d logical result of
the Civil War. In case the rebellion should fail, it put at an
end all propositions for compensation for slaves in loyal states,
and all question of the validity of the emancipation proclamation
of Abraham Lincoln.

The following letter of Secretary Chase shows the extremity of the
measures deemed to be necessary at this period of the war:

"Treasury Department, May 26, 1864.
"My Dear Sir:--I inclose two drafts of a national bank taxation
clause--one marked 'A,' providing for the appropriation of the
whole tax to the payment of interest or principal of the public
debt and repealing the real estate direct tax law, and another
marked 'B,' dividing the proceeds of the tax between the national
and the loyal states. In either form the clause will be vastly
more beneficial to the country than in the form of the bill, whether
original or amended.

"I also inclose a draft of a section providing for a tax on banks
not national in the internal revenue act. It substantially restates
the House proposition limiting it to banks of the states. Some
discrimination in favor of the national system which affords
substantial support to the government as compared with the local
system, which circulates notes in competition with those issued by
the government, seems to me indispensably necessary. It is impossible
to prevent the depreciation of the currency unless Congress will
assume its constitutional function and control it; and it is idle
to try to make loans unless Congress will give the necessary support
to the public credit. I am now compelled to advertise for a loan
of fifty millions, and, to avoid as far as practicable the evils
of sales below par, must offer the long bonds of '81. Should the
provisions I ask for be denied, I may still be able to negotiate
the loan on pretty fair terms; but I dread the effects on future
loans.

"Hitherto I have been able to maintain the public credit at the
best points possible with a surcharged circulation. My ability to
do so is due mainly to the legislation of the session of 1862-63.
I must have further legislation in the same direction if it is
desired to maintain that ability.

"Yours truly,
"S. P. Chase.
"Hon. John Sherman."

A few days before the close of the session, on the 29th of June,
1864, Mr. Chase tendered his resignation as Secretary of the
Treasury. This created quite a sensation in political circles.
It was thought to be the culmination