%495.  Amnesty.%—­In the first place, now that the war was over, the people were heartily tired of war issues.  Taking advantage of this, certain political leaders began, about 1870, to demand a “general amnesty” [1] or forgiveness for the rebels, and a stoppage of reconstructive measures by Congress.

[Footnote 1:  In 1863, Lincoln offered “full pardon” to “all persons” except the leaders of the “existing rebellion.”  Johnson, in 1865, again offered amnesty, but increased the classes of excepted persons; and, though in the autumn of 1867 he cut down the list, he nevertheless left a great many men unpardoned.]

%496.  The National Finances.%—­A second issue resulting from the war was the management of the national finances.  January 1, 1866, the national debt amounted to $2,740,000,000, including (1) the bonded debt of $1,120,000,000, and (2) the unbonded or floating debt of $1,620,000,000, that part made up of “greenbacks,” fractional currency, treasury notes, and the like.  Two problems were thus brought before the people: 

1.  What shall be done with the national bonded debt?

2.  How shall the paper money be disposed of and “specie payment” resumed?

As to the first question, it was decided to pay the bonds as fast as possible; and by 1873 the debt was reduced by more than $500,000,000.

As to the second question, it was decided to “contract the currency” by gathering into the Treasury and there canceling the “greenbacks.”  This was begun, and their amount was reduced from $449,000,000 in 1864 to $356,000,000 in 1868.

By that time a large part of the people in the West were finding fault with “contraction.”  Calling in the greenbacks, they held, was making money scarce and lowering prices.  Congress, therefore, in 1868 yielded to the pressure, and ordered that further contraction should stop and that there should not be less than $356,000,000 of greenbacks.

%497.  “The Ohio Idea”; the Greenback Party.%—­But there was still another idea current.  To understand this, six facts must be remembered. 1.  In 1862 Congress ordered the issue of certain 5-20 bonds; that is, bonds that might be paid after five years, but must be paid in twenty years. 2.  The interest on these bonds was made payable “in coin.” 3.  But nothing was said in the bond as to the kind of money in which the principal should be paid. 4.  When the greenbacks were issued, the law said they should be “lawful money and a legal tender for all debts, public and private, within the United States, except duties on imports and interest as aforesaid.” 5.  This made it possible to pay the principal of the 5-20 bonds in greenbacks instead of coin. 6.  Fearing that payment of the principal in greenbacks might have a bad effect on future loans, Congress, when it passed the next act (March 3, 1863) for borrowing money, provided that both principal and interest should be paid in coin.

At that time and long after the war “coin” commanded a premium; that is, it took more than 100 cents in paper money to buy 100 cents in gold.  Anybody who owned a bond could therefore sell the coin he received as interest for paper and so increase the rate of interest measured in paper money.  The bonds, again, could not be taxed by any state or municipality.