st demands upon it. Taxation was increased, and, in
1862, the government began the issue of its own paper money. The backs
of the bills being printed in green ink, these bills were known as
"greenbacks." They were made a legal tender, despite considerable
opposition to the measure. The law gave any person owing a debt, no
matter if contracted in gold and silver, the right to pay the same with
greenbacks. Since it is impossible to regulate the value of money except
by the law of supply and demand, the bills, as compared with gold,
depreciated a good deal in value.

The act of February 25, 1862, authorized the issue of $150,000,000, and
further issues were made on June 11, 1862, and March 3, 1863. The
depreciation of greenbacks was such that the price of gold averaged 2.20
throughout 1864, and at one time reached 2.85. In other words, a
greenback dollar was worth only thirty-five cents. Another method of
raising money was through the sale of bonds, of which many millions were
issued. To encourage their sale, the National Banking System was
established in 1863. This required all banks that issued currency to
deposit a slightly larger amount of bonds in Washington. Thus the banks
were compelled to help the government by loaning it money.

[Illustration: THE BATTLE OF MALVERN HILL, JULY 1, 1862

Malvern Hill was a very strong position taken by General McClellan in
his retreat before the army of Lee. General Lee made furious and
repeated assaults upon this well-nigh impregnable position, each time to
meet an inevitable repulse, and in the end a defeat accompanied by
severe losses, which necessitated his withdrawal to Richmond.]

CHAPTER XVII.

ADMINISTRATION OF LINCOLN (CONTINUED), 1861-1865.

WAR FOR THE UNION (CONTINUED), 1863.

The Military Situation in the West--Siege and Capture of Vicksburg--The
Mississippi Opened--Battle of Chickamauga--"The Rock of
Chickamauga"--The Battle Above the Clouds--Siege of Knoxville--General
Hooker Appointed to the Command of the Army of the Potomac--His Plan of
Campaign Against Richmond--Stonewall Jackson's Stampede of the Eleventh
Corps--Critical Situation of the Union Army--Death of Jackson--Battle of
Chancellorsville--Defeat of Hooker--The Second Confederate
Invasion--Battle of Gettysburg--The Decisive Struggle of the War--Lee's
Retreat--Subsequent Movements of Lee and Meade--Confederate
Privateering--Destruction of the _Nashville_--Failure of the Attacks on
Charleston--The