power in its hands the administration was able by January,
1865, to construct a union army that outnumbered the Confederates two to
one.

=War Finance.=--In the financial sphere the North faced immense
difficulties. The surplus in the treasury had been dissipated by 1861
and the tariff of 1857 had failed to produce an income sufficient to
meet the ordinary expenses of the government. Confronted by military and
naval expenditures of appalling magnitude, rising from $35,000,000 in
the first year of the war to $1,153,000,000 in the last year, the
administration had to tap every available source of income. The duties
on imports were increased, not once but many times, producing huge
revenues and also meeting the most extravagant demands of the
manufacturers for protection. Direct taxes were imposed on the states
according to their respective populations, but the returns were
meager--all out of proportion to the irritation involved. Stamp taxes
and taxes on luxuries, occupations, and the earnings of corporations
were laid with a weight that, in ordinary times, would have drawn forth
opposition of ominous strength. The whole gamut of taxation was run.
Even a tax on incomes and gains by the year, the first in the history of
the federal government, was included in the long list.

Revenues were supplemented by bond issues, mounting in size and interest
rate, until in October, at the end of the war, the debt stood at
$2,208,000,000. The total cost of the war was many times the money value
of all the slaves in the Southern states. To the debt must be added
nearly half a billion dollars in "greenbacks"--paper money issued by
Congress in desperation as bond sales and revenues from taxes failed to
meet the rising expenditures. This currency issued at par on
questionable warrant from the Constitution, like all such paper, quickly
began to decline until in the worst fortunes of 1864 one dollar in gold
was worth nearly three in greenbacks.

=The Blockade of Southern Ports.=--Four days after his call for
volunteers, April 19, 1861, President Lincoln issued a proclamation
blockading the ports of the Southern Confederacy. Later the blockade was
extended to Virginia and North Carolina, as they withdrew from the
union. Vessels attempting to enter or leave these ports, if they
disregarded the warnings of a blockading ship, were to be captured and
brought as prizes to the nearest convenient port. To make the order
effective, immediate steps