Wisconsin adopted an ingenious plan, suggested to the State Bankers’ Association by Alexander Mitchell. The state banks had deposited with the state comptroller securities for their currency issues. The larger proportion of these securities was made up of the bonds of the southern or border states. Those of the secession states were considered worthless, while those of Missouri, large holdings of which were in Wisconsin, declined rapidly. The comptroller, as required by law, made assessments upon the state banks, which they found it difficult to meet. Mitchell proposed that the banks should purchase the bonds of the state war fund at par, and that the comptroller should accept them for the assessments. In this wise the credit of the state was improved and the currency secured. The details of the arrangement were that the banks took $800,000 of the war-fund bonds, seventy per cent of which was paid at once, three-fifths in specie and two-fifths in sound currency. The remaining thirty per cent was to be met in fifteen annual installments. The adoption of this expedient furnished the state with ready money, placed the banking currency on a sound foundation, and restored confidence to the community. Wisconsin’s banks resumed specie payments at the date fixed by law, December 1, 1861, and maintained them for some time after the New York banks had suspended such payments.
On the basis of these war-fund appropriations state agents flocked to New York to arrange for the purchase of war material. Arms and ammunition had to be largely secured from Europe. The New York banks arranged these transactions, and furnished exchange and information. The competition between the several state agents and those of the federal government raised prices inordinately. This was remedied when the federal government assumed full responsibility for all equipment.
_The federal loans._ The most important function of the banks was the aid they furnished the Secretary of the Treasury in floating the great federal loans that were required by the war necessities. The special session of Congress which met in July, 1861, appropriated $250,000,000 for the immediate needs of the government, leaving large latitude with the Secretary of the Treasury as to the method by which this amount was to be raised.