A
sufficient credit was established, first with the citizens at home and
later with investors abroad, to make a market for the millions of bonds
in the two great issues, the so-called seven-thirties and
five-twenties. The sales of these bonds, together with a wide-reaching
and, in fact, unduly complex system of taxation, secured the funds
necessary for the support of the army and the navy. At the close of the
War, the government, after meeting this expenditure, had a national war
debt of something over four thousand millions of dollars. The gross
indebtedness resulting from the War was of course, however, much larger
because each State had incurred war expenditures and counties as well as
States had issued bonds for the payment of bounties, etc. The criticism
was made at the time by the opponents of the financial system which was
shaped by the Committee of Ways and Means in co-operation with the
Secretary, a criticism that has often been repeated since, that the War
expenditure would have been much less if the amounts needed beyond what
could be secured by present taxation had been supplied entirely by the
proceeds of bonds. In addition, however, to the issues of bonds, the
government issued currency to a large amount, which was made legal
tender and which on the face of it was not made subject to redemption.
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