customs came to be alone the base of the Treasury. The exports of the country at the origin of the government were mostly breadstuffs of northern origin, and this continued up to the peace of 1815, from which time, with each new want of the government, higher rates were required. In 1792, General HAMILTON asked for 2 per cent to be added to existing 5 per cent duties, to provide for the "protection of the frontiers." This he said was an important though not an excessive augmentation, and it was to be temporary only. The levy was made, but it proved not only permanent, but it was followed by other additions, until the 5 per cent of 1789 had risen to 30 per cent in 1808. In the war of 1813 the rate had risen to 60 per cent, being doubled for war purposes.

The occurence of war, with its vast expenses, destroyed the availability of the customs, and threw the government upon new expedients. The amount of capital in the country was not great, and that portion of the country possessed of the most capital was opposed to the war-even organizing secession rather than submit to the will of the whole people as expressed in the acts of the government. Loans were indispensable, and the government was obliged to depend for them, in a good measure, upon the banks of the Middle States, which were the great reservoirs of capital. The loans were in two shapes, treasury notes and stock subscriptions. The former circulated to a considerable extent as currency, being generally taken in business transactions. The subscription of the banks to the loans of the government involved a suspension of specie payment in those sections where the government was supported. The Eastern banks did not favor this loan, and they reduced their liabilities to sustain specie payments. The taxes levied for the support of the war were not very prolific. They did not operate until 1814, and for the three years 1814-15-16, the amount collected was $20,100,000; there was realized from loans $113,000,000. These taxes and loans were all based upon the inconvertible bank currency, which was at a heavy discount as compared with gold. The struggle of the government was severe in order to meet its wants, but with the return of peace in 1816, the immense imports swelled the customs revenues to $36,000,000, a point far higher than ever before. The use of paper money produced two parties for and against specie payment. The first came forward with two significant demands: one was that the debts which had been borrowed in depreciated bank paper, should be paid in gold, and that the taxes should, in like manner, be collected in specie; also that the banks should resume, involving the necessity on the part of all individuals of paying in specie, contracts which had been made in depreciated paper. The merchandise which had been sold on credit at paper prices, were to be paid in gold. The manufacturers also demanded that their productions, which had been developed during the war, should be protected for the future in time of peace. The result of these propositions would be, that while all the debts due creditors, as well as commercial claims-as government paper bought up at low prices-would be paid at par in gold, high duties on imported goods would insure high specie prices in the future for domestic manufactures.

These results were loudly complained of by the Southern members, and the more so that Northern food and provisions had ceased to be the chief exports of the country, but that cotton, rice, and tobacco had come to be the leading staples on which the payment of imported goods depended.

It was uniformly urged that the high prices caused by the duties were taking capital from the agricultural sections and accumulating it in the manufacturing districts. "In one word," said Mr. TELFAIR, in 1816, "all articles are made dear to the consumer, whether of foreign or domestic fabrication, merely that the manufacturer may derive a profit on his capital." The Southern members all declared that the effect of such a policy would be to keep the South poor, and make the North and East very rich. The system prevailed, and the rates of duties were continually increased, amid the growing discontent of the South, until in 1830, when the federal debt was nearly extinguished, the average rate of duties paid was 48 per cent, and the discontent of the South manifested itself in the nullification of 1832. This serious blow at the government caused a reversion of the system. From the peace of 1815 to 1832 the prosperity of the country had been almost uninterrupted. The revenues were ample, and a portion of the debt was annually discharged, until now it was not only closed, but a surplus of $35,000,000 was in the Treasury. The stand taken by the South caused a compromise. The tariff was to be reduced gradually, until in 1842 it should reach 20 as a maximum tax. Unfortunately, while this compromise was adopted, there was no change in the government system of finance, which still depended on the customs solely, and liable to all the vicissitudes of commerce. One effect of the high tariff of 1828, had been an accumulation of specie in the banks, which impelled them to such a course of loans as aided in a wild speculation, which, swelling the government revenues, caused the accumulation of a surplus in the Treasury. To get rid of that surplus, $28,000,000 was deposited with the States, when a financial revulsion burst over the world, involving such a destruction of commercial credits, as greatly reduced the imports into the United States, and deprived the government of reveTo meet the emergency, it was compelled to issue Treasury notes, and continued to use them in aid of the Treasury during nearly seven years before the recuperative powers of the country restored the customs to the level of the public wants. This fatal necessity of depending upon customs caused a violation of the compromise of 1832, in the enaction of the tariff of 1843. Mr. CALHOUN objected to the proposed tariff, that it was worse than that of 1828. The average rate was, indeed, 10 per cent less, but the substitution of cash duties for bonds or long credit, the substitution of specific for ad valorem rates on articles that had fallen in value, the home valuation of goods, the arbitary mode of collecting, and the fact that it went into operation immediately on its passage, all tended to enhance its injurious features.

nue.

He said, "I shall not dwell on the fact that it openly violates the compromise act, and the pledges given by its author and by Governor DAVIS, of Massachusetts, that if the South would adhere to the compromise while it was operating favorably for the manufacturers, they would stand by it when it came to operate favorably for the South. Í dwell not on those double breaches of plighted faith, although they are of a serious character, and likely to exercise a pernicious influence over our future legislation, by preventing amicable adjustments of questions that may hereafter threaten the peace of the country."

The customs again, therefore, became the means of sustaining the Treasury down to the Mexican war, when, foreign trade not being interrupted, smail loans only were requisite to meet the extra demands occa

sioned by hostilities. The gold of California brought on a season of great prosperity, which swelled the revenues to an amount equal to the wants of the government, and enabled it to diminish its debt by purchasing the stock at a high premium. As high as 22 per cent premium was paid by the Treasury, in 1856, for some descriptions of government stock not due. In 1857 a commercial revulsion stopped imports, deprived the government of revenues, and again compelled it to issue Treasury notes.

The aggregate revenues and payments of the United States from the origin of the government down to the close of the fiscal year 1861, were as follows;

There remained unpaid July 1, 1861, a debt of $90,867,828, which, if it had been paid, would have raised the excess of debt payments over receipts to $409,818,558, whence it will be observed that if the revenue had been so regular that no borrowing had at any time been necessary, the amount actually collected would have been sufficient. The government has paid back two dollars for every one borrowed, and also distributed $28,101,644 among the States. The land revenues are more apparent than real, since the lands have cost quite as much as has been realized from them. It results, then, that the customs have paid all the debts and expenses of the government from its origin, and those customs have been imposed on goods purchased with domestic produce. Of these the records have been regularly kept only since 1821. The aggregate domestic exports from 1821 to 1861, was $5,060,929,667. Of this amount, $3,311,208,104 was composed of the four articles, cotton, rice, tobacco, and naval stores; $1,102,362,404 of breadstuffs and provisions, and the remainder cotton goods and other manufactures, of which a considerable portion were of Southern origin. In the aggregate, 70 per cent was of Southern products. In the same period the quantity of goods consumed in the country was $5,818,049,325, and the customs collected amounted to $1,231,456,369, or 21 per cent, and being an annual average of nearly $7 per head each person for the whole period. The larger portion of the foreign goods have been consumed at the North, but they have been paid for by the South, and that section has been reimbursed by Northern manufactures at prices enhanced by the duty on competing foreign goods.

This state of affairs caused that growing discontent against the dangers of which FISHER AMES and others cautioned the first Congress, and of which nullification in 1832, and the warnings of Mr. CALHOUN were indicative, without producing any change in the financial system.

It is no doubt true, that under the operation of these custom duties the

government has been maintained, all the expenses of four wars had been meet, two empires had been purchased-Florida and Louisiana-the country sprinkled with government buildings, forts, and arsenals, a navy created and an immense stock of military supplies accumulated, while tracts of country remained in the hands of the government of almost countless value. All this had been derived from customs duties, and in a purely financial sense the results of this system were evidently gratifying. In another sense it was not so, however. The system had been a constant source of strife between political parties, and the great Southern section, which had denounced it in the beginning as sure to impoverish the South for the benefit of the North, found their discontent deeper seated as their views in that respect were more manifestly justified, and the peace of the country was threatened. It was indeed alleged by a party at the North, that the labor system of the South was the cause of the impoverishment, as if a system which had undeniably produced such vast wealth was of itself the cause of that poverty with which the South was reproached.

The outbreak of the war, involving a scale of expenditures to which the country had hitherto been a stranger, brought the government face to face with the gravest difficulties that ever before presented themselves to a government. The nation heretofore had maintained a high credit while it paid, but when it was in want of money that credit was not found to be stable. Of the individual States that composed the Union, nine had been tainted with repudiation. The consequence was, that when the Federal government, in 1842-although it had been the only government that had always paid its debt, principal and interest, in full-wanted to borrow for peace purposes, it could not get a dollar at home or abroad. • It had never had any system of taxation, and it was considered a problem if the people would submit to Federal taxation. In 1861, twenty years later, a graver difficulty presented itself. The whole resources of the Treasury were customs derived from duties on goods mostly purchased with articles produced at the South, by a class of laborers which the party in power in the North, it was alleged, were determined to emancipate by force of arms-an event which would sweep away what had hitherto been the base of the government finances. It was not to be expected that the credit of the government would stand high abroad among those whose business depended upon those Southern productions, which the war was to destroy. The war also jeopardized the exertions of the government, since no one could tell how many States, or in what condition, would survive the war. Who was to repay the money asked for? These, and a multitude of other questions presented themselves to the minds of capitalists, when the results of the election of November, 1860, were followed by such a diminution of imports that the government found itself without a revenue. The effects of the commercial revulsion of 1857 had not yet passed away in June, 1860, when Congress authorized a loan of $20,000,000 to redeem outstanding Treasury notes. Of this amount Secretary COBB offered $10,000,000 in October, 1860, at five per cent, and it was taken at a premium. Before it was paid, however, the results of the elections cause the bidders to decline part of the stock, and $7,022,000 only was issued. The imports declined simultaneously, and with them customs were reduced. On the 10th of December HOWELL COBB resigned; on the 14th, Congress passed a law permitting the negotiation of $10,000,000 Treasury notes, payable in a year, at the lowest bid. The bids were opened on

the 28th, and only $500,000 was offered, at 12 per cent. There were offers at 36 per cent and at 24 per cent, but all over 12 per cent were rejected. With a great deal of exertion on the part of those interested in support of the government credit, $5,000,000 was subscribed at 12 per cent, to pay the government interest due January 1, 1861. January 19, Secretary Dix negotiated $5,000,000 more at an average of 10 per cent. Congress, however, continued to trifle with the financial, as with the political, condition of the country, but on the 8th of February, under pressure of daily demands, authorized a loan of $25,000,000, to run ten to twenty years, to be sold to the highest bidder. A portion of this was negotiated at 90 @ 96 per cent. The tariff of March 1st authorized a further loan of $10,000,000. The advent of the new government to power being attended by apparent moderation confidence, somewhat recovered. The new Secretary of the Treasury, Mr. CHASE, was placed in power as a politician, but was devoid of all those qualifications which were so indispensable to the financial head of the nation at such a momentous crisis. He was a fair lawyer, but had never been familiar with great money transactions, the principles of financial science, or the machinery by which great operations are moved. In a quiet time, with the government in high credit and the Treasury well supplied, he might have prevented waste. He was much praised, and the public hoped much. At the close of March he put a portion of the loan on the market, and received bids at 93 @ 94 for $8,000,000. This was the first operation of the new Secretary, who came into power amidst general laudation, but this first transaction chilled confidence in his capacity. The offer was 3 per cent higher than made to General Dix, and at the moment the bids were opened the government was secretly fitting out an armed expedition against Sumter and Pickens; yet, under the circumstances, the Secretary had the inconceivable fatuity to reject the offers below 94, and he obtained only $3,099,000. When the departure of the expedition was known, the Secretary came again into the market for $5,000,000, and got no bids at all. Money was 4 per cent, but government 6 per cent stock sold at 83, and the Secretary was helpless. This state of affairs alarmed those interested in public credit, and after much exertion $5,000,000 of Treasury notes, receivable for customs, was placed mostly with banks and large importers, with whom the notes bearing 6 per cent interest were available for duties. The Secretary, who had thus ruined his own credit at the first start, was now entirely helpless. Congress was not to meet until July, and all his means consisted of the balance of the $14,000,000 loan of July, 1860-these could not be sold under par, and as the market price was 84, they could not be used the balance of the $9,000,000 loan of February, and the $10,000,000 authorized in March. The Secretary could do nothing with any of them. The banks and capitalists were alarmed at the condition of the public credit and the incapacity of the head of the department. The Chamber of Commerce, with numerous sub-committees, and the banks of the three cities took the matter in hand and exerted themselves to get bids for the stock to be opened May 21. The opening was put off to May 25, in order to give more time to the committees, who finally succeeded in getting bids for $6,396,000 at 85 @ 93, and for $2,241,000 six per cent notes at par. These sums provided for the most pressing wants of the Treasury, but all the extra wants of the government had been met by the offerings