very many that their fancied wealth had, in part or wholly, disappeared. Factories were closed; artisans were unable to obtain employment; wages fell, step by step, till in many industries they had undergone reductions which were not less than forty per cent. All stocks and every description of property sank lamentably in value; railway companies and other borrowers of foreign capital discontinued payment of the promised interest; immigration almost ceased-for who would now seek a home in this afflicted and impoverished land?

America emerged from those miserable years with her vitality undiminished; with her financial position improved; with her industrial system organized, for the first time, upon a basis of rigorous economy; with the views of her people corrected, and their character braced by adversity. The operatives who were unable to find employment in the cities of the east had made their way westward, and were now contributing to the greatness of the nation by cultivating the soil. Personal extravagance ceased, and the imports of foreign commodities fell one-third. On the other hand, the exports increased largely. America had for many years been accustomed to use an amount of foreign goods very much larger than she was able to pay for by her own surplus productions. In settlement of the excess, she endured a drain upon her store of the precious metals, or she neutralized it for the time by the loans which her people obtained abroad. Now all this was changed. America exported so largely of her manufactures and of the products of her soil, and restricted so carefully her purchase of foreign commodities, that now she has to receive from foreigners an annual balance which exceeds fifty million sterling. And during the painful years through which she passed, while nearly all European countries continued to add to their public indebtedness, America continued to reduce hers. Her debt, which at the close of the war amounted to six hundred million sterling, thirteen years later was only four

hundred million.*

And whereas at one period an amount equal to one-half of her present debt was owing to foreigners, it is now, to the extent of five-sixths, owing to her own citizens. Her currency, which had been long at a discount, rose in value, step by step, till it stood at par. After seventeen years of an inconvertible currency specie payments were resumed, without the slightest inconvenience to the commerce of the country.

* The local indebtedness of America has increased largely since the war, and is now equal to one-half of the Federal debt. In many of the States the Constitution now prohibits the State Legislature from contracting debt excepting for war and other urgent purposes. There is a growing opinion that this wise restriction should be universally adopted.

CHAPTER II.

ENGLAND AND AMERICA.

MERICA looked to England for sympathy when the rebellion began. England had often reproached

her, often admonished her, in regard to the question of Slavery. The war which threatened her existence was a war waged by persons who desired to perpetuate slavery, and who feared the growing Northern dislike to the institution. The North expected the countenance of England in her time of trial. It was reasonable to expect that the deep abhorrence of slavery which had long ruled in the mind of the English people would suffice to decide that people against the effort to establish a great independent slave-empire.

Most unfortunately, that expectation was not wholly fulfilled. The working-men of England perceived, as by intuition, the merits of the dispute, and gave their sympathy unhesitatingly to the North. In the cotton-spinning districts grievous suffering was endured, because the Northern ships shut in the cotton of the South and deprived the mills of their accustomed supply. It was often urged that the English Government should take measures to raise the Northern blockade. Hunger persuades men to unwise and evil courses; but hunger itself could never persuade the men of Lancashire to take any part against the North. So genuine and so deep was their conviction that the Northern cause was right.

But among the aristocratic and middle classes of England it

was different.

Their sympathy was in large measure given to the South. They were misled by certain newspapers, in which they erringly trusted. They were misled by their admiration of a brave people struggling against an enemy of overwhelming strength. They were misled by an unworthy jealousy of the greatness of America. Thus unhappily influenced, they gave their good wishes to the defenders of the slave-system. The North felt deeply the unlooked-for repulse; and a painful alienation of feeling resulted.

A variety of circumstances occurred which strengthened this feeling. A few weeks after the fall of Fort Sumpter, England, having in view that there had been set up in the South a new Government which was exercising the functions of a Government, whether rightfully or otherwise, acknowledged in haste the undoubted fact, and recognized the South as a belligerent power. This the North highly resented; asserting that the action of the South was merely a rebellion, with which foreign countries had nothing to do. A few months later the British mail-steamer Trent was stopped by a rash American captain, and two gentlemen, commissioners to England from the rebel Government, were made prisoners. The captives were released, but the indignity offered to the British flag awakened a strong sentiment of indignation which did not soon pass away. Yet further: there was built in a Liverpool dockyard a steam-ship which it was understood was destined to serve the Confederacy by destroying the merchant shipping of the North. The American Ambassador requested the British Government to detain the vessel. So hesitating was the action of Government, that the vessel sailed before the order for her detention was issued. For two years the Alabama, and some other ships also fitted in English ports, scoured the seas, burning and sinking American ships, and inflicting enormous loss upon American commerce. These circumstances increased the bitter feeling which prevailed. The American Government held that England had failed to

perform the duty imposed upon her by international law, and had therefore made herself responsible for the depredations of the Alabama. English lawyers of eminence expressed the same unacceptable opinion; and a few years after the

1869

war closed the English Government wisely determined A. D. to seek the settlement of the question. There was arranged by the Foreign Secretary and the American Minister a treaty, in terms of which the subject was disposed of by a reference to the arbitration of impartial persons. This treaty was sent to Washington for confirmation, according to the judicious American rule that treaties with foreign powers must receive the sanction of the Senate. But American feeling was not yet prepared for any adjustment of differences which had wounded the nation so deeply. It was not that the terms of the proposed settlement were objected to; it was rather that no immediate settlement was desired. The American people chose that the question should, for the time, remain an open question. Their irritation had not yet subsided, and many of them solaced their angry minds with the purpose that, when England was again involved in some one of those European embarrassments which habitually beset her, this matter of the Alabama should be pressed to a settlement. The Senate gave

effect to the general wish by withholding sanction from the treaty, and President Grant in tructed his minister at the English Court to abstain from further negotiation.

1871

A.D.

But the passage of a little time calmed the irritation of the not implacable Americans. England renewed her proposal to refer the dispute to arbitration, coupling the offer with an expression of regret that injuries so grave had been inflicted upon the shipping of America. She further consented that the arbitrators should guide themselves by a definition of neutral duties so framed that, in effect, it condemned her conduct, and made an adverse decision inevitable. America accepted the proposal, and a dispute which at