had grown to 93 by November. There was 
 yet complaint that the schedule did not conform to market 
 prices, and a Commissioners' Convention in Augusta, Ga., 
 October 26, 1863, endeavored by a series 143 of resolutions 
 to regulate the abuses and inequalities. Through 1864 the 
 undervaluation continued, and a certain sharp increase of 
 the schedule in Virginia was revoked 144 because of the 
 presumed influence on the currency. 
 
 ACT SLOW AND INADEQUATE. 
 
 The administration of the Tax Act of 1863 called for a 
 multiplicity of executive directions. The law was ambigu- 
 ous on many points, and the rulings of the Commissioner 
 had vast scope and authority. A complete system of regu- 
 lations was issued on December 23, 1863, replacing the 
 several provisional orders and minimizing further causes 
 of delay by the officials. The assessments of quarterly 
 sales, surplus and occupations were variously completed, 
 
 '"Report of Nov. 7, 1864. 
 "'Richmond Sentinel, Nov. 2, 1863. 
 144 Richmond Enquirer, Aug. i, 1864. 
 
57 
 
 and the first receipts were realized by September, Wake 
 county, North Carolina, having the credit. By October, 
 the volume 145 of payment was well increased, yet the cities 
 were not returning the proportion expected, and of their 
 dues Augusta and Richmond had discharged only one- 
 third by the end of the year. Nine of the States undertook 
 to handle the tax on quarterly sales. 
 
 The chief collectors announced 146 .that speculators 
 evaded the levy on profits and many other frauds and fail- 
 ures were noted. After a few months, it was generally 
 admitted that the Act would not bring in an adequate tax. 
 This was caused partly by evasion and the system itself, 
 yet largely by increased national demand and higher prices. 
 The President said the taxation was too slow for exigen- 
 cies since it was not available within a year. But that was 
 a commendable showing in comparison with the War Tax 
 of August, 1861, which had not been announced as com- 
 pleted until November, 1863, the avails having been raised 
 to $19,500,000 from $16,660,000, reported a year earlier. 
 
 By February, 1864, the Commissioner had collected $35,- 
 000,000 from seven States, Georgia leading with $10,876,- 
 ooo. Up to April 16, 1864, receipts were reported 147 of 
 $82,262,349 from 471 collection districts; 133 districts had 
 been cut off by the enemy, an aggregate embracing one- 
 third of the population of the Confederacy. The actual 
 value of this amount of revenue must be viewed in the 
 light of the depreciated currency of the time. The state- 
 ment of Mr. Allan was that property had become enhanced 
 five-fold over the prices of 1860, although at the same time 
 he quoted gold at $i for $17 Treasury notes. It was the 
 persistent argument of the Treasury officials and of the 
 press throughout the war that on account of the peculiar 
 conditions in the South gold was no longer the standard 
 of value, but land and negroes had taken its place. 
 
 "* Allan's War Tax Correspondence Book "C." 
 
 146 W. K. Lane's letter, Nov. 17, 1863; J. D. Pope's, Jan. 4, 1864. 
 
 '"Report to Congress, Apr. 29, 1864. 
 
58 
 
 DIRECT TAXATION. 
 
 The recognition of the inadequacy of the Act in force 
 brought the sentiment in favor of direct taxation to pre- 
 vail. Secretary Memminger, in his report 148 to the fourth 
 session of the First Congress, on December 7, 1863, said 
 that the necessities of the situation no longer allowed a 
 hesitancy for the letter of the Constitution, requiring a 
 census to be taken before direct taxes could be levied. 
 'The land and negroes in the Confederate States con- 
 tributed two-thirds of the taxable values, and the policy 
 on the part of the States which had ratified the Constitu- 
 tion, was to withhold from contribution to the mainten- 
 ance of the war the very property for which they were 
 contending. In war time the tax ad valorem would be 
 even more equitable than one based on representation, 
 since so many districts were occupied by the enemy." 
 President Davis joined the Secretary in urging a property 
 tax; he said in his message of December 8, 1863, "The 
 special mode for levying a tax is now impracticable, but 
 Congress is not excused from the general duty; I shall 
 approve any taxation of yours in any mode which puts the 
 burden uniformly on the whole property." 
 
 CONFEDERATE INEFFICIENT TAXATION. 
 
 The Treasury asked for a rate of $% upon a taxable 
 basis of $3,000,000,000 of property, and allowing 20% for 
 evasions, expenses and contingencies, the proceeds were 
 reckoned at $120,000,000. Half of this sum was to go for 
 supplies and half to sustain a new issue of bonds planned to 
 consolidate the public debt. It was asserted that the bonds 
 would not secure credit unless definitely guaranteed by a 
 tax on real property. The House showed its estimate of 
 the need of financial legislation by refusing to refer the 
 recommendations to the Ways and Means Committee, or 
 to the committee of the whole, but a special committee of 
 
 148 Capers's Memminger, pp. 457-476. 
 
59 
 
 one from each State was instructed 149 to prepare a bill for 
 taxation upon real and personal property, according to 
 values. There was again a popular cry for heavy taxation, 
 but the enormous rise in prices since the original act made 
 estimates of the amount very uncertain. The House was 
 disposed 15 to levy a sum aggregating $400,000,000, and 
 the suggestion of a 10% call on property had many sup- 
 porters. But the traditional policy of the avoidance of 
 direct payments could not be forgotten, and the spirit in 
 the Senate was opposed to that of the House. Gov. 
 Brown, of Georgia, even called strongly for a repeal of the 
 tax in kind. Final action on the bill was agaip left to the 
 day of adjournment, when the rate proposed by Mr. Meni- 
 minger was finally accepted. 
 
 However, there were various amendments to the Act of 
 1863 of such a character as to emasculate it entirely and 
 complete the record of the Confederate Congress for in- 
 
 ACT OF FEBRUARY, 1864. 
 
 efficient taxation. The bill was passed on February 17, 
 1864, along with the Currency Act and Compulsory Fund- 
 ing. Its chief feature was the system of rebates ; the new 
 5% tax on property was offset by the tax in kind, and 
 the income tax was credited with the ad valorem tax on 
 property. The additions 151 of the law were taxes of 10% 
 on gold and silver plate and watches, etc.; 5% on gold 
 and silver coin, bullion, and dust held by banks or people ; 
 5% on solvent credits, bills of exchange, moneys held 
 abroad and on paper issued as currency; 10% in addition 
 to the tax of 1863 on profits made in trade and business 
 from January I, 1863-65; also 25% on profits exceeding 
 25% made by any bank, joint stock company, corporation, 
 or manufacturing concern. In the assessments property 
 was strangely rated at the prices of 1861, unless sold after 
 
 148 Dec. 9, 1863. 
 
 ""Montgomery Mail, Jan. 12, 1864. 
 
 "'Acts of Congress, Statute IV, Ch. 64. 
 
6o 
 
 1863, while other values were estimated in current prices 
 of February 17, 1864. 
 
 CRITICISMS AND DEFECTS. 
 
 The application of these laws called forth the most bitter 
 criticism and opposition. The two rates of assessment 
 were charged to have been made in the interest of the 
 agricultural class. The banks were very persistent ob- 
 jectors. A convention of the Virginia and North Carolina 
 banks was held to protest. The memorial of the South 
 Carolina banks of April 7, i864, 152 summarized their griev- 
 ances ; they were taxed twice, on their capital and on their 
 deposits and issues, which were invested in solvent securi- 
 ties. As the credits exceeded the capital two and three- 
 fold, the banks were contributing from 15 to 20%. Be- 
 sides the stock was valued at such a high rate that the 
 tax often exceeded the dividends. The tax on government 
 securities was loudly denounced as a breach of contract. 
 The levy on all these forms of investment worked a great 
 hardship. While it was aimed against speculators, the 
 chief sufferers were trust funds, widows and those depend- 
 ent on such incomes. 
 
 The landed interests in contrast bore a valuation ad- 
 mittedly five times less in proportion, and probably much 
 lower. Also, the tax on coin had a special interpretation, 
 for the "amount" of all gold and silver coin was the word- 
 ing of the section. The levy was made accordingly in kind 
 and the share of coin then converted into currency notes 
 at the ratio of 18 to I by the Treasury order of March 9, 
 
 1864. This action was held to serve as a check on de- 
 preciation, as if the gold in itself was to be legislated 
 against. Thus land worth $10,000 on the basis of 1860, 
 paid $500 tax in notes, while $10.000 in coin was assessed 
 $9,000 in paper. 
 
 But the culminating defect of the amended Act was that 
 
 162 Report to Memminger. 
 
6i 
 
 the tax could be paid by the four per cent, certificates in 
 which the compulsory funding of the redundant notes was 
 proceeding. The wise plan of Mr. Memminger had been 
 to use the coupons of the new bond issue and the new 
 notes, but this alteration by Congress precluded the Treas- 
 ury's receiving any considerable pecuniary aid from the 
 Act in 1864. 
 
 REFORM OF THE CUMBROUS SYSTEM DEMANDED. 
 
 On the assembling of the Second Congress on May 2, 
 1864, the Secretary demanded 153 firmly the reforms of the 
 system, specifying particularly the repeal of the tax in kind, 
 deduction from the five per cent, property tax, the repeal 
 of the deduction of the ad valorem tax from the income 
 tax and a correction of the discrimination as to the dates 
 of assessment of real and personal property with respect 
 to other values. He also pointed out the inequalities suf- 
 fered by the banks and corporations. His arraignment of 
 the system gives an estimate of what real worth there was 
 in this presumedly large attempt at taxation. He said it 
 was marked by inequality, amounting to injustice, and so 
 cumbrous and intricate that delay and disappointment were 
 its inevitable results. 
 
 FURTHER COMPLICATIONS. 
 
 Congress refused to make the chief reforms and brought 
 the final alienation with Mr. Memminger. Moreover, to 
 meet the increased pay of the troops, the Soldiers' Tax 
 was created, an added 20% to all assessments then opera- 
 tive. On the last day of the session, June I4th, there was 
 an amendment 154 to the Acts of April 24, 1863, and of 
 February 17, 1864, to the extent of relieving the banks 
 merely of the tax on deposits. Another effort was made 
 to reach speculation in an extra 30% tax placed against 
 profits realized on trade and sale between February I7th 
 
 1SS Capers's Memminger, pp. 484-7. 
 
 154 Acts of 2nd Congress, Statute I, Ch.,,44. 
 
62 
 
 and July i, 1864. Congress approved the ruling of the $% 
 tax on coin or exchange to be in specie or in notes at rela- 
 tive value, i. e., market rate, thus discrediting its own 
 money by legislative sanction. 
 
 ADMINISTRATION OF THE MEASURE. 
 
 There had been ambiguity as to which year the abate- 
 ment of the tax in kind had application, and as the general 
 taxes were due June I, 1864, the property tax would be 
 collected in advance of the ascertaining of the tithe. Fur- 
 ther delay resulted at this juncture by the order 155 that the 
 property tax be suspended until the value of the tenth was 
 known. Hence, when the commissioner made his re- 
 port, 156 the collections were $118,000,000 on an assessment 
 of $145,527,421, a comparatively small increase over the 
 report of six months earlier. This total included the re- 
 ceipts under the Acts of April 24, 1863, February 17 and 
 June 14, 1864, and was the taxation for two years on 
 several sources of revenue, being also inclusive of the levy 
 on surplus products of 1862. 
 
 No complete new assessment of property other than the 
 valuation under the War Tax of 1861 was made. In pre- 
 paring the statements there was much approximate 157 
 figuring. The Commissioner had to estimate the probable 
 portion of the territory in the possession of the enemy and 
 then make deductions. Using the assessment return of 
 1861 for a State, to this would be added 20% for property 
 not subject then, but taxable under the Acts of 1863-64. 
 
 185 Regulations of Commissioner Allan, June 14, 1864. 
 
 156 To Secretary Trenholm, Oct. 28, 1864, Letter book "E." 
 
 167 The tax for Georgia was: Real and personal property, assess- 
 ed under Act of Aug. 19, 1861, $564,173,946.82. To this add 20% 
 
 for property, taxable after 1861, $112,834,789.36. Total, $677,. 
 
 008,736.18. Tax thereon at 5% is $33,850,436.80; jewelry and 
 watches (say) $2,500,000, at 5% more, equals $125,000, total, $33,- 
 975,036.60. 
 
 Deductions, destroyed by the enemy (say) 5%, $1,698,771, credit 
 of tax in kind (say) two-thirds, $21,517,776; credit of income tax 
 (say) 10%, $3,227,666, net proceeds, $7,431,218. 
 
63 
 
 From the $% levy on this sum, successive deductions were 
 made for the destroyed proportion and for the credits by 
 the tax in kind, frequently two-thirds of the total, and by 
 the income tax reckoned at 10%. 
 
 These rebates, charged against the property tax, left 
 comparatively small net proceeds to be collected from 
 April to October, 1864. With the removal of the system 
 of abatements, the total receipts would have been almost 
 trebled, counting the tax in kind at $145,000,000 and the 
 income tax with other credits at a less figure. The esti- 
 mate 158 of Secretary Trenholm was $374,188,414. 
 
 Mr. Memminger had asked for too small an amount at 
 the inception of the Act of 1863. Congress had been still 
 more niggardly in responding and finally had so vitiated 
 the efficiency of the revenues voted, that the Treasury 
 was forced to continue to the end the policy it too readily- 
 had adopted at the beginning, the payment of its debts with 
 government paper. 
 
 168 Report to Congress, Nov. 7, 1864. 
 
6 4 
 
 CHAPTER IV. REPUDIATION. 
 
 The financial policy of the Confederacy was inaugurated 
 with loans and issues of government money. When the 
 circulation of the banks of the South had been more than 
 displaced in the first year of the war, the emission of paper 
 did not cease. With the certainty of depreciation realized, 
 the problem then was to retire the surplus currency by 
 some measure that would make room for further new is- 
 sues of notes to meet the increasing appropriations. The 
 reliance on the efrfcacy of the provisions for funding was 
 implicit. When the first payment of interest on the bonds 
 in January, 1862, had been made in coin, there was a 
 standard set that the administration had not adequately 
 planned to continue. The succeeding payments on bonds 
 had to be made in Treasury notes, and these beginning to 
 depreciate, the bonds likewise cheapened. The working 
 of this system was such that the one resource proved an 
 imperfect check in preventing the abuse of the other. 
 
 Again, the payment of interest on Treasury notes in 
 1862 operated against a larger sale of bonds in that year. 
 The guarantee back of the bonds was not definite enough. 
 The property of the Confederacy was viewed as a security 
 only in a general way. The continued higher quotations 
 of the first loan of fifteen millions, with its pledge of the 
 duty of cotton export, testified to the superiority of this 
 stock. As a pledge against the one hundred million loan, 
 the AVar Tax was not sufficient to give absolute security. 
 Suggested reforms 159 always included a plan for coin or 
 cotton back of the government obligation. 
 
 As the emission of notes was the established resource 
 to replenish the Treasury, so changes in the methods of 
 funding became a sovereign remedy for redundancy, be- 
 ing directed to induce a larger use of bonds. Yet the rate 
 
 109 Richmond Examiner, Apr. i, 1862; Richmond Sentinel, Aug. 12, 
 1863. 
 
65 
 
 on the highest stock, eight per cent., was small in com- 
 parison with the profits to be gained in the most ordinary 
 trade. An accurate reflex of the depreciation of the 
 finances was found in the increase of speculation. This 
 contagion 160 was well spread in 1862, and in the tendency 
 to dispose of the notes quickly, prices were steadily mount- 
 ing and the standards of gain proportionately swollen. 
 
 A CURRENCY CORRECTIVE. 
 
 In this condition of affairs Congress took its first step 
 in altering the terms of the contract offered for funding 
 notes into bonds. It was in the second session after the 
 unfortunate bill for taxation in the shape of a forced loan 
 had been postponed on the plea that the country was not 
 yet ready. On October 9, 1862, a bill was reported by 
 Chairman Kenner that reduced, after December 1st, the 
 interest of all bonds to 6%, and the holders of notes were 
 given four months to get the advantage of the higher rate 
 of funding. This was amended by the Senate to 7%, and 
 six months allowed in which note holders could fund at &%. 
 The bill was passed October i^th, and constituted the sole 
 currency corrective of the second year of the Confederacy. 
 The advocates of the measure believed that it would 
 bring in so vast a quantity of notes as to remedy deprecia- 
 tion and also would so enhance the value of 8% bonds that 
 the Secretary would make large sales. The Richmond 
 Whig was incredulous and expressed 161 the opinion that 
 Congress, in announcing the panacea of one per cent, dif- 
 ference in interest, had undertaken to settle the currency 
 question by an expedient which seemed trifling and con- 
 temptible in view of the magnitude of the attempted re- 
 sults. In December the most sanguine estimated that by 
 April 22, 1863, the limit, $120,000,000 of notes, would be 
 funded and thus relieve the new issues, which were half a 
 
 180 Examiner, Sept. 23, Oct. 22, 1862. 
 141 Oct. 14, 1862. 
 
66 
 
 million daily. In February the experiment 162 was going 
 well. The new notes, fundable in J% bonds, being issued 
 after December I, 1862, were displacing the old notes, 
 whose holders hoarded them. The bonds had gone to a 
 premium of looj, and by April reached 105. The fund- 
 ing 163 induced by the Act amounted to over $50,000,000 
 from January 1st, as against $17,500,000 for the previous 
 five months. But within the same period $130,000,000 in 
 notes had been paid out, and this increased scale of fund- 
 ing was yet far too small. 
 
 THE SECRETARY'S FUNDING SCHEME. 
 
 The Secretary in his report of January 7, 1863, had 
 marked out the way for the extension of the policy which 
 had met with such a fair measure of success. His recom- 
 mendation 16 * was radical and a precursor of the final des- 
 perate solution of the currency difficulties. It was, that 
 after a reasonable lapse of time the Treasury notes, bear- 
 ing date previous to December i, 1862, should cease to 
 be currency. To carry out this plan the notes, already 
 fundable until April 22, 1863, in 8% bonds, and thereafter 
 in 7% bonds, must have a period of limitation also for 
 the lower rate of conversion, and that date to be July I, 
 1863. The results from the limitation to 8% funding were 
 believed to have failed of their highest efficiency, because 
 six months grace was too long a time allowed for its 
 operation. Sixty days were now considered ample as a 
 stimulant for a new funding provision. The financial 
 policy was to be definitely changed from one of offering 
 inducements to take the government obligations to that 
 of applying a small portion of constraint on the note 
 holders. An abundance of money in the country was 
 
 162 Whig, Feb. 5, 1863. 
 
 165 Letter Book "E," Apr. 11, 1863. 
 
 164 Caper's Memminger, pp. 445, 446. 
 
6 7 
 
 proven by the large sums held on deposit and by the 
 amounts invested at interest in private hands, as reported 
 by the War Tax. 
 
 The Secretary believed that two-thirds of the currency 
 could be funded without material danger to private inter- 
 ests. He met the charge of infringement of contract with 
 a combination of excuse and argument. The first plea 
 was that Congress had already established the principle 
 by the act reducing the interest on the bonds to seven per 
 cent. Again, the time of the contract was not prohibitory 
 of change, if a full opportunity was allowed to receive the 
 benefits of its performance. Finally the modification of 
 the conditions of the note would be a benefit to both 
 parties in the increased purchasing power of the remain- 
 ing currency. Thus expediency was the main determinant, 
 however questionable the legal warrant. To the further 
 objection that the note lost its value as money, Mr. Mem- 
 minger replied that although this function was gone, its 
 intrinsic value would be unimpaired, being yet receivable 
 for public dues and having the faith and property of the 
 Confederate States pledged for its payment. 
 
 But it was evident that a body of notes yet accepted 
 for government obligations would continue to circulate and 
 choke the channels of trade, and it was only a question of 
 time until more heroic measures must cause their removal. 
 The Treasury may be judged to have realized that this 
 limited funding measure was a temporary expedient at 
 best. No sudden large contraction was feared by reason 
 of it, for the circulation of new notes for the six months 
 of 1863 was calculated to reach $200,000,000, a very low 
 estimate. Then the situation of January, 1863, woutd be 
 repeated and the same redundancy must be again faced. 
 The possible depreciation in the price of the bonds from 
 the large funding of notes induced was looked upon as the 
 lesser of two evils, since the depreciation of the notes much 
 exceeded that of the market value of the bonds. 
 
68 
 
 ACTION OF CONGRESS. 
 
 The recommendations of the Secretary found Congress 
 ready with many plans of tampering with the currency, 
 including an advocacy of a legal tender measure. Mr. 
 Baldwin, of Virginia, had the anticipatory plan of funding 
 all notes prior to April I, 1863, at a monthly decline in 
 the interest rate of bonds of one per cent, from July to 
 December and then declare all notes discharged. Another 
 measure was to exchange the old issue on the basis of - 
 $300, allowing $200 in bonds and $100 in legal tender. 
 The bill of Mr. Hunter, chairman of the Senate Finance 
 Committee, was introduced, to embody the wishes of the 
 Treasury, and was passed January 30, 1863, with amend- 
 ments. The limitation of 7% funding was July, buf notes 
 issued since December i, 1862, were included, with the 
 added privilege that after July they could be funded in 
 4% bonds. The new notes to be issued after April 2, 1863, 
 were to have the fundable provision for six months at 6%, 
 and then to be converted at 4%. Mr. Hunter admitted 
 a breach of promise in limiting the time of funding, but 
 defended it as an imperative measure without which the 
 currency must expand until the public debt was so large 
 that there would be slight hope of payment. 
 
 When the bill went to the House, it was debated until 
 March 4th, the legal tender remedy being again urged. 
 The minority fought the measure on the ground that the 
 periodical demonetization of the notes would be unintel- 
 ligible to most people and the funding not largely ob- 
 served. However, the House sent the bill back to the 
 Senate with changes in the times of funding which were 
 finally accepted, and the Act 165 as passed on March 23d, 
 
 ALL KINDS OF FINANCIAL PAPER. 
 
 established three classes of notes ; those prior to Decem- 
 ber I, 1862, $290,000,000 originally in amount, were fund- 
 able in 7% bonds until August 1st, and then ceased to be 
 
 186 Acts of Congress^, Statute III. Ch. IX. 
 I 
 
6 9 
 
 currency; notes issued between December I, 1862, and 
 April 7, 1863, were fundable in 7% bonds up to August ist, 
 and then in 4% stock ; notes after April 6, 1863, were 
 fundable for 12 months in 6% bonds, and thereafter in 4%. 
 
 Besides the legislation on the notes, there were many 
 other financial provisions in the Act. A further use of 
 call certificates was arranged at a lower rate of interest. 
 The six per cent, bonds and notes issued after April i, 
 1863, could be put into 5% call certificates. The 4% bonds 
 were convertible into 4% call certificates. All former 6% 
 call certificates were considered to be funded into bonds 
 on June 7 and lost the power of conversion into notes. 
 The seven-thirty notes had been discontinued as an issue 
 when the first limitation of funding began, and now they 
 were also classed as funded. 
 
 While the Act contained authority to issue $50,000,000 
 of notes a month, it had the provision that the Secretary 
 use any disposable means in the Treasury to purchase 
 notes until the whole amount was reduced to $175,000,000. 
 To accomplish this three classes of bonds were named ; (i) 
 $200,000,000 of 6% stock, to be sold to any of the States ; 
 (2) if guaranteed by the States, the special bonds to be sold 
 for notes to the highest bidder ; (3) $100,000,000 of bonds 
 at 6%, with coupons, payable in notes or in cotton certifi- 
 cates, which pledged the government to pay in cotton at 
 the rate of 8d. sterling and delivered within six months at 
 certain points. 
 
 The first two securities were never issued, but the third 
 class, modified by the Act of April 30,. 1863, represented 
 the first extensive effort to sell bonds direct since the 
 fifteen million loan of 1861. In all seven classes of stock 
 were authorized. 
 
 THE DEPOSITORIES. 
 
 The increased funding plans called for an enlargement 
 of the force of depositories. By the Act of April 15, 1862, 
 there had been an increase of these officials, when to their 
 duties of disbursement and deposit were added the ex- 
 
change of certificates for notes. They were also made 
 agents for the sale of bonds and were the great intermedi- 
 aries for the funding transactions. The notes were re- 
 ceived by them and forwarded to the Treasury at Rich- 
 mond, which performed the cancellation and sent back the 
 bonds in exchange. In March, 1863, the demand to fund 
 before April 22d necessitated the second greater extension 
 of the depositories. With the passage of the new law, it 
 was found necessary to create a special district in the 
 West, the Trans-Mississippi, which military operations had 
 cut off from the East, and Gen. Kirby Smith was di- 
 rected 166 to form a Treasury Note Division at Monroe, La. 
 The reduction in offering bonds from 8% to 7% for 
 notes did not cause any cessation of funding. Rather an 
 end had been made to the hoarding of notes, for the an- 
 
 FEAR OF REPUDIATION. 
 
 ticipation of demonetization was taking possession of the 
 public. Many of the banks helped increase the feeling of 
 insecurity by refusing to take the paper issued previous 
 to December I, 1862. Their excuse was the desire to 
 induce greater funding within the limitation. It was nat- 
 ural that they attempted to save themselves, though later 
 they were persuaded to receive the notes on deposit. Cir- 
 culation had been loyally given in the past to the govern- 
 ment obligations by the people at large, but now discrimi- 
 nation began to be made against issues of certain dates, 
 for it was said 167 repudiation had set in. 
 
 In such a state of affairs prices were not slow to re- 
 spond, and gold experienced the sharpest and greatest rise 
 of the war. In March the premium was 300, on April 3Oth 
 500, on June n, 700, and in August $12 in notes exchanged 
 for $i in specie. 
 
 166 July 3, 1863. 
 
 167 Enquirer, June 20, 1863. 
 
71 
 
 PROGRESS OF FUNDING. 
 
 The reports of funding showed that by June 8th $64,- 
 000,000 of notes had come in under the two Acts of Octo- 
 ber 13, 1862, and March 23, 1863. This had increased in 
 July to $84,000,000, and the total funding was announced 
 by Auditor Robert Tyler, on August i8th, to be $126,- 
 000,000. This represented over forty-three per cent, of the 
 proscribed issue prior to December I, 1862, yet it left a 
 bulk of $165,000,000 demonetized currency which was ac- 
 ceptable for public dues, and the $120,000,000 of 7-30 notes 
 besides had full circulation. The relief was small when the 
 extent of the new issues was taken into consideration, 
 since within that period $380,000,000 must have been emit- 
 ted, the statement for the three quarters ending September 
 30, 1863, being $391,000,000. 
 
 A SANGUINE SECRETARY. 
 
 Nevertheless, Mr. Memminger was sanguine, as was his 
 wont, and in a communication 168 of August 24th to R. M. 
 T. Hunter, said that the funding had been eminently suc- 
 cessful, since the outstanding notes were within the limits 
 of depreciation reported at the last Congress. At that 
 time the total amount had been three-fold greater than 
 the estimated required circulation of $150,000,000. The 
 reassuring figuring of the Secretary was based on the con- 
 clusion that $150,000,000 of the outstanding circulation 
 was held west of the Mississippi, and there then remained 
 in the east a proportion much less than three to one. 
 On the date of July 22d, he had written 189 to G. B. Lamar, 
 of Savannah, that while the loss of the Mississippi river 
 was a very serious injury to the cause, yet in the arrange- 
 ment of Providence it had its counterpoise in cutting off 
 the old currency there from affecting this side. He 
 thought if the Treasury were rid of the old currency in the 
 east, it could get along for another year. 
 
 188 Richmond Enquirer, Aug. 24, 1863. 
 189 Letter Book "E." 
 
72 
 
 But depreciation could not be arbitrarily measured by 
 the excess of outstanding notes over an assumed limit. 
 The military reverses were adding their effect to the finan- 
 cial situation and the merchants of that period were de- 
 manding $12 in currency for goods that $i in specie would 
 buy. 
 
 FAILURE IN THE SALE OF BONDS. 
 
 The attempted large sale of bonds was likewise impaired. 
 The stock offered had for security what many considered 
 the ultimate standard of value in the South. But some of 
 the conditions of the contract were in a measure respon- 
 sible for the wide non-acceptance of the investment. The 
 $100,000,000 bonds of the Act of March 23, 1863, with 6% 
 coupons, payable in notes, or cotton, the cotton to be de- 
 livered within six months, at the option of the holder, 
 had the supplementary legislation of April 30, 1863, applied 
 to it, by which the new stock was authorized to be $250,- 
 000,000, with coupons payable in specie or cotton, the cot- 
 ton to be delivered at the option of the government six 
 months after peace. These cotton interest bonds must be 
 sold for Treasury notes alone, and the proceeds devoted 
 to the purchase of produce. This was a double scheme of 
 funding notes and buying cotton, but as the stock was so 
 little taken, the resources for the purchase of the staple 
 were limited, and from 1863 there were slight accessions 
 to the holdings for the Produce Loan. 
 
 Mr. Memminger was not pleased 170 with the new form of 
 bonds, yet he extensively advertised them to be offered 
 to the highest bidder on July 2Oth. The stock was to be 
 confined to home purchasers, whereas the original form 
 could have been sent abroad. The investment seemed 
 most profitable, for the $1,000 bond would pay interest in 
 500 Ibs. of cotton at 6d. or 12^ cents, while cotton was 
 then selling at the ports from 32 to 40 cents. The first 
 
 170 To Secretary Mallory, June 16, 1863. 
 
73 
 
 bids were too few to allow a sale, and upon the second 
 advertisement a number of offers were accepted at 50% 
 premium in paper money, then rated at 12 to i of gold. 
 The bonds were widely placed with the depositaries and 
 their sale strongly urged, with the insignificant result of 
 placing $2,000,000. The quotations of the market were 
 such that large investments in these bonds must have en- 
 tailed a heavy loss on the government, if they had ever 
 come to payment. 
 
 However, the public was not taken by these induce- 
 ments, since it judged the cotton interest certificates to be 
 -a form of general liability for the indefinite delivery of the 
 staple. Other bonds were quoted at a premium in Treas- 
 ury notes, but their specie value declined through the year 
 along with that of the notes. The funding of notes into 
 4% bonds after August ist was practically stopped, while 
 only a small exchange was made for 6% bonds. Prices 
 grew intolerably high for necessaries. Fuel was $40 a 
 cord in Richmond in September ; bacon sold at $3 a lb., 
 and corn-meal brought $12 per bushel, when formerly it 
 sold at 75 cents. Prices in the interior also fluctuated 
 widely. A feverish condition of the markets was dominant. 
 Bragg's victory caused 171 gold to fall from 15 to I to 
 8 to I. 
 
 DESPERATE REMEDIES CONSIDERED. 
 
 The currency had now reached a condition where it 
 held the supreme public attention. Innumerable remedies 
 were offered on every hand. The position of the adminis- 
 tration was expressed in a letter of the Secretary of the 
 Treasury to President Davis on September I, 1863. He 
 said, "Plans for meetings to discuss aid are futile. I en- 
 deavor to correspond with individual merchants and bank- 
 ers. The two difficulties that confront us are distrust of 
 the stability of the government, . to be relieved only by 
 
 m Richmond Sentinel, Sept. 22, 1863. 
 
74 
 
 military successes, and expectation that the issue of notes 
 will be indefinitely continued; this can be relieved by the 
 determinate refusal of Congress and by a resolute effort 
 to raise money by taxes and bonds." 
 
 There was nothing new in this program, but the prevail- 
 ing popular expression was likely to decide the final policy. 
 One remedy was strongly advocated by a portion of the 
 press, and had the approbation of many public men. That 
 was the plan 172 of compulsory funding, which would free 
 the country of its excessive currency by a disguised repu- 
 diation. The two preceding Acts limiting the time of 
 funding were considered as merely voluntary, appealing to 
 the patriotism of the people. The banks and retired mer- 
 chants had responded, but the great majority of note hold- 
 ers preferred to speculate in other investments. Now, as 
 conscription had to be applied to the military necessities, 
 so forcible 173 conversion of the currency was to be appor- 
 tioned as taxation, thus gathering from all their share. 
 
 BANKERS' CONVENTION AT AUGUSTA. 
 
 The banks, as representing conservative interests, met 
 in Augusta, Ga., November 16 and 17, 1863, when thirty- 
 six institutions from Georgia, South Carolina, North Caro- 
 lina, Tennessee and Virginia, had delegates. Mr. G. A. 
 Trenholm, afterwards Secretary of the Treasury, present- 
 ing a line of arction adopted by the South Carolina banks, 
 was made chairman of the committee which drafted the 
 resolutions sent to Mr. Memminger as the sense of the 
 convention. The recommendations 174 declared that dues 
 collected, and for which Treasury notes were made receiv- 
 able, had proven inadequate to absorb a sufficient amount 
 of notes to prevent redundancy and now measures must 
 be taken to reduce the circulation to $200,000,000. The 
 following means of doing this were suggested: (i) A new 
 
 172 Charlotte Democrat, Nov. 7, 1863. 
 "'Richmond Sentinel, Oct. 27, 1863. 
 174 MSS. of Treasury Department. 
 
75 
 
 issue of coupon bonds of one billion dollars, bearing six 
 per cent, interest, with the coupons payable in coin yearly ;. 
 (2) To meet the wants of the government in the future a 
 sufficient tax should be adopted, and notes be issued as 
 little as possible; (3) A levy of $60,000,000 to meet the 
 interest of the new bonds and the tax be paid in specie or 
 coupons of the bonds in lieu of coin; (4) the bonds first 
 to be apportioned to the States and notification to the 
 taxpayers in each district to provide themselves for the 
 tax; the bonds hitherto issued and all Treasury notes 
 were to be received in pay for the new bonds ; (5) all exist- 
 ing distinctions between Treasury notes of different issues 
 and dates were to be abolished ; (6) increased duty on all 
 imports and exports during the war to be paid in coin and 
 exchange; (7) an Issue Department be created and kept 
 separate from the Treasury Department. 
 
 THE: SECRETARY'S PLAN. 
 
 The Secretary of the Treasury had been invited to at- 
 tend this convention, but sent as his personal representa- 
 tive Wm. Johnson, President of the Charlotte and Colum- 
 bia R. R. Mr. Memminger had well in mind the plan that 
 he would present to Congress in the following month, and 
 his delegate was thoroughly acquainted with it. It was to 
 resemble the scheme of the banks, yet have peculiar 
 features of its own, as the letter of instructions to Mr. 
 Johnson on November nth discloses. The Secretary told 
 him to hold back part of the plan, for it would probably 
 do harm if there were information beforehand of the pre- 
 cise compulsory measures intended. He was directed to 
 present the other portions, and if the convention approved, 
 it might advise measures which would bring in those dis- 
 posed to hold back. 
 
 Mr. Memminger said it would be very unfortunate if by 
 giving the politicians information in advance of the action 
 of Congress, they should agitate against his plan. The 
 
7 6 
 
 Treasury remedy was clearly outlined 175 to G. B. Lamar, 
 of Savannah, the leading idea being a fancied return to 
 specie values. A sufficient tax, payable in coin, and levied 
 on property, was to guarantee the interest on a new loan 
 that would absorb the whole public debt. In lieu of coin, 
 the coupons of the loan could pay the tax. The writer 
 said the country was now prepared to cooperate in re- 
 tiring the currency, and stringent provisions would make 
 the measure certain, for no more risks could be run. 
 
 CRITICISMS OF AUGUSTA PLAN. 
 
 The Augusta plan caused considerable discussion and 
 was criticised as being impracticable: The nature of the 
 objections was that the distrust of the government would 
 not allow a sum of bonds to be taken that was twenty 
 times the banking capital of the South, and that little short 
 of general confiscation would put the currency on a safe 
 basis. There had been from time to time various expres- 
 sions 176 of a want of confidence in ultimate redemption. 
 In the main, the sentiment 177 had grown more pronounced 
 in favor of compulsory funding. 
 
 TH SHATTERED CURRENCY. 
 
 The Secretary matured his plans, bearing a marked re- 
 semblance to that of the banks, yet containing features 
 of temporizing and of radical variance. His statement 178 
 to the Fourth Session of Congress made evident the un- 
 sound condition of the finances. The receipts 179 of the 
 Treasury from January 1st to September 30, 1863, had 
 been $601,522,893, and the expenditures $519,368,559. 
 Civil purposes had demanded $11,629,278, while war re- 
 
 175 Letter of Nov. 9, Book "E." 
 
 "'Augusta Chronicle, Sept. 26, 1863. 
 
 177 Richmond Enquirer, Nov. 19, 1863. 
 
 178 Caper's Memminger, pp. 457, 458. 
 
 "'Bonds were credited as follows: 8% stock, $107,292,900; 7%, 
 $38,737,650; 6%, $6,810,000; call certificates, $23,475,100. Treasury- 
 note issues were $391,623,530. 
 
77 
 
 quired the balance, excepting $32,212,290 on the public 
 debt and $59,000,000 for notes cancelled. At the same 
 date $65,000,000 of notes were held for cancellation. The 
 funded debt had reached $293,000,000; the unfunded was 
 $701,500,000, consisting of notes, excepting $26,000,000 
 five per cent, call certificates. 
 
 Of the total receipts, notes had supplied 65 per cent, and 
 loans 30 per cent., but the very large part of the latter was 
 the compulsory creation of the funding by limitation of 
 the old and new issues of notes. 
 
 Taxation in this period of rapid depreciation had fur- 
 nished a proportion of two-thirds of one per cent. The 
 proportion in the previous report, from the establishment 
 of the permanent government, February i8th to December 
 31, 1862, was seventy per cent, from notes, twenty-two per 
 cent, from loans and three and two-thirds per cent, from 
 taxation. 
 
 On September 30, 1863, there were $476,000,000 of un- 
 drawn appropriations. The estimates for expenses up to 
 July i, 1864, were $475,500,000. Doubling this latter sum 
 to have the total for the calendar year, a need to provide 
 for almost one billion and a half dollars faced Congress 
 when it met December 7, 1863. It was admitted officially 
 that prices were inflated five-fold, while at the same time 
 tax assessments were made at a rate of ten to one for gold. 
 
 BILLION DOLLAR LOAN SCHEME. 
 
 The administration program 180 was directed to the ab- 
 sorption of the mass of notes. Accepting $200,000,000 as 
 a necessary circulation, $500,000,000 had to be retired. 
 With such a reduction prices were expected to become 
 more normal, and the expenditures for 1864 would be 
 about $400,000,000. The oft-quoted fifteen million loan 
 was taken as a model, and a new loan of one billion, pay- 
 able in twenty years, was projected, whose six per cent. 
 
 180 MSS. of Treasury Department. 
 
interest coupons should be made available in public pay- 
 ments as the equivalent of specie dues. This loan was to 
 serve a double purpose, $500,000,000 to be devoted to the 
 funding of the excess of notes, and $500,000,000 to be sold 
 to furnish supplies and to be exchanged to consolidate the 
 debt already funded. This new stock was to be made pre- 
 sumably as good as gold by having specifically pledged for 
 its interest $60,000,000 of taxes on all values, to be paid in 
 coin or the interest coupons of this loan. Taxation was 
 conceived to create a similar demand for these coupons 
 to that which the export duty on cotton fixed for the cou- 
 pons 181 of the fifteen million loan, and thus the bonds were 
 said by the Secretary to have the best security which the 
 government had yet offered. In addition, for the ultimate 
 redemption and for the interest of the bonds not used in 
 funding there was to be a definite guarantee of a duty on 
 exports and imports for a period of five years after peace. 
 
 COMPULSORY FUNDING THE CHIEF FEATURE. 
 
 The new obligation of the Treasury remedial plan re- 
 sembled that of the Augusta Convention, excepting that 
 the interest of the bonds and, preferably, the taxes, were 
 to be paid in specie by the Augusta plan, instead of some 
 arbitrary equivalent of specie. In further agreement, in 
 order to prohibit future over-issue, the Secretary asked 
 Congress for an absolute limit of $200,000,000 of notes. 
 But the compulsory funding was the feature of the recom- 
 mendations, which in severity well answered the popular 
 clamor and at the same time was certain to meet the con- 
 demnation of the conservative interests. It required all 
 notes in excess of $200,000,000 to be funded by April i, 
 1864, east of the Mississippi, and by July 1st west of the 
 Mississippi. After these dates the notes not only lost their 
 funding privilege, as in the Act of March 23, 1863, but 
 ceased to be receivable for public dues. They remained 
 
 181 Capers's Memminger, pg. 467. 
 
79 
 
 only as evidences of debt payable according to their tenor. 
 All notes were required by the plan to be funded except 
 those under five dollars. The $200,000,000 of the old cur- 
 rency not immediately retired could be exchanged within 
 six months for an equal sum of the definitely limited new 
 issue. These notes were to be accepted along with the 
 interest coupons for the proposed property tax. 
 
 SOME JUSTIFICATION URGED. 
 
 The earlier partial repudiation had prepared the way for 
 these more radical measures, and the plea of expediency 
 again sufficed. Mr. Memminger admitted 182 the violations 
 of the note contract in the right to receive a sum of money 
 two years after peace and the right to use them for gov- 
 ernment dues. He offered no defense of the second in- 
 fringement, which the sovereign power of the nation alone 
 was left to justify. But in the first alteration the Treasury 
 was argued to have maintained its good faith by offering 
 the bonds during ninety days for the notes, and in lieu of 
 the specie promised this was the best security to be given 
 for the present, unless the actual payment was postponed 
 until better times. Such an enactment was urged to be in 
 compliance with the spirit of the law, if not the letter, and 
 the only measure that would save the value of the notes 
 issued and likewise prevent the ruin of public and private 
 credit. 
 
 The admininstration, to exonerate itself further, made 
 an ungrateful denial of the resource which had served so 
 faithfully, even if to its destruction. It declared that the 
 legislation now against the notes would be no interference 
 with the rights of the people, as between each other, since 
 there had been no express contract to make them currency, 
 and Congress had always refused to pass a legal tender 
 act for them. The conclusion of the whole matter was that 
 no contract, however solemn, could require national ruin. 
 
 M Caper's Memminger, p . 469-470. Report to Congress. 
 
8o 
 
 The sanguine Secretary believed that the compulsory fea- 
 ture would be less objectionable because the inducements 
 of the bonds would bring in a vast part of the currency 
 voluntarily. 
 
 The President seconded unqualifiedly in his message of 
 December 7, 1863, the heroic policy outlined. He said 183 
 that taxation was too slow for exigencies, and the amount 
 of notes was so swollen that to remove the cause of it no 
 measures could be too stringent. He asked Congress to 
 give its earliest and entire attention to the currency. The 
 chairman of the Finance Committee, Mr. Hunter, was 
 ready for a revolution in finances. He contended 184 that 
 precedents were against paying debts in full. The United 
 States had not done it. The Confederate notes had been 
 greatly superior to the Continental issues, which were not 
 fundable. This had been a good feature, while currency 
 was not in excess, but now it had become utterly destruc- 
 tive of public credit. Mr. Hunter thought the govern- 
 ment should confess like a merchant who is involved and 
 start again. But such absolute repudiation was very little 
 approved. 
 
 ClyASH OF VlEWS AND INTERESTS. 
 
 The plans of the Treasury were subjected to sharp criti- 
 cism in Congress by the advocates of contending policies. 
 The funding was objected to as the chief remedy of the 
 currency rather than taxation. Such a policy was thought 
 to place too high a value on the notes, in addition to the 
 ruinous practice of exchanging non-interest bearing notes 
 for high rate government securites. Under the direction 185 
 of Senator Brown, of Mississippi, the proposition to tax 
 the notes 25 or 33 1-3 per cent., received increasing favor. 
 The right to tax notes was held to be the same as that 
 
 "'Richmond Enqurier, Dec. 8, 1863; Records of War of the Re- 
 bellion, Series IV, Vol. II, pp. 1035-1040. 
 
 184 Richmond Sentinel, Dec. 4, 1863. 
 
 185 Richmond Sentinel, Dec. 24, 1863. 
 
8i 
 
 over any other property. President Davis had hinted in 
 this direction, saying if each person held notes according 
 to his ability, it would be the best form of taxation. The 
 supporters of a legal tender measure renewed their efforts. 
 A bill of Senator Phelan to make the interest coupons 
 of the new bonds legal tender received an unfavorable re- 
 port and was tabled February 3, 1864. Gen. Duff Green, 
 who had been connected with various financial projects, 
 memorialized Congress January 6, 1864, against converting 
 the mass of depreciated notes into a funded debt. He 
 wanted a direct tax on notes and the use of bonds for 
 expenses. 
 
 The double remedy for the currency of funding under a 
 penalty and of heavy taxation of notes brought a clash 
 of the branches of Congress and led 186 to confusion and 
 delay. There was a divergence of opinion as to the pro- 
 portion of notes to be given for bonds and for the new 
 currency. The House voted to tax the notes, while the 
 Senate rejected the proposition; yet after conference a 
 measure was enacted that combined many of the features 
 of the administration plan with radical Congressional 
 amendments. The objection to treating the whole sum of 
 notes to the same process and the fear that special bonds 
 with coupons receivable for taxes would be used as cur- 
 rency shaped the legislation. 
 
 THE; RUINOUS CULMINATING ACT. 
 
 The Act of February 17, 1864, was the culmination of 
 the currency laws of the Confederacy. It was heralded 
 as "marking an epoch in the monetary department of 
 modern polity." But the discrediting of the public obliga- 
 tions by this act so paralyzed the national finances that 
 no more serious repudiation needed to be projected for 
 enactment in the succeeding final year. It was a combina- 
 tion of funding currency and taxation. As complex as had 
 
 "'Savannah Republican, Feb. 4, 1864; Richmond Examiner, Feb. 
 6, 1864. 
 
82 
 
 been the Act of March 23, 1863, in dividing the notes into 
 three classes with reference to the date of issue and pre- 
 scribing different times and rates of funding, the new act 187 
 divided the notes on the basis of denominations and de- 
 monetized portions by application of progressive taxation. 
 
 The compulsory funding was required in four per cent, 
 certified stock of twenty years. All notes above five dol- 
 lars were allowed this form of exchange until April 1st, 
 east of the Mississippi, and July 1st west of the Mississippi. 
 After those dates the one hundred dollar notes were taxed 
 at 33 J -3% an d 10% added monthly. Notes other than 
 one hundred were also taxed 33 1-3%, but could be ex- 
 changed from April ist to January I, 1865, for four per 
 cent, bonds, with the proportionate deduction. They also 
 could be traded for a new issue of notes at the rate of two 
 for three, but on January I, 1865, a tax of 100% was to be 
 levied on all the old issue, wiping it out of existence. The 
 five dollar notes had a longer duration of grace, their 
 funding period running to July 1st east of the Mississippi, 
 and October ist west of the Mississippi; then a tax of 
 33 l ~3% was applied. The seven-thirty interest notes which 
 had been practicably counted as funded, were forthwith 
 converted into six per cent, bonds. Call certificates for 
 notes issued since September, 1863, must be put into four 
 per cent, bonds or lose one-third by taxation. 
 
 The four per cent, certified stock in which the old notes 
 were funded was to be accepted in payment of taxes. An 
 exception was made of States which held notes in their 
 treasuries, the limitation of funding being placed at Janu- 
 ary i, 1865, and six per cent, bonds given. Since future 
 issues were to be checked the two sources of supplies now 
 provided were certificates of indebtedness, bearing six per 
 cent, and transferable, and non-taxable ^onds to the au- 
 thorized amount of $500,000,000. In view of the tax levied 
 on all government securities by the Act of February i7th, 
 
 187 Acts of Congress, Statute IV, Ch. LXIII. 
 
83 
 
 the immunity of this obligation was expected to enhance 
 greatly its value and the demand for it. As definite se- 
 curity for the payment of the six per cent, interest a pledge 
 was made of the export and import duties, payable in 
 specie or coupons of the bonds. 
 
 APPLICATION OF THE MEASURE. 
 
 The provisions of the Act modified materially the pro- 
 gram of Mr. Memminger. All the notes were not per- 
 emptorily funded at an early date. A cheaper security was 
 offered for the funding and the new six per cent, stock was 
 not guaranteed by direct taxation. Taxes were to be paid 
 not in the interest coupons of special bond issue, but in 
 the four per cent, certificates, which were both non-taxable 
 and the funded representatives of the redundant currency 
 being retired. But the Secretary set himself faithfully to 
 the administration of the legislation; 112 new depositaries 
 were appointed for one year to aid the refunding. Quar- 
 termasters in the armies were selected to discharge similar 
 offices. The old notes were to be cancelled by being cut 
 and hammered at these agencies. 
 
 Barely forty days existed for the operations, and in that 
 period it was impossible to prepare the stock and have the 
 new notes issued. Congress had again refused the request 
 to allow the engraving of signatures, and the delay of hav- 
 ing scores of ladies serve as signers of the currency was 
 not remedied. A circular appeal 188 was made to 175 banks 
 that they accept certificates issued by the depositaries in 
 lieu of bonds. Their help was further invoked for the ad- 
 justment of prices and business operations to the new cur- 
 rency. The Secretary thought if they would advertise to 
 accept the old notes and give credit for them in proportion 
 of $2 for $3, the rating would be established. Bank checks 
 and temporary certificates of the funding were to tide over 
 until the new notes and bonds were issued. 
 
 "Treasury Letter Book "E," Mch. 15, 1864. 
 
8 4 
 
 PANIC AND PRICKS. 
 
 The publication of the Act of February I7th caused a 
 panic in commercial circles. Prices 189 at once mounted 
 higher. Whisky that had sold for $90 a gallon brought 
 $120. Various dealers would do no business unless they 
 were paid in $5 notes, and an increase of price was de- 
 manded equal to the tax of 33 1-3%, to be imposed after 
 April 1st. 
 
 Mr. Memminger noted the unfavorable effect on prices 
 of the tax on the notes for which the seller of commodities 
 was bound to indemnify himself in advance. He said 190 
 that his plan of cutting off all the notes at one time would 
 have made holders of goods anxious to get the notes at 
 their highest rates, and prices had fallen. Now Congress 
 by depreciating the currency had brought the opposite 
 result. Gold quotations rose from 21 to I in February to 
 25 to i in March. Many having requisitions refused to 
 present them, awaiting the new issue after April 1st. 
 
 BROWN'S DENUNCIATION. 
 
 The legislation was received loyally at first by those 191 
 who expected a reduction in the circulation of from $300,- 
 000,000 to $500,000,000, yet violent criticism was not en- 
 tirely withheld. Gov. Brown, of Georgia, led in denuncia- 
 tion in his message of March 10, 1864. He said, "The 
 act has shaken confidence in the justice and competence of 
 Congress. The country was prepared to pay cheerfully a 
 heavy tax, but it did not expect repudiation and bad faith." 
 Georgia was obliged to use Confederate currency, and the 
 tax of the notes would be a direct levy on the State by the 
 national government, which must not be allowed. He ad- 
 vised to accept only the notes at par and then issue a State 
 currency to be exchanged for the new notes. 
 
 "'Richmond Enquirer, Feb. 24. 
 
 1K Letter to J. K. Sass, of Charleston, S. C., Feb. 26. 
 
 m Augusta Chronicle, Feb. 22, 1864; Montgomery Advertiser, Apr. 
 
 21, 1864. 
 
PROGRESS OF FUNDING. 
 
 In the brief period allotted the operations of the funding 
 of the notes made a large showing. A statement 192 of the 
 Register of the Treasury on April 30, 1864, gave a com- 
 prehensive view of the currency issues from the origin of 
 the Department which were affected by the Act of Febru- 
 ary 17, 1864. 
 
 REDUNDANCY THEORETICALLY RELIEVED. 
 
 The Treasury report 193 for the period up to the time the 
 taxation on the notes began estimated that $250,000,000 
 had come in for cancellation, east of the Mississippi. The 
 depositaries observed that only about one-half of this 
 amount was in one hundred dollar bills. The redundancy 
 was figured out by the Secretary to have been relieved 
 in the following manner: $800,000,000 was the amount of 
 the general currency on April 1st. Fifty millions being 
 to the credit of disbursing officers, seven hundred and 
 fifty millions were in actual circulation. Fifty millions 
 were presumed to be funded west of the Mississippi, and 
 
 192 
 
 Issued. 
 
 Redeemed. 
 
 Outstand- 
 ing. 
 
 Act of Mch. 9, 1861, Int.-bearing notes ($3.65), . 
 ' May 15, 1861, Two years after date, . . . 
 ' Aiicf. IQ iRfir General enrrenrv 
 
 $2,021,101 
 
 17,347,955 
 291,961,830 
 122,640,000 
 5,600,000 
 138,056,000 
 2,344,800 
 514,032,000 
 3,023,000 
 915,758 
 
 $1,495,150 
 9,172,580 
 141,034,709 
 22,658,100 
 1,102,382 
 
 26,159,960 
 
 44,737,957 
 
 $525,950 
 8,175,375 
 150,927,121 
 99,981,900 
 4,497,618 
 
 114,240,839 
 473,233,322 
 
 
 Apr. 17, 1862, Int.-bearing notes ($7.30), . 
 Apr. 17, 1862, Denominations of $ii,$2, . 
 Oct. 13, 1862, General currency, .... 
 Oct. 13, 1862, Denominations of $11, $2, . 
 Mch. 23, 1863, General currency 
 Mch. 23, 1 863, Ones and Twos 
 Mch 23 1863 Fifty cents 
 
 
 1,097,942,963 
 
 246,360,838 
 
 851,582,125 
 
 In this table the redemptions were for worn currency and earlier cancellations, 
 the notes on hand of the last funding not counted. 
 
 Of the $973,281,863 non-interest notes, the One Hundred denomi- 
 nations aggregated $318,038,200; the remainder was: Fifties, $188,- 
 861,400; Twenties, $217,425,020; Tens, $157,982,750; Fives, $79,- 
 090,315- 
 
 1M To Congress May 2, 1864; Caper's Memminger, pp. 480-1. 
 
 OF THE 
 
86 
 
 thus with the deduction for notes to be cancelled, there 
 remained in circulation four hundred and fifty millions. 
 One hundred and twenty-eight millions of the one hundred 
 dollar notes were assumed to be unfunded and no longer 
 a medium. Finally the residue of three hundred and twen- 
 ty-two millions was brought to a minimum of two hundred 
 and fourteen million dollars by the tax of one-third. Pro- 
 vided this vast contraction did not shatter all business ex- 
 change, and granted that market values had been fairly and 
 effectively touched, then this splendid result on paper of 
 the currency legislation ought to have restored prices to 
 a healthy condition. 
 
CHAPTER V. COLLAPSE. 
 
 The Second Congress of the Confederate States con- 
 vened May 2, 1864, under conditions temporarily more 193 
 hopeful. The winter had not been unfavorable to the 
 Southern arms and the collection of supplies was im- 
 proved. The currency measures were presumed to have 
 furnished the needed remedy and President Davis 194 said 
 the effect would be the reduction of the circulation to 
 $230,000,000 by July first. After the first rise in specie 
 quotations of paper to 23 for I in March, there had been a 
 fall to 20 in April, and 18 in May. 
 
 The government 195 expenses for the two preceding 
 quarters were proportionately decreased, though partly be- 
 cause of requisitions held back for the new note issue. The 
 army and navy had cost $249,426,097 in the inflated cur- 
 rency, but the public debt under the provisions for interest 
 and redemption of notes had required one-third of the to- 
 tal outlay of $383,110,559. The past estimates were now 
 .seen to be much too great, for the balance on April 1st of 
 $608,000,000 of undrawn appropriations was sufficient to 
 meet the demands of the succeeding nine months in 1864, 
 allowing a rate of expenditure based on fifty-four millions 
 monthly. The reported receipts of $690,000,000 since Oct. 
 I, 1863, established apparently a large surplus, but a con- 
 siderable source of this income had been $250,000,000 of 
 four per cent, stock and $39,000,000 of call certificates, real- 
 ized by the compulsory funding. 
 
 The tax of 1863 was credited with $59,400,000, but the 
 
 198 Pollard's Fourth Year, p. 14. 
 
 94 Message of May 2, 1864. 
 1M Capers's Memminger, pp. 477, 8. 
 
actual resource meeting the half year's accounts had been 
 the unfailing Treasury note. 
 
 A LAST ATTEMPT TO LIMIT NOTE ISSUES. 
 
 The problem of the new Congress was to satisfy the 
 claims on the Treasury without a speedy recurrence of the 
 condition of over-issue from which legislation had so lately 
 set it free. The note issues were in theory limited to $200,- 
 000,000, notwithstanding the statute allowed three dollars 
 of the old tenor to be exchanged for two of the new, a pro- 
 viso estimated to require $214,000,000. Hence there was 
 a perilous probability of an output that would thwart the 
 projected improvement of inflated prices. As a relief from 
 this danger, the Administration 196 offered the familiar rem- 
 edies of the past. The public might be diverted from ex- 
 changing its old currency for the new by remitting taxa- 
 tion on the four per cent stock into which the notes had 
 also the option of being funded. Requisitions on the 
 Treasury could be met by certificates of indebtedness, 
 taxes and the sales of the new half-billion non-taxable 
 bonds. 
 
 The experience of earlier efforts did not promise much 
 for the success of this latest government security. Its cou- 
 pons, payable for export duties would have little demand 
 under the effective blockade. The immunity from taxa- 
 tion was a small inducement in contrast with the exag- 
 gerated values of the period. The 197 advertisements stated 
 that $5,000,000 was to be offered at public outcry in Rich- 
 mond, May 12, but the business men had then been called 
 to the field so largely to repel Grant's attacks that the day 
 of sale was postponed to June 8th. The Secretary was de- 
 sirous of securing 50% premium in paper money on the 
 first bids, and, the same conditions prevailing upon the 
 
 106 Capers's Memminger, pp. 481-484. 
 
 197 April 19, 1864, in leading Southern newspapers. 
 
8 9 
 
 second offering at the capital, the place of sale was changed 
 to Columbia, S. C. 
 
 There the price was established at 135 in Confederate 
 paper on June 21 st, and forty-eight special agents were ap- 
 pointed to handle the bonds. Several million dollars worth 
 were sent abroad and the agent, Gen. C. J. McRae, 198 was 
 told to take six cents in specie on the dollar for them. This 
 foreign offering came to nothing, as General McRae 199 re- 
 ported that five cents was the top of the market, since the 
 speculators in the South had sent over their holdings at 
 that quotation. 
 
 USE OF CERTIFICATES OF INDEBTEDNESS. 
 
 By September 3Oth. the sales of the Treasury had 200 
 amounted to $14,481,650, and on February I, 1865, Con- 
 gress was 201 informed that $44,517,500 had been taken at 
 par, with a premium of $14,660,000. $30,000,000 of the 
 bonds were used in discharge of public indebtedness, but 
 there was no additional demand for them. The plan to use 
 the certificates of indebtedness met with even less success 
 than the earlier effort to exchange bonds for subsistence. 
 Every inducement was furnished to urge these credit de- 
 vices, yet the holders of supplies would not take the certi- 
 ficates, nor did the 202 army quartermasters co-operate in 
 disposing of them, so that by September 3Oth, only $1,740,- 
 ooo had been placed. 
 
 Under such conditions the pressure for the issue of notes 
 proved irresistible by an Administration committed for 
 three years to that financial policy. Yet it was com- 
 monly 203 thought that "the paper money machine" had 
 
 198 July 17, 1864, Letter Book "E." 
 199 To Secretary Trenholm, Nov. 4, 1864. 
 200 Report of Nov. 7, 1864, Treasury MSS. 
 m Letter of Trenholm, Book "F." 
 
 102 To Seddon, Secy, of War, Apr. 25, 1864. 
 
 103 Richmond Enquirer, Mch. 12, 1864. 
 
90 
 
 been stopped, as though a legislative act of this date were 
 adequate to prevent further perils from the currency, what- 
 ever should be the demands for expenditures. 
 
 The Treasury Note Bureau was slow in preparing the 
 issues for which heavy demands were made after April 1st. 
 The army had drawn previously $72,609 per diem, when 
 expenses were $600,000. Holders of old notes succeeded 
 in making an exchange only after long delay. There arose 
 much irritation and the Department was charged with 
 holding back the new notes. Mr. Memminger incurred the 
 blame of this and had to 204 explain the expediency of his 
 instructions to Congress. 
 
 Accordingly, the note circulation started again surely on 
 a course of redundancy. On May 3ist, $57,000,000 had 
 been paid out, while $200,000,000 were reported as need- 
 ed. The value of the notes was lessened by the fact that 
 taxes were being paid in the four per cent, certificates, and 
 thus the paper money affected by the repudiation of Feb- 
 ruary 1 7th could yet be made available. The largest pro- 
 ducers, the farmers, were independent of money claims 
 by reason of the tithe, so that the additional currency 
 served as in the past to foster speculation, and the public 
 appraised the first and the second tenor with little dif- 
 ference. 
 
 CONGRESS REPUDIATES SECRETARY MEMMINGER. 
 
 The second Congress was early 205 disposed to adjourn 
 and made a record of irresolution after debate surpassing 
 that of the First Congress. Many currency measures were 
 introduced and agreement reached on none. The Senate 
 voted to reduce the limit of note issue to $100,000,000, in 
 which the House would not concur. In an effort to make 
 
 204 Question of Congress, May 20, Book "E." 
 
 205 Richmond Enquirer, May 31, 1864. 
 
the certificates of indebtedness a chief resource, the Senate 
 alone adopted the provisions of ultimate redemption in 
 specie and payment of interest in notes at a coin rating. 
 This was on the recommendation 206 of Mr. Memminger; 
 but the House declared war on him in a resolution of May 
 26th calling for his resignation, as follows : "In a Congress 
 entrusted with the control of the currency it is impossible 
 to perform the duty effectually, unless the office of Secre- 
 tary is filled by some person of high, unquestioned ability 
 as a financier, whose views in regard to important matters 
 of finance, especially the currency, are in harmony with 
 those of Congress, and who is willing to carry into prompt 
 and efficient operation the deliberate enactments of Con- 
 gress on this subject. The Secretary is thus made respon- 
 sible to Congress, and, without touching a right of the 
 President, public welfare demands the retirement of Mr. 
 Memminger, not questioning his honesty and patriotism, 
 to be succeeded by some individual of proper ability as a 
 financier and more likely to command public confidence." 
 The motion to table these resolutions was lost by a vote 
 of 37 to 45, and they were referred to the Committee on 
 Judiciary. The report was not made, because it was an 
 open secret that the Secretary would resign at the close of 
 the session. 
 
 On June 15th, he 207 asked to be released from his office 
 because there had come an essential divergence in the 
 plans of the Department and those adopted by Congress. 
 He said his action had been delayed by his sense of obliga- 
 tion to put into operation immediately upon its passage 
 the Act of February 17, 1864, but now the machinery for 
 the plans of Congress in finance and taxes was so adjusted, 
 that a new head could readily assume control. 
 
 Congress in its adjournment on June I4th had refused 
 to allow the reforms in taxation so strongly urged and 
 
 206 To the Senate, May 20, 1864. 
 207 Capers's Memminger, p. 365. 
 
92 
 
 thus continued a policy of unfairness and discrimination. 
 Its attack on the Treasury Department was the opening of 
 its opposition to the rest of the Cabinet and reflected that 
 condition 208 , in some quarters prevalent, of a lack of con- 
 fidence in the President and his advisers. 
 
 TREASURY SUPERVISION OF BLOCKADE RUNNING. 
 
 Additional powers were conferred upon the Treasury 
 Department in 1864 for the control of commerce. The 
 previous blockade running had been by private companies, 
 which were commonly required to bring one-third of the 
 importations in government supplies. But by the Act of 
 February 6, 1864, the character of the trade was closely 
 supervised and the entrance of luxuries was debarred, a 
 wide range of articles being designated. A maximum of 
 prices was assigned to manufactured goods of cotton, 
 wool, flax and silk received, and these values were invoiced 
 by the Treasury in coin at the place of export. The fur- 
 ther enactment, that one-half of the cargo in and out must 
 be reserved for the Government, caused conflict with sev- 
 eral States which were engaged in trade on their individual 
 account. Against many remonstrances the Department 
 held firm, and the Congress of the Governors, debating the 
 restriction, at Augusta, Georgia, was told 209 that the 
 united interest of all was paramount to the particular con- 
 cerns of one State. Yet, at the close of the year, the con- 
 cession was made to the States. Cotton was the valuable 
 export that induced various English companies to secure 
 contracts for its shipment. 
 
 After the available sterling exchange and coin had been 
 exhausted by Mr. Memminger, he had traded cotton to 
 Europe for the imperative war supplies. The Navy, War 
 and Treasury Departments operated at cross purposes for 
 a time in foreign financial negotiations until by an agree- 
 
 208 Pollard's Fourth Year of the War, pp. 75, 76. 
 
 SM To Gov. Bonham, of South Carolina, Oct. 28, 1864. 
 
93 
 
 ment 210 , the Treasury assumed direction of handling the 
 cotton and ordered vessels to be purchased exclusively for 
 the purpose. Four 211 boats were at once secured and con- 
 tracts let for ten others, of which only a few got to sea 
 before the surrender. From July to December, i864 212 , 
 I][ >795 bales of cotton, worth $1,500,000 in gold, $45,000,- 
 ooo in paper, were exported, the Produce Loan furnishing 
 the stock. The Department did not ship as largely as it 
 had planned, being hampered by the contracts with private 
 companies. The trade 213 of blockade runners flourished, 
 43 arrivals being entered at Wilmington and Charleston in 
 May and June, and 43 again in November. The most 
 pressing army supplies were thus enabled to be furnished. 
 
 THE TRANS-MISSISSIPPI DEPARTMENT. 
 
 The cutting in twain of the Confederacy caused a separ- 
 ate establishment of the Treasury in Texas and there the 
 Trans-Mississippi Department was created by Act of Con- 
 gress in March, 1864. P. W. Gray was placed in charge at 
 Marshall on July 1st, and carried on the independent ad- 
 ministrative duties of that section. Taxes were collected 
 and the funding conducted, old notes, however, being com- 
 monly stamped and reissued in place of the new, which 
 could not be secured in sufficient quantities from the East. 
 The impressment of supplies was conducted by Gen. Kirby 
 Smith and cotton shipments made from Matamoras. The 
 trade from the Mexican port was directed by the Texas 
 Cotton Bureau, which was active to the last. One re- 
 port 214 from this self-sufficient country was made for the 
 
 210 March 29, 1864, Book "E." 
 
 211 Bulloch's Secret Service of C. S., Vol II, p. 245. 
 
 !12 Trenholm to Senate, Dec. 12. 
 
 213 Cargoes went to Nassau, Bermuda and Havana and thence 
 re-shipped. Vessels were most active in 1863; in 6 months 32,- 
 075 bales being carried. From November, 1861, to March, 18164, 
 84 steamers were engaged, making 363 trips to Nassau and 65 to 
 other ports. Scharf's C. S. Navy. 
 
 214 Gray to Congress, Feb. 20, 1865. 
 
94 
 
 quarter of July to October, and showed $95,000,000 re- 
 ceipts against $6,500,000 expenditures ; $55,000,000 of the 
 old currency had been retired and $50,000,000 were yet to 
 come in. 
 
 POLICY OF THE NEW SECRETARY. 
 
 The selection of the successor of Mr. Memminger was a 
 guarantee of the continuance of his policy. Mr. G. A. 
 Trenholm, of Charleston, assumed the Treasury portfolio 
 on July 20, 1864. He had been a trusted counsellor of his 
 fellow-townsman in preceding years, and was connected 
 with the firm of John Fraser. & Company, which had been 
 the principal agent of the Department in South Carolina, 
 and also was commercially connected with Fraser, Tren- 
 holm & Company, of Liverpool, the foreign agents. 
 
 Mr. Trenholm began with the Department-honored de- 
 vice of getting deposits of four per cent, call certificates 
 that should be exchanged for $120,000,000 of new notes 
 then in process of emission. He advertised widely and 
 urged persistently the sale of Government securities. A 
 convention of the Commissioners of Prices of the States 
 in session at Montgomery, Alabama, September 2d, was 
 told that the great mass of citizens of every class must buy 
 bonds and nothing else. The exhortation of the Secretary 
 was to stand by the Treasury, but the sentiment of the 
 public found expression in the statement of the Richmond 
 Enquirer 215 that no one expects miracles from Mr. Tren- 
 holm. 
 
 Under appeals for home purchasers, $15,000,000 of the 
 non-taxable stock was disposed of in two months, and 
 twice the amount in the succeeding three months. The 
 certificates of indebtedness were also used to the sum of 
 $30,000,000 and other bonds sold, together with temporary 
 loans placed, so that the Secretary stated 216 he had realized 
 
 215 Aug. 22, 1864. 
 
 216 To Secretary Seddon, Dec. 31. 
 
95 
 
 $i97>ooo>oo from these various sources. This showing is 
 rendered improbable by a report of the Treasury Note 
 Bureau, No. 10, that it had furnished a total of $120,000,- 
 ooo of bonds and also by the fact that the issue of paper 
 money was considerably in excess of the amount an- 
 nounced as paid out. However, the activity of the Admin- 
 istration was neutralized by the resumed inflation of prices 
 on to final ruin and* by the variety of government securi- 
 ties which speculators hawked about at complex quota- 
 tions of depreciation. 
 
 PROPOSED MULTIPLE STANDARD OF VALUE. 
 
 The official policy found utterance on the occasion of* 
 the report 217 to Congress for the half year ending Septem- 
 ber 30, 1864. There was frank confession of the failure 
 of the Currency Act of February 7, 1864, attested by the 
 same rating for old and new issues, and a present re- 
 dundancy, requiring $25 for $i of gold. 
 
 The Secretary proposed to originate a multiple standard 
 of value, founded on the agricultural staples of cotton, 
 corn and wheat. This would bring stability into the finan- 
 cial reckoning hitherto convulsed by the variableness of 
 gold. Heavy taxation was the foundation of the plan and 
 the redemption of notes and funded debt was to be made 
 from the tithes of the three staple products, at prices fixed 
 by legislative act. The pledge of the tax in kind was to 
 extend very resolutely into the years after peace and mean- 
 while the circulation was to be reduced to $150,000,000 by 
 its proceeds. It is noteworthy that the practicability of the 
 scheme depended upon the adoption of the same recom- 
 mendations which Mr. Memminger had made, that agricul- 
 tural property be assessed on the values of 1860 and that 
 the abatements for the tax in kind and the. property tax be 
 not allowed. 
 
 '"Nov. 7, 1864. 
 
9 6 
 
 The funding operations and the public 218 debt during 
 the six months had required $342,000,000 of the $615,- 
 000,000 expenditure over against receipts of $415,000,000. 
 Of the $65,000,000 of the currency that had been impaired 
 by the Act of Congress, there was yet credited to the 
 funded debt $325,000,000. It had been impossible to pre- 
 vent the continued use of the interest-bearing notes of 
 1862, nor did the other denominations, excepting the One 
 Hundred Dollar, cease to be accepted with the one-third 
 discount on the first of July and October. Furthermore, 
 by executive direction, on the plea of the discount of the 
 impoverished holders, the absolute retirement of all the 
 old currency was postponed 219 from January to July 1st, 
 1865. 
 
 The money machine continued 220 to operate and it was 
 as impossible as ever to keep within the bounds appointed. 
 The recurring rising tide was marked by the successive 221 
 issues of $57,500,000, May 31, 1864; $120,000,000, July 1st; 
 $345^000,000, November loth, and $468,000,000, January 
 21, 1865-. The large portion of the notes was for direct 
 demands, the exchange of the old currency for the new 
 requiring $121,000,000 the first six months. 
 
 FINAI, FINANCIAL DELIBERATIONS. 
 
 In the second and final session of the Second Congress, 
 sundry bills incorporated the financial plans of Mr. Tren- 
 holm, and President Davis encouraged 222 the Houses with 
 the official opinion that judicious legislation could meet 
 
 !18 The aggregate at this time was placed at $1,126,000,000. being 
 only $96,000,000 in advance of the statement of six months 
 earlier. The funded proportion was $738,340,000. 
 
 219 Act of Congress, Dec. 29, 1864. 
 
 20 The Treasury Note Bureau was removed to Columbia, April 
 26, 1864. The Treasurer was at first ordered to accompany it. 
 Later, July 2, Mr. Elmore resigned and J. N. Hendren succeeded,. 
 October i. 
 
 21 Reports of Note Bureau. 
 
 222 Message of November 7, 1864. 
 
97 
 
 all exigencies of war and prevent a great accumulation of 
 debt. The press 223 demanded a trial of the Treasury pro- 
 gram since it could not make affairs worse. The legisla- 
 tors debated as lengthily and differed as widely as in the 
 three winters past, various groups advocating utter re- 
 pudiation, abolition of tithe, of impressment and quarter- 
 masters, and seizure of cotton and tobacco to pay the sol- 
 diers. 
 
 A portion of the session was devoted to assaults upon 
 the President and the Cabinet. Commissions 224 investi- 
 gated the Commissary Department to discover that it was 
 entirely without supplies. Arrears of pay had been accu- 
 mulating for nine months, reaching $180,000,000, and the 
 Quartermaster General reported 225 that the army was par- 
 alyzed for want of funds. Desperate conditions did not 
 avert the habitual remedy, but before the Senate joined 
 the House in ordering fresh issues of paper money, the 
 capture of the Note Bureau at Columbia necessitated an 
 inexorable cessation. In the theorizing 226 of the Secretary, 
 taxation was now the sole relief and the dissolving Con- 
 gress was asked to pass a levy of one hundred per cent, 
 additional to the rate of 1864. After a protracted dis- 
 agreement of the Houses, a measure was passed on March 
 nth, which contained the reforms whose advocacy had 
 partly discredited Mr. Memminger. The tax in kind and 
 on income must be paid in addition to an eight per cent, 
 levy on property. All taxes for 1865 were doubled save 
 that of the tithe on the farmer. 
 
 IMPRESSMENT OF COIN. 
 
 But the practical planning of Mr. Trenholm had been 
 directed to getting possession of the coin remaining in the 
 
 08 Richmond Enquirer, November 8. 
 
 124 Pollard's Fourth Year, pp. 184-5. 
 
 225 A. R. Lawton to Trenholm, January 2, 1865. 
 
 228 To R. M. T. Hunter, February 20, 1865. 
 
9 8 
 
 banks and concealed. Secret trade had been allowed 227 
 with the enemy to secure gold for cotton, and even the 
 States were advised 228 to get the metal within their borders 
 in order to liquidate their portions of the national indebt- 
 edness under conditions of vast depreciation. A law of 
 dire necessity came forth in the Act of March 17, 1865, 
 which asked for a loan of $3,000,000 in coin, and if not 
 contributed, a tax of 25 per cent, was to follow before 
 April 1st. As security for the loan 50,000 bales of Gov- 
 ernment cotton were hypothecated. Virginia furnished the 
 gold and the money 229 was used to pay the troops in the 
 rating of Treasury notes at 60 for I. 
 
 The utter collapse of the Department was confessed by 
 the call for donations from the citizens of the Confederacy. 
 Joint resolutions came from Congress and the Secretary 
 gave official utterance, March 20, 1865, that the Treasury 
 being straitened, it is deemed not incompatible with the 
 public dignity to accept the free-will offerings of a gener- 
 ous people. The final receipts were acknowledged and re- 
 corded in family plate, church vessels, jewels, ornaments, 
 rings and personal effects. 
 
 7 To T. D. Wagner, of Charleston, January 10, 1865. Book "F." 
 
 28 To Chairman F. S. Lyon, January 16. 
 
 229 Secretary Trenholm encouraged Judge Gray, of the Trans- 
 Mississippi Department, by his advice of March 17, to continue 
 financial operations. When the Government moved from Rich- 
 mond southward, at Danville, Va., 'the gold was drawn on at 
 the rate of 70 to I to pay the army. Mr. Trenholm being left ill 
 at Catawba, S. C, the last executive deed of Mr. Davis was the 
 appointment of J. H. Reagan, P. M., as Acting Treasurer. The 
 fund in coin then was $228,022, which was paid over to the sol- 
 diers, the navy and the agents at Washington, Ga., May 4. 
 Southern Historical Society Papers, Vol. IX, pp. 542-558. 
 
99 
 
 CHAPTER VI. COMPARATIVE FINANCIERING. 
 
 The similarity of the Revolutionary and the Confederate 
 financial history is commonly observed in the vastness of 
 the depreciation of the paper currencies. The causes of 
 this condition were in some degree the same, while the 
 state of the circulating medium made necessary like 
 methods of correction and the adoption of analogous sub- 
 stitutes and experiments. There was the cycle of early re- 
 sort to paper money, regular and finally rapid additions 
 to the issue, limitation of prices, assessment of taxes in 
 kind, impressment and repudiation. Yet in the details and 
 the results of the operations, the experiences of the two 
 governments are by no means parallel. 
 
 The emission of bills of credit was largely under differ- 
 ent circumstances. The colonies had been familiar with 
 the use of paper money and, though the practice had not 
 been engaged in with unvarying honesty, the demand for 
 a continental issue was general and was urged 230 on Con- 
 gress by the people. In the Southern Confederacy many 
 mediums of exchange had been prevalent, and the bills of 
 many systems of banks were used. Specie payments hav- 
 ing been suspended early in 1861, the plan of establishing 
 a Government currency was the conception of the Treas- 
 ury administration for the express purpose of replacing 
 the circulation of the various financial institutions. 
 
 THE: Two FLOODS OF PAPER MONEY. 
 
 The first issue of $2,000,000 on June 22, 1775, was ex- 
 pected to be sufficient; at least, the subsequent amounts 
 would be small and rigorously limited. Protestations pre- 
 faced each grant as the sum of notes at more frequent 
 intervals grew larger. The first Confederate issue of $i,- 
 
 280 Belles' Financial History, Vol. I, p. 37. 
 
100 
 
 000,000 on March 9, 1861, was appointed to furnish im- 
 mediate funds, but the decision of May i6th to emit $20,- 
 000,000 in notes indicated a purpose to employ this form 
 of credit extensively. The initial calculation was to dis- 
 place half the circulation of the banks, then the whole 
 amount, and next to have a moderate increase over what 
 the country had actually required in business. Legislative 
 bounds were touched and lifted again until the national 
 money making was entrusted 231 to the discretion of the 
 Secretary. 
 
 The record 232 of the Continental currency inundation 
 was $6,000,000 in 1775, $19,000,000 in 1776, $13,000,000 in 
 1777, $63,000,000 in 1778, $140,000,000 in 1779, tot al $242,- 
 000,000. In the South the figures approximately were 
 $96,000,000 in 1861, $329,000,000 in 1862, $525,000,000 in 
 1863, $600,000,000 in 1864, total $1,550,000,000. Five- 
 sixths of the Revolutionary issue came in the fourth and 
 fifth years of the war ; three-fifths of the Confederate issue 
 was uttered in the first three years. At the end of the 
 periods named the two governments had practically ceased 
 to print their bills, since they were worth little better than 
 nothing, the quotations of each currency being quite simi- 
 lar, between 40 and 60 to i of specie. 
 
 REPUDIATION, PARTIAL AND COMPLETE. 
 
 However, the more accurate dates of comparison are 
 those of the legislative acts of March 18, 1780 and Febru- 
 ary 17, 1864. The Continental Congress was guilty of 
 direct repudiation, though it had expressly denied 233 that 
 it would proceed in "wanton violation" of the pledges of 
 the United States. It ordered the old tenor to be ex- 
 changed for new at the valuation of 40 to I, and the second 
 issue was to be limited to $10,000,000. The enactment of 
 
 231 Ante, Chapter II, sub-head, "Final reliance on paper." 
 
 232 Phillips' Continental Money, p. 198. 
 
 233 Address of Sept. 13, 1779. 
 
101 
 
 the Southern Congress was not a complete repudiation. 
 For six weeks the currency could be transformed into in- 
 terest-bearing stocks, and then only one-third of the notes 
 was progressively taxed out of existence, while the larger 
 portion was to be rated at three to two of the new issue 
 for a period of nine months. 
 
 The relative stages of the results of the two statutes 
 were dissimilar. The second Continental tenor ran a head- 
 long course, passing at once, 2 for i of hard money ; then in 
 1781 at 4 for I, and next vanishing. Pennsylvania 234 State 
 money had been quoted at 3 to I of specie, arid when the 
 Continental was commercially published at 175 to I of 
 specie, the public in its calculation substituted the State 
 notes as the measure and killed the emission of Congress 
 by a listing of 525 to i. The guarantee of this last money 
 had been, as of the early notes, the illusory pledge of the 
 faith of the United States, not yet confederated, and the 
 statutory valuation was notoriously out of accord with the 
 market 235 acceptance of the old tenor, 60 and more to i. 
 
 The Confederate Congress attempted no valuation of its 
 past issues other than three dollars of the old tenor for 
 two of the new, but since denominations of five dollars 
 were not taxed at once after April ist, 1864, depreciation 
 increased for a month, then was followed by a period of 
 slightly improved quotations. March conditions of the 
 currency were not reproduced until October, although the 
 proportion of exchange for gold was so exaggerated that 
 the relief was practically trifling in degree. The scales of 
 the lessening worth of the paper mediums of the two wars 
 have marked resemblance. 
 
 A COMMON WORTHLESSNESS. 
 
 In Revolutionary times, within two years of the first 
 issue, the quotation was 2 of paper for i of specie ; by the 
 
 ^Sumner's Financier of the Revolution, p. 95. 
 288 Belles' Financial History, Vol. I, p. 94. 
 
102 
 
 close of 1777, 4 to I, and in 1778, a variation between 4 
 to I and 6 to I. The year preceding repudiation, the re- 
 dundancy was measured by $41 of paper in December 
 required to purchase what $8 had secured in January. 
 
 Likewise the depreciation of Confederate currency from 
 a discount of 20 to 300 per cent, during 1862 passed to the 
 ruinous fall in the third year of 19 of paper for I of gold. 
 After the temporary checking of 1864, the stress of need 
 and disaster restored the retrograde tendency and the 
 drop from 20 to 40 for I was the record of a few months. 
 So then the quotation of 60 to I in March, 1865, on the eve 
 of dissolution was no less than the market estimate of the 
 notes, which the First American Congress voted to ex- 
 change. Public opinion of these contrasted periods would 
 have shaken off the inexorable standard of hard money, 
 The Penn Packet of February 16, 1779, proclaimed that 
 land, not gold nor silver, subject to monopoly, was the 
 true measure of value. The Richmond Sentinel of August 
 23, 1863, argued that gold was not a standard for the South 
 and suggestions from many sources were persistent that 
 cotton or land should be substituted. Each government 
 had its currency counterfeited by the enemy. No estimate 
 can be given of English importations. Upham 235b , of Phila- 
 delphia, placed the value of his Confederate fac-similes at 
 $15,000,000, alleging that they were issued to satisfy curi- 
 osity, not as forgeries. But New York firms took his 
 designs and Jew brokers carried the issue South. 
 
 Inefficient taxation was a common fatal fault of these 
 two governments and the legitimate cause of the currency 
 disasters. The united colonies could not demand of them- 
 selves that which they had denied England. The repre- 
 sentatives of the Southern States would not lay on the 
 people burdens in the season when they had proven the 
 lightest. 
 
 235 b Lee's The Currency of the C. S. A., p. 24. 
 
io 3 
 
 THE SLIGHT AID OF TAXATION. 
 
 General advice and then earnest recommendation to the 
 States in 1777 to apportion $5,000,000 in taxes were the 
 strongest measures open to the Continental Congress. 
 The belated collections of the tardy levy yielded by Sep- 
 tember, 1779, $3,000,000, a sum equal to one-sixtieth of the 
 note issues. The fiscal policy of Robert Morris was based 
 on taxation, yet with all his insistence and the modest 
 requisitions of Congress, the returns in three years, to 
 November I, 1784 ,were $2,000,000 in actual value. There 
 was no executive power to compel the payment of taxes in 
 the nascent American nation. 
 
 On the other hand, the ample authority of the Confeder- 
 ate States was not used with a largeness and a promptness 
 demanded by its needs. After a tax levy within six months 
 of the organization of the government, a year elapsed 
 before the Treasury had received 236 slightly more than half 
 the assessment. It was eighteen months after these re- 
 ceipts before the returns of the second and heavier tax 
 were appreciable. The presumed vigorous system of tax- 
 ation with its countervailing rebates was applied in the 
 last year of inflated values, when total avails of $101,- 
 000,000 are correctly estimated upon being divided by 20 
 or 30. 
 
 In the face of the final paper money issues and because 
 of an unresponsive public, the Revolutionary Congress of 
 December 14, 1779, called for specific supplies and appor- 
 tioned to the States amounts of flour, corn, oats and to- 
 bacco. Much produce was secured, notably in Virginia, 
 but the device 237 lacked administrative direction, so that 
 supplies rotted and were not transported because of ex- 
 pense. The tax in kind of the Confederacy was introduced 
 to enable the farmer to pay most easily his share of taxa- 
 
 286 Ante, Chapter II, sub-head, "Delays in Collection." 
 MT Sumner's Financier of the Revolution, I, p. 154. 
 
IO4 
 
 tion. Large collections of the products were wasted, their 
 control was not well centralized and by reason of the im- 
 paired transportation the tithe afforded a national service 
 relatively small to the burden on the people. 
 
 COMPULSORY CONTRIBUTIONS. 
 
 Again, impressment of supplies for the army was com- 
 mon throughout the war with England, beginning in New 
 England in 1775 ; frequent in Pennsylvania in 1778, and 
 severe in Virginia in 1781. The vexations common to it 
 in that period were reproduced in the South, where im- 
 pressment began in 1862. The schedule of prices ap- 
 pointed by the commissioners of the various States for 
 seized products did not remove objections, and at last cer- 
 tificates of indebtedness were forced on the public in some 
 sections for their supplies. Often the payments allowed 
 were notoriously less than the market quotations, thus 
 arousing the resentment of the planter class. Price con- 
 ventions during the Revolution were the constant resort 
 of the States to, urge the use of a money they had already 
 made a legal tender. Schedules 238 of prices were adopted 
 in futile effort against depreciation, Congress recommend- 
 ing in 1779 that they do not exceed 20 fold those of 1774. 
 The Confederate Congress never enacted a law of maxi- 
 mum prices for trade in general though Virginia persist- 
 ently urged it. 
 
 In the fiscal resource of loans a contrast of practice and 
 conditions in the two Treasury Departments is to be ob- 
 served, for the results were as widely different as the at- 
 tendant realities of national triumpfi" and defeat. The loan 
 was an early experiment of the Revolution, $5,000,000 be- 
 ing invited in 1776. Loan office commissioners were 
 placed in each State and fair returns secured. 
 
 238 Belles' Financial History, I, pp. 159, seq. 
 
105 
 
 SUCCESS AND FAILURE OF FOREIGN LOANS. 
 
 But when France in 1778 agreed to pay the interest on 
 the loans in specie, a guarantee was afforded that caused 
 subscriptions to aggregate $60,000,000 by 1782. These 
 loan office certificates were not used by Robert Morris, 
 but the timely aid of Louis XVI. had begun the salvation 
 of the Treasury. To the 18,000,000 livres of France were 
 added the first installment of 1,500,000 gulden of the Dutch 
 loan in June, 1782, and the financial crisis had been 
 passed. 239 When the paper money was reformed by law 
 in 1780 and banished by commerce, a providential supply 
 of a medium was furnished by specie from the West In- 
 dies and the European loans, enabling the master financier 
 to bring stability out of ruin. 
 
 In the Confederacy, commissioners placed largely the 
 Fifteen Million Loan of the first year. The depositories 
 then served as agents of the Treasury, but the loans went 
 slowly, the One Hundred Million being taken after two 
 years by exchanges for cotton, subscriptions of the Pro- 
 duce Loan and funding operations. Other stocks sold 
 slightly, for the guarantee was a substratum of cotton un- 
 der limitations not attractive to the public. The Erlanger 
 loan was well conceived and the risk of getting cotton 
 through the blockade the only uncertainty. However, the 
 proceeds of $7,500,000 did not strengthen the financial sys- 
 tem, but were applied to the purchase of foreign war ma- 
 terials. The large proportion of the stocks and certificates 
 represent the loyal support of the citizens in the various 
 funding struggles to remove the incubus of Treasury notes 
 that eventually overwhelmed all. 
 
 SKILLFUL REHABILITATION vs. LACK OF INITIATIVE. 
 
 There is no common basis for estimate of Robert Morris 
 and C. G. Memminger. The Treasury of the United States 
 
 189 Sumner's Financier of the Revolution, I, p. 58. 
 
io6 
 
 was under the direction of a Board of Administration until 
 1781, when Mr. Morris was installed as financier. Then 
 the Government currency had disappeared and foreign 
 specie was furnishing the standard of circulation. The 
 Bank of North America was organized as an efficient aid 
 of the Treasury, furnishing in loans five times the sum in- 
 vested. The commercial credit of Robert Morris per- 
 sonally counted for much, and he employed every device of 
 discount and bill kiting until the immediate national obli- 
 gations were balanced. Therefore his biographer can 
 say 240 that favorable bookkeeping extricated him, for he 
 did well not with reasonable means, but much with noth- 
 ing. On the contrary, Mr. Memminger, having direction 
 of Confederate finances in the beginning, might have dic- 
 tated a sound economic policy to a Congress which later 
 would not yield him leadership. He invoked the plague 
 of paper money, which he could not remove. No real for- 
 eign aid came to his entanglements, nor did the Treasury 
 hold practical commercial relations with the financial in- 
 stitutions. Resources depleted, a second tide of notes ris- 
 ing, variance with the legislative body brought the retire- 
 ment of the Secretary. 
 
 The expenditures 241 of the Revolutionary War were 
 $92,485,693, of which sum $83,135,000, specie value, went 
 out before 1781. The note issues may be regarded as a tax 
 unequally borne during the years of most active opera- 
 tions. The expenditures of the Confederacy, to October 
 I, 1864, may be approximated on a specie basis at $510,- 
 000,000, but the burden of the notes is evident in the last 
 year, when the one billion outlay, on a currency valuation, 
 shrinks to fifty million dollars, the average inflation being 
 twenty fold. 
 
 240 Sumner's Financier of the Revolution, II, p. 131. 
 
 241 Treasury Report of 1/90. 
 
LOAN POLICY OF NORTH AND SOUTH. 
 
 A more pertinent comparison is that of the financial 
 policies of the North and the South, parties to the same 
 conflict. The sections having a common fiscal training, 
 interesting analogies occur in the measures of anticipation, 
 the programs, and the readjustments to vaster emergen- 
 cies. The period produced a new national conception of 
 taxation, and an extreme application of the loan policy was 
 made, helping to the destruction of one government, while 
 the same fate was averted from the other only by radical 
 remedies and the favorable fortunes of war. 
 
 The nature and form of the various Treasury operations 
 of the North and the South were largely shaped by the 
 respective Secretaries of the Departments. Each came to 
 the position with a legal and legislative, rather than a com- 
 mercial training. One was led by his Congress into a vig- 
 orous policy, the other was not able to get his belated 
 recommendations adopted in their entirety and severity. 
 There was a common failure to appreciate the size of the 
 war and a tendency to employ temporary measures. Both 
 Mr. Chase and Mr. Memminger looked to loans as the 
 adequate resource for deficit financiering; then after the 
 failure of the policy, they desperately demanded heavy 
 taxation. The Federal Congress of July, 1861, was asked 
 for an increase of only $20,000,000 above the ordinary tax, 
 while the loan was fixed at $240,000,000. The banks came 
 to the support of the first loans in each section and then in 
 turn they were driven to suspend specie payment. In the 
 North, this result came from the drain 242 of coin into the 
 government vaults; in the solidly solvent portion of the 
 South, it was 243 demanded in order to give a clear field for 
 the Treasury note circulation. 
 
 242 Belles' Financial History, III, p. 34. 
 
 248 Ante, Chapter I, sub-head, "Loyalty of the banks and capi- 
 talists." 
 
io8 
 
 NARROW VISION OP THE SECRETARIES. 
 
 Mr. Chase planned in 1862 to replace the banknote cir- 
 culation of the North with a national currency, and his 
 modified program found expression in the Banking Act of 
 Feb. 25, 1863, which, however, required two years before 
 being fully operative. In contrast with the large use by the 
 South of the government issue, the North persisted in ac- 
 cepting the money of the private banks, these being more 
 favorably rated than the greenbacks. The first emergency 
 medium of the North, $50,000,000 of demand notes, non- 
 interest bearing, was paid in the fall of 1861 to a very re- 
 luctant 244 public. The purport of the messages of the two 
 Secretaries to the respective Congresses after several 
 months of the war was the same. Mr. Memminger af- 
 firmed that note issues were the chief revenue contem- 
 plated and all measures were for an emergency of limited 
 duration. Likewise, Mr. Chase spoke with uncertainty, 245 
 discussing government paper disparagingly, yet debated 
 whether to have specie or paper as the basis of his system. 
 
 Loans were not being placed, so the Federal Congress 
 took the initiative Feb. 25, 1862, resorting to notes with 
 the legal tender quality. Thus the law of the North in- 
 duced an acceptance which the devotion of the South ac- 
 corded without compulsion. Within a year the authoriza- 
 tion of greenbacks was $450,000,000, while the note issue 
 of the South for about the same period was $329,000,000. 
 When the third appointed limit to irredeemable money 
 was Breached, Mr. Chase employed in 1863 interest bearing 
 notes quite like Mr. Memminger had done 246 in 1862. The 
 Federal Treasury also secured a large acceptance of certifi- 
 cates of indebtedness, placing $160,000,000 by June 30, 
 1864, at which period the Confederate Administration be- 
 gan to urge in desperation this form of temporary loan. 
 
 244 Hart's Chase, p. 223. 
 
 245 Sumner's American Currency, p. 193. 
 248 Ante, pp. 29, 31. 
 
109 
 
 NORTH HELPED BY LOANS OTHER THAN CURRENCY. 
 
 But the radical distinction of these two financial histor- 
 ies is that the North decreased its note issues, developing 
 after two years, auxiliary revenues from bond sales and 
 taxation. The loan of $150,000,000 in 1861 consisted of 
 seven thirty notes and bonds. But in 1862 Mr. Chase sold 
 few U. S. stocks, because he refused all offers below par, 
 just as Mr. Memminger persisted in doing. However, the 
 loan of $900,000,000 in 1863 became a popular 247 security, 
 and was floated by the thorough business methods of Jay 
 Cooke. Later, when the Secretary managed a new secur- 
 ity, his conditions of offer checked its success. Although 
 the currency was increased in order to promote the sale 
 of bonds, multitudes of people were productively employed 
 by the demands of the war and constituted a body of in- 
 vestors, not similarly existant in the South. Mr. Mem- 
 minger's efforts to sell bonds were made in 1863 an d 1864, 
 but the responses were very meager, the public being 
 blamed for complete absorption in speculation. Commer- 
 cial institutions as agents rather than the depositories 
 might have operated to better advantage. Mr. Trenholm 
 early in his term had to admit 248 the apathy of the planters 
 to all inducements. 
 
 The chief utilization of Confederate bonds and securities 
 was in the funding system, which had its affinity in Federal 
 theory, although the Northern practice of it was not so 
 great contemporaneously. The seven thirty notes of 1861 
 could be funded into eight per cent. U. S. Stock and the 
 certificates of deposit, exchanged for notes, were employed 
 by Mr. Chase from 1862 on. But instead of forcing these 
 certificates of deposit into permanent 249 loans as in the 
 South, they were redeemed on one occasion to the amount 
 of $50,000,000 in order to relieve the currency stringency. 
 
 247 Bolles' Financial History, III, p. 109. 
 
 248 Letter Book "F," Sept. 5, 1864. 
 
 249 Ante, Chapter IV, sub-head, "Clash of views." 
 
no 
 
 THE SIMILAR FUNDING SYSTEMS. 
 
 Two identical funding measures were prescribed about 
 the same time. The Confederate Act of March 23, 1863, 
 limited the conversion of notes into seven per cent, stock 
 to August ist, while the Fe'deral Act of March 3d, declared 
 the privilege of funding previous note issues would end 
 on July ist. These legal tender notes continued to be used 
 by the North and other bonds being sold at this period for 
 notes, the limitation was less felt and later repealed. Yet 
 the act checked funding and is thought 250 to have delayed 
 the resumption of specie payment. The Southern Con- 
 gress did not revoke its limitation of the funding contract, 
 but advanced to more violent measures in the following 
 year. The funding system which the biographer 251 con- 
 siders a chief trumph of Mr. Chase was effective in absorb- 
 ing temporary loans largely in the year of peace and after. 
 
 Another financial analogy is found in the record of tax- 
 ation introduced with the same delay to each section, but 
 developed with widely divergent results. The taxes of 
 1861 of the two governments were levied according to the 
 schedule of the old U. S. system and were assumed gener- 
 ally by the respective States of the North and the South. 
 The Federal tax of $20,000,000 was lessened by a fourth 
 by reason of apportionment to the seceding region and 
 slight returns were made in either country within a year. 
 In his plans for 1862, the Northern Secretary apologized 
 for the amount of taxes named, although the New York 
 Chamber of Commerce called for a sum three times as 
 
 *** TAXATION WITHOUT AND WITH EXEMPTIONS. 
 
 large. The first real Federal tax law of July i, 1862, laid 
 the foundation of the internal revenue system, besides as- 
 sessing incomes, occupations and transactions. A tax 
 
 250 Knox U. S. Notes, p. 138. 
 
 251 Schucker's Chase, p. 407. 
 
Ill 
 
 commissioner was appointed, but the administration 252 of 
 the complex measure was inevitably faulty and the returns 
 very slow, $37,000,000 being received in ten months of 
 1863. Mr. Chase awaked to the need of taxation and 
 urged in December, 1863, an excessive levy to offset the 
 vast indebtedness. The third measure of the North was 
 the act of June 30, 1864, which doubled the previous as- 
 sessment and caused the receipts of that year to double 
 those of the preceding. 
 
 No imperative initiative to taxation having been taken 
 by Mr. Memminger in 1862, the Southern Congress was 
 excused in postponing the crude and unpopular measure 
 considered. But this Secretary also changed the spirit of 
 his recommendations and, backed by popular clamor, 253 de- 
 manded a comprehensive tax system, which was answered 
 after a fashion by the legislation of April 24, 1863. 
 
 Mr. Memminger was thence to his retirement in conflict 
 with Congress urging a more efficient measure through a 
 tax on property, and correction of the method of rebates 
 and valuation. Besides, with all vigilant collection, the 
 laws were highly susceptible to evasion, so that Secretary 
 Trenholm had to say 254 that the taxes of 1864 were prac- 
 tically nothing. To the contrary, in the North there was 
 a large increase, the record of revenue, internal and cus- 
 toms, being $112,000,000 in 1863, $264,000,000 in 1864, 
 $333>o > 000 in l86 5- 
 
 A VAST FISCAL AND ECONOMIC INEQUALITY. 
 
 The disastrous year in Federal financial history was 
 that of 1864, when the depreciation of greenbacks fell 
 from 155 in January to 270 in July. Mr. Chase had poor 
 results in floating a new loan and political reasons arising, 
 
 !52 Howe's Internal Revenue System, p. 60. 
 
 258 Ante, Chapter III, sub-head, "Tax act of April, 1863.*' 
 
 284 To T. H. Ivey, Lynchburg, Va., Jan. 18, 1865, Letter Book 
 
112 
 
 he resigned. The two Treasury Departments had new 
 Secretaries at the same time, and the Richmond Enquirer 
 of July 22, 1864, said that Trenholm and Fessenden start 
 under equal circumstances, with enormous debts, immense 
 issue of paper money, heavy taxes, no real money and little 
 credit. 
 
 However, taxes were coming into the Northern Treas- 
 ury at almost a million dollars a day, military successes 
 improved its credit, and Mr. Fessenden succeeded in mak- 
 ing various loans which culminated in the sale of $600,- 
 000,000 of the Act of March 3, 1865, in seven thirty notes. 
 Mr. Trenholm placed bonds better than his predecessor, 
 but the excessive depreciation of the period multiplied the 
 ratio of expenditures, and though the form of tax gather- 
 ing in the uninvaded districts was continued to February, 
 r865, the inevitable financial ruin was consummated. 
 
 The public debt of the North on March 31, 1865, was 
 $2,366,955,077, of which there was funded $1,100,361,241. 
 The last Confederate showing of Secretary Trenholm up 
 to Sept. 30, 1864, made a debt of $1,126,381,095, of which 
 was approximately funded $738,340,090. Yet in this state- 
 ment $649,000,000 of Treasury notes in addition were re- 
 pudiated, being called in for cancellation. The gross ex- 
 penditures of the North from June 30, 1861 to June 30, 
 1865, were $4,655,000 ooo. If the value of the tax in kind 
 of the South, the unpresented claims, and the various do- 
 nations were counted, it is probable that the Confederate 
 outlay would have reached $3,000,000,000, paper valuation. 
 Of the $3,264,000,000, current expenditures of the North, 
 it has been estimated 255 that depreciated currency con- 
 tributed $600,000,000. If an average annual discount of 
 15% in 1 86 1, 200% in 1862, 500% for nine months in 1863, 
 and 2,000% in 1864 to September 3Oth is allowed, the in- 
 crease of Confederate expenditure by reason of paper 
 
 265 Journal of Political Economy, March, 1897. 
 
money is $1,590,000,000. This currency by no specious 
 reasoning can be considered a tax as was the wont in 
 Revolutionary times, for it more than doubled the cost of 
 all outlay. It produced irritation and unreality which ended 
 in a public sense of helpless entanglement. It was thus a 
 forerunner of the military vanquishment. The operation 
 of relentless economic law was in the main vaguely com- 
 prehended, but not a few were convinced that somewhere 
 fatal errors had been made by the authorities. 
 
114 
 
 CHAPTER VII. LIMITATIONS OF THE TREAS- 
 URY. 
 
 Political differences in the interpretation of the Con- 
 stitution of the Republic led to the Civil War, frut other 
 differences, economic and social, distinguished the sec- 
 tions. As parties to the conflict, twenty-two States with 
 22,000,000 population were arrayed against eleven States 
 with 9,000,000, of whom 3,500,000 were slaves. The wealth 
 of the contestants was quoted 256 in the valuation by coun- 
 ties of real and personal property at $12,230,000,000 
 against $6,740,000,000, and in the rating of improved land 
 for agriculture at $4,865,000,000 against $1,780,000,000. 
 In the assessed value of property per capita nine of the 
 Southern States were ranked between third and sixteenth 
 places in the total of thirty-three. 
 
 In the various products of the field, the showing of the 
 North and South for 1860 was 556,169,962 bu. of corn 
 against 282,626,778; 141,663,098 bu. of wheat against 31,- 
 441,826; 13,119,169 tons of hay against 709,997; 3,560,032 
 bu. of peas and beans against 11,501,936. The valuation of 
 the live stock was $707,550,000 against $381,778,000. The 
 staples of the South were represented in 5,196,000 bales of 
 cotton, 357,500,000 pounds of tobacco, 302,000,000 pounds 
 of sugar and 187,000,000 pounds of rice. In the total mar- 
 ketable worth of the agricultural products of the sections 
 there was not the same disparity shown as in the relative 
 yield of some of the competing products. 
 
 INDUSTRIAL AND MONETARY WEAKNESS. 
 
 But in relative strength of the manufacturing, mineral 
 and commercial resources, the South had excessive limita- 
 tions. The capital invested in manufacturing in the North 
 
 288 Eighth Census, U. S. 
 
H5 
 
 was $993,881,130, having a product worth $1,700,330,395, 
 while in the South, the sum was only one-tenth of this, $95,- 
 974,585, with an output of $155,531,281. The volume of 
 the iron industries was in the proportion of $48,346,803 to 
 $3,412,022, and the amounts of coal mined were 13,648,- 
 182 and 649,760 tons respectively. The lengths of the rail- 
 roads of the sections were 19,022 and 9,897 miles. In the 
 financial statistics the odds were heavy against the Con- 
 federacy, which possessed only 221 banking institutions 
 with a capital of $92,048,159, in comparison with 1,421 
 banks of its opponent, capitalized at $329,841,836. 
 
 The ratio of capital and deposits in the South was small 
 in proportion to the other forms of wealth of the section 
 itself; besides, the deposits of $47,204,111 equaled barely 
 a fifth of the money so held in the North. There was a 
 scarcity of specie from the first, the total return being $27,- 
 200,000. Of the specie, the banks of New Orleans held 
 two-fifths, as well as two-fifths of the aggregate deposits. 
 This city had been one of the soundest commercial centers 
 in the United States, for in the panic of 1857 but four of its 
 nine banks suspended specie payment for a brief time. 
 The loss of this financial base was a severe blow to the 
 Confederate Treasury, especially as it had recently aided 
 in the first payment of government interest in coin. 
 
 THE VAGUE SECURITY FOR PAPER ISSUES. 
 
 There was a common expression by public men 
 throughout the most of the war that the wealth of the 
 land was to be measured simply by the money paid for its 
 products by other countries. Conditions had changed and 
 the economic isolation of the period was more severe than 
 before the war, when by deliberate choice the South was 
 not industrially self-sufficient. The blockade of the sea 
 was effective to a degree that fatally weakened the section. 
 Back of the Confederate currency and loans were not vast 
 quantities of cotton and tobacco. Of the 3,849,000 bales of 
 
n6 
 
 the cotton of i86o-i, 257 all virtually had been exported be- 
 fore a paper dollar was voted by Congress. Of the esti- 
 mated crop of 2,000,000 bales in 1862, about one-fifth was 
 presumably subscribed to the Produce Loan, yet actual 
 collections and direct purchases realized in three years 
 only 430,000 bales, of which 300,000 were pledged against 
 the Erlanger loan. There was for a financial system an 
 undoubted foundation of material value, to the extent of 
 the fruitful return of an agricultural economy, in the 
 form of assessments on the fundamental capital of the 
 nation. Yet there were not such industries created by 
 the war demands as in the North, which by a reflex power 
 could yield their share of the enlarged support of the gov- 
 ernment. 
 
 UNACQUAINTED WITH VALUE OF TAXATION. 
 
 The subject of finance had been little regarded by 
 Southern statesmen on account of their concern for politi- 
 cal and constitutional questions. There was no adequate 
 training by any previous acquaintance with financial oper- 
 ations of the government at Washington for the public 
 men of the Confederacy who had to direct the vast prepar- 
 ations and expenditures of the four years. Heavy taxa- 
 tion was then an unknown experience to an American. 
 The several messages of President Davis devoted a rela- 
 tively small portion of space to the discussion of fiscal af- 
 fairs. 
 
 Again, the several States competed with the Confed- 
 eracy in. demanding of the citizens subscriptions to the vari- 
 ous loans for their individual purposes. On the proposed 
 purchase of cotton, the Richmond Examiner had 258 said it 
 would be a vast Federal stretch of power. Any opposi- 
 tion, however, to the national right of taxation was slight, 
 except in the case of the tax in kind, which received bitter 
 
 257 Capers's Memminger, p. 356. 
 
 258 Oct. 12, 1861. 
 
condemnation from several quarters. Georgia particularly 
 through its Governor, Joseph E Brown, clashed with the 
 Treasury Department in its revenue and currency meas- 
 ures. South Carolina had independently laid a prohibi- 
 tion on exports, but removed 259 it. The States being en- 
 gaged in commerce on their official account resented the 
 trade regulations of 1864, pre-empting half of the ship- 
 ments for national purposes, and at the very last they re- 
 gained their privilege. In the main, the States displayed 
 a laudable rivalry in meeting the formal demands of the 
 Administration. 
 
 CONFIDENCE AFFECTING CREDIT. 
 
 The credit of the government obligations became notice- 
 ably impaired in 1862, though the issue of interest bearing 
 notes made the depreciation stationary for the summer. 
 Later, it was affirmed 280 that distrust arose not concerning 
 the Confederacy, but from the superabundance of cur- 
 rency, for all knew that tenure to any Southern property 
 at all depended upon the maintenance of the nation. Yet 
 in those days the opinion 261 was uttered and thought to 
 be gaining credence in Richmond that the cause was lost. 
 The failure to induce the States to guarantee a new form 
 of bonds was a blow to confidence and the funding legisla- 
 tion quickened the decline in quotations of currency val- 
 ues, so that Mr. Memminger in July, 1863, spoke of one 
 more year being assured to the Treasury, provided current 
 measures were executed. But the fortune of arms was the 
 supreme arbiter of credit and after the disasters of July, it 
 was not long until the national finances were hopelessly 
 shattered, the currency manipulations completing the con- 
 dition. 
 
 If unfavorable tide of battle was reflected in the esti- 
 
 269 Apr. 21, 1862. 
 
 !8 Richmond Examiner, Oct. 22, 1862. 
 
 M1 DeBow's Diary. DeBow's Review, Vol. Ill, p. 549, N. S. 
 
n8 
 
 mates of the nation's financial integrity, the military re- 
 sources were in turn impaired by the inefficiency of the 
 Treasury provisions. The Quartermaster General 261b de- 
 clared to the Secretary of War that since the first of 1864 
 credit had been injured by the lack of finances. More es- 
 pecially, the industrial limitations of the South necessitated 
 desperate efforts 262 to furnish in part munitions and arms, 
 which the Administration endeavored to supplement from 
 abroad. 
 
 LOANS CONFINED LARGELY TO CURRENCY. 
 
 The foremost and fatal limitation of the Confederate 
 Treasury was the introduction and maintenance of the 
 loan policy. This plan of financiering was due to a lack 
 of political foresight and the arrangements for revenues 
 contemplated an emergency system solely. The theory of 
 credit was blindly optimistic and deprecated an appeal to 
 the sources of income, best available at the beginning. 
 The resort to loans was the easiest method of raising 
 funds, but it was the most unfortunate in the instance of a 
 country so completely isolated and inevitably compelled 
 to devote all in sacrifice to the cause. It was an effort to 
 project payment into the future, which if met would have 
 been vastly more costly than in the present. 
 
 When this loan took chiefly the form of borrowing the 
 circulating medium of the people and additions continued 
 to be made to the currency without any regard to the 
 needs of exchange, there were possibilities of failure that 
 were appalling. There were few enterprises open for em- 
 ployment of the superabundant notes, and the public 
 
 261 t> Southern Historical Papers, Vol. n, p. 86. 
 
 262 A remarkable development of material resources under stress 
 of war was that of the Ordinance Bureau under Gen. Josiah Gor- 
 gas. He created powder mills at Augusta, armories at Richmond, 
 Rome, Fayetteville and Selma and various arsenals, mining, foun- 
 deries and nitre manufacture were conducted, and by 1863 a large 
 share of the ordinary equipments were furnished. Gorgas' 
 Monograph, Southern Historical Society, Vol. XII. 
 
n 9 
 
 turned to speculation as an outlet, creating fictitious val- 
 ues within a circumscribed trade. The first sale of bonds 
 was thought to have exhausted disengaged capital and 
 this form of loan was not actively pushed again until the 
 full flood of paper money yielded unmistakable signs of 
 wreckage and commercial disaster. Then with the rates 
 of depreciation prevalent, the bonds were not inviting in- 
 vestments; compulsory funding also operated as a deterrent 
 to direct sales in the final years. The Produce Loan in its 
 original plan was a failure, because it required the sales 
 of products to be exchanged for bonds. There was no 
 market, so the subscriptions of cotton had to be taken 
 direct for the securities and the government gained by 
 purchase the staple it had refused in 1861 to handle. 
 
 LANDED INTERESTS PREVENT TAXATION. 
 
 Several causes contributed to the failure tQ employ tax- 
 ation extensively as a source of revenue. There was ex- 
 perimental ignorance of its real importance as the founda- 
 tion of a system of deficit financiering, and it was not un- 
 equivocally demanded by those in authority. Congress 
 lacked the courage to place the definite burden on its con- 
 stituency. The constitutional objection served as a pre- 
 text of postponement, for in the provisional instrument of 
 government there was no apparent limitation. The suc- 
 cessive tax measures show a disinclination to make a com- 
 prehensive, rigorous requisition of the people. The first 
 enlarged taxing spared real property and fell on incomes, 
 occupations and sales. The greatest hindrance to an ade- 
 quate measure was the agricultural class, which in the 
 amendments of 1864 inserted the conditions which nulli- 
 fied the value of the direct levy by the rebates for tax in 
 kind and for income, in addition 263 to the discriminating 
 
 263 Ante, Chapter III, sub-head, "Criticisms and defects." 
 
I2O 
 
 valuation in favor of the land. At the same time, the banks 
 and the merchants were heavily assessed, but under such 
 conditions that many of the latter class practiced evasion. 
 In the final receipts of the bureau, the cities and towns are 
 exclusively the contributors. When revenues were finally 
 realized in 1863-4 directly from the substance of the coun- 
 try, the financial status of the nation was so impaired that 
 the taxes had in specie a worth of six, then four cents to 
 the dollar in paper. 
 
 THE LEGISLATIVE FAILURE OF THE 'SECOND YEAR. 
 
 The opportune time for taxation in the Confederacy was 
 in 1862. Yet with the message of President Davis affirm- 
 ing the high credit of the nation, addressed to Congress 
 in February, it would have been difficult to bring that body 
 to a revenue enactment. However, when the proposition 
 was postponed in October, depreciation was pronounced 
 and increasing, a situation certain to have been modified 
 by resolute action six months earlier. Kven a tax or- 
 dered at the later date would have brought a degree of re- 
 lief before the untoward influence of the military reverses 
 of 1863 was felt. In the North, the readjustment of indus- 
 try counseled a late resort to taxation; in the South, the 
 first and the second years could have been used most 
 efficaciously. The loyalty of the people would have re- 
 sponded to a fearless, positive demand and the cost to the 
 people would have been no more than actually borne in 
 the latter tax in kind. The tax in kind was the device of 
 a dire emergency, but it required a degree of supervision 
 that was scarcely to be furnished and the chance esti- 
 mate 264 of the realization of products worth $40,000,000 
 out of a contribution of $130,000,000 indicates its expen- 
 siveness. 
 
 264 Stephens' War Between the States, Vol. II, 569. 
 
121 
 
 THE CENSURE OF SECRETARY MEMMINGER. 
 
 Upon the resignation of Secretary Memminger the Rich- 
 mond Enquirer, 265 the Administration organ, said Con- 
 gress had produced the causes of the financial failure and 
 the recommendations of the Treasury Department had 
 never been adopted, so it was not responsible for the re- 
 sults. The variance of the legislative body and the Secre- 
 tary had grown intense, but in earlier years the relations 
 had been more harmonious. Mr. Memminger certainly 
 is responsible for the failure to present a large, compre- 
 hensive plan of national finance in his recommendations 
 of the first year. His estimates were small in comparison 
 with the needs, and his anticipations of foreign aid held 
 him from the large action that would have brought future 
 security. The President seems to have seconded the suc- 
 cessive suggestions of his cabinet officer and originated no 
 solution of later monetary difficulties. In the crucial year 
 of 1863 he did not yield to an appeal to call Congress in 
 special session, while market valuations were ruinously ad- 
 vancing from May to December. 
 
 After the nation was financially involved, Congress 
 failed to do its duty and the consideration of revenue 
 measures was always postponed to the very close of the 
 sessions. In the main the recommendations of the Treas- 
 ury Department were carried out, Congress being de- 
 terred by its influence from the purchasing of the cotton 
 crop, and from making a legal tender of the paper money. 
 The Houses adopted the earlier funding suggestions, but 
 it was the agricultural influences that finally brought the 
 rupture in the contest over heavy general taxation. 
 
 LATE ECONOMIC WISDOM AND HELPLESSNESS. 
 
 Mr. Memminger must be commended for his late but 
 courageous fight to establish adequate taxes, but his treat- 
 
 285 June 20, 1864. 
 
122 
 
 ment of the note redundancy proved his helplessness to 
 avert its evils. He had in the beginning sounded the dan- 
 gers of over issue, yet had gone the full length, and at the 
 end with a new tenor emerging, he urged that legislative 
 fiat set a limit to the amount. It was thought that he did 
 not have proper conception of the sums he handled and it 
 was told 266 as a joke in Congress, that in speaking of the 
 debt he had said it was eight thousand million or eight 
 hundred million dollars, not being certain which. He had 
 a firm faith in his funding devices and believed that a 
 change of percentage could call in large sums of notes at a 
 time when all values were paralyzed. His last large form 
 of bonds had as a chief inducement that they were non- 
 taxable. 
 
 It was a remedy of desperation to propose the retire- 
 ment of all the notes in 1864, and it was proclaimed as 
 though values would thereby be restored. But previous 
 changes of the loan contracts with the public had prepared 
 the Secretary for a sweeping measure. Had Congress 
 consented the result in the end would have been little 
 changed. Faith was already largely shaken and the grad- 
 ual retirement of the notes did not lessen the general dis- 
 trust. 
 
 The North by paying its interest faithfully in specie pre- 
 served at the worst a measure of confidence. The Conti- 
 nental finances were conducted with foreign coin after 
 the paper money was repudiated. But there was no coin 
 available in the South to furnish a basis for a new venture, 
 and the taxation ordered for the year was payable in the 
 certificates issued for the notes, being funded under pen- 
 alty. 
 
 No CONTRIBUTION TO PAPER MONEY HISTORY. 
 The persistent practice of the Treasury then was to rely 
 upon the issue of government paper to meet national ex- 
 
 266 DeBow's Review, Vol. IV, p. 531. 
 
I2 3 
 
 penditure, and the history of paper money has been in 
 no way altered by the experiment of the Confederacy. 
 The influence was disastrous upon all the activities of the 
 government and of the land. It induced speculation, which 
 corrupted business morality. In the excessive redundancy 
 all values were permanently distorted. Industries were 
 increasingly crippled, transportation companies were una- 
 ble to make repairs, farmers evaded sales under impress- 
 ment, and the products of the country were decreased. 
 The Confederacy had been progressively prostrated. The 
 resources for the army had all but failed. The money ma- 
 chine was operated until it fell before the same military 
 might which was bringing an end at the capital. And the 
 soldiers, who had borne the brunt at the last received not 
 the discredited money of the nation, but the coin which 
 had come from its hiding places at the final legislative be- 
 hest. 
 
 Receipts. 
 
 Appendix i. 
 
 
 Bonds. 
 
 Call Cer- 
 tificates. 
 
 Notes. 
 
 Taxes. 
 
 Customs. 
 
 Bank 
 Loan. 
 
 
 
 
 
 
 
 
 1862. 
 
 Feb. 18, 1862 to 
 Jan. i, 1863. 
 Jan. i, 1863 to 
 Oct. i, 1863. 
 Oct. i, 1863 to 
 Oct. i, 1864. 
 
 42,773,572 
 154,840,600 
 312,404,900 
 
 $59,742,796 
 23,475,100 
 61,128.660 
 
 329,294,885 
 391,623,530 
 543,264,878 
 
 $16,664,513 
 4,128,988 
 101,701,038 
 
 668,566 
 942,900 
 518,750 
 
 2,539,799 
 
 Total, . . 
 
 541,171,732 
 
 144,346,556 
 
 i, 359,973 ,543 
 
 122,494,539 
 
 3,401,089 
 
 12,353,344 
 
 
 Seques- 
 tration. 
 
 Patent 
 Fund. 
 
 Repay- 
 ments. 
 
 Miscella- 
 neous. 
 
 Tax on 
 Notes. 
 
 Total. 
 
 1861-2 . . . 
 
 
 
 
 
 
 
 1862-3, 
 
 
 Jj7 Q2O 
 
 j-i 86s 8si 
 
 
 
 
 1863-; 
 
 $1,862,500 
 
 IO,794 
 
 24.6^8 428 
 
 
 
 
 1863-4 
 
 4,539,490 
 
 26,957 
 
 62,891,596 
 
 6,964,383 
 
 $14.440,567 
 
 1,106,584831 
 
 Total, . . 
 
 $6401,990 
 
 $51,671 
 
 $91,395,875 
 
 10,278,866 
 
 $14,440,567 
 
 $2,305,014,431 
 
124 
 
 Bonds. 
 
 Appendix 2. 
 
 
 Flight per 
 cent. 
 
 Seven per 
 cent. 
 
 Six per 
 cent. 
 
 Four per 
 cent. 
 
 Cotton 
 Certificates 
 
 Non-tax- 
 able 6 p.c. 
 
 Feby. 186;- 
 1862. 
 Feby. 1862- 
 1863. 
 Jan. Oct 
 
 $31,152,660 
 42,773,572 
 107 292 900 
 
 J?3 737 6so 
 
 
 
 
 
 1863. 
 Oct. 1863- 
 1864. 
 
 2,422,450 
 
 2,364,000 
 
 14,206,400 
 
 $263,394,050 
 
 8,975,000 
 
 $19,303,900 
 
 Total. . 
 
 $183,641,582 
 
 $41,101,650 
 
 $21,016.450 
 
 $263,394,050 
 
 $10.975,000 
 
 $19,303,900 
 
 Certificates. 
 
 
 Six per 
 cent call. 
 
 Five per 
 cent call. 
 
 Four per 
 cent call. 
 
 Certificates 
 Indebtedness 
 
 Total. 
 
 1861-1862 . . . 
 
 
 
 
 
 
 1862-1863 
 
 
 
 
 
 102 516 368 
 
 !863- 
 
 
 
 
 
 
 1863-4, 
 
 
 38 812 500 
 
 22 316 160 
 
 Jl 7jg IOO 
 
 -272 C-23, 560 
 
 
 
 
 
 
 
 Total, 
 
 $59 74 2 79^ 
 
 $61 815 400 
 
 $22 798 360 
 
 $1 739 JOG 
 
 $685 518 288 
 
 
 
 
 
 
 
 Expenditures. 
 
 Appendix 3. 
 
 
 War. 
 
 Navy. 
 
 Civil. 
 
 Public 
 Debt. 
 
 Total. 
 
 Feby. 18, 1861-1862, 
 Feby. 18, i862-Jan. 
 1,1863. 
 Jan. i, i863-Oct. i, 
 1863. 
 Oct. i, i863-Oct. i, 
 1864. 
 
 $152,844,430 
 341,011,754 
 
 377,988,244 
 484,939,816 
 
 $7,600,485 
 20,599,283 
 
 38,437,661 
 26,408,525 
 
 $5,045,660 
 13,673,376 
 
 11,629,278 
 16,038,973 
 
 $41,727,320 
 91,256,739 
 470,607,163 
 
 $165,490,575. 
 416,971,735 
 
 510,311,925 
 
 997,994,472 
 
 Total 
 
 $i 356 784 244 
 
 $q^ COS QS4 
 
 $46 387 287 
 
 5o"? SQl 222 
 
 $2 099 768 707 
 
 
 
 
 
 
 
 Appendix 4, 
 
 DEPRECIATION OF TREASURY NOTES RATED IN $1.00 OF 
 
 Goux 
 
 1861 August, 1.05; October, i.io; Nov., 1.15-1.17; 
 Dec., 1.18-1.20. 
 
 1862 Jan., 1.18-1,22; Feb., 1.25-1.26; Mch., 1.28-1.30; 
 Apr., 1.38-1.40; May, 1.50; August, 1.50; Sept., 1.75; Oct., 
 2.00; Nov., 2.50; Dec., 3.00. 
 
125 
 
 1863 Jan., 3-io ; Feb., 3.33; Mch., 4.20; Apr., 5.00; 
 May, 6.00; June, 7.50; July, 9.00; Aug., 12.00; Sept., 12.50; 
 Oct., 14.00; Nov., 15.00; Dec., 19.00. 
 
 1864 Jan., 21.00; Feb., 23.00; Mch., 25.00; Apr., 21.00; 
 May, 19.00; June, 18.00; July, 20.00; Aug., 22.00; Sept., 
 23.00; Oct., 26.00; Nov., 27-33.00; Dec., 34-42.00. 
 
 1865 Jan., 45-50.00; Feb., 50-60.00; Mch., 60.00; Apr., 
 100.00. 
 
 Appendix 5. 
 
 BIBLIOGRAPHY. 
 
 Appleton's Annual Encyclopedia, 1861, 2, 3, 4, 5. 
 
 Bigelow, Jno. France and the Confederate Navy. 
 
 Bolles, A. S. Financial History of the United States, 
 I, III. 
 
 Bulloch, J. D. The Secret Service of the Confederate 
 States in Europe. 
 
 Capers, H. D. Life and Times of C. G. Memminger. 
 
 Century Magazine, LJII., Feb., 1897. 
 
 Correspondence of the Confederate Treasury Depart- 
 ment, now kept in the U. S. Treasury at Washington, D, C. 
 
 Currency of the Confederate States of America, com- 
 piled by Wm. Lee, M. D. 
 
 Davis, Jefferson Rise and Fall of the Confederacy. 
 
 DeBow's Review, II, IV, V, (New Series). 
 
 Documents of the Confederate Treasury Department, 
 now kept in the "Rebel Archives" of the War Depart- 
 ment, Washington, D. C. 
 
 Eighth Census U. S. 
 
 Hart, A. B. Life of S. P. Chase. 
 
 Howe, F. C. Taxation in. the U. S. under Internal 
 Revenue. 
 
 Jones, J. W. Rebel War Clerk's Diary. 
 
 Journal of Political Economy, Mch., 1897. 
 
 Knox, J. J. U. S. Notes. 
 
 Newspapers Augusta Chronicle, Charleston Courier, 
 Montgomery Mail, Richmond Dispatch, 
 
126 
 
 Enquirer, Examiner and Whig, and 
 Savannah News as preserved in the files 
 of the "Rebel Archives" at Washington. 
 Phillips Continental Paper Money. 
 Pollard, E. A. The Lost Cause. 
 
 The First, Second, Third and Fourth 
 Years of the War. 
 
 Records and Correspondence of the Confederate War 
 Tax Bureau. 
 
 Reports of the Commission of Taxes. 
 Reports of C. G. Memminger and G. A. Trenholm, Sec- 
 retaries of the Confederate Treasury. 
 
 Scharf, J. T. History of the Confederate States Navy. 
 Schuckers, J. W. Life and Public Services of Salmon 
 P. Chase. 
 
 Schwab, J. C. The Finances of the Confederacy, Pol.. 
 
 Science Quarterly, VIII. 
 The Confederate Foreign Loan. Yale 
 
 Review, I. 
 The Financier of the Confederate 
 
 States. Yale Review, II. 
 
 Senate and House Journals of the Confederate States, 
 Secret and Open Sessions. 
 
 Southern Historical Society Papers, II,IX, XII. 
 Statutes of the Provisional, the First and the Second 
 Congresses of the Confederate States. 
 Stephens, Alexander H. War between the States. 
 Sumner, W. G. American Currency. 
 
 The Financier and the Finances of the 
 
 American Revolution. 
 
 Tariff and Tax Laws of the Confederate States. 
 (Concluded.) 
 
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