United States had developed in his message the purpose "to make the contest a short and a decisive one," and had called on Congress for 400,000 men and $400,000,000. The Congress had exceeded the Executive recommendation, and had authorized the levy of half a million of volunteers, besides largely increasing the regular land and naval forces of the United States. The necessity thus first became urgent that a financial scheme should be devised on a basis sufficiently large for the vast proportions of the contest with which we were threatened. Knowing that the struggle, instead of being "short and decisive," would be indefinite in duration, and could end only when the United States should awaken from their delusion of conquest, a permanent system was required fully adapted to the great exigencies before us.
The plan devised by Congress at that time was based on the theory of issuing Treasury notes convertible at the pleasure of the holder into 8 per cent bonds, the interest of which was to be payable in coin, and it was correctly assumed that any tendency to depreciation that might arise from overissue of the currency would be checked by the constant exercise of the holder's right to fund the notes at a liberal interest, payable in specie. This system depended for success on the continued ability of the Government to pay the interest in specie, and means were therefore provided for that purpose in the law authorizing the issues. An internal tax, termed a war tax, was levied, the proceeds of which, together with the revenue from imports, were deemed sufficient for the object designed. This scheme required for its operation that our commerce with foreign nations should not be suspended. It was not to be anticipated that such suspension would be permitted otherwise than by an effective blockade; and it was absurd to suppose that a blockade "sufficient really to prevent access" to our entire coast could be maintained.
We had the means, therefore (if neutral nations had not combined to aid our enemies by the sanction of an illegal prohibition on their commerce), to secure the receipt into the Treasury of coin sufficient to pay the interest on the bonds, and thus maintain the Treasury notes at rates nearly equal to par in specie. So long as the interest continued to be thus paid with the reserve of coin preëxisting in our country, experience sustained the expectations of those who devised the system. Thus, on the 1st of the following
