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ses of praise and sympathy 〃began to pour into the Legation of the United States in a steady and ever swelling stream。〃 An immense popular demonstration took place at Exeter Hall。 Cobden； writing to Sumner； described the new situation in British politics； in a letter amounting to an assurance that the Government never again would attempt to resist the popular pressure in favor of the North。
On the last day of 1862 a meeting of workingmen at Manchester； where the cotton famine was causing untold misery； adopted one of those New Year greetings to Lincoln。 Lincoln's reply expressed with his usual directness his own view of the sympathetic relation that had been established between the democratic classes of the two countries：
〃I know and deeply deplore the sufferings which the workingmen at Manchester； and in all Europe； are called to endure in this crisis。 It has been often and studiously represented that the attempt to overthrow this Government； which was built upon the foundation of human rights； and to substitute for it one which should rest exclusively on the basis of human slavery； was likely to obtain the favor of Europe。 Through the action of our disloyal citizens； the workingmen of Europe have been subjected to severe trials； for the purpose of forcing their sanction to that attempt。 Under the circumstances； I cannot but regard your decisive utterances upon the question as an instance of sublime Christian heroism which has not been surpassed in any age or in any country。 It is indeed an energetic and reinspiring assurance of the inherent power of truth； and of the ultimate triumph of justice； humanity； and freedom。 I do not doubt that the sentiments you have expressed will be sustained by your great nation； and； on the other hand； I have no hesitation in assuring you that they will excite admiration； esteem； and the most reciprocal feelings of friendship among the American people。 I hail this interchange of sentiment； therefore； as an augury that whatever else may happen； whatever misfortune may befall your country or my own； the peace and friendship which now exists between the two nations will be； as it shall be my desire to make them； perpetual。〃
CHAPTER X。 THE SECRETARY OF THE TREASURY
Though the defeat of the Democrats at the polls in 1863 and the now definitely friendly attitude of England had done much to secure the stability of the Lincoln Government； this success was due in part to a figure which now comes to the front and deserves attentive consideration。 Indeed the work of Salmon Portland Chase； Secretary of the Treasury； forms a bridge； as one might say； between the first and second phases of Lincoln's administration。
The interesting Englishman who is the latest biographer of Lincoln says of Chase： 〃Unfortunately； this imposing person was a sneak。〃 But is Lord Charnwood justified in that surprising characterization？ He finds support in the testimony of Secretary Welles； who calls Chase； 〃artful dodger； unstable； and unreliable。〃 And yet there is another side； for it is the conventional thing in America to call him our greatest finance minister since Hamilton； and even a conspicuous enemy said of him； at a crucial moment； that his course established his character 〃as an honest and frank man。〃
Taking these contradictory estimates as hints of a contradiction in the man； we are forced to the conclusion that Chase was a professional in politics and an amateur in finance。 Perhaps herein is the whole explanation of the two characteristics of his financial policyhis reluctance to lay taxes； and his faith in loans。 His two eyes did not see things alike。 One was really trying to make out the orthodox path of finance； the other was peering along the more devious road of popular caprice。
The opening of the war caught the Treasury； as it caught all branches of the Government； utterly unprepared。 Between April and July； 1861； Chase had to borrow what he could。 When Congress met in July； his real career as director of financial policy beganor； 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。 Furthermore； in spite of their protest； Chase issued treasury notes； which the banks had to receive from their depositors； who nevertheless continued to demand specie。 On January 1； 1862； the banks owed 459；000；000 and had in specie only 87；000；000。 Chase defended his course by saying that the financial crisis was not due to his policyor lack of policy； as it would now seembut to a general loss of faith in the outcome of the war。
There now arose a moral crisis for this 〃imposing person〃 who was Secretary of the Treasurya crisis with regard to which there are still differences of opinion。 While he faced his problem silently； the Committee on Ways and Means in the House took the matter in hand： Its solution was an old one which all sound theorists on finance unite in condemningthe issue of irredeemable paper money。 And what did the Secretary of the Treasury do？ Previously； as Governor of Ohio； he had denounced paper money as； in effect； a fraud upon society。 Long after； when the tide of fortune had landed him in the high place of Supreme Justice； he returned to this view and condemned as unconstitutional the law of 1862 establishing a system of paper money。 But at the time when that law was passed Chase； though he went through the form of protesting； soon acquiesced。 Before long he was asking Congress to allow a further issue of what he had previously called 〃fraudulent〃 money。
The answer to the question whether Chase should have stuck to his principles and resigned rather than acquiesce in the paper money legislation turns on that other questionhow were the politician and the financier related in his make…up？
Before Congress and the Secretary had finished； 450；000；000 were issued。 Prices naturally rose； and there was speculation in gold。 Even before the first issue of paper money； the treasury notes had been slightly below par。 In January； 1863； a hundred dollars in paper would bring； in New York； only 69。00 in gold； a year later； after falling； rising； and falling again； the value was 64。00； in July and August； 1864； it was at its lowest； 39。00； when the war closed； it had risen to 67。00。 There was powerful protest against the legislation responsible for such a condition of affairs。 Justin Morrill； the author of the Morrill tariff； said； 〃I would as soon provide Chinese wooden guns for the army as paper money alone for the army。 It will be a breach of public faith。 It will injure creditors； it will increase prices； it will increase many fold the cost of the war。〃 Recent students agree； in the main； that his prophecies were fulfilled； and a common estimate of the probable increase in the cost of the war through the use of paper money and the consequent inflation of prices is 600；000；000。
There was much more financial legislation in 1862； but Chase continued to stand aside and allow Congress the lead in establishing an excise law； an increase in the income tax； and a higher tariffthe last of which was necessitated by the excise law which has been described as a bill 〃that taxed everything。〃 To enable American manufacturers to bear the excise duties levied upon their business； protection was evoked to secure them the possession of their field by excluding foreign competition。 All these taxes； however； produced but a fraction of the Government's revenue。 Borrowing； the favorite method of the Secretary； was accepted by Congress as the main resource。 It is computed that by means of taxation there was raised in the course of the war 667；163；247。00； while during the same period the Government borrowed 2；621；916；786。00。
Whatever else he may think of Chase； no one denies that in 1862 he had other interests besides finance。 Lincoln's Cabinet in those days was far from an harmonious body。 All through its history there was a Chase faction and a Seward faction。 The former had behind them the Radical Republ