Peace was providentially restored in an early part of 1815. On the first of January of that year, the debt of government, funded and unfunded, stood, according to the Treasury books, at 99,824,410 dollars, and there were outstanding claims against it to the amount of 30 or 40 millions more. On the 20th of February the ascertained debt was 108 millions. As the means of satisfying, or rather of deferring satisfaction of some of these claims, an act was passed on the 24th of February 1814, under the authority of which, Treasury notes to the ad ditional amount of 7,815,391 dollars, were issued. It was provided that such of the notes of this new emission, as were of a less denomination than one hundred dollars, should bear no interest : but might be funded at seven per cent and that such as were of the denomination of one hundred dollars and up wards, should bear an interest of five and two-fifths per cent and might be funded at a rate of six per cent interest.
As a means of absorbing part of the outstanding treasury notes, issued under the authority of the different acts of 1812, 13, and 14, invitations were given for a loan of S18,452,000, subscriptions to which might be made in any treasury notes issued previous to the third of March 1815, the clay of the passage of this act. In this way, were created three new denominations of stock; but which still left at the end of the year, between seventeen and eighteen millions of treasury notes unfunded, and a debt of upwards of one million dollars, obtained as a temporary loan, unsatisfied.
In the acts passed during the war for raising a revenue by internal taxation, it was provided that the taxes should not be repealed till one year after the cessation of hostilities. But it was found neces sary, as will be shown hereafter, to continue these taxes for nearly three years after the return of peace: and, in addition, it was deemed expedient on the 1st of April 1815, to pass an act imposing a duty of one dollar a ton, on pig, bar, slit, and rolled iron, manufactured in the country, one dollar and a half a ton on iron castings, one cent a pound on nails, five cents a pound on wax candles, three cents a pound on tallow candles, eight per cent ad valorem on hats, caps, and umbrellas, three per cent on paper, fifty per cent on playing and visiting cards, six per cent on saddles and bridles, beer, ale, and porter, twenty per cent on manufactures of tobacco, five per cent on boots and leather: two dollars a piece on gold watches, one dollar on silver watches, and a tax on household furniture, from one dollar to one hun dred dollars, according to a graduated scale of valuation.
In consequence of this act, the amount received from internal taxes, during the year 1815, was in creased to 4,600,000 dollars, and there being a small increase in the customs, the whole revenue of the government, for the year, independent of what was derived from loans and treasury notes, was a little less than 15,700,000 dollars. It being found impracticable, or deemed inexpedient, im mediately to reduce the army and navy to the peace establishment, the charges on government were very heavy in this period, and the outstanding claims which were daily brought in, occasioned much embarrassment. At the end of the year, the ascertained debt, was upwards of 123 millions.
If hostile operations had been continued to this time, the confusion would have been inextricable: but the return of peace rendered it practicable to resort to all those expedients for changing the form of debt, and deferring the day of payment, which constitute so great a part of the modern art of financiering. The officers of the Treasury had free
scope for exercising their abilities in this way, for the various acts we have mentioned authorising loans, and two others, one passed December 21st 1824, for a loan of six millions, and another on the 9th of January 1815, for another loan of equal amount, together with the acts respecting Treasury notes, gave them authority to borrow to almost any extent, and in almost every form, in which borrow ing would seem possible.
With so much skill did they exert those powers of financial metamorphosis which the funding and Treasury note system gave them, that, though the bona fide revenue of government for the whole year, had been only t5,700,000 dollars, and though the charges of government for the same period amounted to upwards of 39 millions,—there was, according to the published statements, a balance in the Trea sury, on the last clay of the year, of upwards of thirteen million dollars! This balance was, unfortunately, not such as could be immediately applied where it was most wanted. Five months before the conclusion of the war, all the banks south and west of New England, excepting the old bank at Nashville, had suspended specie payments. On the return of peace, the banks in the principal cities could have resumed payments in specie without making any great sa crifices, for they had in this interval added little to their issues. If the government had been free from embarrassment, it might, by refusing to re ceive the notes of any but specie-paying banks in discharge of duties, have induced the principal in stitutions to pursue the course which sound prin ciples dictated. But the credit of government was even worse than that of the banks: and from policy or from necessity, it connived at the continued sus pension of specie payments, a suspension which, it was originally understood, was not to be prolonged beyond the close of the war. Under these circum stances, the banks naturally began to increase their issues, and produced that appearance of prosperity which is one of the first effects of a plentiful emiss ion of paper money. From the great variety of circulating medium, and the inequality of its value, some inconvenience was suffered, but no small number of men found this evil more than com pensated by the rise in the price of real estate, and the briskness of nearly every description of business. If the merchant at Pittsburgh was forced to give ten per cent to have his western notes exchanged for paper current in Philadelphia, he knew how to compensate himself by putting on his goods an ad ditional price, equivalent to the difference in the currencies. Labouring men, in many cases, sus tained a real loss, from their employers paying them in notes of inferior value: but they vented all their indignation on the innocent exchange brokers. Men of business could calculate the par of exchange, and regulate their transactions accordingly. The time when they were to suffer, by the necessary re action of the system, and the consequent fall in the price of real estate, and of nearly every other description of property, had not yet arrived.