It is not feasible, in a work of this character, to enter into the complexities of the financial situation of 1863, or to determine just what influences caused a revolution in the market for government bonds. But two factors must be mentioned. Chase was induced to change his attitude and to sell to banks large numbers of bonds at a rate below par, thus enabling the banks to dispose of them at a profit. He also called to his aid Jay Cooke, an experienced banker, who was allowed a commission of one-half per cent on all bonds sold up to $10,000,000 and three-eighths of one per cent after that. Cooke organized a countrywide agency system, with twenty-five hundred subagents through whom he offered directly to the people bonds in small denominations. By all manner of devices, patriotism and the purchase of bonds were made to appear the same thing, and before the end of the year $400,000,000 in five-twenty bonds had been sold. This campaign to dispose of the five-twenties was the turning-point in war finance, and later borrowings encountered no such difficulties as those of 1862 and 1863.
Better known today than this precarious legislation is the famous Act of 1863, which was amended in the next year and which forms the basis of our present system of national banks. To Chase himself the credit for this seems to be due. Even in 1861 he advised Congress to establish a system of national banks, and he repeated the advice before it was finally taken. The central feature of this system which he advocated is one with which we are still familiar: permission to the banks accepting government supervision to deposit government bonds in the Treasury and to acquire in return the right to issue bank-notes to the amount of ninety per cent of the value of the bonds.
There can be no doubt that Chase himself rated very highly his own services to his country. Nor is there any doubt that, alone among Lincoln's close associates, he continued until the end to believe himself a better man than the President. He and his radical following made no change in their attitude to Lincoln, though Chase pursued a course of confidential criticism which has since inspired the characterization of him as a "sneak," while his followers were more outspoken. In the summer of 1863 Chase was seriously talked of as the next President, and before the end of the year Chase clubs were being organized in all the large cities to promote his candidacy. Chase himself took the adroit position of not believing that any President should serve a second term.
Early in 1864 the Chase organization sent out a confidential circular signed by Senator Pomeroy of Kansas setting forth the case against Lincoln as a candidate and the case in favor of Chase. Unfortunately for Chase, this circular fell into the hands of a newspaper and was published. Chase at once wrote to Lincoln denying any knowledge of the circular but admitting his candidacy and offering his resignation. No more remarkable letter was written by Lincoln than his reply to Chase, in which he showed that he had long fully understood the situation, and which he closed with these words: "Whether you shall remain at the head of the Treasury Department is a question which I do not allow myself to consider from any standpoint other than my judgment of the public service, and, in that view, I do not perceive occasion for change."The Chase boom rapidly declined. The deathblow was given by a caucus of the Union members of the legislature of his own State nominating Lincoln "at the demand of the people and the soldiers of Ohio." The defeat embittered Chase. For several months, however, he continued in the Cabinet, and during this time he had the mortification of seeing Lincoln renominated in the National Union Convention amid a great display of enthusiasm.
More than once in the past, Chase had offered his resignation.
On one occasion Lincoln had gone to his house and had begged him to reconsider his decision. Soon after the renomination, Chase again offered his resignation upon the pretext of a disagreement with the President over appointments to office. This time, however, Lincoln felt the end had come and accepted the resignation. Chase's successor in the Treasury was William Pitt Fessenden, Senator from Maine. During most of the summer of 1864Chase stood aside, sullen and envious, watching the progress of Lincoln toward a second election. So much did his bitterness affect his judgment that he was capable of writing in his diary his belief that Lincoln meant to reverse his policy and consent to peace with slavery reestablished.
