Browsing "Aftermath: The Gilded Age"

Men of the Republican Political Machine

Congressman Roscoe Conkling of New York controlled patronage positions in the New York customhouse after the war, and selected friend and future vice president and president Chester Arthur to the top position of collector in 1871. Seen as a loyal Republican Party hack, Arthur was accused by reformers of taking “illegal kickbacks, overstaffing, insidious accounting and lax administration.” Ironically, Arthur’s custom house corruption investigation was initiated during the presidency of Rutherford B. Hayes, himself known as “His Fraudulency” and elected by Republican Party vote-fraud in the occupied South.

Bernhard Thuersam, www.Circa1865.com

 

Men of the Republican Political Machine

“The Radical Republicanism that defined the immediate years after the Civil War was an attempt by Congress to reengineer the former slave States. The Radicals narrowly failed to remove President Andrew Johnson . . . [was followed] by the election of Ulysses S. Grant. Grant had been a crusty, drunken, charismatic commander, but his presidency marked the end of the politics of passion and the beginning of a long period when personalities determined factions, and when competent, loyal (and at times corrupt) insiders thrived.

Grant’s defenders described him as an icon of pragmatism . . . his detractors assaulted his administration as a descent into a world where the highest bidder was rewarded. By the late 1860s, a new generation of Republicans and [Northern] Democrats jelled into a political class that shared a desire for order and control.

In place of stirring orators debating high principles . . . the Senate was occupied by a class of politicos who believed in “women, wine, whiskey, and war,” as Senator John McDougall of California remarked. They reveled in the martial cult of the Civil War and eagerly supported America’s military expansion against the Native Americans of the Plains. But they reveled more in the political machine and its benefits.

[Grant’s Vice-President Roscoe] Conkling defended the machine as necessary and even constructive force in American political life, thundering, “We are told that the Republican Party is a machine. Yes. A government is a machine, the common-school system of the State of New York is a machine, a political party is a machine . . .”

For him, as for Chester Arthur and even James Blaine, the party was a church to which absolute fealty was expected and demanded, and in emotional moments these men of the machine could wax about its virtues with the romantic zeal of a lover serenading his loved one.

In 1871, Arthur was offered one of the plum positions in the federal bureaucracy, the collector of New York Customhouse. The position of collector had opened up when the former occupant, Arthur’s friend Tom Murphy, was forced to step down in the face of corruption allegations.

The port of New York was the primary gateway for goods from abroad, and smuggling was a constant. As an incentive, officials who snared illegal, unregistered or undertaxed shipments were entitled to a percentage of the goods seized or the fines levied. This “moiety” process made it possible for even a low-level official to double or triple his income . . . [while] it struck reformers . . . as unsavory.”

(Chester Alan Arthur, Zachary Karabell, Henry Holt and Company, 2004, excerpts, pp. 18-20; 22)

Postwar Whiskey, Beer and Dollar Bills

In 1880, the shooting war had been over for 15 years though a conflict raged for political control of the South until 1877. James Garfield and Chester Arthur eked out a slim victory in 1880, and the New York Times wryly observed that so many [Republican] factions were convinced that they had been promised cabinet positions that “if all reports are true, President Garfield’s Cabinet will contain about one hundred and twenty-five persons.” The elimination of Southern conservative influence in Congress led to the corruption of the Gilded Age.

Bernhard Thuersam, www.Circa1865.com

 

Postwar Whiskey, Beer and Dollar Bills

“The [presidential] campaign of 1880 is notable mostly for what it lacked. It was a contest of organization and will, not a battle over the future direction of the country. The Republican factions in Chicago were divided by personalities, not by beliefs, and the [Northern] Democrats did not offer a dramatically different vision.

But the main attraction had all the ideology of a horse race. That fact did not escape the disgusted intellectuals who sat on the sidelines wondering what had happened to the once noble republic of Washington [and] Jefferson . . . [and] . . . What was the election about, really, other than who would win?

[Republicans and Democrats] voted because of party loyalty or because some local organizer sweetened the pot. They voted because a Republican precinct boss in New York Boston or Buffalo or St. Louis or Nashville invited them to a picnic on a fine Sunday on September, trucked out a few respected and/or dynamic speakers, and handed out whiskey, beer and dollar bills.

Yet if you had collared [James] Garfield and Arthur or [Winfield Scott] Hancock . . . and asked them if they stood for anything, they would of course had said yes. They would have said they stood for good government, for the hopes and dreams of the common man, for the expansion of trade, for orderly cities and prosperous farms, well-managed railroads, solvent banks, stable currency, and the settlement of the West.

Having served the Union during the Civil War, they felt the North’s victory had closed the last great fissure that had threatened a country founded on principles of liberty, freedom and the pursuit of happiness. It wasn’t that they eschewed ideology . . . They believed, simply, that everyone would be best served by a government led by their faction. Political appointments and party discipline helped ensure order nationally, and if party leaders stood to gain from electoral success, all the better.

Most politicians of the era saw no inherent conflict between government service and personal gain. They would have looked at later generations of Americans, at the reformers of the twentieth-century who created one box for public service and a separate one for private advancement, and scoffed at the naivete. Most politicians of the 1870s and 1880s looked a government as a vehicle for both.

Accusations that they were feeding at the public trough made minimal sense to them. Government was an institution for the public good that was meant to reward those who entered it.

[To win] the pivotal State of Indiana, Arthur delegated Stephen Dorsey, the former carpetbag Arkansas senator. Dorsey was the ablest fund-raiser the [Republican] Stalwarts had, though it was understood that he was a political operator not afraid to push beyond the limits of law and propriety. He was the type of operative who gives politics a bad name. Dorsey went to the land of the Hoosiers, got some votes legally, and paid for others.

In 1880, not a single State south of the Mason-Dixon Line went Republican, and not a single State from the North went Democratic. A banquet was held by the Union League Club at Delmonico’s to honor Stephen Dorsey for delivering Indiana to the Republicans.

Reform-minded editors like E.L. Godkin sighed that the episode confirmed the venality of politics . . . Dorsey had already been the target of a congressional investigation into the “Star Route” scandals, a scheme that had made a number of Republican loyalists rich from postal route concessions at the federal government’s expense.”

(Chester Alan Arthur, Zachary Karabell, Henry Holt and Company, 2004, excerpts, pp. 45-47; 50, 54)

Scotch Presbyterian Conscience versus Piles of Gold

Woodrow Wilson’s offer of mediation between Britain, France and Germany came some 45 years after Britain and France offered to mediate the conflict between America’s North and South. Lincoln threatened war should they intervene. Lincoln also came to realize the vast money power he had unleashed with war as business interests colluded with government, which led to the postwar Gilded Age. Wilson was elected to stay out of the European war but succumbed to the money power Lincoln had unleashed, and more dark forces drew him into war though a negotiated peace was fully possible. Sadly, with American intervention and Allied victory came the rise of a German national socialist party and many more American dead.

Bernhard Thuersam, www.Circa1865.com

 

Scotch Presbyterian Conscience versus Piles of Gold

“Woodrow Wilson returned to Washington after the 1916 [presidential] campaign convinced that his mandate from the nation demanded the immediate formulation of peace terms which must somehow be forced on the warring powers.

Physically he was worn out. His sick headaches continued to worry [wife] Edith and Dr. Grayson. His head still spun with the clamor of political oratory.

He felt that British and French dependence on American supplies and American credit might give him a whip hand over the Allies if he could only find how to apply it. One third the world’s gold supply was already piled up in the vaults of American banks. “We can determine to a large extent who is to be financed and who is not to be financed,” he had told an audience gathered at Shady Lawn during the campaign.

He summoned the confidential colonel [Edward M. House] to the White House to resume his last winter’s intrigue for mediation. For once House balked. He was convinced the United States should already have intervened on the side of the Allies. Peace now could only be to Germany’s advantage: “I argued again and again that we should no pull Germany’s chestnuts out of the fire.” They broke up late. Neither man would budge from his position.

House’s point was that the German’s now wanted mediation and were holding the threat of a renewed submarine campaign over the world’s head to obtain a victorious peace. “In my opinion,” House noted . . . “the President’s desire for peace is partially due to his Scotch Presbyterian conscience and not to personal fear, for I believe he has both moral and physical courage.”

Like any oldtime Covenanter Wilson believed in the efficacy of the word. By the right word men could be brought to see the light. The war was making the position of neutrals intolerable.

[He wrote] that the warring nations were all fighting, so they claimed, “to be free of aggression and of peril to the free and independent development of their people’s lives and fortunes . . . must the contest be settled by slow attrition and ultimate exhaustion?” he asked. “An irreparable damage to civilization cannot promote peace and the secure happiness of the world.”

(Mr. Wilson’s War, From the Assassination of McKinley to America’s Rejection of the League of Nations, John Dos Passos, Hamish Hamilton, 1963, pp. 189-190)

 

Union Saved for Republican Party Hegemony

With the South out of Congress since 1861 and no Southern leadership to provide a conservative and responsible voice in US government, the predictable occurred. As a soldier Grant was a butcher who sent wave after wave of new recruits to wear down the thin Southern brigades; as a politician, Orville H. Browning of Illinois described Grant as “weak, vain, ignorant, mercenary, selfish and malignant”; that he was surrounded by corrupt and unprincipled men and that his reelection would be a great calamity to the country.” Grant’s election in 1868 was achieved with a few hundred thousand freedmen votes, they herded to the polls by the Republican’s terrorist Union League.

Bernhard Thuersam, www.Circa1865.com

 

Union Saved for Corrupt Republican Party Hegemony

“The eight years of Grant’s administration rocked with one scandal after another. Citizens defrauded the government in the acquisition of land and in claims for [Northern veteran] pensions; contractors supplying the army and navy were often venal; and unscrupulous lawyers levied toll on ignorant and defenseless Indians.

Members of Congress were bribed and disgraced. Cabinet officers were investigated and impeached. Subordinate officials and employees were revealed in outright betrayal of public trust. Never had the Republic sunk to so low an estate of official morality.

During the 1870s there was both incompetence and dishonesty in the large customhouses; discipline and integrity among the navy-yard labor forces were at a low ebb; the Indian service had been roundly condemned by [James] Garfield; land agents connived at irregularities, and surveyors made fraudulent claims for work not performed.

The tone of the eight years of Grant’s administration was . . . set by a small number of weak and unreliable persons holding seats in Congress and in high executive office. It was during these years that the most resounding scandals occurred, not only in Washington but in many States and cities. When the mighty wandered far from the paths of rectitude, it was not surprising that some of the lesser ranks followed their example.

To a few of the scandals we turn . . . The Credit Mobilier . . . originally organized to finance railroad construction, [it] fell into the control of a group of adventurers, including a member of Congress, Oakes Ames. The corporation was awarded a lucrative but fraudulent contract for the . . . [Union Pacific Railroad and disgraced Grant’s] Vice Presidents Colfax and Wilson.

Laxness or corruption in the award of Indian trading posts had been suspected for some time under General [William] Belknap’s administration of the War Department. [Secretary of the Navy George M. Robeson levied] percentages on . . . contractors’ engagements with the navy, [and] Robeson grew rich. [Secretary of the Treasury John D. Sanborn, a protégé of Benjamin Butler, siphoned money destined for the Internal Revenue Service].

The most dramatic and perhaps the most damaging evidence of corruption during the Grant administration involved the evasion of internal revenue taxes on distilleries. Fraud had long been suspected [and persons involved] included General John A. McDonald, collector of internal revenue in St. Louis . . . other collectors, the chief clerk of the internal revenue division of the Treasury Department in Washington [and] General Orville Babcock, President Grant’s private secretary, who was subsequently indicted but who escaped conviction.”

(The Republican Era, 1869-1901, A Study in Administrative History, Leonard D. White, Macmillan Company, 1958, excerpts pp. 366-373)

The Anticipated Profits of Next Year’s Pay Checks

Lincoln instituted a national banking system which “developed into something that was neither national nor a banking system” and more represented a loose organization of currency factories “designed to . . . [serve] commercial communities and confined . . . almost entirely to the New England and Middle Atlantic States.” This system was more concentrated in New York and fraught with abuses, and superseded by the even more abusive Federal Reserve Act of 1913.

Bernhard Thuersam, www.Circa1865.com

 

The Anticipated Profits of Next Year’s Pay Checks

“July 3, 1930

Mr. McFadden: “Mr. Speaker and gentlemen, time and events have arrived at a point where we should no longer deceive ourselves concerning the business situation. Continued statements of unfounded optimism will have only an unhappy effect upon the minds of millions of our citizens who are now unemployed and who, in the circumstances, must continue to be unemployed for many months to come. The economic condition in which we find ourselves is too sustained and deeply seated to be met by pronouncements that it does not exist.

Let us face the truth – that we and the world are undergoing a major economic and business adjustment which is and will be both drastic and painful. These consequences will be particularly severe in the United States, because they will force many people to recede from the standards of living and expenditure attained during the past 14 years.

Some part of this condition is the natural consequence of the operation of basic economic laws which function with little regard for human legislation. A large part is due to mismanagement of our national affairs. A still larger part is due to a deliberately contrived and executed program which has as its object the impoverishment of the people of the United States.

The end of the World War found us with a greatly expanded industrial and credit structure, to large, by far for the requirements of our national needs as the latter existed before the beginning of the war period of abnormal consumption. It was clearly a time to halt and to analyze fundamental economic facts. We did not do this.

Rather we chose to proceed with our abnormal production and to stretch the limits of credit still further. War production and its profits had made Americans drunk with power, and ambition for more power. Luxuries developed in the disorganization of war became necessities with the reestablishment of peace.

The American peop0le entered upon a decade in which the whole structure of their lives was to be passed upon the principle of discounting the future. A vast system of installment credit sprang into life almost overnight, aided by the optimism of the Federal Reserve system. The automobile industry expanded more rapidly and to greater size than any industry had expanded in history.

The public was encouraged by advertising and propaganda to buy beyond its immediate means. Further industrial expansion was financed by the same expansion of credit which made installment buying possible. Consumption was expanded and financed upon the consumer’s promise to pay and production was expanded upon by capitalizing the producer’s hope that the consumer would keep that promise.

In the period between 1920 and the present time we experienced the full use and purpose of the credit machinery built up with the Federal Reserve system. It was but a logical development that anticipated profits should be capitalized as anticipated production and consumption had been capitalized – and that the Federal Reserve system should in turn finance tis capitalization of anticipated profits.

The entry of millions of Americans of moderate means into stock-market speculation [was] a natural consequence of the policy of expansion to which we had committed ourselves. It was also a logical development that the Federal Reserve should expand broker’s loans to make possible a huge inflation of the business of speculating in securities on margins.

All this brought the country to a point where the individual was living beyond his personal means, buying more than he could afford on his hope that he could afford to pay for it in the future and then speculating in the hope that he could make enough profit to pay his debts when they came due. In brief, the greater part of the American business structure was built upon the anticipated profits of next year’s pay checks.”

(Basis of Control of Economic Conditions, the Collective Speeches of Congressman Louis T. McFadden, Omni Press, 1970 pp. 64-66)

McFadden and the Federal Reserve

Congressman Louis T. McFadden of Pennsylvania was Chairman of the House Banking and Currency Committee in 1932, and a staunch opponent of the Federal Reserve. Along with Congressman Charles A. Lindbergh, Sr. he fought the Federal Reserve Act in 1913 and conducted one of the first investigations of the banking and money trust in Congress. The path to the Federal Reserve act began with Lincoln who admitted that “as a result of the war, corporations have been enthroned and an era of corruption in high places will follow and the money power of the country will endeavor to prolong its reign by working on the prejudices of the people until wealth is aggregated in the hands of a few and the Republic is destroyed.” Lincoln destroyed the Republic with war, invasion, fiat money and the marriage of business and government.

Bernhard Thuersam, www.Circa1865.com

 

McFadden and the Federal Reserve

“Friday, June 10, 1932

Mr. McFadden: Mr. Chairman, we have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve banks. The Federal Reserve Board, a Government board, has cheated the Government of the United States and the people of the United States out of enough money to pay the national debt.

This evil institution has impoverished and ruined the people of the United States; has bankrupted itself, and has practically bankrupted our Government. It has done this through the defects of the law under which it operates, through the maladministration of that law by the Federal Reserve Board, and through the corrupt practices of the moneyed vultures who control it.

Some people think the Federal Reserve Banks are United States Government institutions. They are not Government institutions. They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders.

In that dark crew of financial pirates there are those who would cut a man’s throat to get a dollar out of his pocket; there are those who send money into States to buy votes to control our legislation; and there are those who maintain an international propaganda for the purpose of deceiving us and of wheedling us into the granting of new concessions which will permit them to cover up their past misdeeds and set again in motion their gigantic train of crime.

Those 12 credit monopolies were deceitfully and disloyally foisted upon this country by bankers who came here from Europe and who repaid us for our hospitality by undermining our American institutions. Those bankers took money out of this country to finance Japan in a war against Russia.

They created a reign of terror in Russia with our money in order to help that war along. They instigated a separate peace with Germany and Russia and thus drove a wedge between the allies in the World War. The financed Trotsky’s mass meetings of discontent and rebellion in New York. They paid Trotsky’s passage from New York to Russia so that he might assist in the destruction of the Russian Empire.

They fomented and instigated the Russian revolution and they placed a large fund of American dollars at Trotsky’s disposal in one of their branch banks in Sweden so that through him Russian homes might be thoroughly broken up and Russian children flung far and wide from their natural protectors. They have since begun the breaking up of American homes and the dispersal of American children.”

(Collective Speeches of Congressman Louis T. McFadden, Omni Press, 1970 pp. 298-299)

The War for Tariffs, Taxes and Astonishing Profits

The war commenced by Lincoln in 1861 immediately presented his administration with the problem of a conflict the United States could simply not afford. In April 1861, federal spending was only about $172,000 a day, raised by tariffs and land sales. By the end of July 1861, Lincoln had caused this to increase to $1 million, and by the end of December it was up to $1.5 million per day. Also in December 1861 Northern banks had to stop paying their debts in gold, with the federal government doing the same shortly after and resorting to printing money. The country had gone off the gold standard, Wall Street was in a panic, and Lincoln would lament, “The bottom is out of the tub, what shall I do?” The cost of the war would eventually reach $8 billion, enough to have purchased the freedom of every slave five times over – and provided each with the proverbial 40 acres, and the mule.

Bernhard Thuersam, www.Circa1865.com

 

The War for Tariffs, Taxes and Astonishing Profits

“By May 1864 [financier Jay] Cooke was selling [Northern] war bonds so successfully that he was actually raising money as fast as the War Department could spend it, no mean feat for that was about $2 million a day at this point. Altogether, the North raised fully two-thirds of its revenues by selling bonds. If Abraham Lincoln must always be given the credit for saving the Union, there is also no doubt that the national debt was one of the most powerful tools at his disposal for forging victory.

Although the [Northern] people were willing to endure very high taxes during the war, peacetime was another matter altogether. Immediately after the war the cry for repeal of the wartime taxes became insistent. With military expenses quickly dropping, the problem, was what taxes to cut. American industrialists, who had prospered greatly thanks to wartime demand and wartime high tariffs, naturally did not want the tariffs cut.

Because the Civil War had broken the political power of the South, the center of opposition to the tariff, they got their way. The tariff was kept at rates far above the government’s need for revenue as the North industrialized at a furious pace in the last three decades of the nineteenth century and became the greatest – and most efficient – industrial power in the world.

Of course, no matter how large, efficient, and mature these industries became, they continued to demand [tariff] protection, and, thanks to their wealth and political power, get it.  As Professor William Graham Sumner of Yale explained as early as 1885, “The longer they live, the bigger babies they are.” It was only after the bitter dispute between Andrew Carnegie and Henry Clay Frick caused the astonishing profits of the privately held – and highly protected – Carnegie Steel Company to become public knowledge, in 1899, that the political coalition behind high tariffs began to crack.

Before the Civil War there had been little advocacy of an income tax in this country, at least at the federal level, although by the war six States had implemented such taxes for their own revenue purposes. But once a federal income tax was in place, thanks to the Civil War, it quickly acquired advocates, as political programs always do.

These advocates pushed the idea relentlessly . . . Republican Senator John Sherman . . . said during a debate on renewing the income tax in 1872, that “here we have in New York Mr. Astor with an income of millions derived from real estate . . . and we have along side of him a poor man receiving $1000 a year. [The law] is altogether against the poor man . . . yet we are afraid to tax Mr. Astor. Is there any justice in it? Why, sir, the income tax is the only one that tends to equalize these burdens between the rich and the poor.”

(Hamilton’s Blessing, John Steele Gordon, Penguin Books, 1997, pp. 79-83)

Roosevelt’s “New Nationalism”

“Roosevelt the First,” as Mencken referred to Theodore, seemed unaware that his own party was responsible for the national malady he spoke against – it was the Republican Party’s marriage of government and business in the 1860s that unleashed the Gilded Age as the conservative South was no longer there to resist the government corruption and scandal. As he asserted new powers for the president, Roosevelt was creating new authority beyond what the United States Constitution confers upon the executive branch, his New Nationalism was indeed a refuge for “presidential lawbreakers.”

Bernhard Thuersam, www.Circa1865.com

 

Roosevelt’s “New Nationalism”

“[Former President Roosevelt] arrived in New York on June 18 [1910], after visiting courts and other interesting scenes in Europe. In all these places he received great honor, and his landing in New York called forth a demonstration worthy a world hero.

The public was curious to see whether Roosevelt would side with his old friend [William H. Taft], now the President . . . Shortly after landing he visited Taft and outwardly all seemed harmonious. In all he said openly he did not criticize Taft, but he did not abate his opposition to big business in politics.

Then suddenly he hurled a thunderbolt. Speaking on August 31 at Osawatomie, Kansas, he announced a political program, which he called “New Nationalism.” Government by the people, he said, was threatened by wealth in national politics, and the power of the nation should be so extended over it that it could not do what it is doing.

To reach this end he would give the federal government all needed power. If the Constitution was not strong enough he would amend it. He denounced what he called the “twilight zone” between federal and State authority, “a refuge for lawbreakers, and especially for lawbreakers of great wealth, who can hire the vulpine legal cunning which will teach the way to avoid both jurisdictions.”

“New Nationalism,” he added, regards the executive power as the steward of the public welfare. It demands of the judiciary that it shall be interested primarily in human welfare, rather than in property, just as it demands that the representative body shall represent all the people rather than one class or section of the people.” From the individualism of [Grover] Cleveland to the “New Nationalism” of Roosevelt was a long step.”

(Expansion and Reform, 1889-1926, John Spencer Bassett, Kennikat Press, 1971 (original 1926), pp. 175-176)

 

War Profiteering in the North

Published as a textbook well before America’s cultural revolution of the 1960’s, John Hicks “The Federal Union” can be trusted as a fairly accurate source of United States history and free of cultural Marxist revisionism. Below, he touches on the North’s generous government supply contracts, child labor and general wartime prosperity while its bounty-enriched blue-clad soldiers devastated Americans in the South to preserve a territorial Union.

Bernhard Thuersam, www.Circa1865.com

 

War Profiteering in the North

“When the Civil War broke out the North had not fully recovered from the depression that had followed the panic of 1857, and for a time business interests were more frightened than stimulated by the clash of arms. By the summer of 1862, however, a surge of prosperity had put in its appearance that was to outlast the war.

With millions of men under arms the [Northern] government was a dependable and generous purchaser of every kind of foodstuff, and its equally great need of woolen goods and leather strengthened the market also for raw wool and hides. Probably the sales of the farmers made directly or indirectly to the government more than offset the losses sustained by wartime interference with sales to the South.

[And] with the South out of the Union, a homestead law, so long the goal of believers in free land, was speedily enacted (1862). Thereafter any person who was head of a family, or had arrived at the age of twenty-one years, whether a citizen of the united States or an alien who had declared his intention of becoming a citizen, might take up a quarter section of public land, and, after having lived upon it for five years and improved it, might receive full title to it virtually free of charge.

What came in later years to be called “heavy industries” profited enormously from the war. Purchases of munitions abroad practically ceased after the first year because of the rapidity with which American factories supplied the government’s needs . . . the government itself went deeply into the business of manufacturing war materials as public opinion would permit.

High tariffs ensured the northern manufacturers against the dangers of foreign competition. A protectionist policy had been demanded by the Republican national platform of 1860, and a higher schedule of tariffs . . . was placed upon the statute books two days before [President James] Buchanan left office. This speedy answer to the prayers of the protectionists was made possible by the withdrawal from Congress of the delegations from the seven seceding States of the lower South, and by the fact that President Buchanan was no longer unmindful of the wishes of the manufacturers of his home State [of Pennsylvania].

The original Morrill Tariff Act was repeatedly revised upward during the war, until by 1864 the average of duties levied on imports had reached forty-seven per cent, the highest thus far in the history of the nation. The significance of this development can scarcely be overemphasized. A policy which the South had persistently blocked in the years preceding the war became an actuality during it, and as subsequent events were to prove, remained as a permanent fixture in American political and economic life.

The profits of war bred a spirit of extravagance and frivolity among the non-combatants of the north that contrasted oddly with the long casualty lists displayed as a regular part of the daily news. Social life reached a dizzying whirl, with more parties and dances, theaters and circuses, minstrel shows and musicales than ever had been known before.

According to a statement published by the Springfield Republican in 1864, many of the factories whose profits during the war had been “augmented beyond the wildest dreams of their owners” paid their laborers only from twelve to twenty per cent more than before the war. “There is absolute want in many families, while thousands of young children who should be in school are shut up at work that they may earn something to eke out the scant supplies at home.”

(The Federal Union, A History of the United States to 1865, John D. Hicks, Houghton Mifflin Company, 1948, pp. 660-665)

The War to Create Many Large Fortunes

After the departure of conservative Southern congressmen in 1861, the old Whigs in the Republican party went unrestrained in their merger of government and corporations. Historian Charles Beard would later write of the War that it was not easy to tell “where slavery as an ethical question left off and economics – the struggle over the distribution of wealth – began.”

Bernhard Thuersam, www.Circa1865.com

 

The War to Create Many Large Fortunes

“As the election of 1872 approached, the tax and tariff issues were potent enough for [President Ulysses] Grant to take at least some action. Trying to shore up support among farmers and others, Congress approved a 10 percent reduction in tariffs on most items including cotton and wool textiles, iron, steel, paper, glass and other items. But these were baby steps with marginal impact, designed to preserve the whole protectionist system.

Throughout the assault on the [Civil War] income tax, opponents had considered the step of going to court to challenge the tax’s constitutionality. Some suits were filed, and parts of the tax were upheld by various courts, including the Supreme Court. But as the expiration of the tax approached, there did not seem to appear much sentiment in Congress to continue it anyway. Senator [John] Sherman [brother of General Sherman] fought once again to keep the tax alive. He asserted that one of the most solemn obligations of the federal government was to protect the property of Americans. It was therefore only proper “to require property to contribute to their payment.”

Sherman’s appeal was to no avail. Congress was more sensitive to the demands of the growing number of wealthy entrepreneurs, investors, and tycoons, who were at their moment of maximum influence. The power of the new wealthy rested on the newly consolidated railroads and the many large fortunes create by the Civil War.

The landscape of wealth had changed. Whereas New York City had had a handful of millionaires before the conflict, there were hundreds of millionaires afterward. Their fortunes were in the tens of millions of dollars. A.T. Stewart, the dry goods magnate, was worth $50 million, and other millionaires, such as William B. Astor, Cornelius Vanderbilt, and the banker Moses Taylor, were not far behind.

Before Congress abolished the publication of income tax returns, it was reported that Astor had paid more than $1 million in income tax, while Vanderbilt and Taylor had paid more than $500,000. After the war, many millionaires routinely engaged in tax evasion or tricks to hide their income. What they did not bother to hide was their vast influence.

In 1869, Grant’s friend Jim Fisk worked with [Northern financier] Jay Gould to monopolize the market in gold, driving up its price so they could make a killing. Instead, on “Black Friday,” September 24, 1869, a collapse in gold prices engulfed a vast number of speculators and investors.

Fisk and Gould managed to bribe enough officials to avoid prosecution, and Fisk remained close to his trusting friends in the White House. Years later the Credit Mobilier scandal revealed that the construction company owned by stockholders of the Union Pacific Railroad had ensnared many prominent members of the Grant administration and Congress.

As tax the historian Sidney Ratner notes, the Civil War debt “became one of the most powerful instruments in America for the enrichment of the rentier class, the leading capitalists. For the next forty years, farmers, workers, small merchants and other working-class Americans carried this debt burden, to the benefit of the rich.”

(The Great Tax Wars, Lincoln to Wilson, Steven R. Weisman, Simon & Schuster, 2002, pp. 99-101)

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