Financing the Civil War

HARPER'S WEEKLY.

[FEBRUARY 1, 1862.

66

DESTRUCTION OF A SCHOONER OFF THE COAST OF GEORGIA.

WE publish on the preceding page a picture of the DESTRUCTION OF A SCHOONER which was trying to run the blockade off Cumberland Inlet, Georgia. A letter from the United States steamer Alabama to the Herald thus describes the affair :

Early on 15th December a small sail was descried to the southward, standing in toward Cumberland Inlet, and evidently trying to run the blockade. Signalizing the fact to our consort, both vessels got under way and started in pursuit, the Bienville taking the lead, until about nine o'clock, when the chase, finding that they could not make their escape, ran the craft ashore between Cumberland Inlet and Fernandina, leaving all sail set, and commenced removing her cargo to the beach. The Alabama then felt her way cautiously in as far as practicable, the Bienville remaining in the offing to look out for more customers of the same sort. Two of our boats were then lowered, manned, and armed, under the command of Acting-Masters Dennis and West, and one likewise from the Bienville, and, after an hour's hard pulling, they boarded the prize, her late occupants having taken to the woods upon the approach of " Lincoln's hirelings." She proved to be a fine fore and aft schooner, evidently Spanish, without name, colors, or papers, and loaded with a very valuable cargo of coffee, Havana cigars, shoes, and other miscellaneous stores. Observing a steamer coining down Cumberland Inlet, with the evident intention of cutting our boats off, Captain Lanier dispatched another boat with orders to fire the schooner in case that she could not get off immediately. Accordingly the boats were loaded with coffee, cigars, shoes, and fruit, and the doomed schooner was soon wrapped in flames, the officers staying by her long enough to see that her destruction was inevitable. No sooner had our boats started for the ship than the schooner's crew ran down out of the woods and boarded her; but they were too late to extinguish the flames, her masts soon going by the board, and when we last saw her naught remained save a smoking wreck. Considering the close vicinity of these operations to the batteries at the mouth of the inlet, and the uncertainty as to whether it might not prove a clever ruse to draw us under the fire of masked batteries, the expedition was certainly a very hazardous one, and reflects great credit upon the officers and men who carried it out.

THE PIRATE " SUMTER."

WE publish on the preceding page an engraving which represents the pirate Sumter firing shot and shell at the Boston brigantine Joseph Park, after rifling her of the best part of her contents. The drawing was furnished us by Captain Amsbury, of the E. J. Talbot. The Boston Journal thus describes the affair :

The Joseph Park, Captain Knights, sailed from this port July 30, in ballast, for Pernambuco, and at 6.30 A.M., of September 25, saw a steamer steering north. Finding the steamer was bearing down on them, the Captain of the Park ordered the second mate to go below and get the American flag, which he did, and this was run up. The steamer still made for the brig, and when within hailing distance also ran up the American flag at the gaff. An order was then given from the steamer to the Captain of the brig to haul in his studding-sails and heave to, which was at once done. A boat was then lowered from the steamer, which had come tinder the stern of the brig, and a lieutenant, with six men, came on board the brig and asked the Captain for his papers, at the same time telling him that he and his crew were prisoners of war to the Confederate steamer Sumter. Captain Knights at once produced his papers and went on board the Sumter, as did all the crew, each being told to take his clothes, etc., with him. On the crew getting on board the Sumter they were taken to the quarter-deck and their chests examined, when they were sent below, each having his sheath-knife and matches taken from him.

A prize crew was put on board the brig, and she was kept three days as a tender to the Sumter, when her water, provisions, instruments, and new sails were taken on board the steamer, and six shells and three round shots were fired at her at a distance of about five hundred yards, but without hitting her. At sunset the same day a boat's crew went aboard the brig, and putting her before the wind, they set her on fire.

Captain Amsbury tells us that while the Sumter was at St. Pierre she was moored to a tree by a cable, and so intense was the feeling of the negroes against her that a guard of ten marines and ten French soldiers was constantly kept to prevent them cutting the cable. He says that the custom-house and other authorities sympathized with the pirate; that the French man-of-war lying in the port furnished Captain Semmes with several boat-loads of clothing ; and that every obstacle was placed in the way of the Iroquois. At latest accounts the Sumter was again at St. Pierre, Martinique.

HARPER'S WEEKLY.

SATURDAY, FEBRUARY 1, 1862.
CURRENCY AND TAXATION.

BOTH Houses of Congress now stand pledged, by a nearly unanimous vote, to tax the people, directly and indirectly, to the amount of $150,000,000 annually. Nothing has yet been determined with regard to the nature of the new taxes to be imposed, or with regard to the methods by which Mr. Chase proposes to refill his exhausted Treasury. Both topics, however, are being actively ventilated in the papers and in Congress, and it is fair to presume that, when action is taken on them, it will be taken understandingly.

There are certain points which are admitted on all sides. It is confessed that the Treasury is empty, and the floating debt about $80,000,000. No one doubts but the war is costing us $500,000,000 a year. It is also well known, at least in financial circles, that the Government can not borrow any money at present, either at home or abroad. Large sums, such as are required for the prosecution of great wars, can only be borrowed through the interposition of heavy banks and banking-houses, and our banks and bankers have already done their utmost. Very nearly the entire bank capital of New York, Philadelphia, and Boston is at the present moment invested in Government securities, which the people evince no willingness to take off the hands of the banks. As to borrowing abroad, that is not to be thought of. After the Trent affair our people would not suffer any Finance

Minister from this country to go begging to London ; and even if the attempt were made, there are abundant indications that foreign Governments would, from a desire to see this country divided, prevent the negotiation of any United States loan. It being clear, therefore, that we are spending $500,000,000 a year ; that the Treasury is empty ; and that no more money can be borrowed; the question is—by what other process can the Government obtain money for the prosecution of the war?

Thus far two practical schemes, and only two, have been laid before the public. A vast number of visionary methods have been proposed by "currency doctors ;" but none but the two to which we allude deserve attention.

The first has been laid before the House by Mr. Spalding, of the Committee of Ways and Means. It proposes to allow Mr. Chase to pay his debts in Treasury Notes which shall bear no interest, shall be a legal tender, and shall be convertible into United States Sixes. The advantage of this scheme is that it at once relieves the Treasury, and supplies the Government with all the money it needs. The objection to it is the " fatal facility" which it affords for excessive issues of paper money, and the prospect of the new Treasury Notes depreciating.

The other scheme, which is the offspring of certain bank Presidents, proposes to allow Mr. Chase to pay his debts in Treasury Notes bearing 3.65 per cent. annual interest, and not a legal tender, but convertible into 7.30 notes, which latter are convertible into 6 per cents. The advantage of this scheme is that it does not increase the volume of currency afloat, and hence in some degree avoids the dangers of a general inflation. The objection to it is that the 3.65 notes, not being bankable, could not find a market or a resting-place, and would infallibly depreciate to an enormous extent, dragging down with them all other Government securities, and the whole fabric of public and corporate credit. It would seem that this scheme would render certain and speedy all the evils which, under Mr. Spalding's plan, might possibly occur, under adverse circumstances, at a remote period.

Both these projects rest, of course, on a basis of taxation. Without adequate taxation, neither Treasury Notes bearing interest, nor Treasury Notes without interest will help the Government. With taxation to the extent of $150,000,000 annually, a large amount of Government paper can be floated, as it would be receivable for taxes ; and it would be received every where without scruple, if it was apparent that the public revenue from direct taxation was adequate to defray all interest charges upon the bonds into which it was convertible, and to extinguish the principal at a given period by means of a sinking fund.

It is instructive, in this connection, to refer to the experience of other nations engaged in great wars. When Great Britain went to war in 1793 to restore the Bourbons to the throne of France, her rulers believed, as Mr. Lincoln did last spring, that the contest would be brief. Mere temporary arrangements for loans were therefore made (just as Mr. Chase made with the Associated Banks in July), and for four years the war was carried on with borrowed money, and without increase of taxation. In 1797 Mr. Pitt perceived, as Mr. Chase does now, that this resource was exhausted, and that recourse must be had to taxation. The war taxes were increased from an average of less than $90,000,000 annually to $150,000,000 in 1798, $226,000,000 in 1804, $307,000,000 in 1808, and $352,000,000 in 1815. Simultaneously with this, in 1797, the Bank was directed to suspend specie payments, and paper was made, and remained for twenty-three years, a legal tender and the currency of the kingdom. Under this system Great Britain was enabled to expend in this long war a sum of $5,556,000,000 without exhausting her strength. She came out of the war richer than she went into it, with her population increased from ten to sixteen millions, and with her position secured as the most wealthy nation in the world.

If we should follow this example, Congress should first proceed to select the best possible kind and form of paper (there being no institution in this country analogous to the Bank of England), and make it a legal tender, providing for it a market and an ultimate resting-place by making it receivable for all public dues, redeemable in coin at the pleasure of Government, and convertible into Government bonds at a fixed rate. It should next proceed to impose war taxes enough to meet a very large proportion of the annual expenditure—say one-third, at least. The people of Great Britain, who number 26,000,000, pay annual taxes, direct and indirect, amounting to between $300,000,000 and $350,000,000. The people of France, numbering 40,000,000, pay taxes, direct and indirect, to the amount of $275,000,000 to $300,000,000. The people of the loyal States, numbering over 21,000,000, can surely afford to pay $200,000,000 for taxes during the first year of the war, and to increase the amount hereafter, should the war continue.

In July last Congress adopted a measure imposing an income tax, which was to be levied only on incomes over $800 a year. It is to be feared that in this servile imitation of British precedent due regard was not had to the difference

between this country and England. In Great Britain a very large segment of the people enjoy fixed incomes from lands or money invested in public securities; this class is reached better by an income tax than in any other way. In this country, on the contrary, there are no fixed incomes, and every man can be reached by specific taxes upon property and commerce. The limitation fixed by Congress at $800 would, moreover, have the effect of exempting from the operation of the tax the great bulk of the rural population, and would throw the whole of it upon residents in cities.

A revenue of $150,000,000 can be obtained without any income tax. If the tariff be so adjusted as to yield $50,000,000, the remaining $100,000,000 can be raised by—1. A stamp tax, which ought to be made to yield at least $50,000,000 ; 2. Excise duties on liquors, beer, ale, wines, and tobacco, say $20,000,000 ; and, 3. A property tax, $30,000,000. Other legitimate objects of taxation, which should be made to yield revenue, are private carriages ; stock held in banks, railroads, insurance companies, and other commercial and moneyed corporations; watches, jewelry, and plate ; the incomes of resident foreigners who do not propose to become naturalized ; lawsuits ; legacies ; travelers ; steamboats, omnibuses, hack carriages, and other vehicles for travel; newspapers; horses, cattle, and sheep ; auction sales, etc., etc., etc. ; all of which might and ought to be taxed.

THE LOUNGER.

A NATIONAL PRESIDENT.

THE President certainly gives proof of the fact that he regards the question of the suppression of the rebellion to be a purely national question, entirely independent of party. The policy of his Administration, falling upon so critical a time, has been to gather to the national standard all loyal men, whether they were Republicans or Democrats. The peril of the nation annihilates party, and whoever forgets that fact, the President does not. He is the most purely national and loyal Chief Magistrate we have had for many a year. Removals from office have been made from patriotic and not upon partisan grounds. High military appointments have been given to men of the strongest political enmity to the Administration. Mr. Jeremiah S. Black, the last Secretary of State under James Buchanan, has been named Reporter to the Supreme Court. General Dix, the last Secretary of War in the same Cabinet, is now Major-General, and in command at Baltimore. Edwin M. Stanton, Mr. Buchanan's last Attorney-General, is now Mr. Lincoln's Secretary of War.

It would be difficult for any man to give stronger proof of the sincerity of his conviction that the country is to be saved by all loyal citizens than the President gives by this action. And it is quite enough to silence the Democratic party snarls at the war in New Hampshire and Indiana.

THE TAX.

THE most alarming sign since the outbreak of the rebellion was the apparent unwillingness of Congress to levy a necessary tax; for it indicated a want of confidence in the people. It implied that they were not willing to pay for the war. But if we have all made so huge a mistake, let us know it at once. If we are all so absurdly deceiving ourselves, the sooner the truth appears the better. If the nation wishes and expects to pay the enormous cost of this war by throwing up hats and bawling hoarse huzzas to patriotic sentiments, certainly no time should be lost in surrendering to the rebellion.

The question of the tax is simply, Are we in earnest? Are we willing to know that the expense is vast, and to pay it honestly, every cent? It is easy enough to print a myriad reams of prettily engraved notes, and to agree to take them for money. But they are not money; and, like all outer lies, they will come to naught, and bring us to confusion. Are we in earnest ? For if we are, we shall gladly economize, and economize again. If we are, we shall be willing enough to be poor, but never to be dishonored.

Besides, the tax has been expected. For nine months we have known that pay-day must presently come; that a nation whose entire machinery was set to peace could not go to war without an immense outlay. We have had to build a navy; to collect and equip an army; to feed, and move, and arm half a million of men, until now we are spending two millions of dollars a day to keep the machine moving. And that money must be paid by the whole nation. It is about ten cents a day for every man, woman, and child in the loyal States. Does any one doubt that they are willing to pay it -that they expect to pay it ?

Nations have been called upon to do it before ours. William Pitt, the pluckiest of British premiers, when England was wrestling for life and death with France, proceeded upon the principle that the British people wanted to live, and were willing to pay for life. He knew that there would be complaints and outcries, but he knew that John Bull had sense enough to see that he must pay the exact value of what he enjoyed. His motto, therefore, was, "New loans, new taxes." When he was obliged to borrow money, he set apart certain revenues to pay the interest and take care of the principal. John Bull growled; paid the tax; thanked him; and has ever since followed so good an example.

The only question to consider, then, is, not whether we shall be taxed, but how the tax shall best be laid. Every man will feel greater security of our success if he knows that our expenses are virtually cash payments. And a still greater confidence will

possess the public mind when every body is seen willingly submitting to the necessary tax. Every moment of delay is a battle lost. Every sign of hesitation is a bid for foreign interference. The Committee should have at once advised the necessary tax, or an unconditional surrender.

EXPENSIVE ECONOMY.

THAT the war should be ended as suddenly and with as much economy as possible we are all agreed. But the country should keep a sharp eye upon Congress that measures of the most expensive economy are not adopted. If, for instance, there were a high pecuniary premium upon inventions of effective fire-arms and projectiles, this would hardly seem to be the special moment for repealing it. Indeed, the last points which the hand of economy should touch are those which increase our knowledge of the rebels' weaknesses, or furnish us means to strike them effectively.

It is for this reason that the proposition to omit the appropriation for the Coast Survey should be so jealously regarded. It is a plan of penny-wise-and-pound-foolish economy. No money appropriated for many years past is proved by events to have been more wisely expended than that which has sustained this survey. The most brilliant action of the war, hitherto—the capture and occupation of Port Royal—is mainly due to the exact knowledge of the region obtained by the Coast Survey. Captain Davis knew his ground perfectly. So in stopping Charleston harbor. The ships were not sunk at random. They were left in the very spots which the Coast Survey had shown would be the most effective for the purpose.

The war will be waged by us upon the coast, for we are very strong upon the sea. But our marine strength, under the circumstances, gets its efficiency from our exact knowledge of the whole shore against which we operate, and that comes from the Coast Survey. Our navy, however ample in ships and armaments, however heroic in men, can only deal left-handed blows unless it knows precisely the character of the coast. Is this a time to suspend the survey which gives it that knowledge?

Besides, we all naturally wish that we may, as far as possible, avoid the usual brutalizing effects of war. It is its tendency to crush all purely scientific and intellectual progress and life. In our great desire to throttle rebellion we may forget that it is therefore doubly necessary that all humanizing and civilizing processes should be continued. It is our constantly widening and deepening intelligence which confirms our political advance. Without knowledge Democracy is a delusion. Even Great Britain, in her long French wars, fighting for existence, as she now confesses, did not discontinue this kind of work. Why should we? The Coast Survey is invaluable for the immediate purpose of the war. It is a monument of our consciousness of the value of science to a nation. Its expense is small. Is its suspension a cheap economy?

THE VAN OF VICTORY.

WE weekly papers have a hard time of it, when every day is so rich in events and news. Happy fellows they are who can talk of things as they happen ! At this moment of writing the air is full of expectation. Something is imminent. The great January fog which seems to cloud the land from the Mississippi to the Chesapeake, is only symbolic of that perfect obscurity in which events are hidden; while yet events seem at hand, as the Mississippi flotilla and the Burnside expedition are ready somewhere in the fog.

The "great movement," it is universally understood, is commencing which is to crush the rebellion. The next six days, or the next fortnight, are to unroll a splendid spectacle. We are to win victories here, and occupy posts there. In a word, we are going to do exactly what we design to do.

While therefore the public faith and expectation are so resolute, and while no solitary expression can dampen any body's ardor, or even seem to indicate distrust of an ultimate result, why should we not reflect for a moment upon possible disappointment? We are fully ready for victory; are we pretty well prepared for defeat? If the flotilla is driven back, if Burnside's expedition is as ineffective as it will be heroic and devoted, are we all ready to carry our faith as firmly, and to look as squarely at the inevitable consequences?

If any of the great battles which seem to be near shall be lost by us, three things will happen : The white-feather party will begin to cackle; the rebels will insist upon some forward movement of their own; and John Bull will begin to clear his throat preparatory to saying, "You can't do the work, and I recognize 'em."

The point that we ought always to bear in mind is that war is uncertain; that the most ample and adequate preparations often fail ; that a cause may be eminently just, but does not therefore necessarily win the battle ; and that if any disaster befalls us now, we are to be only the readier next time. Rebellions of such proportions as this are not easily snuffed out. In case of success upon every hand in our present operations we are not to look for immediate peace. Broken the rebels may be, and dismayed, and disheartened, but they will not yield to one campaign however successful. They fight from an old hate; from a life-long sophistication. They fight, too, with the sympathy of the world. Let us not suppose, therefore, that they are going to surrender at once. There is much more fighting, much more endurance, much more paying, than we have yet had. The movement of to-day is doubtless the van of victory. But the rear may not be yet in sight.

THE CONTRACTS.

THE people are doubtless willing to pay the necessary money for the war, but they will not patiently endure many such exposures as Mr. Dawes made in his speech. They are specimen plums from (Next Page)