Mr. Rhodes thinks he can discern evidence that Adams communicated indirectly to Palmerston the contents of a dispatch from Seward which indicated that the United States would accept war rather than mediation.

Palmerston had kept his eyes upon the Maryland campaign, and Lee's withdrawal did not increase his confidence in the strength of the South.

Lord Russell, two months previous, had flatly told the Confederate envoy at London that the South need not hope for recognition unless it could establish itself without aid, and that "the fluctuating events of the war, the alternation of defeat and victory," composed such a contradictory situation that "Her Majesty's Government are still determined to wait."

Perhaps the veiled American warning--a.s.suming it was conveyed to Palmerston, which seems highly probable--was not the only diplomatic innuendo of the autumn of 1862 that has escaped the pages of history.

Slidell at Paris, putting together the statements of the British Amba.s.sador and those of the French Minister of Foreign Affairs, found in them contradictions as to what was going on between the two governments in relation to America. He took a hand by attempting to inspire M.

Drouyn de L'huys with distrust of England, telling him he "HAD SEEN...a letter from a leading member of the British Cabinet...in which he very plainly insinuated that France was playing an unfair game," trying to use England as Napoleon's catspaw. Among the many motives that may well have animated the Palmerston Government in its waiting policy, a distrust of Napoleon deserves to be considered.

It is scarcely rash, however, to find the chief motive in home politics.

The impetuous Gladstone at Newcastle lost his head and spoke too soon.

The most serious effect of his premature utterance was the prompt reaction of the "Northern party" in the Cabinet and in the country.

Whatever Palmerston's secret desires were, he was not prepared to take the high hand, and he therefore permitted other members of the Cabinet to state in public that Gladstone had been misunderstood. In an interview with Adams, Lord Russell, "whilst endeavoring to excuse Mr.

Gladstone," a.s.sured him that "the policy of the Government was to adhere to a strict neutrality and leave the struggle to settle itself." In the last a.n.a.lysis, the Northern party in England was gaining ground. The news from America, possibly, and Gladstone's rashness, certainly, roused it to increased activity. Palmerston, whose tenure of power was none too secure, dared not risk a break that might carry the disaffected into the ranks of the Opposition.

From this time forward the North rapidly grew in favor in British public opinion, and its influence upon the Government speedily increased.

Says Lord Charnwood in his recent life of Lincoln: "The battle of Antietam was followed within five days by an event which made it impossible for any government of this country to take action unfriendly to the North." He refers of course to the Emanc.i.p.ation Proclamation, which was issued on September 23, 1862. Lord Charnwood's remark may be too dramatic. But there can be no doubt that the Emanc.i.p.ation Proclamation was the turning-point in Lincoln's foreign policy; and because of it, his friends in England eventually forced the Government to play into his hands, and so frustrated Napoleon's scheme for intervention. Consequently Lincoln was able to maintain the blockade by means of which the South was strangled. Thus, at bottom, the crucial matter was Emanc.i.p.ation.

Lincoln's policy with regard to slavery pa.s.sed through three distinct stages. As we have seen, he proposed, at first, to pledge the Government not to interfere with slavery in the States where it then existed. This was his maximum of compromise. He would not agree to permitting its extension into new territory. He maintained this position through 1861, when it was made an accusation against him by the Abolitionists and contributed to the ebb of his popularity. It also played a great part in the episode of Fremont. At a crucial moment in Fremont's career, when his hold upon popularity seemed precarious, he set at naught the policy of the President and issued an order (August 30, 1861), which confiscated all property and slaves of those who were in arms against the United States or actively aiding the enemy, and which created a "bureau of abolition." Whether Fremont was acting from conviction or "playing politics" may be left to his biographers. In a most tactful letter Lincoln asked him to modify the order so as to conform to the Confiscation Act of Congress; and when Fremont proved obdurate, Lincoln ordered him to do so. In the outcry against Lincoln when Fremont was at last removed, the Abolitionists rang the changes on this reversal of his policy of military abolition.

Another Federal General, Benjamin F. Butler, in the course of 1861, also raised the issue, though not in the bold fashion of Fremont. Runaway slaves came to his camp on the Virginia coast, and he refused to surrender them to the owners. He took the ground that, as they had probably been used in building Confederate fortifications, they might be considered contraband of war. He was sustained by Congress, which pa.s.sed what is commonly called the First Confiscation Act providing that slaves used by Confederate armies in military labor should, if captured, be "forfeited"--which of course meant that they should be set free. But this did not settle what should be done with runaways whose masters, though residents of seceded States, were loyal to the Union. The War Department decided that they should be held until the end of the war, when probably there would be made "just compensation to loyal masters."

This first stage of Lincoln's policy rested upon the hope that the Union might be restored without prolonged war. He abandoned this hope about the end of the year. Thereupon, his policy entered its second stage. In the spring of 1862 he formulated a plan for gradual emanc.i.p.ation with compensation. The slaves of Maryland, Delaware, Kentucky, Missouri, and the District of Columbia were to be purchased at the rate of $400 each, thus involving a total expenditure of $173,000,000. Although Congress adopted the joint resolution recommended by the President, the "border States" would not accept the plan. But Congress, by virtue of its plenary power, freed the slaves by purchase in the District of Columbia, and prohibited slavery in all the territories of the United States.

During the second stage of his policy Lincoln again had to reverse the action of an unruly general. The Federal forces operating from their base at Port Royal had occupied a considerable portion of the Carolina coast. General Hunter issued an order freeing all the slaves in South Carolina, Georgia, and Florida. In countermanding the order, Lincoln made another futile appeal to the people of the border States to adopt some plan of compensated emanc.i.p.ation.

"I do not argue," he said; "I beseech you to make arguments for yourselves. You cannot, if you would be blind to the signs of the times.

I beg of you a calm and enlarged consideration of them, ranging, if it may be, far above personal and partisan politics. This proposal makes common cause for a common object, casting no reproaches upon any. It acts not the Pharisee. The change it contemplates would come gently as the dews of heaven, not rending or wrecking anything. Will you not embrace it? So much good has not been done by one effort in all past time, as in the providence of G.o.d it is now your high privilege to do.

May the vast future not have to lament that you neglected it."

This persuasive att.i.tude and reluctance to force the issue had greatly displeased the Abolitionists. Their most gifted orator, Wendell Phillips, reviled Lincoln with all the power of his literary genius, and with a fury that might be called malevolent. Meanwhile, a Second Confiscation Act proclaimed freedom for the slaves of all those who supported the Confederate Government. Horace Greeley now published in the "New York Tribune" an editorial ent.i.tled, "The Prayer of Twenty Millions." He denounced Lincoln's treatment of Fremont and Hunter and demanded radical action. Lincoln replied in a letter now famous. "I would save the Union," said he, "I would save it the shortest way under the Const.i.tution.... If I could save the Union without freeing any slave, I would do it; and if I could save it by freeing some and leaving others alone, I would also do that. What I do about slavery and the colored race, I do because I believe it helps to save the Union; and what I forbear, I forbear because I do not believe it would help to save the Union."

However, at the very time when he wrote this remarkable letter, he had in his own mind entered upon the third stage of his policy. He had even then discussed with his Cabinet an announcement favoring general emanc.i.p.ation. The time did not seem to them ripe. It was decided to wait until a Federal victory should save the announcement from appearing to be a cry of desperation. Antietam, which the North interpreted as a victory, gave Lincoln his opportunity.

The Emanc.i.p.ation Proclamation applied only to the States in arms against the Federal Government. Such States were given three months in which to return to the Union. Thereafter, if they did not return, their slaves would be regarded by that Government as free. No distinction was made between slaves owned by supporters of the Confederacy and those whose owners were in opposition to it. The Proclamation had no bearing on those slave States which had not seceded. Needless to add, no seceded State returned, and a second Proclamation making their slaves theoretically free was in due time issued on the first of January, 1863.

It must not be forgotten that this radical change of policy was made in September, 1862. We have already heard of the elections which took place soon after--those elections which mark perhaps the lowest ebb of Lincoln's popularity, when Seymour was elected Governor of New York, and the peace party gained over thirty seats in Congress. It is a question whether, as a purely domestic measure, the Emanc.i.p.ation Proclamation was not, for the time, an injury to the Lincoln Government. And yet it was the real turning-point in the fortunes of the North. It was the central fact in the maintenance of the blockade.

In England at this time the cotton famine was at its height. Nearly a million people in the manufacturing districts were wholly dependent upon charity. This result of the blockade had been foreseen by the Confederate Government which was confident that the distress of England's working people would compel the English ministry to intervene and break the blockade. The employers in England whose loss was wholly financial, did as the Confederates hoped they would do. The workmen, however, took a different course. Schooled by a number of able debaters, they fell into line with that third group of political leaders who saw in the victory of the North, whatever its motives, the eventual extinction of slavery. To these people, the Emanc.i.p.ation Proclamation gave a definite programme. It was now, the leaders argued, no longer a question of eventual effect; the North had proclaimed a motive and that motive was the extinction of slavery. Great numbers of Englishmen of all cla.s.ses who had hitherto held back from supporting Cobden and Bright now ranged themselves on their side. Addresses of praise and sympathy "began to pour into the Legation of the United States in a steady and ever swelling stream." An immense popular demonstration took place at Exeter Hall. Cobden, writing to Sumner, described the new situation in British politics, in a letter amounting to an a.s.surance that the Government never again would attempt to resist the popular pressure in favor of the North.

On the last day of 1862 a meeting of workingmen at Manchester, where the cotton famine was causing untold misery, adopted one of those New Year greetings to Lincoln. Lincoln's reply expressed with his usual directness his own view of the sympathetic relation that had been established between the democratic cla.s.ses of the two countries:

"I know and deeply deplore the sufferings which the workingmen at Manchester, and in all Europe, are called to endure in this crisis. It has been often and studiously represented that the attempt to overthrow this Government, which was built upon the foundation of human rights, and to subst.i.tute for it one which should rest exclusively on the basis of human slavery, was likely to obtain the favor of Europe. Through the action of our disloyal citizens, the workingmen of Europe have been subjected to severe trials, for the purpose of forcing their sanction to that attempt. Under the circ.u.mstances, I cannot but regard your decisive utterances upon the question as an instance of sublime Christian heroism which has not been surpa.s.sed in any age or in any country. It is indeed an energetic and reinspiring a.s.surance of the inherent power of truth, and of the ultimate triumph of justice, humanity, and freedom. I do not doubt that the sentiments you have expressed will be sustained by your great nation; and, on the other hand, I have no hesitation in a.s.suring you that they will excite admiration, esteem, and the most reciprocal feelings of friendship among the American people. I hail this interchange of sentiment, therefore, as an augury that whatever else may happen, whatever misfortune may befall your country or my own, the peace and friendship which now exists between the two nations will be, as it shall be my desire to make them, perpetual."

CHAPTER X. THE SECRETARY OF THE TREASURY

Though the defeat of the Democrats at the polls in 1863 and the now definitely friendly att.i.tude of England had done much to secure the stability of the Lincoln Government, this success was due in part to a figure which now comes to the front and deserves attentive consideration. Indeed the work of Salmon Portland Chase, Secretary of the Treasury, forms a bridge, as one might say, between the first and second phases of Lincoln's administration.

The interesting Englishman who is the latest biographer of Lincoln says of Chase: "Unfortunately, this imposing person was a sneak." But is Lord Charnwood justified in that surprising characterization? He finds support in the testimony of Secretary Welles, who calls Chase, "artful dodger, unstable, and unreliable." And yet there is another side, for it is the conventional thing in America to call him our greatest finance minister since Hamilton, and even a conspicuous enemy said of him, at a crucial moment, that his course established his character "as an honest and frank man."

Taking these contradictory estimates as hints of a contradiction in the man, we are forced to the conclusion that Chase was a professional in politics and an amateur in finance. Perhaps herein is the whole explanation of the two characteristics of his financial policy--his reluctance to lay taxes, and his faith in loans. His two eyes did not see things alike. One was really trying to make out the orthodox path of finance; the other was peering along the more devious road of popular caprice.

The opening of the war caught the Treasury, as it caught all branches of the Government, utterly unprepared. Between April and July, 1861, Chase had to borrow what he could. When Congress met in July, his real career as director of financial policy began--or, as his enemies think, failed to begin. At least, he failed to urge upon Congress the need of new taxes and appeared satisfied with himself asking for an issue of $240,000,000 in bonds bearing not less than seven per cent interest.

Congress voted to give him $250,000,000 of which $50,000,000 might be interest-bearing treasury notes; made slight increases in duties; and Prepared for excise and direct taxation the following year. Later in the year Congress laid a three per cent tax on all incomes in excess of $800.

When Congress rea.s.sembled in December, 1861, expenditures were racing ahead of receipts, and there was a deficit of $143,000,000. It must not be forgotten that this month was a time of intense excitability and of nervous reaction. Fremont had lately been removed, and the attack on Cameron had begun. At this crucial moment the situation was made still more alarming by the action of the New York banks, followed by all other banks, in suspending specie payments. They laid the responsibility upon Chase. A syndicate of banks in New York, Boston, and Philadelphia had come to the aid of the Government, but when they took up government bonds, Chase had required them to pay the full value cash down, though they had asked permission to hold the money on deposit and to pay it as needed on requisition by the Government. Furthermore, in spite of their protest, Chase issued treasury notes, which the banks had to receive from their depositors, who nevertheless continued to demand specie.

On January 1, 1862, the banks owed $459,000,000 and had in specie only $87,000,000. Chase defended his course by saying that the financial crisis was not due to his policy--or lack of policy, as it would now seem--but to a general loss of faith in the outcome of the war.

There now arose a moral crisis for this "imposing person" who was Secretary of the Treasury--a crisis with regard to which there are still differences of opinion. While he faced his problem silently, the Committee on Ways and Means in the House took the matter in hand: Its solution was an old one which all sound theorists on finance unite in condemning--the issue of irredeemable paper money. And what did the Secretary of the Treasury do? Previously, as Governor of Ohio, he had denounced paper money as, in effect, a fraud upon society. Long after, when the tide of fortune had landed him in the high place of Supreme Justice, he returned to this view and condemned as unconst.i.tutional the law of 1862 establishing a system of paper money. But at the time when that law was pa.s.sed Chase, though he went through the form of protesting, soon acquiesced. Before long he was asking Congress to allow a further issue of what he had previously called "fraudulent" money.

The answer to the question whether Chase should have stuck to his principles and resigned rather than acquiesce in the paper money legislation turns on that other question--how were the politician and the financier related in his make-up?

Before Congress and the Secretary had finished, $450,000,000 were issued. Prices naturally rose, and there was speculation in gold. Even before the first issue of paper money, the treasury notes had been slightly below par. In January, 1863, a hundred dollars in paper would bring, in New York, only $69.00 in gold; a year later, after falling, rising, and falling again, the value was $64.00; in July and August, 1864, it was at its lowest, $39.00; when the war closed, it had risen to $67.00. There was powerful protest against the legislation responsible for such a condition of affairs. Justin Morrill, the author of the Morrill tariff, said, "I would as soon provide Chinese wooden guns for the army as paper money alone for the army. It will be a breach of public faith. It will injure creditors; it will increase prices; it will increase many fold the cost of the war." Recent students agree, in the main, that his prophecies were fulfilled; and a common estimate of the probable increase in the cost of the war through the use of paper money and the consequent inflation of prices is $600,000,000.

There was much more financial legislation in 1862; but Chase continued to stand aside and allow Congress the lead in establishing an excise law, an increase in the income tax, and a higher tariff--the last of which was necessitated by the excise law which has been described as a bill "that taxed everything." To enable American manufacturers to bear the excise duties levied upon their business, protection was evoked to secure them the possession of their field by excluding foreign compet.i.tion. All these taxes, however, produced but a fraction of the Government's revenue. Borrowing, the favorite method of the Secretary, was accepted by Congress as the main resource. It is computed that by means of taxation there was raised in the course of the war $667,163,247.00, while during the same period the Government borrowed $2,621,916,786.00.

Whatever else he may think of Chase, no one denies that in 1862 he had other interests besides finance. Lincoln's Cabinet in those days was far from an harmonious body. All through its history there was a Chase faction and a Seward faction. The former had behind them the Radical Republicans, while the latter relied upon the support of the moderates.

This division in the Republican party runs deep through the politics of the time. There seems to be good reason to think that Chase was not taken by surprise when his radical allies in Congress, in December, 1862, demanded of Lincoln the removal of Seward. It will be remembered that the elections of the autumn of 1862 had gone against Lincoln. At this moment of dismay, the friends of Chase struck their blow. Seward instantly offered his resignation. But Lincoln skillfully temporized.

Thereupon, Chase also resigned. Judging from the scanty evidence we have of his intention, we may conclude that he thought he had Lincoln in a corner and that he expected either to become first minister or the avowed chief of an irresistible opposition. But he seems to have gone too fast for his followers. Lincoln had met them, together with his Cabinet, in a conference in December, 1862, and frankly discussed the situation, with the result that some of them wavered. When Lincoln informed both Seward and Chase that he declined to accept their resignations, both returned--Seward with alacrity, Chase with reluctance. One of the clues to Lincoln's cabinet policy was his determination to keep both these factions committed to the Government, without allowing himself to be under the thumb of either.

During the six months following the cabinet crisis Chase appears at his best. A stupendous difficulty lay before him and he attacked it manfully. The Government's deficit was $276,900,000. Of the loans authorized in 1862--the "five-twenties" as they were called, bringing six per cent and to run from five to twenty years at the Government's pleasure---the sales had brought in, to December, 1862, only $23,750,000, though five hundred million had been expected. The banks in declining to handle these bonds laid the blame on the Secretary, who had insisted that all purchasers should take them at par.

It is not feasible, in a work of this character, to enter into the complexities of the financial situation of 1863, or to determine just what influences caused a revolution in the market for government bonds.

But two factors must be mentioned. Chase was induced to change his att.i.tude and to sell to banks large numbers of bonds at a rate below par, thus enabling the banks to dispose of them at a profit. He also called to his aid Jay Cooke, an experienced banker, who was allowed a commission of one-half per cent on all bonds sold up to $10,000,000 and three-eighths of one per cent after that. Cooke organized a countrywide agency system, with twenty-five hundred subagents through whom he offered directly to the people bonds in small denominations. By all manner of devices, patriotism and the purchase of bonds were made to appear the same thing, and before the end of the year $400,000,000 in five-twenty bonds had been sold. This campaign to dispose of the five-twenties was the turning-point in war finance, and later borrowings encountered no such difficulties as those of 1862 and 1863.

Better known today than this precarious legislation is the famous Act of 1863, which was amended in the next year and which forms the basis of our present system of national banks. To Chase himself the credit for this seems to be due. Even in 1861 he advised Congress to establish a system of national banks, and he repeated the advice before it was finally taken. The central feature of this system which he advocated is one with which we are still familiar: permission to the banks accepting government supervision to deposit government bonds in the Treasury and to acquire in return the right to issue bank-notes to the amount of ninety per cent of the value of the bonds.

There can be no doubt that Chase himself rated very highly his own services to his country. Nor is there any doubt that, alone among Lincoln's close a.s.sociates, he continued until the end to believe himself a better man than the President. He and his radical following made no change in their att.i.tude to Lincoln, though Chase pursued a course of confidential criticism which has since inspired the characterization of him as a "sneak," while his followers were more outspoken. In the summer of 1863 Chase was seriously talked of as the next President, and before the end of the year Chase clubs were being organized in all the large cities to promote his candidacy. Chase himself took the adroit position of not believing that any President should serve a second term.

Early in 1864 the Chase organization sent out a confidential circular signed by Senator Pomeroy of Kansas setting forth the case against Lincoln as a candidate and the case in favor of Chase. Unfortunately for Chase, this circular fell into the hands of a newspaper and was published. Chase at once wrote to Lincoln denying any knowledge of the circular but admitting his candidacy and offering his resignation. No more remarkable letter was written by Lincoln than his reply to Chase, in which he showed that he had long fully understood the situation, and which he closed with these words: "Whether you shall remain at the head of the Treasury Department is a question which I do not allow myself to consider from any standpoint other than my judgment of the public service, and, in that view, I do not perceive occasion for change."

The Chase boom rapidly declined. The deathblow was given by a caucus of the Union members of the legislature of his own State nominating Lincoln "at the demand of the people and the soldiers of Ohio." The defeat embittered Chase. For several months, however, he continued in the Cabinet, and during this time he had the mortification of seeing Lincoln renominated in the National Union Convention amid a great display of enthusiasm.

More than once in the past, Chase had offered his resignation. On one occasion Lincoln had gone to his house and had begged him to reconsider his decision. Soon after the renomination, Chase again offered his resignation upon the pretext of a disagreement with the President over appointments to office. This time, however, Lincoln felt the end had come and accepted the resignation. Chase's successor in the Treasury was William Pitt Fessenden, Senator from Maine. During most of the summer of 1864 Chase stood aside, sullen and envious, watching the progress of Lincoln toward a second election. So much did his bitterness affect his judgment that he was capable of writing in his diary his belief that Lincoln meant to reverse his policy and consent to peace with slavery reestablished.

CHAPTER XI. NORTHERN LIFE DURING THE WAR

The real effects of war on the life of nations is one of those old and complicated debates which lie outside the scope of a volume such as this. Yet in the particular case of the Northern people it is imperative to answer two questions both of which have provoked interminable discussion: Was the moral life of the North good or bad in the war years? Was its commercial life sound?

As to the moral question, contemporary evidence seems at first sight contradictory. The very able Englishman who represented the "Times", William H. Russell, gives this ugly picture of an American city in 1863:

"Every fresh bulletin from the battlefield of Chickamauga, during my three weeks' stay in Cincinnati, brought a long list of the dead and wounded of the Western army, many of whom, of the officers, belonged to the best families of the place. Yet the signs of mourning were hardly anywhere perceptible; the noisy gaiety of the town was not abated one jot."

On the other hand, a private ma.n.u.script of a Cincinnati family describes the "intense gloom hanging over the city like a pall" during the period of that dreadful battle. The memories of old people at Cincinnati in after days--if they had belonged to the "loyal" party--contained only sad impressions of a city that was one great hospital where "all our best people" worked pa.s.sionately as volunteer a.s.sistants of the government medical corps.

A third fact to be borne in mind in connection with this apparent contradiction in evidence is the source of the greater fortunes of Cincinnati, a large proportion of which are to be traced, directly or indirectly to government contracts during the war. In some cases the merciless indifference of the Cincinnati speculators to the troubles of their country are a local scandal to this day, and it is still told, sometimes with scorn, sometimes with amus.e.m.e.nt, how perhaps the greatest of these fortunes was made by forcing up the price of iron at a time when the Government had to have iron, cost what it might.