“The shortage of specie will require us to print paper currency as soon as possible,” Chase asserted. “Otherwise people will lack instruments to settle their business. People are already resorting to postage stamps as currency, but there aren’t anywhere near enough of those either. If we don’t do something they’ll begin settling their business with private scrip.”
“Printing paper currency would be certain to ruin our credit,” objected Senator Sumner. “Do you recall the saying ‘not worth a Continental’ from the Revolutionary War? It took years to restore confidence in our currency after we debased it with paper.”
“Well, as I recall, we won the War of the Revolution,” retorted Chase. “Would you have preferred that we should have lost the war in order to maintain a perfectly sound currency? Do you want us to lose our country now because people can’t settle their business? Paper currency is necessary. If we issue it now, before a financial panic sets in, people will accustom themselves to valuing it the same as specie. If we wait until all the specie has gone into hiding and the banks are failing then the people will not accept paper currency even if compelled by law.”
“I agree with Chase,” intoned Lincoln. “We cannot allow the nation to fail merely because it is lacking a currency to conduct its business. The true measure of our wealth is the production of our farms, factories, mines, and businesses. Any currency, whether it is gold and silver specie or paper money, is merely a draft on these true sources of wealth.
“It seems to me that if the people are already using paper instruments such as postage and private scrip to settle their business, that there can be no harm in issuing official paper currency approved by the government to be legal tender. That would restore confidence in our government. The people would see that we are managing the situation rather than letting it manage us. Let’s discuss the matter in a full-day’s meeting tomorrow to decide the specifics of how much to print.”
“Meeting to start at ten o’clock, Mr. President?” asked Hay. He updated his notes as the President and members of Congress agreed.
“Now let’s take stock of our military situation, upon which all else depends,” said the President. “Will the Secretary of War please brief us?”
“We have about 300,000 men in service, including those in training,” replied Secretary of War Cameron as he read from his papers.
“They are mostly young, healthy men recruited from the Wide Awakes. They have signed on for three years or the duration of the war. About 3,500 Regular Army men followed us out of the Confederate Union. About 1,500 are stationed on the western frontier forts and in the New England Harbors. The others have been dispersed among the volunteer regiments. We also have about a hundred thousand state militiamen waiting to be mustered into the national army as soon as equipment becomes available. Our primary constraint is lack of arms and equipment. If we had been able to equip all who volunteered could have had perhaps 200,000 more in the field.”
“How long will it take to arm and equip those men?” Lincoln asked.
“We’re producing 10,000 rifles per month, primarily from the Springfield, Massachusetts Arsenal. The smaller arsenals in northern New York, Massachusetts, Maine, and Pennsylvania are fully employed in retrofitting about a 100,000 flintlock muskets to use percussion caps, also at the rate of about 10,000 per month.”
“We’ll need to do something faster than that,” said Senator Wade. “We’ve got hundreds of thousands of men sitting at home sucking their thumbs for lack of weapons. Let’s get these men armed with squirrel guns, shotguns, pistols, or pitchforks and get them in the lines immediately. Then let’s do whatever we have to do to get them standard-issue military rifles. We need those weapons now, not in six months.”
“We’ll be able to let contracts to the Remington, Sharps, Colt, and Burnside companies as soon as we get the currency issue settled,” advised Cameron. “We’re also short on rations, horses, mules, saddles, uniforms, and other material due to the shortage of specie in the government’s accounts to pay for them. Not to mention we’re unable to pay the troops. We’re depending on patriotism to fill the ranks, but even patriotism has its limits.”
“That’s why we must get started immediately with printing paper currency,” replied Treasury Secretary Chase. “We can’t arm and equip the armies unless we have something with which to pay for it. I also recommend that we begin imposing taxes in kind on foodstuffs and livestock. Our commissary agents can impound the goods and send them straight to the armies without having to settle accounts with specie or paper.”
“A tax in kind may not be Constitutional,” advised Congressman Vandever. “We should ask the Supreme Court to rule on it. The same holds true for the printing of paper currency. The Constitution authorizes only gold and silver as legal tender.”
“There’s a war on,” retorted Thad Stevens. “Impose the tax in kind and print the paper currency. There is no time to shillyshally around. We must do what is necessary to defend ourselves. We can argue about the constitutionality after we’ve won our independence.”
“I agree that must take a broad view of the Constitution during the time when our nation’s life hangs in the balance,” said Lincoln. “For each measure in question let us ask first whether it is expedient. If it is expedient then let us ask whether it defies the spirit of the Constitution. I don’t perceive that the printing of paper currency or a tax in kind defies the spirit of the Constitution. Let’s have a complete discussion of those issues at tomorrow’s meeting and decide how to proceed. Let us now return to a discussion of the war. The Secretary of War will please advise us.”
“There isn’t anything new of substance to report on,” said Cameron. “Our fronts have been quiet since our victory at Gettysburg. Our agents in the Confederate Union haven’t reported any preparations for them to resume the offensive. The men they were planning to send into Mexico have been recalled to their training camps near the state capitals. The Confederates have lost their senior commanders. Albert Sydney Johnston is deceased and Joseph Johnston is barely alive in one of our hospitals. General Lee has been sacked. It will take them months to sort out that disorganization in their ranks.”
“They also got their noses bloodied taking St. Louis,” Lincoln reminded them, “and that city was defended by only a few thousand of our men. Their plan for taking Philadelphia unraveled at Gettysburg. I don’t believe they will attack Philadelphia again now that our men are prepared. And that brings us to the proposal for peace that Horace Greeley is attempting to mediate between us and the Jeff Davis Government.”
“What is he proposing?” asked Thad Stevens.
“That the Confederates will recognize our sovereignty,” replied Lincoln. “They will cede to us the Free State territories they hold in New York, New Jersey, Indiana, Illinois, and Oregon. In return we will cede them the Southwest west of the Rocky Mountains, as far north as Latitude 42. That includes all of California. We will retain Oregon and the territories north to Latitude 49 as our window on the Pacific Coast. There is to be free navigation of rivers and canals in all the states and territories of either nation.”
“Who gets Kansas?” asked Stevens.
“Kansas stays with us.”
“What about Colorado?”
“We divide it in half at the Rockies. We get the east. They get the west”