ncial
crisis was not due to his policy--or lack of policy, as it would now
seem--but to a general loss of faith in the outcome of the war.

There now arose a moral crisis for this "imposing person" who was
Secretary of the Treasury--a crisis with regard to which there are
still differences of opinion. While he faced his problem silently, the
Committee on Ways and Means in the House took the matter in hand: Its
solution was an old one which all sound theorists on finance unite in
condemning--the issue of irredeemable paper money. And what did the
Secretary of the Treasury do? Previously, as Governor of Ohio, he had
denounced paper money as, in effect, a fraud upon society. Long after,
when the tide of fortune had landed him in the high place of Supreme
Justice, he returned to this view and condemned as unconstitutional the
law of 1862 establishing a system of paper money. But at the time
when that law was passed Chase, though he went through the form of
protesting, soon acquiesced. Before long he was asking Congress to allow
a further issue of what he had previously called "fraudulent" money.

The answer to the question whether Chase should have stuck to his
principles and resigned rather than acquiesce in the paper money
legislation turns on that other question--how were the politician and
the financier related in his make-up?

Before Congress and the Secretary had finished, $450,000,000 were
issued. Prices naturally rose, and there was speculation in gold. Even
before the first issue of paper money, the treasury notes had been
slightly below par. In January, 1863, a hundred dollars in paper would
bring, in New York, only $69.00 in gold; a year later, after falling,
rising, and falling again, the value was $64.00; in July and August,
1864, it was at its lowest, $39.00; when the war closed, it had risen to
$67.00. There was powerful protest against the legislation responsible
for such a condition of affairs. Justin Morrill, the author of the
Morrill tariff, said, "I would as soon provide Chinese wooden guns
for the army as paper money alone for the army. It will be a breach of
public faith. It will injure creditors; it will increase prices; it will
increase many fold the cost of the war." Recent students agree, in the
main, that his prophecies were fulfilled; and a common estimate of the
probable increase in the cost of the war through the use of paper money
and the consequent inflation of prices is $600,000,000.

Th