Peninsula. Moreover, financial difficulties increased the despondency.
At the outbreak of hostilities practical repudiation of Southern debts
had brought widespread disaster. "The fabric of New York's mercantile
prosperity," said the _Tribune_, "lies in ruins, beneath which ten
thousand fortunes are buried. Last fall the merchant was a capitalist;
to-day he is a bankrupt."[813] In September, 1861, these losses
aggregated $200,000,000.[814] Besides, the strain of raising sufficient
funds to meet government expenses had forced a suspension of specie
payment and driven people to refuse United States notes payable on
demand without interest. Meantime, the nation's expenses aggregated
$2,000,000 a day and the Treasury was empty. "I have been obliged,"
wrote the Secretary of the Treasury, "to draw for the last installment
of the November loan."[815]

[Footnote 812: _Congressional Globe_, January 6, 1862.]

[Footnote 813: New York _Tribune_, May 27, 1861.]

[Footnote 814: _Ibid._, September 18.]

[Footnote 815: Letter of Secretary Chase, dated February 3, 1862.--E.G.
Spaulding, _History of the Legal Tender_, p. 59.]

To meet this serious financial condition, Elbridge G. Spaulding of
Buffalo, then a member of Congress, had been designated to prepare an
emergency measure to avoid national bankruptcy. "We must have at least
$100,000,000 during the next three months," he wrote, on January 8,
1862, "or the government must stop payment."[816] Spaulding, then
fifty-two years of age, was president of a bank, a trained financier,
and already the possessor of a large fortune. Having served in the
Thirty-first Congress, he had returned in 1859, after an absence of
eight years, to remain four years longer. Strong, alert, and
sufficiently positive to be stubborn, he possessed the confidence of
Thaddeus Stevens, chairman of the Ways and Means Committee, who
approved his plan of issuing $100,000,000 legal-tender, non-interest
bearing treasury notes, exchangeable at par for six-twenty bonds.
Spaulding fully appreciated the objections to his policy, but the only
other course, he argued, was to sell bonds as in the war of 1812,
which, if placed at six percent interest, would not, in his opinion,
bring more than sixty cents--a ruinous method of conducting
hostilities. However, his plea of necessity found a divided committee
and in Roscoe Conkling a most formidable opponent, who attacked the
measure as unnecessary, extravagant, unsound, wit