vigor in 1866, when the government receipts from it were $72,982,160. At the close of the war the government found itself not only with this immense indebtedness of $2,778,236,173 on hand, but it was in an ugly and pressing shape. War times did not facilitate funding; that is, gathering the floating debt up and placing it at interest, with gradual and remote payments of the principal. The shape of the debt was as follows: Here then was a total of $1,668,667,981 which was not funded, was floating about loosely, and which the government was liable to be called on to pay at any moment. Worst of all, a part of it (the $830,000,000 of seven-thirties) bore interest at 7 3-10 per cent. Of course no government could stand for a moment in the face of such a drain as would be occasioned by the presentation of these floating claims for payment. Yet it must either pay, fund, or be dishonored. It could not do the first, nor submit to the third. Large as the debt was, the national honor was above all price. It must, therefore, do what all corporations and business firms do, viz.: fund its floating indebtedness. This was a mighty work. In order to do it bonds were prepared, of various denominations, and mostly bearing interest at six per cent. These were to run not less than five nor more than twenty years. Hence they were called fivetwenty six per cents. They were offered to the banks, and through them to the people. Could the government get enough money from their sale to pay its floating indebtedness of $1,668,667,981? Could it pay its interest promptly, and have something over toward the principal? We have seen how the tariff laws and other revenue laws were strengthened. There would be enough and more. The people responded with a hearty good-will. The bonds were taken with alacrity, and looked upon as so desirable an investment that they soon sold at a premium. In a short time the government funded, through its five-twenty six per cents. $1,602,698,950 of its floating indebtedness, and thus relieved itself of all immediate pressure, except what was necessary to provide interest, and gradually reduce the principal. Such was the favor with which these securities (bonds) were received, that the government concluded it might lower its interest on them, and still sell them, thus saving a large amount of interest. This was no longer funding, but refunding. Refunding began by acts of July 14, 1870, and Jan. 20, 1871. Again bonds were authorized to be issued to the extent of $1,500,000,000, bearing interest, $500,000,000 at five per cent. and payable in ten years or at the pleasure of the United States; $300,000,000 at 41⁄2 per cent.; the balance at 4 per cent. With the proceeds of these, the former high interest-bearing bonds were to be lifted. The crisis of 1873 interfered with their sale. But in 1876 they struck a favorable market, were successfully disposed of, and soon at a premium, as before. This favorable situation the government again took advantage of, and by repeated acts down to 1883, succeeded in carrying out a system of refunding which greatly lowered the interest on its bonds, the rates now running from 41⁄2 to 3 per cent. It at the same time paid off the principal of its debt at an average rate of $70,000,000 a year, so that the total is now below $1,400,000,000. It is not supposed that the process of refunding is yet complete. Many think that the 4 and 41⁄2 per cent. bonds can be refunded into 3 per cents., and some enthusiastic persons think the whole interest-bearing debt can be floated at less than 3 per cent. This is hardly possible so long as the government adheres to the policy of paying off the debt so fast. This policy gives to a bond too short a life. It is not issued for any great number of years, and is called in when there is money enough to meet it. Thus the inducement of length of time, which is supposed to overcome the non-inducement of a low rate of interest, is lost. And as to this policy of rapid payment of the principal, it is beginning to receive criticism. The time was when it was proper, as helping to show the nation's earnestness and for the support of its credit. This time has passed. There is now no reason for haste, except a desire to be free from the annual loss of interest. Whether it is better to save this annual loss by prompt payment of the principal, or distribute the burden of payment over the generations that are to follow us, is a question which now draws a variety of opinions. A concluding remark must be made about the management of the Treasury Department during this period of immense receipts, expenditures and great responsibility. It has been such as to show less loss to the government than any former period. Considering the great influx of new force, the rush of business during war times, the newness and experimental character of much of its work, this is agreeably surprising, yet it may go to prove that a financial department, like a financial man, is capable of rising with an emergency, and meeting with honor the severest tests of ability and honesty. In answer to a request from the Senate the Treasury Department submitted the following table, showing the per cent. of losses in its transactions since the beginning of the government and up to June 30, 1879: .... Appointed. Alex. Hamilton, N. Y....Sept. 11, 1789 Names. Robert J. Walker, Miss. . Mar. 6, 1845 THE WAR DEPARTMENT. As the name indicates, this Department has charge of all matters appertaining to the army. It is presided over by the Secretary of War, salary $8,000, who is appointed by the President by and with the advice and consent of the Senate, for the term. of four years unless sooner removed. He is a member of the President's Cabinet, and in a military point of view ranks next to the President. The War Department was established by act of August 7, 1789, and therefore is as old as the government. The act says "there shall be an executive Department denominated the Department of War, and there shall be a principal officer therein to be called the Secretary for the Department of War, who shall perform such duties as shall be entrusted to or enjoined on him by the President agreeably to the Constitution, relative to land forces, ships, or warlike stores of the United States." The Department then had control of "land forces and ships." It was both a War and Navy Department, the latter not having a separate existence till some time afterwards. SECRETARY'S DUTIES.-When it is said that the Department has charge of all matters relating to war a sharp line must be drawn between its affairs and those of the army in the field. The responsibility for campaigns, battles and manœuvres rests on the generals who represent the commander-in-chief, the President, in the field. The War Department is the civil side of army affairs. The Secretary conducts the business of the Department. In war he is one hand of the President and the army the other. He attends to all commissions of officers, to the raising of forces, to the matter of army supplies. He has charge of all captured property, and sees to the transportation of troops, munitions, equipments and stores throughout the United States. He defines the quantity and kind of supplies and attends to their purchase through the Subsistence and Quartermaster's Departments. He procures buildings to store them in. He receives field officers' accounts of clothing, munitions, supplies of every kind, and adjusts and passes on their accounts. In connection with army officers he must see to the condition of prisoners of war, advise with the militia officers of the States, issue proposals for supplies, and report to Congress annually or whenever called upon, the transactions of his office and its condition. An important duty added since the civil war is the purchase, preparation and care of the national cemeteries, of which there are seventy-nine, containing the bodies of tens of thousands of Union soldiers, known and unknown. His office is divided into sub-Departments, Bureaus or Divisions, each of which is presided over by a responsible head. ADJUTANT-GENERAL.-This subdepartment is in charge of an Adjutant-General of the Army, who has army rank as Brigadier, and army pay. The business of the office is the organization and management of the armies. All orders to the military establishments and armies go out through this office. It attends to recruiting the armies, keeps all muster in and out rolls, and officers' accounts, furnishes statements to Treasury Auditors, Pension Commissioners, Paymasters, Commissaries and Quartermasters. |