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256 year 1845-46 was $815,445 less than for the preceding twelve month. In a word, shrinking revenues and curtailed outlays were the prospect.

In this condition of things, not only had the unpredictable costs and embarrassments of war to be faced, but those of war in a distant land. Money was to be sent out of the country, never to return, and the bills for supplies to be increased by the burdens of marine transportation, insurance and losses; while risks from privateers and European complications could be seen. Before such an outlook business men shrank from large enterprises. People with money felt disposed to keep it.

Where, then, were funds to come from? The currency had been inflated by the paper issues of many banks. Stocks were selling far below the prices of twelve months before. Even the business men who did not endorse the tariff of 1842 had adjusted their affairs to it, and now everybody understood that a new scale of duties, based upon free-trade ideas, lay on the treasury anvil. Calls for the government funds held and used by state depositories and for the specie of all the banks were feared. The banks cannot support a loan, and even in peace our capitalists have never done so, remarked the financial editor of the New York Herald, probably the best newspaper authority.

The government must look abroad, concluded the editor, and in Europe no light could be seen. By 1842 our state debts, mostly held there, had amounted to nearly $200,000,000. Mississippi, Michigan, Arkansas and Florida sank in the mire of repudiation. Pennsylvania, Maryland, Indiana, [Illinois and Louisiana became delinquent. The bonds of South Carolina fell below par. Missouri passed a stay law. Sidney Smith, when he met a Pennsylvanian at dinner, felt like dividing the man's raiment among the British guests, most of whom, if not all, had probably suffered by the "dishonor" of the state. Indeed, the bondholders were disposed to throw off half of the interest rate, if our national treasury would assume the debts; but a proposition to do this failed in Congress.

As early as 1841 even our six per cent national bonds would not sell in Europe, though money commanded less than half as large a return there. "Who will lend on American securities?"' asked the London Spectator the very month we began war upon Mexico. Our credit then grew worse instead of