Browsing "Financing Lincoln’s War"

Public Debt, Then and Now

Abraham Lincoln was a devotee of the Alexander Hamilton/Henry Clay “American System” of public debt, tariff protectionism, government subsidies and a national bank. To finance his war in 1861, Lincoln turned to an income tax, and then succumbed to printing money. Nowhere in the United States Constitution is the federal government authorized to make paper money legal tender. By 1865, the public debt was $2.6 billion, and the direct/indirect cost of Lincoln’s war would reach $8 billion by 1900.

www.Bernhard Thuersam, www.Circa1865.com

 

Public Debt, Then and Now

“Contrary to official capitalist wisdom, debt does not create economic growth. This idea is a swindle. Interest to the very rich . . . does not produce anything. It does not multiply creatively into new enterprises and jobs; it merely diverts ever-greater proportions of earning that might be fruitfully invested.

The proof is all around us. How could the vast unpayable federal debt, which absorbs much of the government’s income just for the interest bondholders, foreign and domestic, possibly be an economic stimulus? How can the immense and near universal burden of personal mortgage and credit card debt possibly indicate a healthy economy and commonwealth?

The matter is simple, obvious to anybody except a politician, a captive economist, or a media flack, and it ought to be conveyed to the people at every opportunity. Debt is killing us. Every wise man in recorded history has affirmed that debt is not a good thing. Debt can destroy a family, a government, a society.

Alexander Hamilton, an upwardly mobile immigrant bastard with a Napoleon complex, declared that “a public debt is a public blessing.” Troubled, but not surprised, Jefferson noted a connection between debt cruel taxation that undermined the independence of the citizens, warning that “we must not let our rulers load us with perpetual debt.”

Weighed down by government debt, the people would have to labor ever harder to pay the debt-holders, leaving them “no time to think, no means of calling the managers to account.” Jefferson avowed as a core principle that “the earth belongs in usufruct to the living,” but the living had no right to consume the earnings of posterity.

Antebellum statesmen like John Taylor of Caroline and John C. Calhoun and economists like William Gouge and Condy Rageut made the same case. After the War Between the States, so did William Graham Sumner, Thomas E. Watson and countless other public men and thinkers.

Republicans (and their predecessors) have always been the party of bankers and bondholders, service to the rich being for them a natural and essential function of the federal government. Opposition to the federal debt was long a plank in the Democratic platform, but Democrats today are just as guilty as the Republicans in regard to the issue.

Lip service to the virtue of “low public debt” continued until Franklin Roosevelt discovered Keynes and declared that debt is no problem “because we owe it to ourselves” – “ourselves” being a conveniently vague and collective being.

The bipartisan bailout of misbehaving bankers and brokers that we saw a few years ago, and the failure of a multitude of presidential candidates to mention the matter, is not promising.”

(It’s the Debt, Stupid, Clyde N. Wilson, Chronicles, February 2016, excerpt pg. 16)

The Dollar Invades and Conquers

Lee was not alone in seeing the masked reasons for the war prosecuted by the North and the opportunity seen in reducing the American South to a politically-weak economic colony. The bounty-enriched foreign mercenaries and displaced slaves used to fight its war of conquest were expendable tools for the task, and later employed to eradicate Indians.

Bernhard Thuersam, www.Circa1865.com

 

The Dollar Invades and Conquers

“Certainly he must have sensed that in the future “those people,” as he called his Northern adversaries, were determined to push aside “his people” with their aristocratic prerogatives and privileges. Despite his determination to stay out of politics both during and after the war, Lee could see the handwriting on the wall as plain as anyone, and plainer than most.

He understood that in addition to the sharp odor of gunpowder, there was the sweet smell of profits in the balmy spring air. Lincoln’s Secretary of the Treasury, visiting New York earlier that spring, had noted that many people there paid more attention to the stock market than to the casualty reports. To this a New York editor added: “Real or professed patriotism may be made to cover a multitude of sins. Gallantry in battle may be regarded as a substitute for all the duties of the Decalogue.”

In the Northern States, the rapid transformation from a conglomeration of farmers to a nation of industrialists had been hastened by the war. The exclusion of Southern planters from the halls of government made the change considerably easier. Astronomical profits on wartime speculation and gouging encouraged rapid expansion. While the brave boys in [blue] shed blood on the battlefields, the crafty made profits back home.

If the drama of collapse and surrender centered in the South, the drama of growth and expansion focused on the West. Hundreds of millions of dollars would go there; the receding frontier would be whittled down by systematic attacks of the Yankee investor. The Federal government would help by showering the railroads and settlers with land and services. Mines, cattle and farming would boom. Where bayonet had never been, the dollar would invade and conquer.”

(Lee After the War, Marshall W. Fishwick, Dodd, Mead & Company, 1963, pp. 39-40)

 

The North’s Extended Payday

Beyond eliminating Negro slavery in the South, the war “hastened the transformation of the North from a country of farmers and small manufacturers to a highly organized industrial region.” The North had no shortage of those who saw no need to carry a rifle, as great profit awaited those supplying war materiel.

Bernhard Thuersam, www.Circa1865.com

 

The North’s Extended Payday

“With the war, too, came what moral philosophers have said was moral decay in wholesale volume, an apparently illimitable increase in man’s cupidity. Scandals uncorked during and right after the fighting showed that [Northern] soldiers had been given clothing and blankets made of shoddy, technically a material of reclaimed wool, such as old rags, which gave a new term to our language.

Soldiers also got boots made largely of paper; they were fed meat that had come from diseased cattle and hogs; they rode hags that had been doctored to make a sale to the cavalry. Only too often the very guns put into their hands would not shoot. One big order for such weapons, refused by ordnance offices in the East, was sold and shipped to General [John] Fremont in the West.

Likely the moral condition of the country was lower than usual. Perhaps the moral philosophers should take into account the possibility that man’s inherent cupidity fluctuates, like a thermometer, with the number and quality of opportunities to commit theft, legal or otherwise; that the honesty of too few men is constant.

The decade after 1865 in the United States appears in retrospect to be an extended payday for the vast military exploit just concluded. Somebody observed it was as if Booth’s bullet had released all the chicanery and cupidity of thirty-five million people. Pastor’s warned that God’s hand would smite the Republic. And yet, the more numerous and grosser sort continued to admire the “smart” man.

The most notoriously smart figures of the postwar period in the United States were three characters who without too much exaggeration were also known as the men of disaster. They were Daniel Drew, Jay Gould, and Jim Fisk. Many called them wreckers, “Foul hyenas,” said an editorial writer of the time, “who when their prey was full rotten came to sink their slavering jaws into the carrion.”

As a big herd of anywhere from six hundred to a thousand head of Ohio beef approached New York City, Drew had his drovers salt them well, then, just before reaching the market place, let them drink their fill. Cattle were sold live-weight. Drew’s processing with salt and water added many tons to the average herd [and] “Watered stock” soon became a term in Wall Street.

Jim Fisk was a genial, handsome fellow . . . Both men and women liked him. He could sell them stuff they did not want before they realized they had bought it. When New Orleans fell into federal hands, Fisk took off to buy cotton for a Boston syndicate, which made a mint of money quickly.

(The Age of the Moguls, Stewart H. Holbrook, Doubleday and Company, 1953, excerpts, pp. 20-24)

Undermining the Constitution

Thomas J. Norton notes below in 1951 that Congress has no authority to “lend money or to give it away” – and cites James Madison’s warning of paper barriers being insufficient to stop evil persons in government. Jefferson Davis stated in 1881: “Of what value then are paper constitutions and oaths binding officers to their preservation, if there is not intelligence enough in the people to discern the violations, and virtue enough to resist the violators?”

Bernhard Thuersam, Circa1865.com

 

Undermining the Constitution

“The Constitution gives power to Congress (1) “to coin money” and (2) “to borrow on the credit of the United States” — but not to lend money, or to give it away, either at home or abroad.

What is expressed in a Constitution is equivalent to a prohibition of what is not expressed. The powers over money mentioned are the only ones that the Constitutional Convention brought in from the world of inherent powers and fixed in the Fundamental Law.

Those specifications reject the theory of unlimited powers exercised by European monarchs in 1787. Not long before that, Louis XIV had kept Europe embroiled in wars by loans or grants of money to belligerent rulers. Did the Constitutional Convention, at least one member of which was born in his reign, intend to give that power to Congress? It did not say so. The power was therefore withheld by the people from their servants.

The United States is now, without authority — under a denial of authority — lending or granting money to Europe, and to the rest of the world. Postwar programs, twenty-two in number, for aiding foreign nations, in addition to the military aid program, have piled on top of the costs [330 billion] of [World] War II $30,757,000,000, according to Senator Byrd of Virginia, speaking in September 1949.

Thus, the limitations of the Constitution become what Madison gave warning of — “paper barriers.”

(Undermining the Constitution: A History of Lawless Government, Thomas James Norton, Devin-Adair Company, 1951, page 22)

The Strong Economic Interest of the Union War Effort

The Union League was able to muster such a large membership as many Northern men remained home while immigrants, former slaves, draftees and substitutes were off fighting Americans in the South. The Union League became a powerful propaganda arm of the Republican Party and an effective instrument of political control in the postwar South.

Bernhard Thuersam, www.Circa1865.com

 

The Strong Economic Interest of the Union War Effort

“The first Union League was founded in Pekin, Illinois, by a Republican party activist, George F, Harlow. As war weariness deepened, and the restraint that had held back dissenters in the early months of the war fell away, loyal Republican became alarmed by the resurgence in support for the Democratic Party. To combat this, they formed a secret society “whereby true Union men could be known and depended on in an emergency.” By the end of 1864 the Leagues claimed more than a million members.

In May 1863, the [Philadelphia] Press urged that the north unite “by any means” and called on Unionists to “silence every tongue that does not speak with respect of the cause and the flag.” Union Leagues institutionalized the denial of legitimate partisanship by conflating opposition to the Union [Republican] Party with disloyalty to the United States. “Men of the Northwest! Are you ready for Civil War?” asked an editorial in the radical Chicago Tribune, “the danger is imminent; the enemy is at your door . . . a Union Club or league ought to be formed in every town and placed in communication with the State central committee.” They formed vigilante groups, which reported suspected disloyalists to the War Department and called for the suppression of opposition newspapers. Leagues also mobbed the offices of several small-town newspapers whose editors had expressed support for Democratic candidates or had attacked the [Lincoln] administration.

Unlike the mass-membership Union Leagues, the Union League of Philadelphia, the New York Union League Club, and the Boston Union League Club were founder with the appropriate accoutrements of a mid-Victorian gentlemen’s club: elegant headquarters with libraries, billiard rooms and butlers. Membership was by invitation only and determined by social status and “unqualified loyalty to the Government of the United States and unwavering support for the suppression of the rebellion.” The idea was to exclude anyone suspected of Southern sympathies from business or social relations with members.

“Sympathy with [armed rebellion] should in social and commercial life be met with the frown of the patriotic and true. Disloyalty must be made unprofitable.” [A founding member of the Philadelphia club] . . . the issue of the war was, after all, one that directly confronted the class interests of the city’s business elite. “We . . . live under the national law. If that is broken down, our interests, our property, and our lives may be lost in the disorder that will ensue . . . Nothing but ruin awaits all business interests of ours . . . if the doctrines of the Secession leaders are to prevail” Sustaining the federal government was essential . . . [and] Furthermore, as bankers and the monied elite of New York assumed an ever-greater responsibility for financing the war effort through buying government bonds, there was also a strong economic interest in the success of the Union war effort.

(No Party Now, Politics in the Civil War North, Adam I.P. Smith, Oxford University Press, 2006, pp. 68-74)

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)

Voodoo Economics, Circa 1864

Lincoln’s choice for the cabinet post of treasury, Salmon P. Chase, was no financial expert yet he was to advise Congress on the framing of financial bills, obtaining money from “keen-minded bankers and investors” like Jay Gould, as well as loans and paper money. The taxes collected were far smaller than expenditures and throughout the war the total amount received in loans was 2621 million dollars, against 667 million dollars obtained from taxation.

Bernhard Thuersam, www.Circa1865.com

 

Voodoo Economics Circa 1864

[Diary Entry] July 2, 1864:

“There is discord in the Cabinet. Mr. Seward represents the moderates, while Mr. Chase, the abolitionist and the inventor of paper money, represents the Radicals. He is regarded here, rightly or wrongly, as the greatest financier in the world. It seems to me that his entire science has consisted of keeping the ship afloat by throwing the provisions overboard. It is easier to borrow than to repay, and I fear Mr. Chase is leaving the difficult task to those who will follow him.

The failure of his financial policy and the defeat of a bill on gold that he recently submitted to Congress have led Mr. Chase to hand in his resignation.”

[Diary Entry] July 5, 1864:

“A financial crisis can, from one day to the next, reduce the value of paper money to virtually nothing. Everything now hangs on the hope of taking Richmond. But because Grant moves this way and that without gaining ground, because Petersburg, a town defended by children and schoolmasters, continues to stand firm against a hundred thousand men, and because the Confederates, far from giving in, are threatening Maryland with an invasion which is forcing the President to call up the militia and because, in a word, nobody sees an end to the war, public confidence is growing weaker.

The government itself, obliged to pay interest on the public debt in gold, is requiring that all customs duties be paid in gold. Nothing depreciates the currency so much as this self-distrust manifested in the Treasury. Until now the “greenbacks” have had more value in actual trading than that indicated by the rates quoted for them on the official gold market. But if ever the small businessmen should refuse to take them and if ever they should cease to circulate freely among the people, the poor Mr. [William P.] Fessenden (who has just succeeded Mr. Chase) will have to take over the direction of the Treasury only to associate his name with the impending national bankruptcy.

Let us return to Mr. Chase. He had a single obsession: to strangle speculation and force down the price of gold. He thought that to do this he needed only to decree an increase in the value of paper money, and that economic interests could be manipulated so easily as the parts of a machine. Thus he proposed a law prohibiting overdraft operations, speculative transactions which result in a paper loss or gain on balance. Judge for yourselves whether the waving of the Treasurer’s wand has had the magical effect he expected it to have.

By the very next day the speculators had taken fright and activity was concentrated in a small number of hands; now it is continued in secret, without competition, and this quasi-monopoly has immediately raised the price of gold by 40 percent. Congress wanted the bill withdrawn. Mr. Chase insisted that it be acted upon, and it was himself who had to withdraw.

If the moment of crisis ever comes when paper money is forced into the hands of only a few holders, the public will think only of getting rid of it, and America will offer to the world in a twofold sense the spectacle of “hideous bankruptcy.”

(A Frenchman in Lincoln’s America, Ernest Duvergier de Hauranne, Donnelly & Sons, 1974, pp. 77-88)

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)

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