TOPICS OF THE DAY.
THE CONSEQUENCES OF SPASMODIC FINANCE.
THERE can he no doubt whatever as to the meaning of 1 the latest incidents in the American civil war. The cause of the North is lost unless the method of war is changed. The policy of the North, since the defeat of Bull's Run, so far as it is given to outside barbarians to compre- hend it, may have been, in theory, sound. It was briefly to wait, and shut up the South until the organization of the Northern masses and the exhaustion of their enemies' means enabled them to advance in irresistible strength, and change a war into a military occupation, to be followed—though this was perhaps not distinctly contemplated—by a dissolution and reconstruction of society. The policy was a timid one, and one which indicated the absence of any commanding intellect, but it might, under the circumstances believed by Northern statesmen to exist, have been successful. Had North and South been under the same political conditions, had the contest been really one be- tween twenty millions and eight millions, or even between twenty millions and twelve, the North in a waiting game must ultimately have won. It was very far the richer section. It was in a more limited degree the section which could pro- duce the largest amount of men and munitions of war. It was for all warlike purposes the more homogeneous section, for though party spirit was strong in the north, and almost extinct in the South, the North had no decree of emancipa- tion hanging over its head. It had the complete com- mand of the sea, and to a large extent the practical sympathy of the civilized world. Europe supplied arms in profusion to New York, kept up her diplomatic relations with the North, and not with the South,and sent her soldiers of fortune—from princes to mauvais sujets—to swell the ranks of the Federal G-overnment. It was impossible under such circumstances to doubt that, the conditions being equal, victory must ultimately remain with the stronger power. Unfortunately,the Northern statesmen had left one element out of the calculation. They forgot that the South was governed, while the North was only directed. It is not of much use to discuss whether the South, as its representatives assert, is unanimous to fana- ticism, or whether, as Northern electors will have it, a strong minority is simply coerced by the bolder and less scrupulous leaders of the mass. The visible fact is, that the South has a government, as strong as a legitimate authority, and as unscrupulous as a Committee of Public Safety, able to raise—we do not say levy—troops to any required amount, to ensure absolute military obedience within the lines of the army, and to collect, whether by direct taxes or by semi-voluntary loans, or—and most frequently —by requisitions, all the supplies absolutely required for carrying on the war. The whole resources of the South, in men and materiel, are in fact made available for the cam- paign, and as money can be used only to purchase men and materiel, Mr. Davis has, as it were, the taxable resources of his country wholly at his command. ' The North has nothing of the kind. Further advanced in civilization than the South, it is wholly without that govern- ing power through which civilization is accustomed to assert its strength. It cannot supply resources by conscription, or keep its men wholly without pay. It cannot apportion loans among the propertied classes, and thus raise, in fact, an enormous war tax on realized property. It is bound to pay interest on its loans, salaries to its officers, wages to its soldiery, prices and profits to the contractors for supplies. Yet at the same time, while acknowledging their liability for funds, the Northern Government do not possess the requi- site political power to collect those funds. They can indeed raise loans, but loans require a basis of taxation if only to pay the interest, and the Central Government is either impotent or unwilling to tax to any adequate extent. Congress has indeed, it is true, raised the customs, and even imposed new duties, but the measure is hope- lessly insufficient. The Morrill tariff produced no revenue, and even the duties on tea, coffee, and sugar were defeated b_y the cold thriftiness which is one distinguishing mark of the Northern population. An extra shilling a pound on tea is not worth much if the mass of the population "conclude" that herb tea is nearly as good and cold water a great deal better. It is direct taxation that is required, and from direct taxation Congress, either in ignorance or help- lessness, constantly shrink. They did indeed in the extra Session put on a very small property tax, but they were obliged to "alleviate" its operation in the West, and its whole proceeds were only estimated at 4,000,000/. The new taxation does not, in fact, fairly meet the interest on th new loans. The Secretary of the Treasury, indeed, has asked for more taxes, but he does not get them. Congress passes none of his measures, either for excise or direct taxes, and there is not the slightest evidence that it has any intention of passing them. It has, in fact, no organization for the levy of any vast tax. That source of power is in the hands of the States, and might or might not be effectively used in the end, but certainly would not be employed without the sanction of the State legislatures, that is, of some nineteen or twenty different Governments, some of which will not even tax themselves to pay their own debts. The constitution, in other words, intercepts supplies indispensable to its own preserva- tion. The loans of course have become discredited, Mr. Chase has been driven to an effort to monopolize the paper cur- rency, the banks have declined to provide the third instalment of the loan—fifty millions of dollars—and the Treasury is compelled to suspend specie payments, or in the American dialect, to "decline to convert" its own notes payable on de- mand. Some of the banks anticipated this inevitable step, and others followed it, till at the, date of the latest advices one or two New York bankers alone were paying in specie. They must, of course, follow the example, or be drained of their supply, and the system of assignats will then have fairly set in—at all events for a time. The journals, to their credit be it spoken, are contending warmly for the only remedy which can terminate this calamity—a severe and searching taxation. They ask, under different forms, for a one per cent. property tax, which the States, they think, could bear for a year or two, being, in fact, equivalent to a four-shilling income tax. But a measure of that kind, kind, adopted in a country unused to direct taxes, to be carried out with imperfect means, and perhaps in the West amidst popular resistance, requires time. The tax could not be discussed, decreed, and collected in less than six months ; and a three months' suspension is almost as bad as a national bankruptcy. We fear the issue of assignat State notes, only redeemable in the future, and secured for the present on the waste lands, will be found the easier, and therefore for the moment the most popular, resource, and the consequences must be tremendous.
They will not be immediately those which some of our contemporaries appear to expect. A paper currency does not at first mean either peace or anarchy. On the contrary, until it is fairly discredited, until, for example, it has sunk to a third of its value, it ought to lend the Government a new and terrible energy. Everything can be obtained for the time, for there is nothing to pay for, and the army may be equipped as no army was ever before. -Under smooth phrases the resources of a continent have been "placed in requisition," and if the Cabinet have but the energy, they may, as far as money is concerned, hurl a million of men over the frontier. Depreciation will not for a time affect their power, for it is just as easy to issue two bits of printed rag as one bit, and the temptation to do so, to have some result for all this expenditure, is almost irresistible. The day must come when gold having finally disappeared, the price of all necessaries bought with inconvertible paper will advance in geometrial ratio, until the assignats have reached their true value—that of the paper on which they are printed. That day, however, may be postponed longer than English financiers imagine. The French assignats did not sink fifty per cent in many months. There is, it is true, little chance that Mr. Chase will display as much self-restraint as M. Cambon, and he has no prospect of paying his troops out of the resources of conquered States. But assignats among a population like America, if issued in any reasonable modera- tion, may still take some time to fall. There is no danger of wilful repudiation, for the law-makers will be the debt- holders. The Treasury must take its own notes, and taxa- tion will be, therefore, as light as food will be dear. The people may trust their Government up to a certain extent, more particularly if they find it willing to tax and able to realize the taxation. The assignats ought not to be valueless till the amount issued is palpably beyond that sum on which Government on the restoration of peace can be expected to pay interest, and Mr. Chase may not reach that amount in the next six months. His temptation, no doubt, will be to enormous expenditure, double or treble the amount on which he now calculates, but he may be afraid of the day of reckoning, and strive to keep outlay down within its possible limits. Even then, if the present system is to con- tinue, the case of the North is almost hopeless. The South cannot be conquered in six months by simply defending Washington. It cannot be conquered at all by hosts so vast that it takes them a day to move ten miles, so undisciplined that they cannot be relied on to attack a battery without a panic, and so little enthusiastic as to demand pay as regularly as any workmen. Before the South can be conquered, the North must invade the Gulf States, true tropical deltas, crowded with bayous, where every additional man and com- missariat cart is an additional cause of delay. The war, if it is to go on at all, must become one of two things—a regular campaign, conducted by fifty thousand men, who can be fed and kept efficient at an endurable expense, or a crusade. For the first plan General McClellan has neither the time nor the means. He cannot reduce even fifty thousand men into an army fit to invade under three months, and the mere effort would cool, and perhaps destroy, national enthusiasm. The second is the only practical resource. Once declare every slave who crosses the Mason and Dixon's line permanently free, and the South must either lose their slaves man by man, and with them their means of transport, commissariat, and cultivation, or they must resolve themselves into a national guard, employed and exhausted in the defence of individual properties. The project of arming the slaves is a piece of evil nonsense. It . would take months to turn them into troops, during which white enthusiasm would be slowly dying away. They must be drawn away, freedom proclaimed the fundamental law of the States—as it already is for white men—and the place of discipline supplied by the conscious- ness of a cause before which all considerations of pay, or per- sonal equality, or irritation with individual leaders will finally disappear. The suspension of cash payments renders the conquest of the South through the present organization simply hopeless. The only alternatives before the North are peace, or a revolutionary war, and the time left them to make their choice is almost reduced to days.
Previous page
