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 attitude 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.
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