Circa1865

Lincoln’s New America

“The Civil War ennobled no one, except perhaps its central figure, but it brought enormous and probably inevitable changes in the north. Those States actually gained wealth, population and power between 1861 and 1865, during the concurrent destruction of the American Confederacy. War manufactures exploded industrial production, made agriculture prosper, and a flood of immigration from Europe more than replaced the blood and bone buried in the South.

Until 1861, the full effect of the Industrial Revolution had been held in check by the powerful agronomists from Virginia to Texas. With this check removed, the industrial States consolidated their gains swiftly.

While the war itself was moving political power irresistibly toward the federal capital in Washington, money power was centralized in New York through the wartime Currency Acts. And an enormous centralization, through economic expansion, was going on [with] Businesses and enterprises formed that soon transcended the States themselves.

The removal of real power to a national capital was the first necessity for an expanded transportation and industrial complex that lay across many States. The concentration of fiscal power in New York broke the monetary freedom of State legislatures. As business enterprise became more and more national and spread on rails, old boundaries were, and had to be, meaningless. All this would, in quick time, forge a new society.

The old American of a huge farming, small holder class with a tiny mercantile and professional elite was not gone; vast islands of it remained. But it was submerged in flooding money and roaring steam.

If the men and interests behind the rise of the new industrial America did not realize fully where they were going, they understood their basic imperatives well enough. They needed certain things from government: high tariffs on industrial products; business subsidies and the diversion of public finances to railroads; centralized money control; continued massive immigration to curb native workers and create a labor pool; and a hard money policy, without which a solid financial-industrial complex was difficult to build.

The political instrument of this new force was the new Republican party . . . [where] refugees from Whiggery found a home. As virtually all foreign observers have seen, the erection of the immense American politico-industrial-financial machine in 1861 was not pure destiny; it took a certain kind of genius.

[But] the new wealth was more monstrously maldistributed than it had ever been. Millions of northern workers were little better off, in grimy tenements and working long, tedious days, than Texas slaves; many, in fact, were cared for worse. Native-born workers, who had enjoyed decades of scarcity and demand, begged for a limit to flooding immigration as they were drowned.  In the 19^th century they were hardly sustained by the 20^th century illusion that they rose on each succeeding wave.”

(Lone Star: A History of Texas and the Texans. T.R. Fehrenbach. Collier Books, pp. 403-405)

Lincoln, in his first inaugural address, promised no interference with the South’s labor system and admitted that a president lacked the authority to do so. But he did threaten to invade any State that failed to collect federal tariff revenues – despite the US Constitution’s Article III, Section 3, declaring treason to be waging war against one of “Them”, the States, or adhering to their enemy, giving them aid and comfort.

Lincoln’s Tariff War

“Once the Republicans were confident that Lincoln would win the 1860 election, and especially once the Southern Democrats began leaving the U.S. Congress, they did what they had been dreaming of doing for decades: They went on a protectionist frenzy that lasted for decades after the war.

The Morrill Tariff was passed by the House of Representatives in May 1860 and by the Senate in March 1861, just prior to Lincoln’s inauguration. Thus, the apparatus of protectionism was initiated before Fort Sumter and before the war. The Morrill Tariff was not passed to finance the war; it was passed because the old-line Whigs, who were now Republicans [including Lincoln], finally had the power to do it.

Even though it was passed before Lincoln officially took office, it is important to note that, as the Republicans’ presidential candidate, he was the leader of the party and, as such, most likely had a great deal to do with the political maneuvering on behalf of the tariff.

[In his classic 1931 book, “The Tariff History of the United States”] Frank Taussig explains that “in the next regular [congressional] session, in December 1861, a still further increase of [tariff] duties was made. From that time until 1865, no session, indeed, hardly a month of any session, passed in which some increase in of duties on imports were not made.” By 1862, the average tariff rate had crept up to 47.06 percent which “established protective duties [for Northern industries] more extreme than had been ventured on in any previous tariff act in our country’s history.”

The Republicans openly admitted that the purpose of their protectionist policy was not necessarily to raise money to finance the war but to pay off Northern manufacturers for their political support. The manufacturers were being taxed explicitly (through excise taxes) to help finance the war, and the tariff was a way to offset those losses.  Congress enacted and Lincoln signed into law tariff legislation “whose chief effect was to bring money into the pockets of private individuals.”

Long after the war, Taussig concluded, “almost every increase in duties demanded by domestic producers was readily made” and “great forces were made by changes in legislation urged and brought about by those who were benefited by them.”

(Abraham Lincon and the Triumph of Mercantilism, Thomas J. DiLorenzo. Reassessing the Presidency. John V. Denson, ed., Mises Institute Press, 2001, pp. 220-221)

The Morrill Tariff War

The United States House and Senate passed on March 2, 1861, a pro-slavery amendment by the required 2/3 vote which received the endorsement of newly elected President Abraham Lincoln. This would prohibit the United States government from ever interfering with the domestic institution of African slavery in any State. The amendment was ratified by at least three States prior to Lincoln’s ill-advised attempt to reinforce and supply Fort Sumter in mid-April, after which he began raising an army which a president is forbidden to do.

The amendment, as a clear assessment of northern political feeling at the time, indicates that the ensuing war was not prosecuted by the north for emancipation. If the American South’s only interest was “preserving slavery” it need only remain in the 1789 union and join the other States in ratifying the amendment.

At the very same time in early March the northern-dominated Congress passed the oppressive Morrill Tariff Act, which imposed a 40% sales tax on imported goods shipped primarily to the Southern States. This Act protected northern commercial interests.

The only way the American South could avoid the tariff was to withdraw from political union with the north, and initially the northern press supported this. Editor Horace Greeley wrote of “erring sisters” departing the union but entitled to determine their own political future – and not “pinned to the other States with a bayonet.”

In early March 1861 the Confederate States Congress convened and passed a minor 10% tariff which would bring the world’s shipping traffic to Southern ports instead of high-tariff northern ports. This sent a veritable shock wave through the commercial north as it would bankrupt those ports and business interests.

The north’s attitude of letting the “erring sisters” enjoy their political independence changed to invasion and conquest as the only remaining path to collecting their all-important tariff.  Hence, all Southern ports from Virginia to Texas had to be brought under northern control.

As only Congress is authorized to raise and supply an army and would not convene until July, it looked the other way while State governors in the north supplied Lincoln with troops after the provocation at Fort Sumter.