In 7 per cent., thirty-year bonds ; (3) the issue of not over

$50,000,000 of 3.65 per cent, one- year treasury notes to

meet any need unprovided for by the proceeds of taxation

and the other loans. But, said Mr. Chase, "the greatest

care will .... be requisite to prevent the degradation of

such issues into an irredeemable paper currency, than which

no more certainly fatal expedient for impoverishing the

masses and discrediting the government of any country can

well be devised." 2

If Secretary Chase erred in thus proposing at the outset

to rely upon borrowing to secure three-quarters of the means

for waging the war because he doubted the readiness of the

people to submit to heavy taxation, Congress was neither

wiser nor bolder than he. With his report were submitted

drafts of bills embodying its suggestions. 3 After one hour's

debate, entirely taken up by Mr. Vallandigham in an attack

upon the policy of the president, the House passed the

$250,000,000 loan bill by a vote of 150 to 5.* In the Senate

a few verbal amendments were made; 5 these were quickly

concurred in by the House, 6 and eight days after its intro-

duction the bill was approved by the president. 7

J The issue of $2,584,550 treasury notes under the act of June 22, 1860 (p. 12,

above), had reduced the balance of thatloan remaining to be borrowed to $11,393,450.

Besides this there was the $10,000,000 loan authorized by the act of March 2, 1861.

Senate Executive Document No. 2, p. 12, 37th Cong., 1st Sess.

2 Ibid., p. 14. 3 ibid., pp. 65 ff. And 71 ff.

* Congressional Globe, 37th Cong., 1st Sess., p. 61.

5 Ibid., pp. 109 and 127. Ibid., p. 147.

1 12 Statutes at Large, p. 259. Act of July 17, 1861.

SUSPENSION OF SPECIE PAYMENTS 17

So hurriedly, indeed, was the work done that a supple-

mentary act had immediately to be passed. 1 Together, these

two laws authorized the secretary to borrow $250,000,000, 2

for which he could issue in such proportions as he might

deem advisable, (1) 7 per cent, twenty-year bonds at par;

(2) 6 per cent, twenty-year bonds "at any rate not less than

the equivalent of par for the bonds bearing 7 per centum

Interest;" (3) 7.3 per cent, three-year treasury notes, fundable

In 6 per. Cent, twenty-year bonds; or (4) treasury notes,

either bearing interest at 3.65 per cent, and payable in one

year, or bearing no interest and payable on demand. These

demand notes were to be receivable for all public dues and

of denominations as low as $5 ; but their issues were not to

exceed $50,000,000. Finally, 6 per cent, treasury notes,

" payable at any time not excee'ding twelve months from

date," might be issued to the amount of $20,000,000. To

facilitate the negotiation of the loan, it was provided that

any part, not above $100,000,000, might be borrowed

abroad, and the principal and interest made payable in

Europe ; and that the secretary might " deposit any of the

moneys obtained on any of the loans .... in such solvent

specie-paying banks as he may select."

Legislative indorsement was also promptly given to Sec-

retary Chase's suggestion of increased taxation. August 5

a revenue act was approved which (1) raised the tariff by

1 Ibid., p. 313. Act of August 5, 1861.

2 The amount of securities, however, that might be issued under these acts was

not definitely limited ; for Sec. 1 of the act of August 5 provided that holders of

the three-year 7.30 notes might exchange them for 6 per cent, twenty-year bonds.

12 Statutes at Large, p. 313. The total issues under the acts were as follows :

6 per cent, bonds $189,321,350

Demand treasury notes, no interest 60,030,000

7.30 treasury notes 139,999,750

$389,351,100

E. A. BATLET, National Loans of the United States, p. 78. Of the 6 per cent, bonds

only $50,000,000 was sold for money; the remainder, $139,321,350, was issued in

exchange for 7.30 notes. Ibid., p. 153.

18 HISTORY OF THE GREENBACKS

imposing duties on tea, coffee, sugar, and molasses

important revenue articles admitted free or at low rates by

the Morrill act; 1 (2) apportioned between the states a direct

tax of $20,000,000, of which, however, there was small

hope of collecting the quotas of the disloyal states, amount-

ing to $5,000,000; (3) levied a tax of 3 per cent, upon the

excess of incomes above $800. 2 While certain features of

this scheme of taxation encountered opposition, members of

Congress evinced a striking readiness to waive objections and