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 reassembled 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.
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