ons of bonds
in the two great issues, the so-called seven-thirties and
five-twenties. The sales of these bonds, together with a wide-reaching
and, in fact, unduly complex system of taxation, secured the funds
necessary for the support of the army and the navy. At the close of the
War, the government, after meeting this expenditure, had a national war
debt of something over four thousand millions of dollars. The gross
indebtedness resulting from the War was of course, however, much larger
because each State had incurred war expenditures and counties as well as
States had issued bonds for the payment of bounties, etc. The criticism
was made at the time by the opponents of the financial system which was
shaped by the Committee of Ways and Means in co-operation with the
Secretary, a criticism that has often been repeated since, that the War
expenditure would have been much less if the amounts needed beyond what
could be secured by present taxation had been supplied entirely by the
proceeds of bonds. In addition, however, to the issues of bonds, the
government issued currency to a large amount, which was made legal
tender and which on the face of it was not made subject to redemption.

In addition to the bills ranging in denomination from one dollar to one
thousand, the government brought into distribution what was called
"postal currency." I landed in New York in August, 1862, having returned
from a University in Germany for the purpose of enlisting in the army. I
was amused to see my father make payment in the restaurant for my first
lunch in postage stamps. He picked the requisite number, or the number
that he believed would be requisite, from a ball of stamps which had,
under the influence of the summer heat, stuck together so closely as to
be very difficult to handle. Many of the stamps were in fact practically
destroyed and were unavailable. Some question arose between the
restaurant keeper and my father as to the availability of one or two of
the stamps that had been handed over. My father explained to me that
immediately after the outbreak of the War, specie, including even the
nickels and copper pennies, had disappeared from circulation, and the
people had been utilising for the small change necessary for current
operations the postage stamps, a use which, in connection with the large
percentage of destruction, was profitable to the government, but
extravagant for the community. A little later, the postal department