Current History, Vol. VIII, No. 3, June 1918 online

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the Constitution, Alexander Hamilton came forward with a funding scheme
by which the various debts owed to foreign countries, to private
creditors, and to the several States were combined. In 1791, on a specie
basis, our total debt was $75,000,000. The paper dollar was practically
valueless and the people were forced to give the Government adequate
powers to raise money and to impose taxes. Between that date and 1812
thirteen tariff bills were passed to raise money to meet public
expenditures and pay off the national debt.

THE WAR OF 1812.

For some time previous to the actual outbreak of the War of 1812
hostilities had been predicted. In a measure, this enabled Congress to
prepare for it. And although the war did not begin until June of 1812,
as early as March of that year a loan of $11,000,000, bearing 6 per
cent. at par, to be paid off within 12 years from the beginning of 1813,
was authorized. Of this, however, only $2,150,000 was issued, and all
was redeemed by 1817. The next year a loan of $16,000,000 was authorized
and subscribed. This was followed, in August, by a loan of $7,500,000
which sold at 88-1/4 per cent.

At the end of the war the total loans negotiated by the Government
aggregated $88,000,000. The nation's public debt, as a result of this
war, was increased to $127,334,933 in 1816. By 1835, either by
redemptions or maturity, it was all paid.


The Mexican War net debt incurred by the United States was approximately
$49,000,000 and was financed by loans in the form of Treasury notes and
Government stock. The Treasury notes, under the act of 1846, totaled
$7,687,800 and the stock $4,999,149. The latter paid 6 per cent.
interest. By act of 1847 Treasury notes to the amount of $26,122,100
were issued, bearing interest in the discretion of the Secretary of the
Treasury, reimbursable one and two years after date, and convertible
into United States stock at 6 per cent. They were redeemable after Dec.
31, 1867. Economic developments following this war led to a period of
extraordinary industrial prosperity which lasted for several years. A
change in the fiscal policy of the Government, with overexpansion of
industry, however, resulted in a panic in 1857 and a Treasury deficit in
1858. The debt contracted in consequence of the Mexican War was redeemed
in full by 1874.

The situation had not improved to any great extent when Lincoln took
office on March 4, 1861, and by mid-November of that year a panic was
in full swing. The outbreak of the civil war found the Treasury empty
and the financial machinery of the Government seriously disorganized.
Public credit was low, the public mind was disturbed, and raising money
was difficult. In 1862 the Legal Tender act was passed, authorizing an
issue of $150,000,000 of legal-tender notes, and an issue of bonds in
the amount of $500,000,000 was authorized.

This proved to be a most popular loan. The bonds were subject to
redemption after five years and were payable in twenty years. They bore
interest at 6 per cent., payable semi-annually, and were issued in
denominations of $50, $100, $500, and $1,000. Through one agent, Jay
Cooke, a genius at distribution, who employed 2,850 sub-agents and
advertised extensively, this loan was placed directly with the people at
par in currency. Altogether the aggregate of this loan was $514,771,600.
Later in that year Congress authorized a second issue of Treasury notes
in the amount of $150,000,000 at par, with interest at 6 per cent.; in
January, 1863, a third issue of $100,000,000 was authorized, which was
increased in March to $150,000,000, at 5 per cent. interest. These
issues were referred to as the "one and two year issues of 1863."


In December, 1862, Congress had to face a deficit of $277,000,000 and
unpaid requisitions amounting to $47,000,000. By the close of 1863
nearly $400,000,000 had been raised by bond sales. A further loan act,
passed March 3, 1864, provided for an issue of $200,000,000 of 5 per
cent. bonds known as "ten-fortys," but of this total only $73,337,000
was disposed of. Subsequently, on June 30, 1864, a great public loan of
$200,000,000 was authorized. This was an issue of Treasury notes,
payable at any time not exceeding three years, and bearing interest at
7-3/10 per cent. Notes amounting to $828,800,000 were sold. The
aggregate of Government loans during the civil war footed up a total of
$2,600,700,000; and on Sept. 1, 1865, the public debt closely
approached $3,000,000,000, less than one-half of which was funded.

Civil war loans, with one exception, which sold at 89-3/10, were all
placed at par in currency, subject to commissions ranging from an eighth
to one per cent. to distributing bankers. The average interest nominally
paid by the Government on its bonds during the war was slightly under 6
per cent. Owing to payment being made in currency, however, the rate
was, in reality, much higher. With the conclusion of the war, the
reduction of the public debt was undertaken, and it has continued with
but two interruptions to date.

Heavy tax receipts for several years after the close of the war
potentially enabled the Government to reduce its debt. Indeed, from 1866
to 1891, each year's ordinary receipts exceeded disbursements, and
enabled the Government to lighten its financial burdens. In 1866 the
decrease in the net debt was $120,395,408; in 1867, $127,884,952; in
1868, $27,297,798; in 1869, $48,081,540; in 1870, $101,601,917; in 1871,
$84,175,888; in 1872, $97,213,538, and in 1873, $44,318,470.

Through refunding operations - in addition to bonds and short-time
obligations redeemed with surplus revenues - the Government paid off, up
to 1879, $535,000,000 bonds bearing interest at from 5 to 6 per cent. In
this year the credit of the Government was on a 4 per cent. basis, and a
year later on a 3-1/4 per cent. basis, against a maximum basis of 15-1/2
per cent. in 1864.

Between 1881 and 1887 the Governzment paid off, either with surplus
revenues or by conversion, $618,000,000 of interest-bearing debt. In
1891 all bonds then redeemable were retired, and on July 1, 1893, the
public debt amounted to less than one-third of the maximum outstanding
in 1865. In 1900 the Government converted $445,900,000 bonds out of an
aggregate of $839,000,000 convertible under the refunding act passed by
Congress in that year. And further conversions in 1903, 1905, and 1907
brought the grand total up to $647,250,150 - a result which earned for
the Government a net annual saving in interest account of $16,551,037.


The United States is a debt-paying nation. Hence, America's credit,
despite occasional fluctuations, has steadily risen, and our national
debt has sold on a lower income basis than that of any other nation in
the world.

Following the sinking of the Maine in Havana Harbor, in 1898, Congress
authorized an issue of $200,000,000 3 per cent. ten-twenty-year bonds.
Of this aggregate $198,792,660 were sold by the Government at par. So
popular was this loan, it was oversubscribed seven times. During the
year 1898, following the allotment to the public, this issue sold at a
premium, the price going to 107-3/4, and, during the next year, to
110-3/4. After the war ended, the Government, in accordance with its
unvarying custom, began to pay off this debt; but, despite the Secretary
of the Treasury's offer to buy these bonds, he succeeded in purchasing
only about $20,000,000 of them.


American Labor Mission in Europe

War Aims of Organized Workers Conveyed to English and French Labor

An American Labor Mission visited England and France in April, 1918, to
present the views of American workingmen regarding the war. The
delegation numbered eighteen, headed by James Wilson, President of the
Patternmakers' League of North America. In his first address at London,
April 28, before the British and Foreign Press Association, Mr. Wilson

We recognize as a fundamental truth that there can be no democracy
with the triumph of the Imperial German Government. The principle of
democracy or the principle of Prussian military autocracy will
prevail as a result of the world war. There can be no middle course
nor compromise. The contest must be carried on to its finality.

The Central Powers have staked everything on the result of this
struggle. Their defeat means the destruction of a machine which has
been built with remarkable efficiency and embodies the very life of
the German race.

On the other hand, every free man instinctively appreciates that if
we are to maintain the standard of civilization as worked out by the
free men of the world, and if posterity is to be guaranteed
political and industrial freedom, the war must be won by the allied
countries. Peace now would be the fulfillment of the Prussian dream,
for they have within their grasp the very heart of Continental
Europe and resources which would make sure further conquest upon the
other nations of the world.

The American labor movement, in whose behalf my colleagues and
myself have been authorized to speak, declare most emphatically that
they will not agree to a peace conference with the enemies of
civilization, irrespective of what cloak they wear, until Prussian
militarism has withdrawn within its own boundaries, and then not
until the Germans have, through proper representatives, proved to
our satisfaction that they recognize the right of peoples and
civilized nations to determine for themselves what shall be their

Unless reconstruction shall soon come from the German workers within
that country, it is now plain that the opportunity to uproot the
agencies of force will only come when democracy has defeated
autocracy in the military field and wins the right to reconstruct
the relations between nations and men.

German freedom is ultimately the problem of the German people, but
the defeat of Prussian autocracy in the field will bring the
opportunity for German liberty at home.


J. Havelock Wilson, President of the British Seamen's Union, conferred
with the American Mission at London, April 30, and informed it of the
decision of his union to transport no pacifists to any peace conference.
He made the following statement:

On Sept. 21, 1917, we formed what we called a Merchant Seamen's
League, and declared that if German terrorism on the sea continued
we would enforce a boycott against Germany for two years after the
war, and that for every new crime from that time on we would add one
month to the length of the boycott. The length of the boycott now
stands at five years seven months. We have reliable information that
this action is making a very profound impression on German
manufacturers and shippers.

The British seamen got their first intimation of German treachery
when the international transport strike was first proposed by German
delegates ostensibly to pledge support. But the British learned
later that the German delegates had in their pockets as they talked
contracts signed with employers.

After that we watched the German Social Democrats in the Socialists'
international. But we never could get the Germans to face the issue.
Always they had excuses and evasions. We never had confidence in
them. When war came we felt it our duty to take care of the men on
our ships who could no longer sail, and also to set a good example.

Here were Germans on our ships who had been in England so long that
they had forgotten their language. On Aug. 20, 1914 - you see we
acted quickly - we bought an estate of thirty-nine acres and built
the model internment camp of Great Britain. We asked the Government
to give us charge of all interned German sailors, and, let it be
known to the credit of Great Britain, that was done. The Government
allowed us all 10s. per week per man for upkeep. The camp became a
great success. There were 1,000 German sailors interned in it.

Until May, 1915, all went well. On May 1 the interned men celebrated
May Day, their international revolutionary holiday. They had their
banners, "Workers of the World, Unite," "World Brotherhood," and so
on. We had planned a great fête to be held later and I had secured
the consent of several well-known persons to attend and help make it
a success. On May 7 the Lusitania was sunk. I called the Germans in
camp together and told them the terrible thing that had happened. I
told them they were not to blame, but that the celebration could not
be held. And they made no protest to me.

Now here were 1,000 Germans not under control of the Kaiser. Some of
them had been among us twenty or thirty years. As soon as I had got
out of the place they sang and cheered and rejoiced over the
Lusitania disaster. They kept this up for four hours. They made me
conclude that the camp must be handed over to the military as soon
as possible, and this was done. Six months after that came the
U-boat campaign, and, what made that worse, the fact that the
U-boats always turned their guns on open boats.

I have got hundreds of cases of boys whose arms and legs have been
blown off by U-boat guns while trying to get away from sinking ships
in open boats. I wrote the Secretary of the International Transport
Workers' Union protesting against these crimes. His reply attempted
to justify every crime. That showed us that not only was the Kaiser
responsible, but that the organized trade union movement of Germany
was also responsible.

On June 1, 1917, a Socialist congress was convened at Leeds. It was
advertised as the greatest conference ever held. We sent two men
there to tell our story. Our men found that small bodies of only a
handful of members had been delegated, who got the floor easily for
the pacifist cause. Our men could not secure anything like a fair

In this conference MacDonald, Fairchild, and Jowett were elected
delegates to Stockholm. We at once resolved that no delegates should
leave this country. And none did.

That is the history of the seamen's determination to bottle up such
British pacifists as may desire to go abroad spreading their
doctrine. Mingled with it is the grim, sad story of 12,000 members
of the Seamen's Union who have lost their lives on merchant ships
through Germany's criminal conduct on the seas.

And while there is here and there one in England who resembles a
leader of labor who is a pacifist, the determination of the British
seamen to go through with the war to the finish is scarcely more
than a reflection of the rank-and-file spirit that is to be found
throughout the whole of British labor.


The American delegates met the representatives of labor in London and in
Paris. In England they found the sentiment almost unanimous in approval
of their decision to favor no conferences with German labor
representatives until a victory had been achieved. In France, however,
they encountered a group that favored contact with the German and
Austrian Socialists. On May 6 there was a conference in Paris between
the American labor delegates and the members of the Confederation
Générale de Travail, the great French revolutionary labor organization.
M. Jouhaux, General Secretary of the confederation, made the proposed
international conference practically the sole note of his speech.
France, he asserted, had no hatred for the German workers themselves,
and he pointed out that if the conference took place it could have only
one of two results. Either the workers in the enemy countries would
refuse to join in the efforts of the workers of the allied countries for
the liberation of the world's peoples, in which case the war must
continue, or they would accept the allied view of what was right and
would act with the allied peoples for the good of humanity.

The American reply was in these definite words:

"We don't hate the German workers any more than you do, but to give them
our hand now would be looked upon by them only as a sign of weakness."

After reminding the congress of the hypocritical professions of the
German Socialist Party before the war, the delegation declared itself in
entire agreement with Samuel Gompers that American labor men would
refuse to meet the German delegates under any circumstances so long as
Germany was ruled by an Imperialistic Government. This declaration left
Albert Thomas, former Cabinet officer and leader of the group,
practically without a word to say. M. Thomas urged the same arguments
as Jouhaux, but all the satisfaction the French labor men got was a
promise from James Wilson, President of the American delegation, to
report the matter to the American workers when he returned home.

Chairman Wilson reaffirmed at a luncheon given at the Foreign Office May
10 that American labor would not discuss the war with representatives of
German labor until victory was won, because German labor, which was
permitting the war, must do something itself in its own country toward
ending the conflict justly before it could debate with labor
representatives of the allied countries on what ought to be.

The luncheon was given by Stephen Pichon, Foreign Minister, on behalf of
the French Government. With the exception of Premier Clemenceau, all the
members of the Cabinet were present as well as other men notable in
French public life. Ambassador Sharp was also in attendance.

The mission visited the fighting front and returned to London May 11 to
hold mass meetings at English industrial centres. The members were
received by the King and dined by the London Chamber of Commerce May

Progress of the War

Recording Campaigns on All Fronts and Collateral Events From April 18,
1918, Up to and Including May 17, 1918


The campaign for the Third Liberty Loan of $3,000,000,000 ended on May
4. The total subscription was $4,170,019,650, as announced by the
Treasury Department on May 17.

On April 20 President Wilson issued a proclamation extending to women
enemy aliens the restrictions imposed on men.

The Overman bill, giving the President power to consolidate and
co-ordinate executive bureaus and agencies as a war emergency measure,
was passed by the Senate on April 28 and by the House on May 14.

The War Trade Board announced on May 3 that a general commercial
agreement with Norway had been signed. On May 12 it announced that in
order to conserve materials and labor and to add tonnage to the fleet
carrying men and munitions to Europe, arrangements had been made to have
Great Britain, France, Italy, and Belgium pass upon the advisability of
releasing proposed exports before granting licenses to shippers. On May
14 an agreement was reached between the United States and the allied
nations providing that all imports to the United States should be
forbidden unless sanctioned by the War Trade Board.

A conference report on the Sedition bill, giving the Government broad
new powers to punish disloyal acts and utterances, was adopted by the
Senate on May 4, and by the House of Representatives on May 7, and sent
to the President for his signature.

As a result of charges of graft, inefficiency, and pro-German tendencies
directed against the military aircraft administration by Gutzon Borglum,
President Wilson, on May 15, asked Charles Evans Hughes to aid Attorney
General Gregory in making a thorough investigation. Mr. Hughes accepted
the invitation. The President also wrote a letter to Senator Martin
denouncing the Chamberlain resolution for an investigation of the
conduct of the war by the Committee on Military Affairs of the Senate,
and on the same day the Senate Committee on Audit and Expenses, to which
the resolution had been referred, ordered a favorable report on it,
modifying it so as to provide for a limited inquiry.


The American steamship Lake Moor was reported sunk on April 11.

Forty-four Americans were killed when the Old Dominion liner Tyler was
sunk off the French coast on May 2.

The British liner Oronsa was sunk on April 28. All on board except three
members of the crew were saved. The British sloop Cowslip was torpedoed
on April 25. Five officers and one man were missing.

The British Admiralty announced on April 24 the cessation of the weekly
return of shipping losses and the substitution of a monthly report.

In a statement made in the Chamber of Deputies on May 11, Georges
Leygues, the French Minister of Marine, declared that the total of
allied tonnage sunk by German submarines in five months was 1,648,622,
less than half the amount alleged by Germany to have been destroyed. He
announced that the number of submarines sunk by the Allies was greater
than Germany's output.


Austro-Hungarian Foreign Minister in succession to Czernin]


[Illustration: John Dillon, M. P.,

_Leader of the Nationalist Party_

(_Press Illustrating Service_)]

[Illustration: Joseph Devlin,

_Nationalist M. P. for West Belfast_

(_Press Illustrating Service_)]

[Illustration: Sir Edward Carson, M. P.,

_Leader of the Ulster Unionists_

(_Central News_)]

[Illustration: Sir Horace Plunkett,

_Chairman of the Irish Convention_

(_Bain News Service_)]

Twelve German submarines were officially reported captured or sunk in
British waters by American or British destroyers during the month of
April, and two others were known to have been destroyed.

Ten passengers were killed when the French steamship Atlantique was
torpedoed in the Mediterranean early in May. The ship managed to reach


April 18 - French advance on both banks of the Avre River between Thanne
and Mailly-Raineval; Germans deliver terrific assaults upon the British
front from Givenchy to the neighborhood of St. Venant.

April 19 - Italian troops reach France; British beat off assaults on Mont
Kemmel and recover ground west of Robecq; bombardment of Paris resumed.

April 20 - Germans hurl force against American and French troops at
Seicheprey and get a grip on the town, but are driven out; Belgians give
ground temporarily near the Passchendaele Canal, but regain it; British
re-establish their positions in Givenchy-Festubert region.

April 21 - British drive Germans from some of their advanced positions
near Robecq; Americans retake Seicheprey outposts.

April 23 - British gain ground east of Robecq and in the neighborhood of

April 24 - Germans take Villers-Bretonneux, but are repulsed at other
places south of the Somme; Franco-American positions at Hangard shelled.

April 25 - British recover Villers-Bretonneux; French and British lose
ground in the Lys salient before terrific German assaults from
Wytschaete to Bailleul, aiming at Mont Kemmel; Germans take Hangard.

April 26 - Germans take Mont Kemmel and the villages of Kemmel and
Dranoutre and push on to St. Eloi; French recover part of Hangard.

April 27 - British and French troops recover some of the ground lost in
the Bailleul-Wytschaete sector; Germans repulsed at Voormezeele after
hard fight.

April 28 - Germans take Voormezeele, but are driven out by counterattack;
Locre changes hands five times.

April 29 - Germans make heavy attacks upon the entire Franco-British
front from Zillebeke Lake to Meteren; British hold their line intact;
French yield some ground around Scherpenberg and Mont Rouge, but later
regain it; Belgians repulse attacks north of Ypres; Americans take over
a sector of the French line at the tip of the Somme salient.

April 30 - French recover ground on the slope of Scherpenberg and
advance their line astride the Dranoutre road; positions of the allied
forces push forward between La Clytte and Kemmel.

May 1 - Americans repulse attacks in the Villers-Bretonneux region;
Béthune region bombarded.

May 3 - French and British improve their positions along the Somme River
southward to below the Avre; French take Hill 82, near Castel, and the
wood near by.

May 4 - Germans repulsed at Locon; French make progress near Locre, and
British advance near Meteren; Americans in the Lorraine sector raid
German positions south of Halloville and penetrate to third line; French

Online LibraryVariousCurrent History, Vol. VIII, No. 3, June 1918 → online text (page 8 of 30)