Thursday, May 12, 2022

Ways and Means: Lincoln and His Cabinet and the Financing of the Civil War (Roger Lowenstein)

Much has been written about the economic differences between the North and South during the Civil War and how the North’s advantage in population, industry, and commerce were factors in their eventual win. The financial management of the North and South is a topic that is less known about. Roger Lowenstein’s Ways and Means: Lincoln and His Cabinet and the Financing of the Civil War addresses how the two parts of the country attempted to finance and govern their war efforts.

When Abraham Lincoln was elected in 1860, the government had no authority to raise taxes, no federal bank, and no official currency. The South’s secession and the subsequent war required both the Union and the secessionists to finance their war efforts. Each camp took vastly different approaches. Salmon Chase, Lincoln’s Secretary of the Treasury, developed a taxation strategy and financed bonds while battling to keep inflation in check. The South embargoed its main cash crop, cotton, and watched while inflation and poor fiscal decision-making drove runaway inflation and gradual starvation of the Confederacy.

Lowenstein also devotes a part of Ways and Means to the change in the federal government’s involvement in the lives of Americans. Pre-Civil War America was a state-driven enterprise, with the federal government a weaker federation having less direct control and influence in policy. The Republicans of the Civil War era were modernizers, permitting the construction of the transcontinental railroad, the formation of land grant universities, and increased government involvement in agriculture and eventually immigration policy. These reforms helped sustain and push the country along after the Civil War’s conclusion. Lowenstein smartly points out that much of those reforms and efforts helped push the North and West while the South lagged for decades to come. The country’s internal economic disparity remained significant between North and South until cities such as Houston, Atlanta, and Dallas began to attract large numbers of residents and immigrants, helping the South to shed its agrarian way of life and leave the Jim Crow era behind.

Ways and Means is a great account of how fiscal policy can guide a country in tough times and how Chase’s creativity and resourcefulness helped in large part to save the Union.