So, exactly what were the circumstances facing Linooln as he took office in March?
The finances of the Federal Government had been in a very disordered condition due to business downturns beginning with the massive recession in 1857. Northern business interests were in a downturn resulting from the political disturbances, and which by reducing the imports of overseas goods, had reduced the customs income, the chief source of revenue for the Treasury.
In June, 1860, a loan of twenty million dollars had been authorized by Congress. Of this amount, ten million was offered in October in a five per cent stock, and it had been taken by investors at a small premium.
Before any installments were paid up, the panic that attended the election had affected credit, and many bids were withdrawn.
This so seriously affected the Treasury Department, that as the New Year approached, it seemed likely there would be no funds with which to meet the interest on the National debt.
By the Act of December 17th, 1860, an issue of ten million dollars, in treasury notes, was authorized, to bear such a rate of interest as might be offered by the lowest bidders, but so shaken was credit, few bids were made, and some of them at a rate of thirty six per cent interest per annum.
The investors interested in the Government credit finally took one million five hundred thousand dollars of one year treasury notes, at twelve per cent per annum (the amount was subsequently raised to five million dollars), on condition that the money should be applied to paying the interest on the national debt.
This was certainly a dark day in the Capitol, when the Federal Government, which had earned the honor of being the only nation that had ever paid its debts in full—principal and interest—and which in 1856, with an overflowing treasury, had paid twenty-two per cent premium for its own stock, was now reduced to give twelve per cent interest, for a few millions, and to engage to protect its credit with the money.
This, combined with the specter that as soon as the primary cotton and tobacco producing states seceded with the subsequent massive loss in exportable products, that the US Treasury was in great jeopardy.
Brojoke, let's think clearly here for a moment.
You said: “...since the vast majority of Federal revenues came from tariffs collected in Union ports, they could not have an immediate impact on Lincoln's actions of March & April 1861.”
You persist in quoting the tariff revenues coming from New York. Do you think money was being printed there and handed over to Treasury?
Of course not. That money had been collected from the importers on the goods they had purchased from Great Britain.
And remember that the “currency” they used to buy their goods was Southern grown and produced goods. You have been shown dozens of times that the value of this “currency” was almost 70% of total exports.
Would the tariff revenue be anywhere the same if the Northern exporters only brought in 30% of previous years’ taxable goods?
And don't you believe that Northern business interests would NOT wait for Congress to convene?
Do you?
PeaRidge: “The finances of the Federal Government had been in a very disordered condition due to business downturns beginning with the massive recession in 1857.”
At home I have numbers of actual Federal revenues in every year, including this time period.
From memory now I’ll say they were in the neighborhood of $80 million per year, and rose a couple of million each year.
National debt at the time was near to zero, iirc.
So, when you are discussing a problem of $20 million, that is a squeeze on about three month’s of revenue.
Compared to today’s massive Federal debt, those are mere pittances.
So nobody denies that in early 1861, federal coffers were slim and money tight.
After all, declarations of secession and seizures of major Federal properties, along with threats and firings on Union ships — and the total lack of effective response from Doughfaced Democrat President Buchanan — had the country roiling.
I merely point out that all these economic matters were quickly addressed by Congress in July 1861, Federal finances were put on a much sounder basis, and funds found to pay for a TWENTY FOLD increase in wartime defense spending.
So I don’t think we should exaggerate the financial problems of early 1861.
They were merely a part of the larger failure of Buchanan’s administration to deal with the overall situation.
PeaRidge: “...the ‘currency’ they used to buy their goods was Southern grown and produced goods.
You have been shown dozens of times that the value of this ‘currency’ was almost 70% of total exports.”
And you have just as often been corrected, showing that number was much closer to 50%.
Which is still huge, not trying to minimize it, but Deep South cotton was not the US’ only export.
Nor did the loss of 100% of those exports during the war years cause the Union irreparable economic damage.
My point is that for you, like 1860s Confederates, and indeed similar to OPEC in our times, it’s easy to exaggerate the importance of a raw material like cotton, and fail to see how quickly others can adapt to its absence.
Bottom line: in early April 1861, when Lincoln ordered resupply ships to Fort Sumter, solving the treasury’s financial squeeze was not his purpose.