Circa1865

Though it is claimed that Sherman did not sack and burn North Carolina as he did South Carolina, there is scant evidence that the former did not suffer as did the latter. In the bummer’s path were helpless women, children and old men – whose scarce food supplies, valuables and farm animals were made off with by soldiers in blue.

Bernhard Thuersam, www.Circa1865.com

Highwaymen in North Carolina

“[T]he “corn-crib” and “fodder-stack” commandoes could look back upon a plentiful harvest between Fayetteville and Goldsboro. Meat and meal had been found in abundance. So skillfully had [Sherman’s] “bummers” covered this region that the rooster no longer crowed in the morning because he no longer existed. Had the rooster escaped with his life, there would have been no fence rail for him to stand on.

[General J.D. Morgan said] “I have some men in my command . . . who have mistaken the name and meaning of the term foragers, and have become under that name highwaymen, with all of their cruelty and ferocity and none of their courage; their victims are usually old men, women and children, and Negroes whom the rob and maltreat without mercy, firing dwelling and outhouses even when filled with grain . . . These men are a disgrace to the name of soldier and the country . . . ”

Elizabeth Collier, an eighteen year-old girl of Everittsville, [North Carolina] entered in her diary:

“On Monday morning, the 20^th [March], the first foraging party made their appearance at Everittsville. They asked for flour and seeing we were disposed not to give it, made a rush in the house and took it himself—the cowardly creature even pointed his gun at us – helpless women. Looking out, we soon saw that poor little Everittsville was filled with Yankees and they were plundering the houses . . . everything outside was destroyed – all provisions taken – fences knocked down – horse, cows, carriages, and buggies stolen, and everything else the witches could lay their hands on – even to the servants clothes.”

(The Civil War in North Carolina, John G. Barrett, UNC Press, 1963, pp. 346-347)

Former Alabama Governor George Wallace recalled: “My father used to tell me that poverty and illiteracy in the South resulted from the way in which we were treated after the war when they burned the schools down, burned the railroads, just desecrated the South. We are just now overcoming the effects of that tyranny and of the iniquitous Thaddeus Stevens [the Radical Republican leader in Congress], who wanted nothing but vengeance.” Wallace felt himself as one of the South’s “rural proletariat,” and committed himself to “rid the region of what he considered a Northern-imposed inferiority.”

Bernhard Thuersam, www.Circa1865.com

Experimenting with Government Social Programs

“Most Southerners of the [postwar] – and their progeny, including George Wallace – viewed the period of military occupation as cruelly harsh . . . [but] for Southerners, “the unforgiveable reality was not that military rule was unbearably strict or unreasonably long but that it had been imposed at all; what mattered was that the bayonets had glittered among a people who had complied, whatever their reluctance and misgivings, with the Lincoln program for Reconstruction, only to find that the rules had changed as the political winds shifted.

Military rule (but not military occupation) ended in most States in 1868. By then, however, the federal Reconstruction Acts had placed the South’s political structure firmly under the control of [Republican] Radicals who, in practice if not in law, hand-picked governors, legislators, judges, tax collectors, and postmasters.

Many of the jobs were lucrative political plums that lent themselves to graft and payoffs. Legislators were bribed to sell railroad holdings to speculators for next to nothing. An Alabama editor of the time complained that “inside the State capitol and outside of it, bribes were offered and accepted at noonday and without hesitation or shame,” which helped “to drive capital from the State, paralyze industry, demoralize labor, and force the [best] citizens to flee Alabama as a pestilence, seeking relief and repose in the wilds of the distant West.”

Bribes and frauds notwithstanding, Reconstructions greatest dollar cost to the South came from enormous (and frequently wasteful) legislative spending on new programs fostered by the novel and, for the time, somewhat extraordinary notion that social responsibility was a function of the government.

These programs involved not only the establishment of free public school systems for white and black children but also the construction of insane asylums, hospitals, roads, and bridges. Despite extravagances and often misused funds, America’s first integrated governments – [Southern] legislatures comprising blacks, carpetbaggers and scalawags – were experimenting with social programs that State governments in the North had never before financed.

But these largely noble experiments were undertaken at the expense – financially and psychologically – of Southern white landowners, who saw the American republic’s traditional rights and values being overturned by what seemed to them a motley collection of blacks, Northern usurpers and Southern traitors.

In formal as in common speech . . . “the United States are” became “the United States is.” But to Southerners, the end of the war – the War Between the States, as most Southerners would refer to it for at least the next 125 years – meant encroaching federalism and government involvement in theretofore private sectors.

Thenceforth, at least well into the heyday of George Wallace, Alabamians would distrust and often detest the federal government, or at best, view it with deep misgivings.

In Barbour County, the defeated whites told their children and grandchildren horror stories of Reconstruction that would burn into their memories: black constables “paraded the streets,” administering “powers of sovereignty” over whites; federal troops carried off or killed farm animals, burned cotton, and plundered stores and homes; once-wealthy families were reduced to penury; local leaders were arrested on trumped-up charges; most whites were prohibited from voting in local and State elections while blacks, induced by threats, money or liquor, were permitted to vote two or three times each for candidates sympathetic to the Radicals.”

(George Wallace, American Populist, Stephan Lesher, Addison-Wesley, 1994, pp. 10-12)

Webster’s Dictionary of 1828 defined a traitor as one who “betrays his allegiance to his country” and “who aids an enemy in conquering his country.” Lt. Snelling, described below, deserted his Georgia regiment and guided the enemy army through his home State.

Bernhard Thuersam, www.Circa1865.com

Lt. Snelling Returns Home to Georgia

“Sunday, November 20, 1864 was a day of unprecedented excitement in the capital of Georgia. Members of the legislature had already departed in haste for their homes. The governor and Statehouse officers were in flight, and many citizens of the town were following the example set by them. In the afternoon distant cannon fire was heard in the direction of Macon, some thirty miles away.

Just before sunset a small group of blue-coated cavalrymen were seen lingering on the outskirts of the town . . . They cut telegraph wires, seized a few horses, and then made a hurried exit. They were the first of more than thirty thousand enemy soldiers who were to enter Milledgeville within the next four days.

With flags unfurled, the band at the head of the column playing the “Battle Hymn of the Republic” and other martial airs . . . [the enemy army occupied the town and Sherman] learned that he was occupying a plantation belonging to General Howell Cobb and forthwith issued orders for its complete destruction.

On the same evening he ordered a special guard to protect the property of Andrew J. Banks whose farmhouse stood a short distance away. Banks, a North Carolinian by birth, was known to be of strong Unionist sentiment.

It is doubtful if Sherman’s intelligence channels had ever been more effective than on this particular occasion. His knowledge of the country which he had entered, and of the varying sentiments of the inhabitants, he owed largely to David R. Snelling, the twenty-six year-old cavalry lieutenant who commanded his escort. Snelling had been born a few miles from Cobb’s plantation and, until the war began, had always lived in the community to which he was now returning as a conquering enemy.

He had left the county early in 1862 as a member of Captain Richard Bonner’s company of the 57^th Georgia Regiment. Never an enthusiastic rebel, he deserted at Bridgeport, Alabama, in July. Later he became a member of a Unionist regiment made up of defecting Southerners. He was now a first lieutenant in the 1^st Alabama (Union) Cavalry and assigned to Sherman’s personal escort where his knowledge of the people and of the country through which they were marching made his services invaluable to the commanding general who kept him close by his side.

While [Sherman and Snelling] were seated around the [evening] fire, a Negro slave . . . recognized Snelling and greeted him as “Massa Dave.” According to [an observer], the slave fell on the floor, hugged the lieutenant around his knees, and expressed mixed feelings and astonishment and thankfulness at seeing his former master in the uniform of the invading army. The slave who greeted him had belonged [to David Lester, Snelling’s] uncle, in whose home the lieutenant had lived as an orphan since boyhood.

That evening Sherman granted . . . Snelling’s request to ride six miles ahead to visit his relatives at the Lester plantation. In his memoirs, the general noted that Snelling returned that night on a fresh horse from his uncle’s stable [and that the visit had been] social in nature. The David Lester plantation book, however, indicates that Snelling was accompanied on his visit by a squad of Federal cavalrymen and the group conducted a raid on the plantation, burned the ginhouse, and pillaged the premises.

Whether Snelling’s unusual conduct was an attempt to prove his loyalty to the Union army or the result of an old grudge he bore against his affluent uncle perhaps may never be determined.”

(Sherman at Milledgeville in 1864, James C. Bonner, Journal of Southern History, Volume XXII, Number 3, August, 1956, pp. 273, 275-277)

The triumph of Northern arms in 1865 ensured the political supremacy of the New England industrial elite over the agricultural South — the South that presided over the republic’s “classic years,” defended its political conservatism and produced most of the presidents. With the South in ruins, industrial interests with unlimited funds and government patronage had won the second American revolution.

Bernhard Thuersam, www.Circa1865.com

Industrial Machines and Political Machines

“What Charles Beard has called “the second American Revolution — the revolution that assured the triumph of the business enterprise — had been fought and largely won by 1877. In four great lines of endeavor — -manufacturing, extractive industries, transportation and finance — business marched from one swift triumph to another.

In 1860 about a billion dollars was invested in manufacturing plants which employed 1,500,000 workers; but in less than fifty years the investment had risen to 12 billions and the number of workers to 5,000,000.

A bloody and riotous year, violence was everywhere evident in the America of 1877. The great railroad strike of that year was the first significant industrial clash in American society. “Class hatred,” writes Denis Tilden Lynch, “was a new note in American life where all men were equal before the law. The South was in the turmoil of reconstruction, sand-lot rioters ruled in San Francisco; and 100,000 strikers and 4,000,000 unemployed surged in the streets of Northern cities.

At a cabinet meeting on July 22, 1877, the suggestion was advanced that a number of States should be placed under martial law.

Once triumphant, the industrial tycoons discovered that they could not function within the framework of the social and political ideals of the early Republic. To insure their triumph, a new social order had to be established; a new set of institutions had to be created of which the modern corporation was, perhaps, the most important . . . [and with] the Industrial machine came the political machine.

Dating from 1870, the “boss system” had become so thoroughly entrenched in American politics by 1877 that public life was everywhere discredited by the conduct of high officials. The simplicity of taste which had characterized the “classic” years of the early Republic gave way to a wild, garish, and irresponsible eclecticism. “The emergence of the millionaire,” writes Talbot Hamlin, “was as fatal to the artistic ideals of the Greek Revival as were the speed, the speculation and the exploitation that produced him.”

In one field after another, the wealth of the new millionaire was used to corrupt the tastes, the standards, and the traditions of the American people.”

(A Mask for Privilege, Carey McWilliams, Little, Brown & Company, 1948, pp 8-10)

As described below, Americans in general seem unaware of the enormity of the Southern experience 1861-1865 and the aftermath of devastating defeat and subjugation. The author’s analogy brings needed perspective to an unnecessary war and death of a million Americans, counting military and civilian casualties.

Bernhard Thuersam, www.Circa1865.com

Suppressing the Consent of the Governed

“Imagine America invaded by a foreign power, one that has quadruple the population and industrial base. Imagine that this enemy has free access to the world’s goods as well as an inexhaustible supply of cannon fodder from the proletariat of other countries, while America itself is tightly blockaded from the outside world.

New York and Cincinnati have been taken. For months, Boston and Chicago have been under constant siege, the civilian population driven from their homes. Enemy forces roam over large parts of the country burning the homes, tools and food of the noncombatants in a campaign of deliberate terrorism.

Nearly eighty-five percent of the nation’s able-bodied men (up to 50 years of age) have been called to arms. Battlefield casualties have run to 39 percent and deaths amount to half of that, far exceeding those from any other war.

On the other hand, the enemy, though its acts and domestic propaganda indicate otherwise, is telling the American population that it only wants peace and the restoration of the status quo antebellum. Lay down your arms and all will be as before. What would be our state of morale in such conditions? Americans have never suffered such misfortune, have they?

Alas, they have. This was the experience of the Southern people from 1861-1865 in their lost War for Independence.

How hard the Southerners struggled for independence from the American Empire has been, and continues to be, suppressed by a nationalist culture that can only wonder: How could any group possibly have dissented from the greatest government on earth? But a very large number of Americans did no consent that government (the regime, after all, was supposed to be founded on the consent of the governed).

They were willing to put their dissent on the line in a greater sacrifice than any large group of Americans has ever been called on to make. Until finally, as a disappointed Union officer quoted by [author Gary] Gallagher remarked: “The rebellion [was] worn out rather than suppressed.”

(An Honorable Defeat, Clyde Wilson, Chronicles, October 1998, pg. 28)

The passage below describes the surrender and occupation of Smithville, now Southport, North Carolina in late January 1865 after Fort Fisher had fallen to Northern forces. The town’s public offices were plundered by the troops and those like Uncle Gibb suffered ill-treatment from soldiers who sought buried valuables.

Bernhard Thuersam, www.Circa1865.com

Uncle Gibb’s Liberators

“Now Smithville [North Carolina] had relapsed into its state of quiet, but not the quiet of former days . . . Negroes however reaped a rich harvest in the shape of clothing from soldiers and blankets of which the forest was strewn.

A large assembly of Negro men, women and children had collected at the boat in order to greet their “saviors,” and to fall upon their necks and kiss them if such liberties should be allowed. [Northern] Captain [William] Cushing then addressed the sable crowd and informed them that they were free, that they were in all respects equal to the whites and would be so treated. In order to make that this was true he directed that they [the Negroes] should form a procession and give three cheers which they did saying, “God bless Massa Lincum, we’re free” and “Massa Lincum is cumin in a day or two to bring each of us a mule and deed for forty acres of land.”

The procession then started to move, and wild cheering for “Massa Lincum.” There were some small United States flags scattered among the crowds which they waved frantically in the air, crying “hallelujah, hallelujah.” The procession then moved through the garrison to Moore Street, a motley crowd dressed in every conceivable style bearing banners of anything that was bright color and they started down Moore Street amid cheering for “Massa Lincum.”

In the procession which had marched around town was “Uncle Gibb,” and in his posterity “Uncle Gibb” had been treated during his entire life as kindly as any white citizen in the town. He had a house to live in, plenty of food and clothes, and a horse and dray; and it was difficult to perceive how he had bettered his condition by freedom; but he soon found out as he was brought a prisoner into the [Northern army] Garrison for some alleged offense.

Here he was tied up by the thumbs to an oak tree which stood there, and hoisted till his toes barely touched the ground. This was done in full view of his own sister who was cooking in an adjoining kitchen, and who fainted and fell at the awful sight. We thus had an opportunity to find out whether the new friends of the colored race were any better than the old friends who had treated him with such kindness.

The ceremony attending the surrender [of Smithville] having been completed, the boat containing the plunder was dispatched back to the [USS] Monticello, and there being apparently nothing to do on shore, the sailors were given liberty and the officers proceeded to enjoy themselves.

The sailors spread themselves over the town, and proceeded first to inspect the public buildings. They broke open the court house and its offices, tore up such papers as they found lying around, among which happened to be the entire record of the Court of Equity and scattered them about the streets. They went to the Academy building in which was a Masonic Hall, and stole the jewels of the Order, and carried them to the ship.”

(Reminiscences, Dr. D.W. Curtis, Special Collections, W.M. Randall Library, UNCW, pp. 33-37)

Northeastern North Carolina suffered enemy occupation early in the war – those that could left the area. The occupation troops had little consideration for the African race they were emancipating, and seemed to consider the people of North Carolina their subjects and whose land would become resorts for Northerners.

Bernhard Thuersam, www.Circa1865.com

Union Captain Murrey’s Toast

“With their young men away at war, Washington and most of Beaufort County came under the heel of the Union Army. They found the town evacuated by its defenders and abandoned by about three-quarters of its inhabitants. All who could possibly leave, and find refuge with friends and relatives further inland, had done so.

The occupation force included units of the 24^th Massachusetts Cavalry; 3^rd New York Artillery; 3^rd New York Cavalry; and some Marine artillery. Gunboats anchored across the river, off the town. Union forces continued to occupy Washington from the end of March 1862, until 20 April 1864.

On March 30, Captain Murrey, commander of the gunboat Commodore Hull, invited six of the older men who had remained in Washington, to dinner on his vessel. He is alleged to have gotten them drunk, then proposed a toast: “To the reconstruction of the Federal Union, a plantation in Georgia with a hundred niggers, and a summer residence in North Carolina.” It is recorded these men all drank with zest to this toast.

During this period, conditions in Washington were growing steadily worse. Older men who were compelled to remain with their business, had sent their wives and families away. Food was scarce. Though the freed Negroes who had collected in the town were given better food than the inhabitants could procure, bands of these Negroes roamed the streets at night, pillaging and stealing. Strong protests were made by the representatives of eastern North Carolina to President Davis, to return North Carolina troops from Virginia, to clear Union forces from their homes.”

(History of Beaufort County, C. Wingate Reed, Edwards & Broughton, 1962, pp. 184-188)

The University of North Carolina survived the war but found itself in desperate condition when Northern carpetbaggers and local scalawags assumed control of State government in 1868. Historian Hugh Talmage Lefler wrote: “Lack of public confidence, financial support, and students closed the University in 1870. A student expressed it graphically when he wrote of a classroom blackboard: “Today this University busted and went to hell.” The University was reopened in 1875 after North Carolinians regained political control of their State.

Bernhard Thuersam, www.Circa1865.com

Vandals and Goths at Chapel Hill

“Of the seventy-eight new Trustees of the University, only four had been members of the former Board, and they were men who had seldom attended meetings of the Trustees and really cared very little about the fate of the University. At the meeting of the new Board in Raleigh, in June 1868, several names were brought forward for the presidency.

After several days of travail the Board brought forth Mr. Solomon Pool, a native of Elizabeth City, North Carolina . . . To be sure, he had no “established reputation” for scholarship, though he was a man of some ability. Immediately after the close of “The War” in 1866, Mr. Pool had resigned his position as Tutor in the University to take a job as a Deputy Appraiser in the Revenue Service of the hated Reconstruction Government, allying himself with the Republican party.

The word “opportunist” had not been invented, but “traitor,” “renegade,” and “apostate” were freely hurled at his complacent head. Mr. Joseph [Engelhard], editor of the Wilmington Journal, said in one issue of his paper that the University was “infested with pismires” (termites?) and the very next week he wrote that it was “presided over by nincompoops.”

The Board of Trustees had its own troubles in forming a new faculty. Mr. S.[S]. Ashley, a Massachusetts Yankee, who was Superintendent of Public Education, placed a relative, James A. Martling, in the “Chair of Belles Lettres,” whatever that means. The Martling family occupied the house recently made vacant by my grandfather’s death, and June Spencer and I, living next door, watched with scornful eyes the daughters of the family . . . with their village beaux on the piazza or strolling in the moonlight, but there was no communication between us.

George Dickson, Professor of Agriculture, was a Friend from Philadelphia who came South as a missionary to the Negroes. He brought Bibles, Testaments, and hymn books from the good Quakers of his city, a fine and generous gesture – if only the recipients had been able to read. Friend Dickson went to England to inquire into some new ideas in agriculture for the benefit of the South. He never came back.

During the first year of the Reconstruction Administration there were thirty-five students in attendance . . . just little bare-foot boys from the village and the adjoining country, with their home-made breeches held up by a string across one shoulder, and their dinner in a little tin bucket. Now and then a small black face appeared among them. None of them knew what it was all about. It was just a grand frolic for them to be “goin’ to college.”

Nor were the pupils altogether appreciative of their advantages. We find one A.J. Banks haled before the faculty for non-attendance upon his classes. His excuse was that he did not want to study Greek, nor did he want to stay in college with “them Yanks.”

The grim record shows that the Archives of the Literary Societies were broken into and their contents scattered. A box of Siamese curios presented to the University by the Reverend Daniel McGilvary, a Presbyterian missionary to Siam, was broken, and objects of rare beauty and great value stolen or destroyed. Scientific apparatus was smashed into bits, and great damage was done to the buildings and libraries of the University . . . owls and bats flew in the broken windows of the buildings, the campus was a jungle of weeds, cattle and hogs roamed the unlighted streets at night.

From a charming, dignified home of cultured people, who enjoyed a gracious society, Chapel Hill had become a desolate, silent wilderness. Even the strangers who composed the puppet faculty disliked each other, the village, the State, and the institution they were expected to serve.”

(A Rare Pattern, Lucy Phillips Russell, UNC Press, 1957, pp. 45-49)

Considered one of Wilmington, North Carolina’s antebellum architectural treasures, the Dr. John D. Bellamy mansion was seized by Northern General Joseph R. Hawley in February 1865 for use as his headquarters while occupying the city — ironically, Hawley was a native North Carolinian. Bellamy’s daughter Ellen was a young girl at the time and later recalled vivid memories of the enemy invasion.

Bernhard Thuersam, www.Circa1865.com

Northern Vandals Liberate Wilmington Furniture

“The Federal troops captured Wilmington on February 21, 1865; they took possession of our home, which we had temporarily vacated, and it remained General Hawley Headquarters a long time, even after Lee’s surrender. It was very galling . . .”

[Mother] came up to own dear house, accompanied by a friendly neighbor . . . who was related to General Hawley, and had offered to introduce her. It was most humiliating, and trying, to be entertained by Mrs. Hawley, in her own parlor. Mrs. Hawley showed her raising by “hawking and spitting” in the fire, a most unlady-like act. During the call she offered Mother some figs (from Mother’s own tree) which Aunt Sarah had picked — our own old cook, who had been left there in charge of the premises.

My father made several trips to . . . Washington City before they would grant him his “Pardon.” For what? For being a Southern Gentlemen, a Rebel, and a large Slave Owner! The slaves he had inherited from his father, and which he considered a sacred trust. Being a physician, he guarded their health, kept a faithful overseer to look after them (his home being a regular drug store), and employed a Methodist minister, Rev. Mr. Turrentine, by the year, to look after their spiritual welfare.

Although the war was practically over seven months, we did not get possession of our home ‘till September. [T]he beautiful white marble mantles in the two parlors were so caked with tobacco spit and garbs of chewed tobacco, they were cleaned with great difficulty; indeed, the white marble hearths are still stained . . . No furniture had been left in the parlors . . . On leaving here, the Yankees gave [the] furniture to a servant . . .” In our sitting room, our large mahogany bookcase was left, as it was too bulky for them to carry off; but from its drawers numerous things were taken, among them an autograph album belonging to me brother Marsden.

A number of years later, when my brother John was in Washington as a member of Congress, this same Hawley, then a senator from Illinois, told him of the album “coming into his possession” when he occupied our house, and said he would restore it to him. However, he took care not to do it, although repeatedly reminded.”

(Back With The Tide, Memoirs of Ellen D. Bellamy, Bellamy Mansion Museum 2002, pp. 5-8)

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)