THE FINANCIAL POSITION.
The Americans are proud of much that they have done in this war, and
indeed much has been done which may justify pride; but of nothing are
they so proud as of the noble dimensions and quick growth of their
Government debt. That Mr. Secretary Chase, the American Chancellor
of the Exchequer, participates in this feeling I will not venture to
say; but if he do not, he is well nigh the only man in the States
who does not do so. The amount of expenditure has been a subject of
almost national pride, and the two million of dollars a day which has
been roughly put down as the average cost of the war, has always been
mentioned by northern men in a tone of triumph. This feeling is, I
think, intelligible; and although we cannot allude to it without a
certain amount of inward sarcasm,--a little gentle laughing in the
sleeve, at the nature of this national joy, I am not prepared to say
that it is altogether ridiculous. If the country be found able and
willing to pay the bill, this triumph in the amount of the cost will
hereafter be regarded as having been anything but ridiculous. In
private life an individual will occasionally be known to lavish his
whole fortune on the accomplishment of an object which he conceives
to be necessary to his honour. If the object be in itself good, and
if the money be really paid, we do not laugh at such a man for the
sacrifices which he makes.
For myself, I think that the object of the northern States in this
war has been good. I think that they could not have avoided the
war without dishonour, and that it was incumbent on them to make
themselves the arbiters of the future position of the South, whether
that future position shall or shall not be one of secession. This
they could only do by fighting. Had they acceded to secession
without a civil war, they would have been regarded throughout Europe
as having shown themselves inferior to the South, and would for
many years to come have lost that prestige which their spirit and
energy had undoubtedly won for them; and in their own country such
submission on their part would have practically given to the South
the power of drawing the line of division between the two new
countries. That line, so drawn, would have given Virginia, Maryland,
Kentucky, and Missouri to the southern Republic. The great effect of
the war to the North will be, that the northern men will draw the
line of secession, if any such line be drawn. I still think that such
line will ultimately be drawn, and that the southern States will be
allowed to secede. But if it be so, Virginia, Maryland, Kentucky, and
Missouri will not be found among these seceding States; and the line
may not improbably be driven south of North Carolina and Tennessee.
If this can be so, the object of the war will, I think, hereafter
be admitted to have been good. Whatever may be the cost in money of
joining the States which I have named to a free-soil northern people,
instead of allowing them to be buried in that dismal swamp, which
a confederacy of southern slave States will produce, that cost can
hardly be too much. At the present moment there exists in England a
strong sympathy with the South, produced partly by the unreasonable
vituperation with which the North treated our Government at the
beginning of the war, and by the capture of Mason and Slidell; partly
also by that feeling of good-will which a looker-on at a combat
always has for the weaker side. But, although this sympathy does
undoubtedly exist, I do not imagine that many Englishmen are of
opinion that a confederacy of southern slave States will ever offer
to the general civilization of the world very many attractions. It
cannot be thought that the South will equal the North in riches, in
energy, in education, or general well-being. Such has not been our
experience of any slave country; such has not been our experience of
any tropical country; and such especially has not been our experience
of the southern States of the North American Union. I am no
abolitionist; but to me it seems impossible that any Englishman
should really advocate the cause of slavery against the cause of
free soil. There are the slaves, and I know that they cannot be
abolished,--neither they nor their chains; but, for myself, I will
not willingly join my lot with theirs. I do not wish to have dealings
with the African negro either as a free man or as a slave, if I can
avoid them, believing that his employment by me in either capacity
would lead to my own degradation.* Such, I think, are the feelings of
Englishmen generally on this matter. And if such be the case, will it
not be acknowledged that the northern men have done well to fight for
a line which shall add five or six States to that Union which will in
truth be a union of free men, rather than to that Confederacy which,
even if successful, must owe its success to slavery?
*In saying this I fear that I shall be misunderstood, let me
use what foot-note or other mode of protestation I may to guard
myself. In thus speaking of the African negro, I do not venture to
despise the work of God's hands. That He has made the negro, for
His own good purposes, as He has the Esquimaux, I am aware. And I
am aware that it is my duty, as it is the duty of us all, to see
that no injury be done to him, and, if possible, to assist him in
his condition. When I declare that I desire no dealings with the
negro, I speak of him in the position in which I now find him,
either as a free servant or a slave. In either position he impedes
the civilization and the progress of the white man.
In considering this matter it must be remembered that the five
or six States of which we are speaking are at present slave
States, but that, with the exception of Virginia,--of part only of
Virginia,--they are not wedded to slavery. But even in Virginia,
great as has been the gain which has accrued to that unhappy State
from the breeding of slaves for the southern market,--even in
Virginia slavery would soon die out if she were divided from the
South, and joined to the North. In those other States, in Maryland,
in Kentucky, and in Missouri there is no desire to perpetuate the
institution. They have been slave States, and as such have resented
the rabid abolition of certain northern orators. Had it not been for
those orators, and their oratory, the soil of Kentucky would now have
been free. Those five or six States are now slave States; but a line
of secession drawn south of them will be the line which cuts off
slavery from the North. If those States belong to the North when
secession shall be accomplished, they will belong to it as free
States; but if they belong to the South, they will belong to the
South as slave States. If they belong to the North, they will become
rich as the North is, and will share in the education of the North.
If they belong to the South they will become poor as the South
is, and will share in the ignorance of the South. If we presume
that secession will be accomplished,--and I for one am of that
opinion,--has it not been well that a war should be waged with
such an object as this? If those five or six States can be gained,
stretching east and west from the Atlantic to the centre of the
continent, hundreds of miles beyond the Mississippi, and north and
south over four degrees of latitude,--if that extent of continent can
be added to the free soil of the northern territory, will not the
contest that has done this have been worth any money that can have
been spent on it?
So much as to the object to be gained by the money spent on the war!
And I think that in estimating the nature of the financial position
which the war has produced, it was necessary that we should consider
the value of the object which has been in dispute. The object I
maintain has been good. Then comes the question whether or no the
bill will be fairly paid;--whether they who have spent the money will
set about that disagreeable task of settling the account with a true
purpose and an honest energy. And this question splits itself into
two parts. Will the Americans honestly wish to pay the bill; and if
they do so wish, will they have the power to pay it? Again that last
question must be once more divided. Will they have the power to pay,
as regards the actual possession of the means, and if possessing
them, will they have the power of access to those means?
The nation has obtained for itself an evil name for repudiation. We
all know that Pennsylvania behaved badly about her money affairs,
although she did at last pay her debts. We all know that Mississippi
has behaved very badly about her money affairs, and has never paid
her debts, nor does she intend to pay them. And, which is worse than
this, for it applies to the nation generally and not to individual
States, we all know that it was made a matter of boast in the States
that in the event of a war with England the enormous amount of
property held by Englishmen in the States should be confiscated.
That boast was especially made in the mercantile city of New York;
and when the matter was discussed it seemed as though no American
realized the iniquity of such a threat. It was not apparently
understood that such a confiscation on account of a war would be an
act of national robbery justified simply by the fact that the power
of committing it would be in the hands of the robbers. Confiscation
of so large an amount of wealth would be a smart thing, and men did
not seem to perceive that any disgrace would attach to it in the eyes
of the world at large. I am very anxious not to speak harsh words of
the Americans; but when questions arise as to pecuniary arrangements
I find myself forced to acknowledge that great precaution is at any
rate necessary.
But, nevertheless, I am not sure that we shall be fair if we allow
ourselves to argue as to the national purpose in this matter from
such individual instances of dishonesty as those which I have
mentioned. I do not think it is to be presumed that the United States
as a nation will repudiate its debts because two separate States may
have been guilty of repudiation. Nor am I disposed to judge of the
honesty of the people generally from the dishonest threatenings of
New York, made at a moment in which a war with England was considered
imminent. I do believe that the nation, as a nation, will be as ready
to pay for the war as it has been ready to carry on the war. That
"ignorant impatience of taxation," to which it is supposed that we
Britons are very subject, has not been a complaint rife among the
Americans generally. We, in England, are inclined to believe that
hitherto they have known nothing of the merits and demerits of
taxation, and have felt none of its annoyances, because their entire
national expenditure has been defrayed by light Custom duties; but
the levies made in the separate States for State purposes, or chiefly
for municipal purposes, have been very heavy. They are, however,
collected easily, and, as far as I am aware, without any display of
ignorant impatience. Indeed, an American is rarely impatient of any
ordained law. Whether he be told to do this, or to pay for that, or
to abstain from the other, he does do and pay and abstain without
grumbling, provided that he has had a hand in voting for those
who made the law and for those who carry out the law. The people
generally have, I think, recognized the fact that they will have to
put their necks beneath the yoke, as the peoples of other nations
have put theirs, and support the weight of a great national debt.
When the time comes for the struggle,--for the first uphill heaving
against the terrible load which they will henceforth have to drag
with them in their career, I think it will be found that they are not
ill-inclined to put their shoulders to the work.
Then as to their power of paying the bill! We are told that the
wealth of a nation consists in its labour, and that that nation is
the most wealthy which can turn out of hand the greatest amount of
work. If this be so the American States must form a very wealthy
nation, and as such be able to support a very heavy burden. No one,
I presume, doubts that that nation which works the most, or works
rather to the best effect, is the richest. On this account England is
richer than other countries, and is able to bear, almost without the
sign of an effort, a burden which would crush any other land. But
of this wealth the States own almost as much as Great Britain owns.
The population of the northern States is industrious, ambitious of
wealth, and capable of work as is our population. It possesses, or is
possessed by, that restless longing for labour which creates wealth
almost unconsciously. Whether this man be rich or be a bankrupt,
whether the bankers of that city fail or make their millions, the
creative energies of the American people will not become dull.
Idleness is impossible to them, and therefore poverty is impossible.
Industry and intellect together will always produce wealth; and
neither industry nor intellect is ever wanting to an American. They
are the two gifts with which the fairy has endowed him. When she
shall have added honesty as a third, the tax-gatherer can desire no
better country in which to exercise his calling.
I cannot myself think that all the millions that are being spent
would weigh upon the country with much oppression, if the weight were
once properly placed upon the muscles that will have to bear it. The
difficulty will be in the placing of the weight. It has, I know,
been argued that the circumstances under which our national debt
has extended itself to its present magnificent dimensions cannot be
quoted as parallel to those of the present American debt, because we,
while we were creating the debt, were taxing ourselves very heavily,
whereas the Americans have gone a-head with the creation of their
debt before they have levied a shilling on themselves towards the
payment of those expenses for which the debt has been encountered.
But this argument, even if it were true in its gist, goes no way
towards proving that the Americans will be unable to pay. The
population of the present free-soil States is above eighteen
millions; that of the States which will probably belong to the Union
if secession be accomplished is about twenty-two millions. At a time
when our debt had amounted to six hundred millions sterling, we
had no population such as that to bear the burden. It may be said
that we had more amassed wealth than they have. But I take it that
the amassed wealth of any country can go but a very little way in
defraying the wants or in paying the debts of a people. We again come
back to the old maxim, that the labour of a country is its wealth;
and that a country will be rich or poor in accordance with the
intellectual industry of its people.
But the argument drawn from that comparison between our own conduct
when we were creating our debt, and the conduct of the Americans
while they have been creating their debt,--during the twelve months
from April 1, 1861, to March 31, 1862, let us say,--is hardly a fair
argument. We, at any rate, knew how to tax ourselves,--if only the
taxes might be forthcoming. We were already well used to the work;
and a minister with a willing House of Commons had all his material
ready to his hand. It has not been so in the United States. The
difficulty has not been with the people who should pay the taxes, but
with the minister and the Congress which did not know how to levy
them. Certainly not as yet have those who are now criticising the
doings on the other side of the water, a right to say that the
American people are unwilling to make personal sacrifices for the
carrying out of this war. No sign has as yet been shown of an
unwillingness on the part of the people to be taxed. But wherever
a sign could be given, it has been given on the other side. The
separate States have taxed themselves very heavily for the support
of the families of the absent soldiers. The extra allowances made
to maimed men, amounting generally to twenty-four shillings a month,
have been paid by the States themselves, and have been paid almost
with too much alacrity.
I am of opinion that the Americans will show no unwillingness to pay
the amount of taxation which must be exacted from them; and I also
think that as regards their actual means they will have the power
to pay it. But as regards their power of obtaining access to those
means, I must confess that I see many difficulties in their way.
In the first place they have no financier,--no man who by natural
aptitude and by long continued contact with great questions of
finance, has enabled himself to handle the money affairs of a nation
with a master's hand. In saying this I do not intend to impute any
blame to Mr. Chase, the present Secretary at the Treasury. Of his
ability to do the work properly, had he received the proper training,
I am not able to judge. It is not that Mr. Chase is incapable. He may
be capable or incapable. But it is that he has not had the education
of a national financier, and that he has no one at his elbow to help
him who has had that advantage.
And here we are again brought to that general absence of state craft
which has been the result of the American system of government. I am
not aware that our Chancellors of the Exchequer have in late years
always been great masters of finance; but they have at any rate been
among money men and money matters, and have had financiers at their
elbows if they have not deserved the name themselves. The very fact
that a Chancellor of the Exchequer sits in the House of Commons and
is forced in that House to answer all questions on the subject of
finance, renders it impossible that he should be ignorant of the
rudiments of the science. If you put a white cap on a man's head and
place him in a kitchen, he will soon learn to be a cook. But he will
never be made a cook by standing in the dining-room and seeing the
dishes as they are brought up. The Chancellor of the Exchequer is our
cook; and the House of Commons, not the Treasury chambers, is his
kitchen. Let the Secretary of the United States Treasury sit in the
House of Representatives. He would learn more there by contest with
opposing members than he can do by any amount of study in his own
chamber.
But the House of Representatives itself has not as yet learned its
own lesson with reference to taxation. When I say that the United
States are in want of a financier, I do not mean that the deficiency
rests entirely with Mr. Chase. This necessity for taxation, and for
taxation at so tremendous a rate, has come suddenly, and has found
the representatives of the people unprepared for such work. To us, as
I conceive, the science of taxation, in which we certainly ought to
be great, has come gradually. We have learned by slow lessons what
taxes will be productive, under what circumstances they will be most
productive, and at what point they will be made unproductive by their
own weight. We have learned what taxes may be levied so as to afford
funds themselves, without injuring the proceeds of other taxes, and
we know what taxes should be eschewed as being specially oppressive
to the general industry and injurious to the well-being of the
nation. This has come of much practice, and even we, with all our
experience, have even got something to learn. But the public men
in the States who are now devoting themselves to this matter of
taxing the people have, as yet, no such experience. That they
have inclination enough for the work is, I think, sufficiently
demonstrated by the national tax bill, the wording of which is now
before me, and which will have been passed into law before this
volume can be published. It contains a list of every taxable article
on the earth or under the earth. A more sweeping catalogue of
taxation was probably never put forth. The Americans, it has been
said by some of us, have shown no disposition to tax themselves for
this war; but before the war has as yet been well twelve months in
operation, a bill has come out with a list of taxation so oppressive,
that it must, as regards many of its items, act against itself and
cut its own throat. It will produce terrible fraud in its evasion,
and create an army of excise officers who will be as locusts over
the face of the country. Taxes are to be laid on articles which I
should have said that universal consent had declared to be unfit for
taxation. Salt, soap, candles, oil, and other burning fluids, gas,
pins, paper, ink, and leather, are to be taxed. It was at first
proposed that wheat-flour should be taxed, but that item has, I
believe, been struck out of the bill in its passage through the
House. All articles manufactured of cotton, wool, silk, worsted,
flax, hemp, jute, india-rubber, gutta percha, wood (?), glass,
pottery wares, leather, paper, iron, steel, lead, tin, copper, zinc,
brass, gold and silver, horn, ivory, bone, bristles, wholly or in
part, or of other materials, are to be taxed;--provided always that
books, magazines, pamphlets, newspapers, and reviews shall not be
regarded as manufactures. It will be said that the amount of taxation
to be levied on the immense number of manufactured articles which
must be included in this list will be light,--the tax itself being
only 3 per cent. ad valorem. But with reference to every article,
there will be the necessity of collecting this 3 per cent.! As
regards each article that is manufactured, some government official
must interfere to appraise its value and to levy the tax. Who shall
declare the value of a barrel of wooden nutmegs; or how shall
the Excise-officer get his tax from every cobbler's stall in the
country? And then tradesmen are to pay licences for their trades,--a
confectioner £2, a tallow-chandler £2, a horsedealer £2. Every man
whose business it is to sell horses shall be a horsedealer. True. But
who shall say whether or no it be a man's business to sell horses?
An apothecary £2, a photographer £2, a pedlar £4, £3, £2, or £1,
according to his mode of travelling. But if the gross receipts of any
of the confectioners, tallow-chandlers, horsedealers, apothecaries,
photographers, pedlars, or the like do not exceed £200 a year, then
such tradesmen shall not be required to pay for any licence at all.
Surely such a proviso can only have been inserted with the express
view of creating fraud and ill blood! But the greatest audacity has,
I think, been shown in the levying of personal taxes,--such taxes
as have been held to be peculiarly disagreeable among us, and have
specially brought down upon us the contempt of lightly-taxed people,
who, like the Americans, have known nothing of domestic interference.
Carriages are to be taxed,--as they are with us. Pianos also are to
be taxed, and plate. It is not signified by this clause that such
articles shall pay a tax, once for all, while in the maker's hands,
which tax would no doubt fall on the future owner of such piano or
plate; in such case the owner would pay, but would pay without any
personal contact with the tax-gatherer. But every owner of a piano or
of plate is to pay annually according to the value of the articles
he owns. But perhaps the most audacious of all the proposed taxes
is that on watches. Every owner of a watch is to pay 4_s._ a year
for a gold watch and 2_s._ a year for a silver watch! The American
tax-gatherers will not like to be cheated. They will be very keen in
searching for watches. But who can say whether they or the carriers
of watches will have the best of it in such a hunt. The tax-gatherers
will be as hounds ever at work on a cold scent. They will now be
hot and angry, and then dull and disheartened. But the carriers of
watches who do not choose to pay will generally, one may predict, be
able to make their points good.
With such a tax bill,--which I believe came into action on the 1st of
May, 1862,--the Americans are not fairly open to the charge of being
unwilling to tax themselves. They have avoided none of the irritating
annoyances of taxation, as also they have not avoided, or attempted
to lighten for themselves, the dead weight of the burden. The dead
weight they are right to endure without flinching; but their mode of
laying it on their own backs justifies me, I think, in saying that
they do not yet know how to obtain access to their own means. But
this bill applies simply to matters of excise. As I have said before,
Congress, which has hitherto supported the government by custom
duties, has also the power of levying excise duties, and now, in its
first session since the commencement of the war, has begun to use
that power without much hesitation or bashfulness. As regards their
taxes levied at the Custom House, the government of the United States
has always been inclined to high duties, with the view of protecting
the internal trade and manufactures of the country. The amount
required for national expenses was easily obtained, and these duties
were not regulated, as I think, so much with a view to the amount
which might be collected, as to that of the effect which the tax
might have in fostering native industry. That, if I understand it,
was the meaning of Mr. Morrill's bill, which was passed immediately
on the secession of the southern members of Congress, and which
instantly enhanced the price of all foreign manufactured goods in the
States. But now the desire for protection, simply as protection, has
been swallowed up in the acknowledged necessity for revenue; and the
only object to be recognized in the arrangement of the custom duties
is the collection of the greatest number of dollars. This is fair
enough. If the country can at such a crisis raise a better revenue
by claiming a shilling a pound on coffee than it can by claiming
sixpence, the shilling may be wisely claimed, even though many may
thus be prohibited from the use of coffee. But then comes the great
question, What duty will really give the greatest product? At what
rate shall we tax coffee so as to get at the people's money? If it be
so taxed that people won't use it, the tax cuts its own throat. There
is some point at which the tax will be most productive; and also
there is a point up to which the tax will not operate to the serious
injury of the trade. Without the knowledge which should indicate
these points, a Chancellor of the Exchequer, with his myrmidons,
would be groping in the dark. As far as we can yet see, there is not
much of such knowledge either in the Treasury Chambers or the House
of Representatives at Washington.
But the greatest difficulty which the States will feel in obtaining
access to their own means of taxation, is that which is created by
the constitution itself, and to which I alluded when speaking of
the taxing powers which the constitution had given to Congress, and
those which it had denied to Congress. As to custom duties and excise
duties, Congress can do what it pleases, as can the House of Commons.
But Congress cannot levy direct taxation according to its own
judgment. In those matters of customs and excise, Congress and the
Secretary of the Treasury will probably make many blunders; but
having the power they will blunder through, and the money will be
collected. But direct taxation, in an available shape, is beyond the
power of Congress under the existing rule of the constitution. No
income-tax, for instance, can be laid on the general incomes of the
United States, that shall be universal throughout the States. An
income-tax can be levied, but it must be levied in proportion to the
representation. It is as though our Chancellor of the Exchequer, in
collecting an income-tax, were obliged to demand the same amount of
contribution from the town of Chester as from the town of Liverpool,
because both Chester and Liverpool return two Members to Parliament.
In fitting his tax to the capacity of Chester, he would be forced to
allow Liverpool to escape unscathed. No skill in money matters on
the part of the Treasury Secretary, and no aptness for finance on
the part of the Committee on Ways and Means, can avail here. The
constitution must apparently be altered before any serviceable resort
can be had to direct taxation. And yet, at such an emergency as
that now existing, direct taxation would probably give more ready
assistance than can be afforded either by the Customs or the Excise.
It has been stated to me that this difficulty in the way of direct
taxation can be overcome without any change in the constitution.
Congress could only levy from Rhode Island the same amount of
income-tax that it might levy from Iowa; but it will be competent to
the legislature of Rhode Island itself to levy what income-tax it may
please on itself; and to devote the proceeds to national or federal
purposes. Rhode Island may do so; and so may Massachusetts, New
York, Connecticut, and the other rich Atlantic States. They may
tax themselves according to their riches, while Iowa, Illinois,
Wisconsin, and such-like States are taxing themselves according to
their poverty. I cannot myself think that it would be well to trust
to the generosity of the separate States for the finances needed by
the national Government. We should not willingly trust to Yorkshire
or Sussex to give us their contributions to the national income,
especially if Yorkshire and Sussex had small Houses of Commons of
their own, in which that question of giving might be debated. It may
be very well for Rhode Island or New York to be patriotic! But what
shall be done with any State that declines to evince such patriotism?
The legislatures of the different States may be invited to impose a
tax of 5 per cent. on all incomes in each State; but what will be
done if Pennsylvania, for instance, should decline, or Illinois
should hesitate? What if the legislature of Massachusetts should
offer 6 per cent., or that of New Jersey decide that 4 per cent.
was sufficient? For a while the arrangement might possibly be made
to answer the desired purpose. During the first ebullition of high
feeling, the different States concerned might possibly vote the
amount of taxes required for federal purposes. I fear it would not be
so, but we may allow that the chance is on the card. But it is not
conceivable that such an arrangement should be continued when, after
a year or two, men came to talk over the war with calmer feelings
and a more critical judgment. The State legislatures would become
inquisitive, opinionative, and probably factious. They would be
unwilling to act in so great a matter under the dictation of the
federal Congress; and by degrees one, and then another, would decline
to give its aid to the central government. However broadly the
acknowledgment may have been made, that the levying of direct taxes
was necessary for the nation, each State would be tempted to argue
that a wrong mode and a wrong rate of levying had been adopted, and
words would be forthcoming instead of money. A resort to such a mode
of taxation would be a bad security for government Stock.
All matters of taxation, moreover, should be free from any taint
of generosity. A man who should attempt to lessen the burdens of
his country by gifts of money to its Exchequer would be laying his
country under an obligation, for which his country would not thank
him. The gifts here would be from States, and not from individuals;
but the principle would be the same. I cannot imagine that the United
States' Government would be willing to owe its revenue to the good
will of different States, or its want of revenue to their caprice. If
under such an arrangement the western States were to decline to vote
the quota of income-tax or property-tax to which the eastern States
had agreed,--and in all probability they would decline,--they would
in fact be seceding. They would thus secede from the burdens of their
general country; but in such event no one could accuse such States of
unconstitutional secession.
It is not easy to ascertain with precision what is the present amount
of debt due by the United States; nor probably has any tolerably
accurate guess been yet given of the amount to which it may be
extended during the present war. A statement made in the House of
Representatives, by Mr. Spaulding, a member of the Committee of Ways
and Means, on the 29th of January last, may perhaps be taken as
giving as trustworthy information as any that can be obtained. I have
changed Mr. Spaulding's figures from dollars into pounds, that they
may be more readily understood by English readers.
There was Due up to July 1,1861 £18,173,566
" Added in July and August 5,379,357
" Borrowed in August 10,000,000
" Borrowed in October 10,000,000
" Borrowed in November 10,000,000
" Amount of Treasury Demand
Notes issued 7,800,000
-----------
£61,352,923
This was the amount of the debt due up to January 15th, 1862. Mr.
Spaulding then calculates that the sum required to carry on the
Government up to July 1st, 1862, will be £68,647,077. And that a
further sum of £110,000,000 will be wanted on or before the 1st
of July, 1863. Thus the debt at that latter date would stand as
follows:--
Amount of Debt up to January, 1862 £61,352,923
Added by July 1st, 1862 68,647,077
Again added by July 1st, 1863 110,000,000
------------
£240,000,000
The first of these items may no doubt be taken as accurate. The
second has probably been founded on facts which leave little doubt
as to its substantial truth. The third, which professes to give the
proposed expense of the war for the forthcoming year, viz. from 1st
July, 1862, to 30th June, 1863, must necessarily have been obtained
by a very loose estimate. No one can say what may be the condition of
the country during the next year,--whether the war may then be raging
throughout the southern States, or whether the war may not have
ceased altogether. The North knows little or nothing of the capacity
of the South. How little it knows may be surmised from the fact that
the whole southern army of Virginia retreated from their position at
Manassas before the northern generals knew that they were moving; and
that when they were gone no word whatever was left of their numbers.
I do not believe that the northern Government is even yet able to
make any probable conjecture as to the number of troops which the
southern confederacy is maintaining, and if this be so, they can
certainly make no trustworthy estimates as to their own expenses for
the ensuing year.
Two hundred and forty millions is, however, the sum named by a
gentleman presumed to be conversant with the matter, as the amount
of debt which may be expected by midsummer, 1863; and if the war
be continued till then, it will probably be found that he has not
exceeded the mark. It is right, however, to state that Mr. Chase in
his estimate does not rate the figures so high. He has given it as
his opinion that the debt will be about one hundred and four millions
in July, 1862, and one hundred and eighty millions in July, 1863. As
to the first amount, with reference to which a tolerably accurate
calculation may probably be made, I am inclined to prefer the
estimate as given by the member of the committee; and as to the
other, which hardly, as I think, admits of any calculation, his
calculation is at any rate as good as that made in the Treasury.
But it is the immediate want of funds, and not the prospective debt
of the country, which is now doing the damage. In this opinion Mr.
Chase will probably agree with me; but readers on this side of the
water will receive what I say with a smile. Such a state of affairs
is certainly one that has not uncommonly been reached by financiers;
it has also often been experienced by gentlemen in the management of
their private affairs. It has been common in Ireland, and in London
has created the wealth of the pawnbrokers. In the States at the
present time the government is very much in this condition. The
prospective wealth of the country is almost unbounded, but there is
great difficulty in persuading any pawnbroker to advance money on the
pledge. In February last Mr. Chase was driven to obtain the sanction
of the legislature for paying the national creditors by bills drawn
at twelve months' date, and bearing 6 per cent. interest. It is the
old story of the tailor who calls with his little account, and draws
on his insolvent debtor at ninety days. If the insolvent debtor be
not utterly gone as regards solvency he will take up the bill when
due, even though he may not be able to pay a simple debt. But then,
if he be utterly insolvent, he can do neither the one nor the other!
The Secretary of the Treasury, when he asked for permission to
accept these bills,--or to issue these certificates, as he calls
them,--acknowledged to pressing debts of over five millions sterling
which he could not pay; and to further debts of eight millions
which he could not pay, but which he termed floating;--debts, if
I understand him, which were not as yet quite pressing. Now I
imagine that to be a lamentable condition for any Chancellor of an
Exchequer,--especially as a confession is at the same time made
that no advantageous borrowing is to be done under the existing
circumstances. When a Chancellor of the Exchequer confesses that he
cannot borrow on advantageous terms, the terms within his reach must
be very bad indeed. This position is indeed a sad one, and at any
rate justifies me in stating that the immediate want of funds is
severely felt.
But the very arguments which have been used to prove that the country
will be ultimately crushed by the debt, are those which I should use
to prove that it will not be crushed. A comparison has more than once
been made between the manner in which our debt was made, and that in
which the debt of the United States is now being created; and the
great point raised in our favour is, that while we were borrowing
money we were also taxing ourselves, and that we raised as much by
taxes as we did by loans. But it is too early in the day to deny to
the Americans the credit which we thus take to ourselves. We were a
tax-paying nation when we commenced those wars which made our great
loans necessary, and only went on in that practice which was habitual
to us. I do not think that the Americans could have taxed themselves
with greater alacrity than they have shown. Let us wait, at any rate,
till they shall have had time for the operation, before we blame
them for not making it. It is then argued that we in England did not
borrow nearly so fast as they have borrowed in the States. That is
true. But it must be remembered that the dimensions and proportions
of wars now are infinitely greater than they were when we began to
borrow. Does any one imagine that we would not have borrowed faster,
if by faster borrowing we could have closed the war more speedily?
Things go faster now than they did then. Borrowing for the sake of a
war may be a bad thing to do,--as also it may be a good thing; but if
it be done at all, it should be so done as to bring the war to the
end with what greatest despatch may be possible.
The only fair comparison, as it seems to me, which can be drawn
between the two countries with reference to their debts, and the
condition of each under its debt, should be made to depend on the
amount of the debt and probable ability of the country to bear that
burden. The amount of the debt must be calculated by the interest
payable on it, rather than by the figures representing the actual sum
due. If we debit the United States Government with seven per cent.
on all the money borrowed by them, and presume that amount to have
reached in July, 1863, the sum named by Mr. Spaulding, they will then
have loaded themselves with an annual charge of £16,800,000 sterling.
It will have been an immense achievement to have accomplished in so
short a time, but it will by no means equal the annual sum with which
we are charged. And, moreover, the comparison will have been made in
a manner that is hardly fair to the Americans. We pay our creditors
three per cent. now that we have arranged our affairs, and have
settled down into the respectable position of an old gentleman whose
estates, though deeply mortgaged, are not over-mortgaged. But we did
not get our money at three per cent. while our wars were on hand, and
there yet existed some doubt as to the manner in which they might be
terminated.
This attempt, however, at guessing what may be the probable amount of
the debt at the close of the war is absolutely futile. No one can as
yet conjecture when the war may be over, or what collateral expenses
may attend its close. It may be the case that the government in
fixing some boundary between the future United States and the future
southern Confederacy, will be called on to advance a very large sum
of money as compensation for slaves who shall have been liberated
in the border States, or have been swept down south into the cotton
regions with the retreating hordes of the southern army. The total
of the bill cannot be reckoned up while the work is still unfinished.
But, after all, that question as to the amount of the bill is not
to us the question of the greatest interest. Whether the debt
shall amount to two, or three, or even to four hundred millions
sterling,--whether it remain fixed at its present modest dimensions,
or swell itself out to the magnificent proportions of our British
debt,--will the resources of the country enable it to bear such
a burden? Will it be found that the Americans share with us that
elastic power of endurance which has enabled us to bear a weight that
would have ruined any other people of the same number? Have they the
thews and muscles, the energy and endurance, the power of carrying
which we possess? They have got our blood in their veins, and have
these qualities gone with the blood? It is of little avail either
to us or to the truth that we can show some difference between our
position and their position which may seem to be in our favour. They,
doubtless, could show other points of difference on the other side.
With us, in the early years of this century, it was a contest for
life and death, in which we could not stop to count the cost,--in
which we believed that we were fighting for all that we cared to call
our own, and in which we were resolved that we would not be beaten,
as long as we had a man to fight and a guinea to spend. Fighting in
this mind we won. Had we fought in any other mind, I think I may say
that we should not have won. To the Americans of the northern States
this also is a contest for life and death. I will not here stay to
argue whether this need have been so. I think they are right; but
this at least must be accorded to them--that having gone into this
matter of civil war, it behoves them to finish it with credit to
themselves. There are many Englishmen who think that we were wrong to
undertake the French war; but there is, I take it, no Englishman who
thinks that we ought to have allowed ourselves to be beaten when we
had undertaken it. To the Americans it is now a contest of life and
death. They also cannot stop to count the cost. They also will go on
as long as they have a dollar to spend or a man to fight.
It appears that we were paying fourteen millions a year interest on
our national debt in the year 1796. I take this statement from an
article in "The Times," in which the question of the finances of the
United States is handled. But our population in 1796 was only sixteen
millions. I estimate the population of the northern section of the
United States, as the States will be after the war, at twenty-two
millions. In the article alluded to these northern Americans are now
stated to be twenty millions. If then we, in 1796, could pay fourteen
millions a year with a population of sixteen millions, the United
States, with a population of twenty or twenty-two millions, will be
able to pay the sixteen or seventeen millions sterling of interest
which will become due from them,--if their circumstances of payment
are as good as were ours. They can do that and more than that if
they have the same means per man as we had. And as the means per man
resolves itself at last into the labour per man, it may be said that
they can pay what we could pay, if they can and will work as hard as
we could and did work. That which did not crush us will not crush
them, if their future energy be equal to our past energy.
And on this question of energy I think that there is no need for
doubt. Taking man for man and million for million, the Americans are
equal to the English in intellect and industry. They create wealth at
any rate as fast as we have done. They develop their resources, and
open out the currents of trade, with an energy equal to our own. They
are always at work, improving, utilizing, and creating. Austria, as I
take it, is succumbing to monetary difficulties, not because she has
been extravagant, but because she has been slow at progress;--because
it has been the work of her rulers to repress rather than encourage
the energies of her people; because she does not improve, utilize,
and create. England has mastered her monetary difficulties because
the genius of her government and her people has been exactly opposite
to the genius of Austria. And the States of America will master
their money difficulties, because they are born of England, and are
not born of Austria. What! Shall our eldest child become bankrupt
in its first trade difficulty; be utterly ruined by its first
little commercial embarrassment? The child bears much too strong a
resemblance to its parent for me to think so.