CHAPTER XX FINANCIAL HISTORY, MONEY AND BANKING 1860-1915 I. FINANCING THE WAR A. Extent and Character of Government Receipts and The receipts and expenditures of the government at the outbreak of the Civil War were meager as compared to those during the war period. Thus receipts for the fiscal year 1860 approximated $80,000,000, and expenditures were only a little less. The public debt, which was something like $70,000,000, carried an interest charge of about eleven cents per capita. The government had but one important source of revenue, the tariff. A detailed statement of both receipts and expenditures follows: TREASURY DEPARTMENT, SIR: In compliance with the act of Congress entitled "An act supplementary to an act to establish the Treasury Department," approved May 10, 1800, I have the honor to submit the following report: On the first day of July, 1859, being the commencement of the fiscal year 1860, the balance in the treasury was.. The receipts into the treasury during the fiscal year 1860 were as follows: For the quarter ending September 30, 1859: $4,339,275.54 210,000.00 20,618,865.85 1 Treasury Report, 1860 (Washington, 1860), 3-4, 6-7. Making the aggregate means for the service of the fiscal year ending June 30, 1860.... 81,091,309-43 The expenditures during the fiscal year ending June 30, 1860, were as follows: Which amount was applied to the respective branches of the To civil, foreign intercourse, and miscellaneous services..... To service of Navy Department.. 27,969,870.84 3,955,686.59 16,409,767.10 11,513,150.19 17,613,628.00 77,462,102.72 Estimates for the fiscal year from 1st July, 1861, to 30th June, 1862. Estimated expenditures from permanent appropriations........ 9,626,386.20 not before required. 12,198,112.62 Estimates now submitted by the executive departments for appropriation by Congress. . 46,539,227.29 Aggregate estimated expenditures for fiscal year 1862.. Showing a deficit of estimated means for the service of the fiscal year ending 30th June, 1862, of... 68,363,726.11 3,867,834-53 The suggestions above made, as to not drawing from the treasury during the year the whole amount of the appropriations authorized by law, will apply to these estimates, so that instead of the above deficiency of $3,867,834.53, there will probably remain [in] the treasury on the 1st July, 1862, a balance of about $8,000,000. B. Money Cost of the Civil War, 18691 The money cost of the Civil War was stupendous in its magnitude, so much so that few if any of the public men of the time would have believed at the beginning of the conflict that such a cost would have been borne by the people. It was borne, however, with little apparent difficulty and without much complaint, for the north prospered in spite of the War. The million or more northerners in the field required immense quantities of food and equipment, and their places had been taken by improved machinery. The money cost of the war was reported on in 1869 by the Special Commissioner of the Revenue, David A. Wells, as follows: It would seem to be desirable at this point, now that all feeling in regard to the subject from its bearing on political questions has apparently passed away, to place upon record the exact cost of the war, as nearly as the same can be determined. With this object, attention is asked to the following exhibit: The amount of outstanding national indebtedness March 7, 1861, was. $76,455,299.28 1 Report of the Special Commissioner of the Revenue, 1869 (Washington, 1870), During the four years of war which terminated in April, 1865, (April 1, 1861, to April 1, 1865,) the actual receipts of the treasury were as follows: The receipts of revenue from April 1, 1865, to June 30, 1869, inclusive, during which period the larger portion of the expenditures has been directly in consequence of the war, were as follows: The amount of outstanding indebtedness, less cash and sink- Making the total expenditure (loans and receipts) in eight We shall have. $2,489,002,480.58 2,412,547,181.30 4,996,914,498.33 825,000,000.00 $4,171,914,498.33 which sum represents the cost of the war to the United States government down to June 30, 1869. To this sum should be added the value of the pensions now paid by the Government on account of the war, if the same were capitalized. This, at eight years' purchase of the present annual payment, would amount to about two hundred millions. But this aggregate, however large, must still further be increased by other items if we would reach the true cost of the war to us as a people, the above representing only the expenditures of the national government. These additional charges are substantially as follows: Increase of State debts, mainly on war account... Expenditures of States, counties, cities, and towns, on account Estimated direct expenditures and loss of property by the Confederate States by reason of the war.. $123,000,000 200,000,000 600,000,000 1,200,000,000 2,700,000,000 These estimates, which are believed to be moderate and reasonable, show an aggregate destruction of wealth, or diversion of industry which would have produced wealth, in the United States since 1861, approximating nine thousand millions of dollars a sum nominally in excess of the entire increase of wealth, as returned by the census, for the whole country from 1850 to 1860. II. THE GREENBACKS A. Quantity and Nature of the Greenback Issues, 18641 One of the methods adopted by Congress for raising war revenue was the issuing of United States notes, popularly known as greenbacks. The total amount authorized was $450,000,000. These notes displaced coins as a circulating medium and caused a rise in prices as measured in the greenbacks themselves. In other words the value of the notes fell measured in gold. Because of their effect on prices and on the circulation of gold, many persons have criticized Congress for authorizing them. An official account of the greenback situation was given in 1864 as follows: The necessities of the treasury were, however, immediate. To raise money in large amounts by taxation, and even by loans, requires more time than can always be afforded with large armies in the field and great navies afloat. The demands of war are imperative, and cannot await the slow process of financial negotiations. To meet a demand thus urgent, Congress, by acts of February 25 and July 11, 1862, saw fit to authorize the emission of United States notes to the amount, including sixty millions of treasury notes previously author1 Treasury Report, 1864 (Washington, 1864), 3. |