The Hawaiian gazette., 1918-09-20

DDS employed AMI the difficulties en-
cOuntPred in financing the Civil War
are thG tA6thorts~ Of floating Liberty
Loans Of the present war. Costly ip
'Ihency ~ ch+emhd the CITl War the
total expenditures for the war .period
, " ere1 only q little mOEe than4the first
| Liberty Ilsoan. The following Associ
aAed" FseSs = correspondence received
from Washington tells Of the financial
difiCuIties of Iittle. more than half
a century ago.
The CiVh WkE Sdsl Che fodttal CIV
! errinent $G,O27, Hi,AdN exclusive Of
pensions and interest on the public dtht
/ beyond the actual war period. This
| amount seems small indeed, when com
pared with the $50, 100, 600 a day the
United States now is paying as it's
share Of the present conflict. Condi-
! tlOns fifty years ago wore such that
tho people of that day felt tho burden
they were forced to carry, to greater
! degree, perhaps, than do the people Of
! the present.
There was dCmnnd by the peOpl"
during the Civil War period for cmer
gOncy taxation and, while a vast
amount Of war revenue was raised
|
head Of the treasury department,
pinned his greatest faith to loans.
Chase Tries Loans
The loan system inaugurated by
Chase was elaborate and complicated
Loan followed loan in rapid success
sion and they were Aoatcd at varying
! rates of interest and over widely sep,
arated periods Of time. In discussi ny
this phase of the nation s financial ex
ppriPnce, authoritative writer's have
found it convenient to group these
loans under four headings; (a) Long
Term Loans; (b) Short Term Loans;
tc) Non interest Loans; (d) Temporal
nv Indebtedness.
With the exception of an issue Of
$5O,0OO,000 of twenty year bonds bear
ing six percent interest, the loan Oper
atoms of 1851 were Of temporary
nature, bat in February, 1862, an issue
of $500,000,0 900 was authorized, at siS
percent, redeemable after five years
and actually payable in twenty years
1t was provided, however,, that they
were not to he sold "below the mar
ket value, which Secretary Chase in
terpretrd to mean ut par, and since {
ma iority of investors were buying
} bonds merely for the purpose of sellin;
, them again, at a profit, only $4,000,
600 of the issue was sold.
Shin Plasters Appear
. During, 1862 1863, after the fedora
army had suffered rPvPrses and none,
was badly needed, the system Of tenn
pOrarv loans was revived and cert
frates of deposit, bearing five pererm
interest, we're issued. They prOvP'
popular and within a month the $2j
900 ,0Op authorized as limit had bee
|, doubled Sin, months later 1t was in
creased to 800 ,0OO, 900 and by the mex
wear june. 1864, a limit of $l50,0oO
600 had been authorized. The pre-
MUM on precious metals caused coin
TO 20 almost out of circulation, an
in their PLACE congress authorized tn
, use Of stamps. That medium in"onv'
mrnt at best, was replaced March
1863, by small notes caned fractiono
! currency or,.i' shin planters and tn
u $4,000, 900 worth Of it AUTHORIZE
proved effective in rcpenishing tn
! treasury:
! Broker Employed
when congress met IN D"crmhr
1862, il was confronted by a duhcl
Of SIC, 900 900. To meet it, q srrIr
of treasury notes tOtallng $0O0,OOO,OU
! was authorized, but of the amount onl
y 80, 900, 900 was sold. In the meal
time, however. the restriction agalm>
y setting below par the $500, OOO,O 900 bon
: issue, authorized eleven months bcfOr
it was repealed, and Jay Cooke, Nr
York banker was engaged to dlspo~
, Of the honds on commission hhsi
Cooke established agencies throughol
the country aud 100000, 600 of III
hond1 were sold off within a year. I'll
plan Of selling bonds through broker
, and outside the. immediate control {
the government, aroused much anita;
unlsm aud it was abandOnrd by thns
in negotiating the next loan.
Temporary loans were r"sortcd
during the fiscal year Of 1863 81, whc
y. one year notes bearing five percent il
= trrrSt were is~u"d, and sold through II
. banks OF New York, PhllaIrlphIH al
-, Boston. They brought return
" 50 go, OOO An issue of two year not,
Il was disposed Of at the tim" nj
= through their sale $l6G,4SO,O 900 vi
= realized. The notes, however, were II,
=, entirely desirable since their coupon
Il could Ice clipped only by an officer
II, the government, which mad" them Il
=. suitable for popular Investment The
were held chiefly by banks for r
II serve purposes and the banks, in tur
m set free their own paper rurrcnr
whirh it was roptcndrd increased II
4. evils Of an inflated monetary mr'lur
~ Realizing II danger, Secretary Cha
changed his plans and when it hernn
-. necessary to negotiate temporary l"f
t., the following year, PreferenreiM3&
!" On To the compound intfrest trcaSu
y, notes at higher rate OF interest.
i, Bonds Go Faster
The financial condition Of the fr
!, crul government was found to be in
y very satisfactory shape when Sc
10 rotary Chase made his report to con
ress in December, 1863. Taxes hi
\, begun to hr productive, confidence hi
. been restored through the success
II the Union armies at Gettysburg Al
Nirksburg, the premium on gold Al
decreased AMI the bonds left ON han
If from the early long issue, were IN d
g. mand. The secretary reported that Z
II recruits from loans for the fiscal We
m were $500, 600, 600 aud he proposed
,r the committee on ways and means tn