[rustbucket]

Your point about that depression is well taken. Congress added to the debt problem, or wanted to, in 1860-1861. From the remarks of a Representative Phelps speaking to the House on February 6, 1861 (paragraph breaks mine):

Then the existing debt of the United States is nearly seventy million dollars. The $10,000,000 Treasury notes recently issued were negotiated, a portion at twelve percent, and a portion at between ten and eleven. Your ten percent Treasury notes were sold in the market of New York below par; and if you authorize new loans that are not absolutely necessary, you cannot negotiate them except at ruinous rates.

I have made a comparison of actual debt created and proposed to be created by this Congress. The balance of the loan authorized under the act of 22nd June, 1860 is $13,978,000. If the amendment of the Senate be concurred in, that loan cannot be negotiated. I am in favor of that amendment.

The tariff bill, which will probably become law, authorizes the loan of $21,000,000. The Pacific raailroad bill as it passed the House authorized an indebtedness of $96,000,000, and the Senate has put on an additional $25,000,000. In other words, the proposed indebtedness of the country is $167,000,000 [actually the figures above add to $165,978,000]; making with the present public debt and the loan already authorized, an aggregate of $250,351,649. With such indebtedness, how can you expect to raise a loan on favorable terms?

I gather a Pacific railroad bill didn't finally pass until 1862. I don't know whether the other new loans above came to pass. To make the figures balance, "the loan already authorized" that Phelps referred to must have been for $15,000,000.

The South could have justified secession based on the out of control spending of a Keynesian Congress alone.

[PeaRidge]

In my opinion, you have pointed out one of the two reasons for Lincoln starting the war.

The Northern states had vastly overextended themselves, anticipating repayment of loans from tariff revenue which they were about to double with Morrill.

With secession, that plan wouldn't work since the North had very little to export.

The South, getting ready to begin direct trading with Europe, by-passing both the tariff and the expense of using New England shipping, was the other reason.

Not only was the Lincoln government either going to fail financially, or have to start direct taxiation, but also the trading centers of the North, Philly, NYC, and Boston, were going to shift to Charleston, Mobile, and New Orleans.

Thanks for the quote. I am going to add it to my collection.