to fifteen per cent.; on some it
rose to twenty per cent.

[Illustration: Two men looking out a window.]
Maximilian Watching the Departure of the
Last French Troops from the City of Mexico.

[1864]

But these taxes, severe as they were, could furnish only a small part of
the necessary income. The Government must borrow. In the first year of
the war the banks loaned the United States $150,000,000 at 7.3 per cent.
interest. Many other loans were secured as the war went on--one for
$500,000,000, another for $900,000,000. As security the Government
issued bonds, bearing various rates of interest and payable after a
certain number of years. Treasury notes were also issued and made legal
tender for all debts public and private. As the Government paid its own
debts with them, they were in the nature of a forced loan. Of those
which bore no interest (commonly known as greenbacks) $433,000,000 were
issued from first to last. Also, when property was seized for the use of
the army, the owners were given certificates of indebtedness which
entitled the holders to payment at the United States Treasury.

The proportion of revenue derived from each of the above sources is
illustrated by the report of the treasurer of the United States for the
year ending July 1, 1865. Customs yielded $85,000,000, internal revenue
$209,000,000, loans $1,470,000,000.

Finance legislation during the war was more patriotic than wise, due
partly to necessary haste, largely to ignorance. The internal taxes bore
very unequally upon different classes. The tariff was ill-adjusted to
the internal taxes, letting in at low rates some classes of goods whose
home production was heavily taxed, thus discriminating in favor of the
foreigner. Millions of debt and half the other economic evil of the war
might have been saved by doing more to keep the paper dollar on a par
with gold. Thus the banks should not have been compelled to pay in gold
the loan of 1861. It forced them to suspend specie payment altogether,
December 31st of that year--those of New York City first, followed by
others everywhere, and by the United States itself. Gold had been at a
nominal premium all through 1861, but the first recorded sale at an
advance was on January 13, 1862. It would have been better, also, to
resort earlier to heavy loans, even at high rates, instead of flooding
the country with greenbacks. The national banks, which were created on
purpose to help the sale of government