"Long experience [he wrote] has shown that armies cannot be maintained unless desertion shall be punished by the severe penalty of death. The case requires, and the law and the Constitution sanction, this punishment. Must I shoot a simple-minded soldier boy who deserts, while I must not touch a hair of a wily agitator who induces him to desert? This is none the less injurious when effected by getting a father, or brother, or friend into a public meeting, and there working upon his feelings till he is persuaded to write the soldier boy that he is fighting in a bad cause for a wicked administration and a contemptible government, too weak to arrest and punish him if he shall desert. I think that in such a case to silence the agitator and save the boy is not only constitutional, but, withal, a great mercy."
His real argument may be summed up in these words of his:
"You ask, in substance, whether I really claim that I may override all the guaranteed rights of individuals, on the plea of conserving the public safety—when I may choose to say the public safety requires it. This question, divested of the phraseology calculated to represent me as struggling for an arbitrary prerogative, is either simply a question who shall decide, or an affirmation that nobody shall decide, what the public safety does require in cases of rebellion or invasion.
"The Constitution contemplates the question as likely to occur for decision, but it does not expressly declare who is to decide it. By necessary implication, when rebellion or invasion comes, the decision is to be made, from time to time; and I think the man, whom for the time, the people have under the Constitution, made the commander-in-chief of their army and navy, is the man who holds the power and bears the responsibility of making it. If he uses the power justly, the same people will probably justify him; if he abuses it, he is in their hands to be dealt with by all the modes they have reserved to themselves in the Constitution."
Lincoln virtually appealed to the Northern people to secure efficiency by setting him momentarily above all civil authority. He asked them in substance, to interpret their Constitution by a show of hands. No thoughtful person can doubt the risks of such a method; yet in Ohio, in 1863, the great majority—perhaps everyone who believed in the war—accepted Lincoln's position. Between their traditional system of legal juries and the new system of military tribunals the Ohio voters made their choice without hesitation. They rejected Vallandigham and sustained the Lincoln candidate by a majority of over a hundred thousand. That same year in New York the anti-Lincoln candidate for Secretary of State was defeated by twenty-nine thousand votes.
Though these elections in 1863 can hardly be called the turning-point in the history of the Lincoln Government, yet it was clear that the tide of popularity which had ebbed so far away from Lincoln in the autumn of 1862 was again in the flood. Another phase of his stormy course may be thought of as having ended. And in accounting for this turn of the tide it must not be forgotten that between the nomination and the defeat of a Vallandigham the bloody rebellion in New York had taken place, Gettysburg had been fought, and Grant had captured Vicksburg. The autumn of 1863 formed a breathing space for the war party of the North.
It is the custom of historians to measure the relative strength of North and South chiefly in terms of population. The North numbered 23,000,000 inhabitants; the South, about 9,000,000, of which the slave population amounted to 3,500,000. But these obvious statistics only partially indicate the real situation. Not what one has, but what one is capable of using is, of course, the true measure of strength. If, in 1861, either side could have struck swiftly and with all its force, the story of the war would have been different. The question of relative strength was in reality a question of munitions. Both powers were glaringly unprepared. Both had instant need of great supplies of arms and ammunition, and both turned to European manufacturers for aid. Those Americans who, in a later war, wished to make illegal the neutral trade in munitions forgot that the international right of a belligerent to buy arms from a neutral had prevented their own destruction in 1861. In the supreme American crisis, agents of both North and South hurried to Europe in quest of munitions. On the Northern side the work was done chiefly by the three ministers, Charles Francis Adams, at London; William L. Dayton, at Paris; and Henry S. Sanford, at Brussels; by an able special agent, Colonel George L. Schuyler; and by the famous banking-house of Baring Brothers, which one might almost have called the European department of the United States Treasury.
The eager solicitude of the War Department over the competition of the two groups of agents in Europe informs a number of dispatches that are, today, precious admonitions to the heedless descendants of that dreadful time. As late as October, 1861, the Acting Secretary of War wrote to Schuyler, one of whose shipments had been delayed: "The Department earnestly hopes to receive...the 12,000 Enfield rifles and the remainder of the 27,000, which you state you have purchased, by the earliest steamer following. Could you appreciate the circumstances by which we are surrounded, you would readily understand the urgent necessity there is for the immediate delivery of all the arms you are authorized to purchase. The Department expects to hear that you have been able to conclude the negotiations for the 48,000 rifles from the French government arsenals." That the Confederate Government acted even more promptly than the Union Government appears from a letter of Sanford to Seward in May: "I have vainly expected orders," he complains, "for the purchase of arms for the Government, and am tempted to order from Belgium all they can send over immediately.... Meanwhile the workshops are filling with orders from the South.... It distresses me to think that while we are in want of them, Southern money is taking them away to be used against us."
At London, Adams took it upon himself to contract for arms in advance of instructions. He wrote to Seward: "Aware of the degree to which I exceed my authority in taking such a step, nothing but a conviction of the need in which the country stands of such assistance and the joint opinion of all the diplomatic agents of the United States...in Paris, has induced me to overcome my scruples." How real was the necessity of which this able diplomat was so early conscious, is demonstrated at every turn in the papers of the War Department. Witness this brief dispatch from Harrisburg: "All ready to leave but no arms. Governor not willing to let us leave State without them, as act of Assembly forbids. Can arms be sent here?" When this appeal was made, in December, 1861, arms were pouring into the country from Europe, and the crisis had passed. But if this appeal had been made earlier in the year, the inevitable answer may be guessed from a dispatch which the Ordnance Office sent, as late as September, to the authorities of West Virginia, refusing to supply them with arms because the supplies were exhausted, and adding, "Every possible exertion is being made to obtain additional supplies by contract, by manufacture, and by purchase, and as soon as they can be procured by any means, in any way, they will be supplied."
Curiously enough, not only the Confederacy but various States of the North were more expeditious in this all-important matter than Cameron and the War Department. Schuyler's first dispatch from London gives this singular information: "All private establishments in Birmingham and London are now working for the States of Ohio, Connecticut, and Massachusetts, except the London Armory, whose manufacture is supposed to go to the Rebels, but of this last fact I am not positively informed. I am making arrangements to secure these establishments for our Government, if desirable after the present State contracts expire. On the Continent, Messrs, Dayton and Sanford...have been making contracts and agreements of various kinds, of which you are by this time informed." Soon afterward, from Paris, he made a long report detailing the difficulties of his task, the limitations of the existing munitions plants in Europe, and promising among other things those "48,000 rifles from the French government arsenals" for which, in the letter already quoted, the War Department yearned. It was an enormous labor; and, strive as he would, Schuyler found American mail continuing to bring him such letters as this from the Assistant Secretary of War in October: "I notice with much regret that [in the latest consignment] there were no guns sent, as it was confidently expected that 20,000 would arrive by the [steamship] Fulton, and accordingly arrangements had been made to distribute them through the different States. Prompt and early shipments of guns are desirable. We hope to hear by next steamer that you have shipped from 80,000 to 100,000 stand."
The last word on the problem of munitions, which was so significant a factor in the larger problem, is the report of the United States Ordnance Office for the first year of the war. It shows that between April, 1861, and June, 1862, the Government purchased from American manufacturers somewhat over 30,000 rifles, and that from European makers it purchased 726,000.
From these illustrations it is therefore obvious that the true measure of the immediate strength of the American contestants in 1861 was the extent of their ability to supply themselves from Europe; and this, stated more concretely, became the question as to which was the better able to keep its ports open and receive the absolutely essential European aid. Lincoln showed his clear realization of the situation when he issued, immediately after the first call for volunteers, a proclamation blockading the Southern coasts. Whether the Northern people at the time appreciated the significance of this order is a question. Amid the wild and vain clamor of the multitude in 1861, with its conventional and old-fashioned notion of war as a thing of trumpets and glittering armies, the North seems wholly to have ignored its fleet; and yet in the beginning this resource was its only strength.
The fleet was small, to be sure, but its task was at first also small. There were few Southern ports which were doing a regular business with Europe, and to close these was not difficult. As other ports opened and the task of blockade grew, the Northern navy also increased. Within a few months, to the few observers who did not lose their heads, it was plain that the North had won the first great contest of the war. It had so hampered Southern trade that Lincoln's advantage in arming the North from Europe was ten to one. At the very time when detractors of Lincoln were hysterical over the removal of Fremont, when Grimes wrote to Fessenden that the country was going to the dogs as fast as imbecility could carry it, this great achievement had quietly taken place. An expedition sailing in August from Fortress Monroe seized the forts which commanded Hatteras Inlet off the coast of North Carolina. In November, Commander Dupont, U. S. N., seized Port Royal, one of the best harbors on the coast of South Carolina, and established there a naval base. Thenceforth, while the open Northern ports received European munitions without hindrance, it was a risky business getting munitions into the ports of the South. Only the boldest traders would attempt to "run the blockade," to evade the Federal patrol ships by night and run into a Southern port.
However, for one moment in the autumn of 1861, it seemed as if all the masterful work of the Northern navy would be undone by the Northern people themselves in backing up the rashness of Captain Charles Wilkes, of the war-ship San Jacinto. On the high seas he overhauled the British mail steamer, Trent. Aboard her were two Confederate diplomatic agents, James M. Mason and John Slidell, who had run the blockade from Charleston to Havana and were now on their way to England. Wilkes took off the two Confederates as prisoners of war. The crowd in the North went wild. "We do not believe," said the New York Times, "that the American heart ever thrilled with more sincere delight."
The intemperate joy of the crowd over the rashness of Wilkes was due in part to a feeling of bitterness against the British Government. In May, 1861, the Queen had issued a proclamation of neutrality, whose justification in international law was hotly debated at the time and was generally denied by Northerners. England was the great cotton market of the world. To the excited Northern mind, in 1861, there could be but one explanation of England's action: a partisan desire to serve the South, to break up the blockade, and to secure cotton. Whether such was the real purpose of the ministry then in power is now doubted; but at that time it was the beginning of a sharp contention between the two Governments. The Trent affair naturally increased the tension. So keen was the indignation of all classes of Englishmen that it seemed, for a moment, as if the next step would be war.
In America, the prompt demand for the release of Mason and Slidell was met, at first, in a spirit equally bellicose. Fortunately there were cool and clear heads that at once condemned Wilkes's action as a gross breach of international law. Prominent among these was Sumner. The American Government, however, admitted the justice of the British demand and the envoys were released.
Relations with the United States now became a burning issue in English politics. There were three distinct groups in Parliament. The representatives of the aristocracy, whether Liberals or Conservatives, in the main sympathized with the South. So did most of the large manufacturers whose business interests were affected by cotton. Great bitterness grew up among the Northerners against both these groups, partly because in the past many of their members had condemned slavery and had said scornful things about America for tolerating it. To these Northerners the Englishmen replied that Lincoln himself had declared the war was not over slavery; that it was an ordinary civil war not involving moral issues. Nevertheless, the third Parliamentary group insisted that the American war, no matter what the motives of the participants, would, in the event of a Northern victory, bring about the abolition of slavery, whereas, if the South won, the result would be the perpetuation of slavery. This third group, therefore, threw all its weight on the side of the North. In this group Lincoln recognized his allies, and their cause he identified with his own in his letter to English workmen which was quoted in the previous chapter. Their leaders in Parliament were Richard Cobden, W. E. Forster, and John Bright. All these groups were represented in the Liberal party, which, for the moment, was in power.
In the Cabinet itself there was a "Northern" and a "Southern" faction. Then, too, there were some who sympathized with the North but who felt that its cause was hopeless—so little did they understand the relative strength of the two sections—and who felt that the war was a terrible proof of the uselessness of mere suffering. Gladstone, in later days, wished to be thought of as having been one of these, though at the time, a famous utterance of his was construed in the North as a declaration of hostility. To a great audience at Newcastle he said in October, 1862: "We may have our own opinions about slavery; we may be for or against the South; but there is no doubt that Jefferson Davis and other leaders of the South have made an army; they are making, it appears, a navy; and they have made, what is more than either—they have made a nation."
The Prime Minister, Lord Palmerston, wished to intervene in the American war and bring about an amicable separation into two countries, and so, apparently, did the Foreign Secretary, Lord John Russell. Recently, the American minister had vainly protested against the sailing of a ship known as 290 which was being equipped at Liverpool presumably for the service of the Confederacy, and which became the famous Alabama. For two years it roved the ocean destroying Northern commerce, and not until it was sunk at last in a battle with the U. S. S. Kearsarge did all the maritime interests of the North breathe again freely. In time and as a result of arbitration, England paid for the ships sunk by the Alabama. But in 1862, the protests of the American minister fell on deaf ears.
It must be added that the sailing of the Alabama from Liverpool was due probably to the carelessness of British officials rather than to deliberate purpose. And yet the fact is clear that about the first of October, 1862, the British ministry was on the verge of intervening to secure recognition of the independence of the Southern confederacy. The chief motive pressing them forward was the distress in England caused by the lack of cotton which resulted from the American blockade. In 1860, the South had exported 615,000 bales; in 1861, only 10,127 bales. In 1862 half the spindles of Manchester were idle; the workmen were out of employment; the owners were without dividends. It was chiefly by these manufacturing capitalists that pressure was put upon the ministry, and it was in the manufacturing district that Gladstone, thinking the Government was likely to intervene, made his allusion to the South as a nation.
Meanwhile the Emperor of the French was considering a proposal to England and Russia to join with him in mediation between the American belligerents. On October 28, 1862, Napoleon III gave audience to the Confederate envoy at Paris, discussed the Southern cause in the most friendly manner, questioned him upon the Maryland campaign, plainly indicated his purpose to attempt intervention, and at parting cordially shook hands with him. Within a few days the Emperor made good his implied promise.
The month of November, 1862, is one of the turning-points in American foreign relations. Both Russia and England rejected France's proposal. The motive usually assigned to the Emperor Alexander is his hatred of everything associated with slavery. His own most famous action was the liberation of the Russian serfs. The motives of the British ministry, however, appear more problematical.
Mr. Rhodes thinks he can discern evidence that Adams communicated indirectly to Palmerston the contents of a dispatch from Seward which indicated that the United States would accept war rather than mediation. Palmerston had kept his eyes upon the Maryland campaign, and Lee's withdrawal did not increase his confidence in the strength of the South. Lord Russell, two months previous, had flatly told the Confederate envoy at London that the South need not hope for recognition unless it could establish itself without aid, and that "the fluctuating events of the war, the alternation of defeat and victory," composed such a contradictory situation that "Her Majesty's Government are still determined to wait."
Perhaps the veiled American warning—assuming it was conveyed to Palmerston, which seems highly probable—was not the only diplomatic innuendo of the autumn of 1862 that has escaped the pages of history. Slidell at Paris, putting together the statements of the British Ambassador and those of the French Minister of Foreign Affairs, found in them contradictions as to what was going on between the two governments in relation to America. He took a hand by attempting to inspire M. Drouyn de L'huys with distrust of England, telling him he "HAD SEEN...a letter from a leading member of the British Cabinet...in which he very plainly insinuated that France was playing an unfair game," trying to use England as Napoleon's catspaw. Among the many motives that may well have animated the Palmerston Government in its waiting policy, a distrust of Napoleon deserves to be considered.
It is scarcely rash, however, to find the chief motive in home politics. The impetuous Gladstone at Newcastle lost his head and spoke too soon. The most serious effect of his premature utterance was the prompt reaction of the "Northern party" in the Cabinet and in the country. Whatever Palmerston's secret desires were, he was not prepared to take the high hand, and he therefore permitted other members of the Cabinet to state in public that Gladstone had been misunderstood. In an interview with Adams, Lord Russell, "whilst endeavoring to excuse Mr. Gladstone," assured him that "the policy of the Government was to adhere to a strict neutrality and leave the struggle to settle itself." In the last analysis, the Northern party in England was gaining ground. The news from America, possibly, and Gladstone's rashness, certainly, roused it to increased activity. Palmerston, whose tenure of power was none too secure, dared not risk a break that might carry the disaffected into the ranks of the Opposition.
From this time forward the North rapidly grew in favor in British public opinion, and its influence upon the Government speedily increased.
Says Lord Charnwood in his recent life of Lincoln: "The battle of Antietam was followed within five days by an event which made it impossible for any government of this country to take action unfriendly to the North." He refers of course to the Emancipation Proclamation, which was issued on September 23, 1862. Lord Charnwood's remark may be too dramatic. But there can be no doubt that the Emancipation Proclamation was the turning-point in Lincoln's foreign policy; and because of it, his friends in England eventually forced the Government to play into his hands, and so frustrated Napoleon's scheme for intervention. Consequently Lincoln was able to maintain the blockade by means of which the South was strangled. Thus, at bottom, the crucial matter was Emancipation.
Lincoln's policy with regard to slavery passed through three distinct stages. As we have seen, he proposed, at first, to pledge the Government not to interfere with slavery in the States where it then existed. This was his maximum of compromise. He would not agree to permitting its extension into new territory. He maintained this position through 1861, when it was made an accusation against him by the Abolitionists and contributed to the ebb of his popularity. It also played a great part in the episode of Fremont. At a crucial moment in Fremont's career, when his hold upon popularity seemed precarious, he set at naught the policy of the President and issued an order (August 30, 1861), which confiscated all property and slaves of those who were in arms against the United States or actively aiding the enemy, and which created a "bureau of abolition." Whether Fremont was acting from conviction or "playing politics" may be left to his biographers. In a most tactful letter Lincoln asked him to modify the order so as to conform to the Confiscation Act of Congress; and when Fremont proved obdurate, Lincoln ordered him to do so. In the outcry against Lincoln when Fremont was at last removed, the Abolitionists rang the changes on this reversal of his policy of military abolition.
Another Federal General, Benjamin F. Butler, in the course of 1861, also raised the issue, though not in the bold fashion of Fremont. Runaway slaves came to his camp on the Virginia coast, and he refused to surrender them to the owners. He took the ground that, as they had probably been used in building Confederate fortifications, they might be considered contraband of war. He was sustained by Congress, which passed what is commonly called the First Confiscation Act providing that slaves used by Confederate armies in military labor should, if captured, be "forfeited"—which of course meant that they should be set free. But this did not settle what should be done with runaways whose masters, though residents of seceded States, were loyal to the Union. The War Department decided that they should be held until the end of the war, when probably there would be made "just compensation to loyal masters."
This first stage of Lincoln's policy rested upon the hope that the Union might be restored without prolonged war. He abandoned this hope about the end of the year. Thereupon, his policy entered its second stage. In the spring of 1862 he formulated a plan for gradual emancipation with compensation. The slaves of Maryland, Delaware, Kentucky, Missouri, and the District of Columbia were to be purchased at the rate of $400 each, thus involving a total expenditure of $173,000,000. Although Congress adopted the joint resolution recommended by the President, the "border States" would not accept the plan. But Congress, by virtue of its plenary power, freed the slaves by purchase in the District of Columbia, and prohibited slavery in all the territories of the United States.
During the second stage of his policy Lincoln again had to reverse the action of an unruly general. The Federal forces operating from their base at Port Royal had occupied a considerable portion of the Carolina coast. General Hunter issued an order freeing all the slaves in South Carolina, Georgia, and Florida. In countermanding the order, Lincoln made another futile appeal to the people of the border States to adopt some plan of compensated emancipation.
"I do not argue," he said; "I beseech you to make arguments for yourselves. You cannot, if you would be blind to the signs of the times. I beg of you a calm and enlarged consideration of them, ranging, if it may be, far above personal and partisan politics. This proposal makes common cause for a common object, casting no reproaches upon any. It acts not the Pharisee. The change it contemplates would come gently as the dews of heaven, not rending or wrecking anything. Will you not embrace it? So much good has not been done by one effort in all past time, as in the providence of God it is now your high privilege to do. May the vast future not have to lament that you neglected it."
This persuasive attitude and reluctance to force the issue had greatly displeased the Abolitionists. Their most gifted orator, Wendell Phillips, reviled Lincoln with all the power of his literary genius, and with a fury that might be called malevolent. Meanwhile, a Second Confiscation Act proclaimed freedom for the slaves of all those who supported the Confederate Government. Horace Greeley now published in the "New York Tribune" an editorial entitled, "The Prayer of Twenty Millions." He denounced Lincoln's treatment of Fremont and Hunter and demanded radical action. Lincoln replied in a letter now famous. "I would save the Union," said he, "I would save it the shortest way under the Constitution.... If I could save the Union without freeing any slave, I would do it; and if I could save it by freeing some and leaving others alone, I would also do that. What I do about slavery and the colored race, I do because I believe it helps to save the Union; and what I forbear, I forbear because I do not believe it would help to save the Union."
However, at the very time when he wrote this remarkable letter, he had in his own mind entered upon the third stage of his policy. He had even then discussed with his Cabinet an announcement favoring general emancipation. The time did not seem to them ripe. It was decided to wait until a Federal victory should save the announcement from appearing to be a cry of desperation. Antietam, which the North interpreted as a victory, gave Lincoln his opportunity.
The Emancipation Proclamation applied only to the States in arms against the Federal Government. Such States were given three months in which to return to the Union. Thereafter, if they did not return, their slaves would be regarded by that Government as free. No distinction was made between slaves owned by supporters of the Confederacy and those whose owners were in opposition to it. The Proclamation had no bearing on those slave States which had not seceded. Needless to add, no seceded State returned, and a second Proclamation making their slaves theoretically free was in due time issued on the first of January, 1863.
It must not be forgotten that this radical change of policy was made in September, 1862. We have already heard of the elections which took place soon after—those elections which mark perhaps the lowest ebb of Lincoln's popularity, when Seymour was elected Governor of New York, and the peace party gained over thirty seats in Congress. It is a question whether, as a purely domestic measure, the Emancipation Proclamation was not, for the time, an injury to the Lincoln Government. And yet it was the real turning-point in the fortunes of the North. It was the central fact in the maintenance of the blockade.
In England at this time the cotton famine was at its height. Nearly a million people in the manufacturing districts were wholly dependent upon charity. This result of the blockade had been foreseen by the Confederate Government which was confident that the distress of England's working people would compel the English ministry to intervene and break the blockade. The employers in England whose loss was wholly financial, did as the Confederates hoped they would do. The workmen, however, took a different course. Schooled by a number of able debaters, they fell into line with that third group of political leaders who saw in the victory of the North, whatever its motives, the eventual extinction of slavery. To these people, the Emancipation Proclamation gave a definite programme. It was now, the leaders argued, no longer a question of eventual effect; the North had proclaimed a motive and that motive was the extinction of slavery. Great numbers of Englishmen of all classes who had hitherto held back from supporting Cobden and Bright now ranged themselves on their side. Addresses of praise and sympathy "began to pour into the Legation of the United States in a steady and ever swelling stream." An immense popular demonstration took place at Exeter Hall. Cobden, writing to Sumner, described the new situation in British politics, in a letter amounting to an assurance that the Government never again would attempt to resist the popular pressure in favor of the North.
On the last day of 1862 a meeting of workingmen at Manchester, where the cotton famine was causing untold misery, adopted one of those New Year greetings to Lincoln. Lincoln's reply expressed with his usual directness his own view of the sympathetic relation that had been established between the democratic classes of the two countries:
"I know and deeply deplore the sufferings which the workingmen at Manchester, and in all Europe, are called to endure in this crisis. It has been often and studiously represented that the attempt to overthrow this Government, which was built upon the foundation of human rights, and to substitute for it one which should rest exclusively on the basis of human slavery, was likely to obtain the favor of Europe. Through the action of our disloyal citizens, the workingmen of Europe have been subjected to severe trials, for the purpose of forcing their sanction to that attempt. Under the circumstances, I cannot but regard your decisive utterances upon the question as an instance of sublime Christian heroism which has not been surpassed in any age or in any country. It is indeed an energetic and reinspiring assurance of the inherent power of truth, and of the ultimate triumph of justice, humanity, and freedom. I do not doubt that the sentiments you have expressed will be sustained by your great nation; and, on the other hand, I have no hesitation in assuring you that they will excite admiration, esteem, and the most reciprocal feelings of friendship among the American people. I hail this interchange of sentiment, therefore, as an augury that whatever else may happen, whatever misfortune may befall your country or my own, the peace and friendship which now exists between the two nations will be, as it shall be my desire to make them, perpetual."
Though the defeat of the Democrats at the polls in 1863 and the now definitely friendly attitude of England had done much to secure the stability of the Lincoln Government, this success was due in part to a figure which now comes to the front and deserves attentive consideration. Indeed the work of Salmon Portland Chase, Secretary of the Treasury, forms a bridge, as one might say, between the first and second phases of Lincoln's administration.
The interesting Englishman who is the latest biographer of Lincoln says of Chase: "Unfortunately, this imposing person was a sneak." But is Lord Charnwood justified in that surprising characterization? He finds support in the testimony of Secretary Welles, who calls Chase, "artful dodger, unstable, and unreliable." And yet there is another side, for it is the conventional thing in America to call him our greatest finance minister since Hamilton, and even a conspicuous enemy said of him, at a crucial moment, that his course established his character "as an honest and frank man."
Taking these contradictory estimates as hints of a contradiction in the man, we are forced to the conclusion that Chase was a professional in politics and an amateur in finance. Perhaps herein is the whole explanation of the two characteristics of his financial policy—his reluctance to lay taxes, and his faith in loans. His two eyes did not see things alike. One was really trying to make out the orthodox path of finance; the other was peering along the more devious road of popular caprice.
The opening of the war caught the Treasury, as it caught all branches of the Government, utterly unprepared. Between April and July, 1861, Chase had to borrow what he could. When Congress met in July, his real career as director of financial policy began—or, as his enemies think, failed to begin. At least, he failed to urge upon Congress the need of new taxes and appeared satisfied with himself asking for an issue of $240,000,000 in bonds bearing not less than seven per cent interest. Congress voted to give him $250,000,000 of which $50,000,000 might be interest-bearing treasury notes; made slight increases in duties; and Prepared for excise and direct taxation the following year. Later in the year Congress laid a three per cent tax on all incomes in excess of $800.
When Congress reassembled in December, 1861, expenditures were racing ahead of receipts, and there was a deficit of $143,000,000. It must not be forgotten that this month was a time of intense excitability and of nervous reaction. Fremont had lately been removed, and the attack on Cameron had begun. At this crucial moment the situation was made still more alarming by the action of the New York banks, followed by all other banks, in suspending specie payments. They laid the responsibility upon Chase. A syndicate of banks in New York, Boston, and Philadelphia had come to the aid of the Government, but when they took up government bonds, Chase had required them to pay the full value cash down, though they had asked permission to hold the money on deposit and to pay it as needed on requisition by the Government. Furthermore, in spite of their protest, Chase issued treasury notes, which the banks had to receive from their depositors, who nevertheless continued to demand specie. On January 1, 1862, the banks owed $459,000,000 and had in specie only $87,000,000. Chase defended his course by saying that the financial crisis was not due to his policy—or lack of policy, as it would now seem—but to a general loss of faith in the outcome of the war.
There now arose a moral crisis for this "imposing person" who was Secretary of the Treasury—a crisis with regard to which there are still differences of opinion. While he faced his problem silently, the Committee on Ways and Means in the House took the matter in hand: Its solution was an old one which all sound theorists on finance unite in condemning—the issue of irredeemable paper money. And what did the Secretary of the Treasury do? Previously, as Governor of Ohio, he had denounced paper money as, in effect, a fraud upon society. Long after, when the tide of fortune had landed him in the high place of Supreme Justice, he returned to this view and condemned as unconstitutional the law of 1862 establishing a system of paper money. But at the time when that law was passed Chase, though he went through the form of protesting, soon acquiesced. Before long he was asking Congress to allow a further issue of what he had previously called "fraudulent" money.
The answer to the question whether Chase should have stuck to his principles and resigned rather than acquiesce in the paper money legislation turns on that other question—how were the politician and the financier related in his make-up?
Before Congress and the Secretary had finished, $450,000,000 were issued. Prices naturally rose, and there was speculation in gold. Even before the first issue of paper money, the treasury notes had been slightly below par. In January, 1863, a hundred dollars in paper would bring, in New York, only $69.00 in gold; a year later, after falling, rising, and falling again, the value was $64.00; in July and August, 1864, it was at its lowest, $39.00; when the war closed, it had risen to $67.00. There was powerful protest against the legislation responsible for such a condition of affairs. Justin Morrill, the author of the Morrill tariff, said, "I would as soon provide Chinese wooden guns for the army as paper money alone for the army. It will be a breach of public faith. It will injure creditors; it will increase prices; it will increase many fold the cost of the war." Recent students agree, in the main, that his prophecies were fulfilled; and a common estimate of the probable increase in the cost of the war through the use of paper money and the consequent inflation of prices is $600,000,000.
There was much more financial legislation in 1862; but Chase continued to stand aside and allow Congress the lead in establishing an excise law, an increase in the income tax, and a higher tariff—the last of which was necessitated by the excise law which has been described as a bill "that taxed everything." To enable American manufacturers to bear the excise duties levied upon their business, protection was evoked to secure them the possession of their field by excluding foreign competition. All these taxes, however, produced but a fraction of the Government's revenue. Borrowing, the favorite method of the Secretary, was accepted by Congress as the main resource. It is computed that by means of taxation there was raised in the course of the war $667,163,247.00, while during the same period the Government borrowed $2,621,916,786.00.
Whatever else he may think of Chase, no one denies that in 1862 he had other interests besides finance. Lincoln's Cabinet in those days was far from an harmonious body. All through its history there was a Chase faction and a Seward faction. The former had behind them the Radical Republicans, while the latter relied upon the support of the moderates. This division in the Republican party runs deep through the politics of the time. There seems to be good reason to think that Chase was not taken by surprise when his radical allies in Congress, in December, 1862, demanded of Lincoln the removal of Seward. It will be remembered that the elections of the autumn of 1862 had gone against Lincoln. At this moment of dismay, the friends of Chase struck their blow. Seward instantly offered his resignation. But Lincoln skillfully temporized. Thereupon, Chase also resigned. Judging from the scanty evidence we have of his intention, we may conclude that he thought he had Lincoln in a corner and that he expected either to become first minister or the avowed chief of an irresistible opposition. But he seems to have gone too fast for his followers. Lincoln had met them, together with his Cabinet, in a conference in December, 1862, and frankly discussed the situation, with the result that some of them wavered. When Lincoln informed both Seward and Chase that he declined to accept their resignations, both returned—Seward with alacrity, Chase with reluctance. One of the clues to Lincoln's cabinet policy was his determination to keep both these factions committed to the Government, without allowing himself to be under the thumb of either.
During the six months following the cabinet crisis Chase appears at his best. A stupendous difficulty lay before him and he attacked it manfully. The Government's deficit was $276,900,000. Of the loans authorized in 1862—the "five-twenties" as they were called, bringing six per cent and to run from five to twenty years at the Government's pleasure—-the sales had brought in, to December, 1862, only $23,750,000, though five hundred million had been expected. The banks in declining to handle these bonds laid the blame on the Secretary, who had insisted that all purchasers should take them at par.
It is not feasible, in a work of this character, to enter into the complexities of the financial situation of 1863, or to determine just what influences caused a revolution in the market for government bonds. But two factors must be mentioned. Chase was induced to change his attitude and to sell to banks large numbers of bonds at a rate below par, thus enabling the banks to dispose of them at a profit. He also called to his aid Jay Cooke, an experienced banker, who was allowed a commission of one-half per cent on all bonds sold up to $10,000,000 and three-eighths of one per cent after that. Cooke organized a countrywide agency system, with twenty-five hundred subagents through whom he offered directly to the people bonds in small denominations. By all manner of devices, patriotism and the purchase of bonds were made to appear the same thing, and before the end of the year $400,000,000 in five-twenty bonds had been sold. This campaign to dispose of the five-twenties was the turning-point in war finance, and later borrowings encountered no such difficulties as those of 1862 and 1863.
Better known today than this precarious legislation is the famous Act of 1863, which was amended in the next year and which forms the basis of our present system of national banks. To Chase himself the credit for this seems to be due. Even in 1861 he advised Congress to establish a system of national banks, and he repeated the advice before it was finally taken. The central feature of this system which he advocated is one with which we are still familiar: permission to the banks accepting government supervision to deposit government bonds in the Treasury and to acquire in return the right to issue bank-notes to the amount of ninety per cent of the value of the bonds.
There can be no doubt that Chase himself rated very highly his own services to his country. Nor is there any doubt that, alone among Lincoln's close associates, he continued until the end to believe himself a better man than the President. He and his radical following made no change in their attitude to Lincoln, though Chase pursued a course of confidential criticism which has since inspired the characterization of him as a "sneak," while his followers were more outspoken. In the summer of 1863 Chase was seriously talked of as the next President, and before the end of the year Chase clubs were being organized in all the large cities to promote his candidacy. Chase himself took the adroit position of not believing that any President should serve a second term.
Early in 1864 the Chase organization sent out a confidential circular signed by Senator Pomeroy of Kansas setting forth the case against Lincoln as a candidate and the case in favor of Chase. Unfortunately for Chase, this circular fell into the hands of a newspaper and was published. Chase at once wrote to Lincoln denying any knowledge of the circular but admitting his candidacy and offering his resignation. No more remarkable letter was written by Lincoln than his reply to Chase, in which he showed that he had long fully understood the situation, and which he closed with these words: "Whether you shall remain at the head of the Treasury Department is a question which I do not allow myself to consider from any standpoint other than my judgment of the public service, and, in that view, I do not perceive occasion for change."
The Chase boom rapidly declined. The deathblow was given by a caucus of the Union members of the legislature of his own State nominating Lincoln "at the demand of the people and the soldiers of Ohio." The defeat embittered Chase. For several months, however, he continued in the Cabinet, and during this time he had the mortification of seeing Lincoln renominated in the National Union Convention amid a great display of enthusiasm.
More than once in the past, Chase had offered his resignation. On one occasion Lincoln had gone to his house and had begged him to reconsider his decision. Soon after the renomination, Chase again offered his resignation upon the pretext of a disagreement with the President over appointments to office. This time, however, Lincoln felt the end had come and accepted the resignation. Chase's successor in the Treasury was William Pitt Fessenden, Senator from Maine. During most of the summer of 1864 Chase stood aside, sullen and envious, watching the progress of Lincoln toward a second election. So much did his bitterness affect his judgment that he was capable of writing in his diary his belief that Lincoln meant to reverse his policy and consent to peace with slavery reestablished.