So long as the South seemed to be winning the war, Jefferson Davis was an esteemed leader. But adversity clouded his reputation. The "patent and appalling evidences of inefficiency" demonstrated by the surrender of Forts Henry and Donelson had lost Davis "the confidence of the country," according to the Richmond Whig. Congressman William Boyce of South Carolina lamented "the incredible incompetency of our Executive" that "has brought us to the brink of ruin." George W. Bagby, editor of the Southern Literary Messenger and a Richmond correspondent for several newspapers, wrote during the spring of 1862: "We have reached a very dark hour. . . . Cold, haughty, peevish, narrow-minded, pig-headed, malignant, he [Davis] is the cause. While he lives, there is no hope."1
Davis resented what he considered "contemptible" attacks by men "who engage in strife for personal and party aggrandisement."2 But he
1. Richmond Whig, Feb. 15, March 18, 1862, quoted in Harrison A. Trexler, "The Davis Administration and the Richmond Press, 1861–1865," JSH, 16 (1950), 187 and n.; Boyce to James Hammond, April 4, 12, 1862, in Rosser R. Taylor, "Boyce-Hammond Correspondence," JSH, 3 (1937), 351–52; Emory M. Thomas, The Confederate Nation 1861–1865 (New York, 1979), 142.
2. Rowland, Davis, V, 209, 246.
was not free himself from the sins of excessive pride and willfulness. Austere and humorless, Davis did not suffer fools gladly. He lacked Lincoln's ability to work with partisans of a different persuasion for the common cause. Lincoln would rather win the war than an argument; Davis seemed to prefer winning the argument. Although he rarely defended himself in public, he sometimes privately lashed back at critics in a manner that only increased their hostility. Even Davis's devoted wife Varina admitted that "if anyone disagrees with Mr. Davis he resents it and ascribes the difference to the perversity of his opponent." Suffering from dyspepsia and a neuralgia that grew worse under wartime pressures and left him blind in one eye, Davis was wracked by constant pain that exacerbated his waspish temper. He recognized and regretted his thin-skinned defensiveness: "I wish I could learn just to let people alone who snap at me," Davis said to his wife in May 1862, "in forbearance and charity to turn away as well from the cats as the snakes."3
The cats wanted the administration to wage war with more vigor and boldness. It must become a total war, wrote a Confederate general, "in which the whole population and the whole production . . . are to be put on a war footing, where every institution is to be made auxiliary to war."4 In the spring of 1862 the Confederate government enacted two radical measures to carry out such recommendations—conscription and martial law. But these acts provoked even more venomous attacks from the snakes.
By the winter of 1861–62 the bloom had faded from southern enthusiasm for the war. "The romance of the thing is entirely worn off," wrote a soldier with Stonewall Jackson's brigade in the Shenandoah Valley, "not only with myself but with the whole army."5 The South still had more soldiers than it had weapons to arm them, but that state of affairs promised to come to an abrupt and disastrous end in the spring—not because of a windfall of weapons, but because the one-year enlistments of nearly half the troops would expire.6 Few of them seemed ready to re-enlist. "If I live this twelve months out, I intend to try mighty hard to keep out of [the army]," wrote another Virginia soldier
3. Foote, Civil War, I, 65; Davis to Varina Davis, May 16, 1862, in Rowland, Davis, V, 246.
4. O.R., Ser. III, Vol. 4, p. 883.
5. J. H. Langhorne to his mother, Jan. 12, 1862, in Robert G. Tanner, Stonewall in the Valley: Thomas J. "Stonewall" Jackson's Shenandoah Valley Campaign Spring 1862 (Garden City, N.Y., 1976), 91.
6. The other half were three-year volunteers.
in January 1862. "I don't think I could stand it another year."7 It looked like the army might melt away just as the Yankees began their spring offensives.
The Confederate Congress initially addressed this problem within the traditional framework of voluntarism. In December 1861 it enacted legislation granting a fifty-dollar bounty and a sixty-day furlough to one-year men who re-enlisted, with the additional proviso that they could join new regiments and elect new officers if they wished. As one analyst commented, "a worse law could hardly have been imposed on the South by the enemy."8 The furloughs were likely to weaken the army as much at a critical time as refusals to re-enlist would have done; the election of new officers might oust efficient disciplinarians in favor of good ol' boys; the process of organizing new regiments was a sure-fire recipe for chaos, especially since many infantrymen decided to re-enlist in the more glamorous (and safer) cavalry or artillery.
A dismayed Robert E. Lee pronounced this law "highly disastrous" and urged instead a law "drafting them 'for the war.'" Although he had gone to war to prevent coercion of a state by the national government, Lee now believed the war would be lost unless the government in Richmond obtained the power to coerce men into the army. Davis agreed. On March 28, 1862, he sent to Congress a special message recommending conscription. State's righters and libertarians protested that such a measure contradicted what the South was fighting for. But the blunt, hot-tempered Senator Louis Wigfall of Texas took the floor and warned his colleagues to "cease this child's play. . . . The enemy are in some portions of almost every State in the Confederacy. . . . Virginia is enveloped by them. We need a large army. How are you going to get it? . . . No man has any individual rights, which come into conflict with the welfare of the country."9
More than two-thirds of the congressmen and senators concurred. On April 16 they enacted the first conscription law in American history. It declared all able-bodied white male citizens between the ages of eighteen and thirty-five liable to service for three years. One-year volunteers must remain in the army two more years. This universal obligation
7. G. K. Harlow to his family, Jan. 23, 1862, in Tanner, Stonewall in the Valley, 91.
8. Douglas Southall Freeman, R. E. Lee: A Biography, 4 vols. (New York, 1934–35), II, 26.
9. O. R., Ser. I, Vol. 6, p. 350; Wigfall quoted in Frank E. Vandiver, Their Tattered Flags: The Epic of the Confederacy (New York, 1970), 131.
turned out to have some loopholes, however. A drafted man could hire a substitute from the pool of "persons not liable for duty"—men outside the specified age group or immigrant aliens. The practice of buying substitutes had deep roots in European as well as American history. Men called into militia service in previous wars, including the Revolution, had been allowed to send substitutes. Even the levée en masse of the French Revolution permitted substitution. This practice was based on an assumption that the talents of men who could afford substitutes might be of more value on the homefront, organizing and producing the matériel of war, than in the army. But recognizing that substitution would not exempt all men necessary for behind-the-lines duty, Congress on April 21 passed a supplementary law specifying several exempt categories: Confederate and state civil officials, railroad and river workers, telegraph operators, miners, several categories of industrial laborers, hospital personnel, clergymen, apothecaries, and teachers. Congress resisted planter pressure to exempt overseers—but that issue would rise again.
Some of these exemptions created a potential for fraud. Many new schools sprang up as the teaching profession enjoyed a remarkable growth. Scores of apothecary shops suddenly appeared stocked with "a few empty jars, a cheap assortment of combs and brushes, a few bottles of 'hairdye' and 'wizard oil' and other Yankee nostrums." Governors who opposed conscription increased the number of exempt civil servants. Governors Joseph Brown of Georgia and Zebulon Vance of North Carolina showed special ingenuity in this regard: these two states accounted for 92 percent of all state officials exempted from the draft. Brown insisted that militia officers were included in this category, and proceeded to appoint hundreds of new officers. A Confederate general sarcastically described a Georgia or North Carolina militia regiment as containing "3 field officers, 4 staff officers, 10 captains, 30 lieutenants, and 1 private with a misery in his bowels."10
Hiring a substitute was the most controversial form of exemption. Rich men could buy their way out of the army whether or not their skills were needed at home. This gave rise to a bitter saying: "A rich man's war but a poor man's fight." Some poor men, however, might become rich—if they survived—by selling themselves as substitutes.
10. Columbus [Ga.] Weekly Sun, Sept. 2, 1862, and D. Harvey Hill, both quoted in Albert B. Moore, Conscription and Conflict in the Confederacy (New York, 1924), 56, 71n.
"Substitute brokers" established a thriving business. Many substitutes deserted as soon as they could, and sold themselves again—and again, and again. One man in Richmond was said to have sold himself thirty times. The price of substitutes rose by late 1863 to as high as $6,000 (the equivalent of $300 in gold, or three years' wages for a skilled workingman). The abuses of substitution became so obnoxious that Congress abolished the privilege in December 1863.
The main purpose of conscription was to stimulate volunteering by the threat of coercion rather than by its actual use. Thus the law allowed thirty days for potential draftees to avoid the stigma of the draft by volunteering. If they did so, they could join new regiments and elect their officers just as the volunteers of 1861 had done. Conscripts and substitutes, by contrast, were assigned to existing regiments. To a degree this carrot and stick method worked. During 1862 the total number of men in the Confederate army increased from about 325,000 to 450,000. Since about 75,000 men were lost from death or wounds during this period, the net gain was approximately 200,000. Fewer than half of these new men were conscripts and substitutes; the remainder were considered volunteers even though their motives for enlisting may not have been unalloyed patriotism.
Despite its success in getting more men into the army, conscription was the most unpopular act of the Confederate government. Yeoman farmers who could not buy their way out of the army voted with their feet and escaped to the woods or swamps. Enrollment officers met bitter resistance in the upcountry and in other regions of lukewarm or nonexistent commitment to the Confederacy. Armed bands of draft-dodgers and deserters ruled whole counties. Conscription represented an unprecedented extension of government power among a people on whom such power had rested lightly in the past. Even some soldiers, who might have been expected to welcome a law that forced slackers to share their hardships, instead considered it a repudiation of what they were fighting for. A Virginia private branded conscription "so gross a usurpation of authority . . . such a surrender of the right for which above all others we are now contending [that it] would go far to make me renounce my allegiance." A North Carolina soldier reflected that "when we hear men comparing the despotism of the Confederacy with that of the Lincoln government—something must be wrong."11
11. Bell Irvin Wiley, The Road to Appomattox (Memphis, 1956), 56–57.
Conscription dramatized a fundamental paradox in the Confederate war effort: the need for Hamiltonian means to achieve Jeffersonian ends. Pure Jeffersonians could not accept this. The most outspoken of them, Joseph Brown of Georgia, denounced the draft as a "dangerous usurpation by Congress of the reserved rights of the States . . . at war with all the principles for which Georgia entered into the revolution."12 In reply, Jefferson Davis donned the mantle of Hamilton. The Confederate Constitution, he pointed out to Brown, gave Congress the power "to raise and support armies" and to "provide for the common defence." It also contained another clause (likewise copied from the U.S. Constitution) empowering Congress to make all laws "necessary and proper for carrying into execution the foregoing powers." Brown had denied the constitutionality of conscription because the Constitution did not specifically authorize it. This was good Jeffersonian doctrine, sanctified by generations of southern strict constructionists. But in Hamiltonian language, Davis insisted that the "necessary and proper" clause legitimized conscription. No one could doubt the necessity "when our very existence is threatened by armies vastly superior in numbers." Therefore "the true and only test is to enquire whether the law is intended and calculated to carry out the object. . . . If the answer be in the affirmative, the law is constitutional."13
Most southerners probably agreed with Davis about this—especially if they lived in Virginia or western Tennessee or Mississippi or Louisiana, which unlike Georgia were threatened by invasion in 1862. "Our, business now is to whip our enemies and save our homes," declared the Richmond Enquirer. "We can attend to questions of theory afterwards."14 The draft was upheld by every court in which it was tested—including the supreme court of Georgia, which approved it unanimously.
Nevertheless, disaffection remained a serious problem. Another divisive controversy blew up over the question of martial law. This matter became an embarrassment to Davis. In his February 22 inaugural address he had contrasted the Confederacy's refusal "to impair personal liberty or the freedom of speech, of thought, or of the press" with Lincoln's
12. O. R., Ser. 4, Vol. 1, pp. 1156, 1116.
13. Rowland, Davis, V, 254–62.
14. April 18, 1862, quoted in Paul D. Escort, After Secession: Jefferson Davis and the Failure of Confederate Nationalism (Baton Rouge, 1978), 88.
imprisonment without trial of "civil officers, peaceful citizens, and gentlewomen" in vile "Bastilles."15 Davis overlooked the suppression of civil liberties in parts of the Confederacy, especially east Tennessee, where several hundred civilians languished in southern "Bastilles" and five had been executed. Only five days after Davis's inaugural address, Congress authorized him to suspend the writ of habeas corpus and declare martial law in areas that were in "danger of attack by the enemy."16 Davis promptly proclaimed martial law in Richmond and other Virginia cities. He did so not only because of Union invasion but also because of rising crime and violence among the war-swollen population of the capital. General John H. Winder, provost marshal of the Richmond district, created an efficient but ruthless corps of military police. In addition to banning the sale of liquor, establishing a pass system, arresting drunken soldiers, gamblers, pickpockets, and thieves, Winder jailed without trial several "disloyal" citizens including two women and John Minor Botts, a venerable Virginia unionist and former U.S. congressman. The Richmond Whig branded these actions akin to Lincoln's suppression of civil liberties, whereupon Winder threatened to shut down the newspaper. He never did so, but a Richmond diarist noted in April 1862 that several editors "have confessed a fear of having their offices closed, if they dare to speak the sentiments struggling for utterance. It is, indeed, a reign of terror."17
Some newspapers, however, thought such a reign just what Richmond needed. "Our streets are quiet," rejoiced the Dispatch, because the military police had "arrested all loiterers, vagabonds, and suspicious-looking characters. . . . The consequences are peace, security, respect for life and property, and a thorough revival of patriotism." The Examiner believed that in an emergency "the Government must do all these things by military order. . . . To the dogs with Constitutional questions and moderation! What we want is an effectual resistance."18
15. Rowland, Davis, V, 199. "Gentlewomen" referred mainly to Rose O'Neal Greenhow, a Confederate spy in Washington whom Pinkerton's secret service had arrested and imprisoned.
16. James M. Mathews, ed., Public Laws of the Confederate States of America (Richmond, 1862), 1.
17. Jones, War Clerk's Diary (Miers), 73. For a discussion of the enforcement of martial law in Richmond, see Emory M. Thomas, The Confederate State of Richmond (Austin, 1971), 81–84.
18. Richmond Dispatch, April 4, 1862, quoted in Thomas, Confederate State of Richmond, 84; Richmond Examiner, Feb. 26, 1862.
Some commanders of military districts far from Richmond took it upon themselves to proclaim martial law. This provoked sharp protests. General Van Dorn's sweeping declaration of martial law in parts of Louisiana and Mississippi in July 1862 caused the governor of Louisiana to respond that "no free people can or ought to submit to [this] arbitrary and illegal usurpation of authority."19 Davis forbade generals to suspend the writ or impose martial law on their own authority. But they sometimes honored his prohibition in the breach. Suspension of the writ proved an especially effective device to enforce conscription in parts of the South where state judges issued writs of habeas corpus ordering the release of draftees.
Civil libertarians linked martial law with conscription in their condemnations of Davis's "despotism." A triumvirate of Georgians emerged as leaders of an anti-administration faction on these issues: Governor Brown, Vice President Stephens, and Robert Toombs—now an ambitious but frustrated brigadier general. Even though the Confederate Constitution sanctioned suspension of the writ in case of invasion, Stephens considered such action "unconstitutional." "Away with the idea of getting independence first, and looking for liberty afterwards," he exclaimed. "Our liberties, once lost, may be lost forever." Brown agreed that "we have more to fear from military despotism than from subjugation by the enemy." Toombs denounced the "infamous schemes of Davis and his Jannissaries. . . . The road to liberty does not lie through slavery."20 Bending to such protests, Congress in April limited the scope of martial law and specified that the authority to impose it would expire in September. In October Congress renewed Davis's power to suspend the writ—but provided for expiration of this power in February 1863. Draft resistance caused Congress to renew the power for a third time in February 1864, but once more it expired at the end of July.
Davis therefore possessed the authority to suspend the writ of habeas corpus for a total of only sixteen months. During most of that time he exercised this power more sparingly than did his counterpart in Washington. The rhetoric of southern libertarians about executive tyranny thus seems overblown. The Confederacy did not have the North's problem of administering captured territory with its hostile population. Nor
19. John B. Robbins, "The Confederacy and the Writ of Habeas Corpus," Georgia Historical Quarterly, 55 (1971), 86.
20. Foote, War, II, 951; Frank L. Owsley, State Rights in the Confederacy (Chicago, 1925), 162–64.
did the South have as large a disloyal population—sizable though it was—in its disaffected upland regions as the Union contained in the border states. These areas accounted for most of the Lincoln administration's suspension of civil liberties.
For a few months in the spring of 1862, however, the rise in Union military fortunes caused a relaxation of northern procedures. Since July 1861, Secretary of State Seward had been in charge of internal security—an odd arrangement resulting probably from Lincoln's distrust of Secretary of War Cameron. Seward had organized a corps of agents whose zeal to ferret out treason brooked no restraint by rules of evidence. Seward seemed enamored of his power to throw into prison anyone he suspected of aiding the rebellion. Cries of outrage arose from Republicans as well as Democrats. Perhaps it was necessary to arrest pro-Confederate legislators in Maryland, wrote Horace Greeley, but when the government imprisoned such a prominent northern Democrat as James Wall of New Jersey (soon to be elected to the Senate) "you tear the whole fabric of society."21
Lincoln recognized the justice of these protests. By February 1862 the detention of some two hundred political prisoners was doing more harm than good to the Union cause. The appointment of Edwin M. Stanton as secretary of war provided an opportunity for a change. On February 14 Lincoln transferred enforcement of internal security to the War Department. At the beginning of the rebellion, explained the president, harsh measures had been necessary because "every department of the Government was paralyzed by treason." Now the government had established itself and possessed armed forces sufficient to suppress rebellion. "The insurrection is believed to have culminated and to be declining. . . . In view of these facts and anxious to favor a return to the normal course of the administration," Lincoln therefore ordered the release of all political prisoners upon their taking an oath of loyalty. Stan-ton appointed a review board that applied liberal criteria for determining loyalty. Riding the crest of confidence in imminent victory, the North released most of its political prisoners during the spring of 1862. The New York Tribune rejoiced that "the reign of lawless despotism is ended." Stanton won praise as a humane civil libertarian—an ironic preview to his subsequent reputation as a ruthless tyrant.22
21. Nevins, War, II, 312.
22. O.R., Ser. 2, Vol. 2, pp. 221–23; New York Tribune, Feb. 17, 1862.
Stanton was also responsible for another optimistic policy decision in the spring of 1862. On April 3 he ordered all recruiting offices closed. The public perceived this as a sign that the armies were large enough to win the war. Stanton may have shared this belief; in any case he considered the existing system of raising troops inefficient. State governors, prominent individuals, and officers on detached service from active regiments were all beating the same bushes for recruits. Stanton closed down these operations in order to reorganize and rationalize them—if necessary. With the rebellion evidently collapsing in the West and McClellan poised for the final thrust up the Peninsula, many northerners believed it would not be necessary. By July they realized their mistake.
Events on the battlefields affected each side's ability to finance the war. The Confederate economy had started with two strikes against it. Most of the South's capital was tied up in the nonliquid form of land and slaves. While the Confederate states possessed 30 percent of the national wealth (in the form of real and personal property), they had only 12 percent of the circulating currency and 21 percent of the banking assets. The cotton embargo prevented the South from cashing in on its principal asset in 1861–62. Instead of possessing money to invest in Confederate bonds, most planters were in debt—mainly to factors who in turn were financed by northern merchants or banks.
The South initially hoped to turn that planter debt into a means of making Yankee bankers pay for the war. On May 21, 1861, Congress enacted a law requiring Confederate citizens to pay into the Treasury the amount of debts owed to U.S. citizens, in return for which they would receive Confederate bonds. Later legislation confiscated property owned by "alien enemies." Like so many other southern financial measures, however, these laws yielded disappointing results—no more than $12 million, a far cry from the estimated $200 million owed to northern creditors. Enforcement was difficult and concealment of debts easy. And some planters preferred to retain their credit rating with northern factors as an aid to selling cotton illegally across the lines.23
Of the three principal methods to finance the war—taxation, borrowing,
23. John C. Schwab, The Confederate States of America: A Financial and Industrial History (New York, 1901), 110–20; Richard C. Todd, Confederate Finance (Athens, Ga., 1954), 157–65, 174.
and fiat money—taxation is the least inflationary. But it also seemed the least desirable to southerners in 1861. Antebellum Americans had been one of the most lightly taxed peoples on earth. And the per capita burden in the South had been only half that in the free states. A rural society in which one-third of the people were slaves, the South had few public services and therefore little need for taxes. Except for tariff duties —which despite southern complaints were lower in the late 1850s than they had been for almost half a century—virtually all taxes were collected by state and local governments. The Confederate government possessed no machinery for levying internal taxes and its constituents had no tradition of paying them. Congress enacted a tiny tariff in 1861, but it brought in only $3.5 million during the entire war. In August 1861 a direct tax of one-half of one percent on real and personal property became law.24 The Richmond government relied on states to collect this levy. Only South Carolina actually did so; Texas confiscated northern-owned property to pay its assessment; all the other states paid their quotas not by collecting the tax, but by borrowing the money or printing it in the form of state notes!
Loans seemed a better and fairer way to pay for the war. Risking their lives for liberty, southerners expected future generations to bear the financial cost of the independence won for them by the men of '61. The first bond issue of $15 million was quickly subscribed. Subsequent action by Congress in May and August of 1861 authorized the issuance of $100 million in bonds at 8 percent interest. But these sold slowly. Even those southerners with spare cash to invest had to dip deeply into their reserves of patriotism to buy bonds at 8 percent when the rate of inflation had already reached 12 percent a month by the end of 1861. Recognizing that willing investors might lack cash but possessed cotton, tobacco, and other crops, Congress permitted them to pledge the proceeds from such crops in return for bonds. This "produce loan," the brainchild of Treasury Secretary Christopher Memminger, was more ingenious in concept than successful in results. Some planters, having pledged part of their cotton, changed their minds and sold it instead on the open market or to agents of northern purchasers for higher prices. Only $34 million was eventually realized from the produce loan.
Investors bought most of the remainder of the $100 million bond issue with treasury notes. These notes came off the printing presses in
24. By exempting a head of family if his property was worth less than $500, this tax was partly progressive in nature.
ever-increasing volume. The South resorted to this method of financing the war from necessity, not choice. Memminger warned in 1862 that the printing of notes was "the most dangerous of all methods of raising money. . . . The large quantity of money in circulation today must produce depreciation and final disaster."25 Indeed it did. But from the onset of war, bills accumulated on Memminger's desk faster than he could pay them with the proceeds of loans or taxes. He had no choice but to ask Congress to authorize treasury notes. Congress did so in amounts of $20 million in May 1861, another $100 million in August, a further $50 million in December, and yet another $50 million in April 1862. During the first year of its existence the Confederate government obtained three-quarters of its revenues from the printing press, nearly a quarter from bonds (purchased in part with these same treasury notes), and less than 2 percent from taxes. Although the proportion of loans and taxes increased slightly in later years, the Confederacy financed itself primarily with a billion and a half paper dollars that depreciated from the moment they came into existence.
These notes were to be redeemable in specie at face value within two years of the end of the war. In effect they were backed by the public's faith in the Confederacy's potential for survival. Some congressmen wanted to make the notes legal tender—to require by law all persons to accept them in payment for debts and obligations. But a majority of Congress, along with Memminger and President Davis, considered this unconstitutional, inexpedient, or both. A law to compel acceptance of the notes, they reasoned, would rouse suspicion, undermine confidence, hasten depreciation, and hence defeat the very purpose it sought to accomplish. The promise to redeem in specie after the war, said Memminger, was a better way to assure acceptability.
Southern states, counties, cities, even private businesses also began to issue notes and small-denomination "shinplasters." Shortages of high-quality paper and skilled engravers in the South meant that these as well as the Confederate notes were crudely printed and easily counterfeited. Some counterfeit notes could be detected because of their superior quality to the real thing. Awash in a sea of paper, the South experienced runaway inflation. At first the currency depreciated slowly, because Confederate victories in the summer of 1861 bolstered confidence. In September the price index stood only 25 percent above its January level.
25. Eugene M. Lerner, "The Monetary and Fiscal Programs of the Confederate Government, 1861–1865," Journal of Political Economy, 62 (1954), 509–ion.
But the issuance of new notes caused the index to jump 35 percent in the next three months. Military reverses in the spring of 1862 moved the index up 100 percent in the first half of the year; continued expansion of the currency caused it to double again in the second half. By the beginning of 1863 it took seven dollars to buy what a dollar had bought two years earlier.
This kind of inflation became, in effect, a form of confiscatory taxation whose burden fell most heavily on the poor. It exacerbated class tensions and caused a growing alienation of the white lower classes from the Confederate cause. Wage increases lagged far behind price increases. In 1862 wages for skilled and unskilled workers increased about 55 percent while prices rose 300 percent. Conditions on the small farms where most southern whites lived were little better. Although farm families grew much of what they consumed, the absence of adult males from many of the farms reduced crop yields and caused severe hardship.
The worst problem on many farms was the shortage of salt (the only means of preserving meat) and its catastrophic rise in price—from $2 a bag before the war to $60 in some places by the fall of 1862. Prior to 1861 the South, despite plentiful saline deposits, had imported most of its salt from the North or abroad. The war forced the rapid development of southern salt mines, but transportation priorities for war matériel, the deterioration of southern railroads, and shortages of labor kept supplies scarce and prices high. "There is now in this country much suffering amongst the poorer classes of Volunteers families," wrote a Mississippian in December 1862, "for want of corn and salt. . . . In the name of God, I ask is this to be tolerated? Is this war to be carried on and the Government upheld at the expense of the Starvation of the Women and children?" A rise in desertions from the army in 1862 resulted in part from the distress of the men's families. A mother of three children whose father was in the army wrote to Jefferson Davis in March 1862 that she could get no food. "If I and my little children suffer [and] die while there Father is in service I invoke God Almighty that our blood rest upon the South." A soldier from Mississippi who had overstayed his furlough wrote to the governor on December 1, 1861: "Poor men have been compelled to leave the army to come home to provide for their families. . . . We are poor men and are willing to defend our country but our families [come] first."26
26. The first and third letters are quoted in Charles W. Ramsdell, Behind the Lines in the Southern Confederacy (Baton Rouge, 1944), 28–30; the second letter is quoted in Escott, After Secession, 122. For the salt problem, see Ella Lonn, Salt as a Factor in the Confederacy (New York, 1933).
Anguished southerners sought scapegoats to blame for their woes. They accused "speculators" and "extortioners" of cornering the market in essential items until the rise in price enabled them to sell for fantastic profits. "We have in fact two wars upon our hands," declared a Georgia newspaper in September 1862. "Whilst our brave soldiers are off battling the Abolitionists . . . a conscienceless set of vampires are at home warring upon their indigent families." This "band of harpies preying on the vitals of the Confederacy," these "contemptible wretches" who "would bottle the universal air and sell it at so much a bottle" had "caused the present high prices, and they are determined to make money even if one-half of the people starve."27 Jefferson Davis himself stated that the "gigantic evil" of speculation had "seduced citizens of all classes from a determined prosecution of the war to a sordid effort to amass money." The Richmond Examiner lamented in July 1862 that "native Southern merchants have outdone Yankees and Jews. . . . The whole South stinks with the lust of extortion."28
Despite this condemnation of "native" merchants, the Examiner and many other southerners focused on Jews as the worst "extortioners." Jewish traders had "swarmed here as the locusts of Egypt," declared a congressman. "They ate up the substance of the country, they exhausted its supplies, they monopolized its trade." Jews were said to be more numerous in Charleston than in Jerusalem; the streets of Wilmington "swarmed" with "unctuous and oleaginous" Jews who bought up the cargoes of blockade runners. War Department clerk John B. Jones fulminated in his diary against "Jew extortioners" who had "injured our case more than the armies of Lincoln. Well, if we gain our independence, instead of being the vassals of the Yankees, we shall find all our wealth in the hands of the Jews."29
27. Quotations from Moore, Conscription and Conflict, 150; Eugene M. Lerner, "Money, Prices, and Wages in the Confederacy, 1861–65," in Ralph Andreano, The Economic Impact of the American Civil War (Cambridge, Mass., 1962), 30; Coulter, Confederate States, 225.
28. O.R., Ser. 4, Vol. 2, p. 810; Richmond Examiner, July 22, 1862.
29. Coulter, Confederate States, 227; W. Buck Yearns and John G. Barrett, eds., North Carolina Civil War Documentary (Chapel Hill, 1980), 74–75; Jones, War Clerk's Diary (Swiggett), I, 221.
Such diatribes were hardly unique to the Confederacy. As in other times and places, people suffering from causes beyond their comprehension fastened on an identifiable minority as scapegoats. There were Jewish merchants in the South, of course, and some of them speculated in consumer goods. So did a much larger number of southern-born Gentiles. But most merchants—Jewish and Gentile—were as much victims as perpetrators of shortages and inflation. To be sure, many of them sold goods at markups of 50 percent or more. But when inflation was running at 10 or 15 percent a month, they made little if any profit in real terms on much of what they sold.
By 1862 the Confederate economy had become unmanageable. The futility of trying to bring it under control was illustrated by the attempts of several states to curb "monopolies" or fix maximum prices. Anti-monopoly laws were aimed at speculators who tried to corner markets in any of several necessities, or to charge "exorbitant" prices for them. But these laws proved unenforceable, for they either created a black market or further exacerbated shortages. Richmond's czar of martial law, General John Winder, established maximum prices for several categories of food in April 1862. Farmers and fishermen immediately ceased to sell at these prices. After three weeks Winder admitted failure and lifted the controls, whereupon prices doubled or tripled. Under the pressures of blockade, invasion, and a flood of paper money, the South's unbalanced agrarian economy simply could not produce both guns and butter without shortages and inflation.
The northern economy proved more adaptable to the demands of war. But for a time in the winter of 1861–62, fiscal problems threatened to overwhelm the Union cause. Lincoln's administration entered the war with at least two financial advantages over the Confederacy: an established Treasury and an assured source of revenue from the tariff. But the lower rates enacted by the tariff of 1857 and the depression following the panic of that year had reduced revenues by 30 percent. From 1858 to 1861 the federal budget ran four consecutive deficits for the first time since the War of 1812. Secession produced a new panic. Specie fled the Treasury and the government's credit rating plunged. When Lincoln took office the national debt was the highest in forty years. Secretary of the Treasury Salmon P. Chase was a political appointee without prior financial experience—in contrast to the Confederacy's Memminger, who was an expert in commercial and banking law.
But Chase was an adept learner and turned out to be a good treasury secretary. His principal tutor was Jay Cooke, head of a Philadelphia banking firm, whose brother had been an ally of Chase in Ohio politics. Chase kept the Treasury afloat in the war's early months with short-term bank loans at 7.3 percent. Cooke persuaded some of his moneyed associates to buy longer-term bonds at 6 percent. Chase pioneered the concept of selling bonds to ordinary people, as well as to bankers, in denominations as small as $50 to be paid in monthly installments. Cooke undertook to market these bonds by patriotic advertising that anticipated the great war-bond drives of the twentieth century. Although this policy of financing a democratic war by democratic means got off to a slow start, Cooke eventually achieved great success in selling $400 million of "five-twenties"—6 percent bonds redeemable in not less than five or more than twenty years—and nearly $800 million of "seven-thirties"—three-year notes at 7.30 percent. Newspapers occasionally accused Cooke of getting rich from the commissions he earned on these sales. In fact his firm did earn some $4 million for marketing these bonds. But this amounted to a commission of about three-eighths of one percent, out of which Cooke paid all expenses for agents and advertising, leaving a net profit of about $700,000. This was a cheaper and more efficient means of selling bonds to the masses than the government could have achieved in any other way.30
Unlike the Confederacy, which relied on loans for less than two-fifths of its war finances, the Union raised two-thirds of its revenues by this means. And while the South ultimately obtained only 5 or 6 percent of its funds by actual taxation, the northern government raised 21 percent in this manner. Congress revised the tariff upward several times during the conflict, but wartime customs duties averaged only $75 million a year—scarcely more, after adjustment for inflation, than the $60 million annually in the mid-1850s. Far more important in potential, though not at first in realization, were the new internal taxes levied in the North, beginning with the first federal income tax in American history enacted on August 5, 1861. This revolutionary measure grew from a need to assure the financial community that sufficient revenue would be raised to pay interest on bonds. The Republican architects of the 1861 income tax made it modestly progressive by imposing the 3 percent tax on annual incomes over $800 only, thereby exempting most wage-earners. This was done, explained Senate Finance Committee Chairman William
30. Ellis P. Oberholtzer, Jay Cooke: Financier of the Civil War, 2 vols. (Philadelphia, 1907); Henrietta M. Larson, Jay Cooke: Private Banker (Cambridge, Mass., 1936).
Pitt Fessenden, because the companion tariff bill was regressive in nature. "Taking both measures together, I believe the burdens will be more equalized on all classes of the community."31
Most of these taxes would not be collected until 1862. Meanwhile the government would have to depend on loans. But the legacy of the Jacksonian divorce of government from banking created complications. Gold for purchase of bonds had to be literally deposited in a government subtreasury. An ambiguous amendment to the war-loan act of August 5 seemed to repeal this requirement and permit the Treasury to leave the gold on deposit to the government's credit in banks, where it would form part of the legal reserves to support the banks' notes. But Chase, something of a hard-money Jacksonian in his fiscal views, chose not to proceed in this manner. Instead, he required banks and other purchasers of bonds to pay in specie, which then sometimes remained idle for weeks in government vaults while bank reserves dropped toward the danger point.32
Union defeat at the battle of Ball's Bluff in October 1861 and McClellan's failure to advance on Richmond eroded confidence in northern victory. Then came the threat of war with Britain over Captain Wilkes's seizure of Mason and Slidell from the Trent. The panic on financial exchanges caused a run on banks, whose specie reserves plummeted. The sequel was inevitable. On December 30 the banks of New York suspended specie payments. Banks elsewhere followed suit. Deprived of specie, the Treasury could no longer pay suppliers, contractors, or soldiers. The war economy of one of the world's richest nations threatened to grind to a halt. As Lincoln lamented on January 10, "the bottom is out of the tub. What shall I do?"
What indeed? Lincoln, no financial expert, played little role in congressional efforts to resolve the crisis. Chase proposed the chartering of national banks authorized to issue notes secured by government bonds. This would free the currency from direct specie requirements, pump new money into the economy, and create a market for the bonds. These ideas eventually bore fruit in the National Banking Act of 1863. But
31. CG, 37 Cong., 1 Sess., 255.
32. Bray Hammond, Sovereignty and an Empty Purse: Banks and Politics in the Civil War (Princeton, 1970), chaps. 3–5. For all practical purposes, "specie" meant gold, because the high price of silver in recent years had made a silver dollar worth more than a dollar for its metal, thus driving silver coins almost out of circulation.
Congressman Elbridge G. Spaulding of New York, chairman of the House subcommittee charged with responsibility for framing emergency legislation, believed that the immediate crisis demanded quicker action than the lengthy procedures necessary to establish a new banking system. A delegation of bankers tried to persuade Spaulding (himself a banker) to introduce legislation allowing banks to become depositories of public funds, thereby ending the wasteful practice of transferring gold from banks to subtreasury vaults, and to authorize a new issue of bonds to be sold "at the market" rather than for face value. Since such bonds would sell below par, investors would reap high interest rates and large profits at government expense. Spaulding rejected this proposal along with "any and every form of 'shinning' by Government through Wall or State streets . . . [and] the knocking down of Government stocks to seventy-five or sixty cents on the dollar."33 Instead, he introduced a bill to authorize the issuance of $150 million in Treasury notes—i.e., fiat money.
This bill seemed to imitate the dubious Confederate example—but with a crucial difference. The U.S. notes were to be legal tender—receivable for all debts public or private except interest on government bonds and customs duties. The exemption of bond interest was intended as an alternative to selling the bonds below par, with the expectation that the payment of 6 percent interest in specie would make the bonds attractive to investors at face value. Customs duties were to be payable in specie to assure sufficient revenue to fund the interest on bonds. In all other transactions individuals, banks, and government itself would be required to accept U.S. notes—soon to be called greenbacks—as lawful money.
Opponents maintained that the legal tender bill was unconstitutional because when the framers empowered Congress "to coin money," they meant coin. Moreover, to require acceptance of paper money for debts previously contracted was a breach of contract. But the attorney general and most Republican congressmen favored a broad construction of the coinage and the "necessary and proper" clauses of the Constitution. "The bill before us is a war measure," Spaulding told the House, "a necessary means of carrying into execution the power granted in the Constitution 'to raise and support armies.' . . . These are extraordinary
33. Robert P. Sharkey, Money, Class, and Party: An Economic Study of Civil War and Reconstruction (Baltimore, 1959), 32.
times, and extraordinary measures must be resorted to in order to save our Government and preserve our nationality."34
Opponents also questioned the expediency, morality, even the theology of the legal tender bill. Such notes would depreciate, they said, as the Revolutionary continentals had done and as Confederate notes were even then depreciating. "The wit of man," said Democratic Congressman George Pendleton of Ohio, "has never discovered a means by which paper currency can be kept at par value, except by its speedy, cheap, certain convertibility into gold and silver." If this bill passed, "prices will be inflated . . . incomes will depreciate; the savings of the poor will vanish; the hoardings of the widow will melt away; bonds, mortgages, and notes—everything of fixed value—will lose their value." One banker insisted that "gold and silver are the only true measure of value. These metals were prepared by the Almighty for this very purpose."35
Supporters of the bill exposed the hollowness of such arguments. "Every intelligent man knows that coined money is not the currency of the country," said Republican Representative Samuel Hooper of Massachusetts. State banknotes—many of them depreciated and irredeemable—were the principal medium of exchange. The issue before Congress was whether the notes of a sovereign government had "as much virtue . . . as the notes of banks which have suspended specie payments."36
By early February most businessmen and bankers had become convinced of the necessity for the legal tender bill. So had Treasury Secretary Chase and Finance Committee Chairman Fessenden. "I came with reluctance to the conclusion that the legal tender clause is a necessity," Chase informed Congress on February 3, 1862. "Immediate action is of great importance. The Treasury is nearly empty." Fessenden considered the measure "of doubtful constitutionality. . . . It is bad faith. . . . It shocks all my notions of political, moral, and national honor." Nevertheless, "to leave the government without resources in such a crisis is not to be thought of." Fessenden voted for the bill.37 So did three-fourths of his Republican colleagues in Congress, who readily overcame
34. CG, 37 Cong., 2 Sess., 523, 525.
35. Ibid., 551; Hugh McCulloch, Men and Measures of Half a Century (New York, 1888), 201.
36. CG, 37 Cong., 2 Sess., 691; Sharkey, Money, Class, and Party, 32.
37. CG, 37 Cong., 2 Sess., 618; Fessenden quoted in Hammond, Sovereignty and an Empty Purse, 213–14.
the three-fourths of the Democrats who voted against it. With Lincoln's signature on February 25, the Legal Tender Act became law.
This act created a national currency and altered the monetary structure of the United States. It asserted national sovereignty to help win a war fought to preserve that sovereignty. It provided the Treasury with resources to pay its bills, it restored investor confidence to make possible the sale at par of the $500 million of new 6 percent bonds authorized at the same time, and unlocked the funds that had gone into hoarding during the financial crisis of December. All these good things came to pass without the ruinous inflation predicted by opponents, despite the authorization of another $150 million of greenbacks in July 1862. This brought the total to $300 million, nearly equal to the amount of Confederate Treasury notes then in circulation. But while the southern price index rose to 686 (February 1861 = 100) by the end of 1862, the northern index then stood only at 114. For the war as a whole the Union experienced inflation of only 80 percent (contrasted with 9,000 percent for the Confederacy), which compares favorably to the 84 percent of World War I (1917–20) and 70 percent in World War II (1941–49, including the postwar years after the lifting of wartime price controls). While the greenbacks' lack of a specie backing created a speculator's market in gold, the "gold premium" did not rise drastically except in periods of Union military reverses. During the four months after passage of the Legal Tender Act, the gold premium rose only to 106 (that is, 100 gold dollars would buy 106 greenback dollars).
Three main factors explain the success of the Legal Tender Act. First: the underlying strength of the northern economy. Second: the fortuitous timing of the law. It went into effect during the months of Union military success in the spring of 1862, floating the greenbacks on a buoyant mood of confidence in victory. The third reason was the enactment of a comprehensive tax law on July 1, 1862, which soaked up much of the inflationary pressure produced by the greenbacks. The Union ultimately raised half again as much war revenue from taxes as from the issuance of paper money—in sharp contrast with the Confederate experience.38
The Internal Revenue Act of 1862 taxed almost everything but the air northerners breathed. It imposed sin taxes on liquor, tobacco, and
38. The total value of greenbacks issued was $447 million. Taxes during the war amounted to nearly $700 million.
playing cards; luxury taxes on carriages, yachts, billiard tables, jewelry, and other expensive items; taxes on patent medicines and newspaper advertisements; license taxes on almost every conceivable profession or service except the clergy; stamp taxes, taxes on the gross receipts of corporations, banks, insurance companies, and a tax on the dividends or interest they paid to investors; value-added taxes on manufactured goods and processed meats; an inheritance tax; and an income tax. The law also created a Bureau of Internal Revenue, which remained a permanent part of the federal government even though most of these taxes (including the income tax) expired several years after the end of the war. The relationship of the American taxpayer to the government was never again the same.
The Internal Revenue Act was strikingly modern in several respects. It withheld the tax from the salaries of government employees and from dividends paid by corporations. It expanded the progressive aspects of the earlier income tax by exempting the first $600, levying 3 percent on incomes between $600 and $10,000, and 5 percent on incomes over $10,000.39 The first $1,000 of any legacy was exempt from the inheritance tax. Businesses worth less than $600 were exempt from the value-added and receipts taxes. Excise taxes fell most heavily on products purchased by the affluent. In explanation of these progressive features, Chairman Thaddeus Stevens of the House Ways and Means Committee said: "While the rich and the thrifty will be obliged to contribute largely from the abundance of their means . . . no burdens have been imposed on the industrious laborer and mechanic. . . . The food of the poor is untaxed; and . . . no one will be affected by the provisions of this bill whose living depends solely on his manual labor."40
Whether northern wage-earners appreciated this solicitude is hard to tell. By the time the internal revenue act went into effect many of them were suffering the pinch of inflation. While far less serious than in the South, price increases did cause an average decline of 20 percent in real wages of northern workers by 1863 or 1864. In classical economic theory, the labor shortage caused by a wartime decline of immigration and by the enlistment of workers in the army should have enabled wages to keep up with the cost of living, if not exceed it. Three factors seem to have prevented this from happening. The first was some slack
39. Revised in 1864 to 5 percent on incomes from $600 to $5,000; 7½ percent from $5,000 to $10,000; and 10 percent on incomes over $10,000.
40. CG, 37 Cong., 2 Sess., 1576–77.
in the economy left from the aftershocks of the Panic of 1857 and a renewed panic and downturn caused by secession in 1861, which meant that a labor surplus did not become a labor shortage until 1862. Second, a wartime speedup in mechanization of certain key industries helped alleviate the tight labor market: for example, more reapers and mowers for harvesting grain and hay were produced during the war than ever before, easing the demand for agricultural labor; the sewing machine multiplied the productivity of seamstresses making army uniforms and other clothing; and the Blake-McKay machine for sewing uppers to the soles of shoes reduced the time consumed in that process one hundredfold. Third was a great increase in the employment of women, in occupations ranging from government civil service and army nursing to agricultural field work and manufacturing. In agriculture, the increased use of farm machinery enabled women to fill much of the gap left by the enlistment of nearly a million northern farmers and farm laborers in the army. "I met more women driving teams on the road and saw more at work in the fields than men," wrote a traveler in Iowa during the fall of 1862. As evidence of "the great revolution which machinery is making in agriculture," reported another observer the following year, he saw "a stout matron whose sons are in the army, with her team cutting hay. . . . She cut seven acres with ease in a day, riding leisurely on her cutter." In northern industry women worked mainly in occupations where they were already prominent—textiles, clothing, shoemaking—but increased their proportion of the manufacturing labor force from one-fourth to one-third during the war. Because women earned much less than men for the same or similar jobs, their expanded proportion of the wartime labor force kept down the average of wage increases.41
The wage lag behind cost-of-living increases fueled protests and strikes, especially in 1863–64. A good many strikes succeeded in winning substantial wage gains, especially in skilled trades and heavy industries where machinery and women could do little to redress a now-acute labor shortage. By the last year of the war real wages in many of these trades
41. Quotations from Emerson D. Fite, Social and Industrial Conditions in the North during the Civil War (New York, 1910), 8; and George W. Smith and Charles Judah, eds., Life in the North during the Civil War (Albuquerque, 1966), 167. For other sources on which this and the following paragraphs are based, see Philip S. Foner, History of the Labor Movement in the United States, Vol. 1 (New York, 1947); and David Montgomery, Beyond Equality: Labor and the Radical Republicans, 1862–1872 (New York, 1967).
had returned to prewar levels and were poised for postwar increases. For unskilled workers and women, however, low wages and inflation remained a searing grievance. "We are unable to sustain life for the prices offered by contractors, who fatten on their contracts by grinding immense profits out of the labor of their operatives," wrote a group of seamstresses—who in war as in peace were the most exploited group of workers—making army uniforms in 1864.42
Wartime activism and strikes, combined with labor's pride in its contribution to northern victory, caused an increase of worker militancy and organization. Several new national trade unions were organized during the war, and a number of labor newspapers sprang into existence, paving the way for the founding of the umbrella National Labor Union in 1866. The wartime impetus helped drive union membership to its highest proportion of the industrial labor force in the nineteenth century by the eve of the Panic of 1873. But that is a story for the next volume in this series.
The second session of the 37th Congress (1861–62) was one of the most productive in American history. Not only did the legislators revolutionize the country's tax and monetary structures and take several steps toward the abolition of slavery;43 they also enacted laws of far-reaching importance for the disposition of public lands, the future of higher education, and the building of transcontinental railroads. These achievements were all the more remarkable because they occurred in the midst of an all-consuming preoccupation with war. Yet it was the war—or rather the absence of southerners from Congress—that made possible the passage of these Hamiltonian–Whig–Republican measures for government promotion of socioeconomic development.
Having appealed to voters in the Northwest with a homestead plank in the 1860 platform, Republicans easily overcame feeble Democratic and border-state opposition to pass a homestead act on May 20, 1862. This law granted 160 acres of public land to a settler after five years' residence and improvements on his (or her, since the law made no distinction of sex) claim. Although the Homestead Act never measured up to the starry-eyed vision of some enthusiasts who had hoped to "give
42. Montgomery, Beyond Equality, 97.
43. For a discussion of slavery, see Chapter 16, below.
every poor man a farm," it did become an important part of the explosive westward expansion after the war. Even before Appomattox, 25,000 settlers had staked claims to more than three million acres, forerunners of some half-million farm families who eventually settled eighty million acres of homesteaded land.
For years Vermont's Justin Morrill—the architect of Republican tariff legislation in 1861 and chairman of the House subcommittee that framed the Internal Revenue Act—had sponsored a bill to grant public lands to the states for the promotion of higher education in "agriculture and the mechanic arts." When Morrill brought his measure before Congress again in 1861, regional tensions within the Republican party delayed its passage. The bill proposed to grant every state (including southern states if and when they returned) 30,000 acres of public land for each congressman and senator. Since New York, Pennsylvania, and other populous eastern states would get the lion's share of the bounty while all of the public land they would receive was located in the West, the plan did not sit well with many westerners. Nevertheless a sufficient number of western Republicans supported the bill—partly as a quid pro quo for eastern support of the Homestead Act—to pass the Morrill Act on July 2, 1862. For good measure, Congress also created a Department of Agriculture. The success of the land-grant college movement was attested by the later development of first-class institutions in many states and world-famous universities at Ithaca, Urbana, Madison, Minneapolis, and Berkeley.
Sectional conflict over the route of a transcontinental railroad had prevented action on government aid to construct such a line in the 1850s. Freed of the southern incubus, Yankee legislators highballed forward in 1862. On July 1, the same day that the Internal Revenue Act became law, Lincoln signed the Pacific Railroad Act granting 6,400 acres of public land (later doubled) per mile and lending $16,000 per mile (for construction on the plains) and $48,000 per mile (in the mountains) of government bonds to corporations organized to build a railroad from Omaha to San Francisco Bay. Intended to prime the pump of private capital, this measure succeeded in spectacular fashion. The first rails were laid eastward from Sacramento in 1863; six years later the golden spike linked the Central Pacific and Union Pacific at Promontory, Utah. Other land grants to transcontinental railroads followed the first one, eventually totaling 120 million acres. Although these railroads became a source of corruption and of corporate power in politics, most Americans in 1862 viewed government aid as an investment in national unity and economic growth that would benefit all groups in society.
This was the philosophy that underlay all three of the land-grant laws of 1862. To some degree these laws functioned at cross purposes, for settlers, universities, and railroads competed for portions of the same land in subsequent years. Yet the 225 million acres that the government ultimately gave away under these laws constituted only a fraction of the two billion acres of public land. And despite waste, corruption, and exploitation, these land grants did help to people a vast domain, sprinkle it with schools, and span it with steel rails.
By its legislation to finance the war, emancipate the slaves, and invest public land in future growth, the 37th Congress did more than any other in history to change the course of national life. As one scholar has aptly written, this Congress drafted "the blueprint for modern America." It also helped shape what historians Charles and Mary Beard labeled the "Second American Revolution"—that process by which "the capitalists, laborers, and farmers of the North and West drove from power in the national government the planting aristocracy of the South . . . making vast changes in the arrangement of classes, in the accumulation and distribution of wealth, in the course of industrial development, and in the Constitution inherited from the Fathers."44 This new America of big business, heavy industry, and capital-intensive agriculture that surpassed Britain to become the foremost industrial nation by 1880 and became the world's breadbasket for much of the twentieth century probably would have come about even if the Civil War had never occurred. But the war molded the particular configuration of this new society, and the legislation of the 37th Congress that authorized war bonds to be bought with greenbacks and repaid with gold and thereby helped concentrate investment capital, that confiscated southern property and strengthened northern industry by expanding internal markets, protecting those markets with tariffs, and improving access to them with subsidies to transportation, that settled the public domain and improved its cultivation, and rationalized the country's monetary and credit structure—this legislation did indeed help fashion a future different enough from the past to merit the label of revolution.
The revolution abounded in ironies, to be sure. Congressmen from
44. Leonard P. Curry, Blueprint for Modern America: Nonmilitary Legislation of the First Civil War Congress (Nashville, 1968); Charles A. Beard and Mary R. Beard, The Rise of American Civilization, 2 vols. (New York, 1927), II, 53–54.
western states had been the strongest proponents of the Legal Tender Act and the National Banking Act, in order to remedy the instability and regional imbalance of the monetary and credit system from which western states suffered most. Eastern congressmen and bankers, more satisfied with the existing system, had been lukewarm or opposed. Westerners had also been the prime supporters of federal aid to construct a transcontinental railroad, while easterners, already served by a good transportation system, were less enthusiastic. Yet the consequences of these acts were to increase the domination of the country's credit, transportation, and marketing structure by eastern bankers, merchants, and investors. By the 1890s the farmers of the West and South revolted against their "slavery" to an eastern "money power" that was allegedly squeezing their life blood from them. Back in the 1830s, Jacksonian artisans and yeomen had viewed with suspicion the transportation revolution, the growth of banks, and the evolution of wage-labor capitalism that seemed to threaten their republican independence. By the 1890s this economic system had penetrated the farthest reaches of the country. For the last time, perhaps, aggrieved Americans rose in the name of Jeffersonian republicanism in a counterrevolution against the second American revolution of free-labor capitalism. Once again the country rang with rhetoric of sectional conflict—this time the South and West against the Northeast—in a presidential election with the Populist ticket headed by a former Union general teamed with a former Confederate general as his running mate.
That also is a story for the next volume in this series. Before there could be such a story to tell, however, before the "Second American Revolution" could draft the "blueprint for modern America," the North must win the war. Its prospects for doing so took a sudden turn for the worse in the summer of 1862, when Stonewall Jackson and Robert E. Lee derailed the Union war machine.