McClellan never tested Lincoln’s forbearance more severely than during the days and weeks after Antietam. With deepening frustration, the president waited fruitlessly for the general to advance. But McClellan did nothing to prevent or respond to Lee’s escape with his army to Virginia a few days after the battle. On October 6 Lincoln bluntly ordered McClellan to “cross the Potomac and give battle to the enemy. . . . Your army must move now.” When McClellan made his usual excuses that the rebels were too strong and his own army too weak, Lincoln replied with a long letter that was part pep talk and part military treatise: “You remember my speaking to you of what I called your over-cautiousness. Are you not overcautious when you assume that you cannot do what the enemy is constantly doing? Should you not claim to be at least his equal in prowess, and act upon the claim? . . . Again one of the standard maxims of war, as you know, is to ‘operate on the enemy’s communications as much as possible without exposing your own.’ . . . I say ‘try’; if we never try we shall never succeed.” McClellan offered the excuse that his horses were worn out and thus he could not pursue Lee. To this Lincoln asked, “Will you pardon me for asking what the horses of your army have done since the battle of Antietam that fatigue anything?” All along Lincoln somehow kept his sense of humor. During a visit to McClellan’s headquarters, he pointed to all the soldiers and asked one of his entourage, “What do you suppose all these people are?” To the reply that they made up the Army of the Potomac, Lincoln demurred: “No, you are mistaken. That is General McClellan’s body guard.”20
Shortly after Antietam similar threats erupted in the western theater, with similar results. At his Corinth, Mississippi, headquarters, Gen. Ulysses Grant nipped an invasion in the bud. On September 14 Gen. Sterling Price, with fifteen thousand troops, captured the rail junction of Iuka. Grant sought to encircle and destroy him by sending Gen. Edward Ord due east from Corinth while having Gen. William Rosecrans angle around from the south. Price skillfully shifted his forces, attacked Rosecrans south of Iuka on September 19, then sidestepped him and marched west to join Gen. Earl Van Dorn at Tupelo, Mississippi. Together they led their twenty-two thousand troops north to attack Corinth. Learning of this movement, Grant quick-marched Rosecrans back to defend that vital rail and supply junction. Rosecrans and his men reached Corinth in time to repulse the Confederate attack. Grant then ordered Rosecrans to pursue and destroy the enemy, but the rebels escaped.
Federal troops elsewhere in the west repelled another invasion the same fall. On October 8 Gen. Don Buell’s Army of the Ohio blocked Gen. Braxton Bragg’s Army of the Tennessee at Perrysville, Kentucky, and after a hard-fought battle forced it to retreat. But, like McClellan, Buell disobeyed Lincoln’s order and failed to turn a limited victory into a decisive one by immediately pursuing and destroying the rebel army’s remnants. Word of this latest failure prompted Lincoln to despair that “we cannot march as the enemy marches, live as he lives, and fight as he fights, unless we admit the inferiority of our troops and generals.”21
Swallowing his dismay at McClellan’s failure to destroy Lee, Lincoln used the limited victory of Antietam as an excuse to publish, on September 22, his Emancipation Proclamation, which held that from January 1, 1863, all slaves held in any unoccupied states still in rebellion would be “forever free” and that the federal government would employ any able-bodied black man as a laborer, soldier, or sailor.22
Lincoln’s proclamation was, typically, caught in a cross fire between political extremes. Slavocrats, of course, condemned Lincoln’s decree for violating their rights. Abolitionists decried the proclamation as forcing the burden of liberation on the slaves themselves and being limited only to rebel states and not to all states. In the middle were those who traded on Wall Street or showed up at recruiting centers. Lincoln acknowledged that “stocks have declined, and troops come forward more slowly than ever.”23
Actually, Lincoln’s Emancipation Proclamation was a huge step toward abolition everywhere in the United States. While the proclamation did not literally free a single slave on New Year’s Day 1863, it embraced 2.9 million slaves, or 82 percent of slaves in the Confederacy and 74 percent of slaves in the United States. Legally breaking the shackles of three of four American slaves was certainly a huge leap toward one day liberating the rest.24 The deadline imposed a hard choice on each slave state, which had a month to decide whether to abolish slavery with federal compensation or to cling to the institution and most likely get not a penny should Washington one day emancipate all slaves everywhere. For Frederick Douglass, the succession of abolitionist measures revolutionized the conflict’s nature: “The war now being waged in this land is a war for and against slavery; and . . . it can never be effectively put down till one or the other of these vital forces is completely destroyed.”25
Although his hand trembled slightly as he signed the proclamation, Lincoln had no doubt over its justice. To Seward and his son Fred, he said, “I never in my life felt more certain that I was doing right than I do in signing this paper. If my name ever goes into history it will be for this act, and my whole soul is in it.”26
In issuing the proclamation, Lincoln took the only constitutional step available to him as president. “Military necessity” empowered him as commander in chief to deprive the enemy of a vital component of their power to resist. Abolition at once depleted the Confederacy and enriched the United States with manpower. In his December 1862 address to Congress, Lincoln called on it to pass a three-part bill promoting a broader emancipation: (1) every state must abolish slavery before January 1, 1900, thirty-seven years in the future; (2) any slaves who escaped during the rebellion would be “forever free,” although the government would compensate owners loyal to the United States for their loss; and (3) Congress would appropriate money for any blacks who sought to immigrate to another country. Here again, Lincoln fell short of cutting the Gordian knot of slavery in America by simply advocating a constitutional amendment for its immediate abolition. He had a war to win that would be all the more arduous if the border states joined the rebels.
Having presented his agenda, he tried to sell it on practical grounds. Slaveholders could reason that with nearly four decades until abolition they had plenty of time to extract their money’s worth from their chattel. Congressmen and taxpayers could reason that compensating slave states was a lot cheaper than crushing them. Workers could reason that their wages would likely rise once slavery disappeared. Slaves themselves could either try to escape now for guaranteed freedom or stay with their masters and try to learn vital skills to survive after their eventual release.
Lincoln ended his address with some of the most beautiful and profound lines he ever penned: “Fellow citizens, we cannot escape history. . . . The fiery trial through which we pass will light us down in honor or dishonor to the latest generation. . . . The dogmas of the quiet past are inadequate to the stormy present. . . . In giving freedom to the slave, we assure freedom to the free. . . . We shall nobly save or meanly lose the last, best hope of earth.”27
9
The Hamiltonian Triumph
To secure to each laborer the whole product of his labor, or as nearly as possible, is a worthy object of any good government. But then another question arises, How can a government . . . effect this?
ABRAHAM LINCOLN
The legitimate object of government is to do for a community of people, whatever they need to have done, but cannot do at all, or cannot so well do for themselves.
ABRAHAM LINCOLN
Upon the subject of education, not presuming to dictate any plan or system respecting it, I can only say that I view it as the most important subject which we as a people can be engaged in.
ABRAHAM LINCOLN
I want every man to have a chance.
ABRAHAM LINCOLN
Washington never before more actively mobilized the nation’s resources for war and economic development than from 1861 to 1865.1 Two factors explain the sweeping measures. One was the Civil War’s scal
e. No previous war had demanded a fraction of the resources vital for crushing the rebellion. Fortunately, thanks to the industrial revolution, the economy had developed to the point where it could provide virtually all the goods and money needed to fight and win the struggle. The other was an ideology that provided a blueprint for mobilization, which first Jeffersonian then Jacksonian opponents had previously thwarted. During the 1790s Alexander Hamilton tried to implement his vision of a muscular government dedicated to working with the private sector to develop America’s economy through a central bank, a regulated financial system, a national currency, internal improvements, protective tariffs, and education. This agenda’s baton was carried first by Hamilton’s Federalist Party, then Henry Clay’s Whig Party, and then Abraham Lincoln’s Republican Party. By the 1860s Hamiltonians controlled all three branches of the American government.
Abraham Lincoln was certainly an outstanding successor for advancing Hamiltonianism. A vision of how to create and distribute wealth was central to his political outlook and efforts for decades before slavery displaced it.2 His interest stemmed from being born into and struggling free of poverty, combined with his innate sense of right and wrong. Unlike most self-made men, he sought to understand just why poverty existed and how government could work with society and individuals to alleviate it and let ever more people enjoy higher standards of living and a better quality of life. When Lincoln was a young man, Henry Clay, the Whig Party, and such works as Francis Wayland’s Elements of Political Economy and Henry Carey’s Principles of Political Economy provided, with their ideas and policies, illuminating answers to his questions.3
Lincoln first ran for public office in 1832, the same year that Clay challenged Andrew Jackson in his campaign for reelection to the White House. The contrast between the Whig and Democratic Parties was stark. The Whigs championed and the Democrats condemned the concept of a partnership between the government and the people to develop the economy, grounded in the Bank of the United States, internal improvements, and protective tariffs. Jackson retook the presidency and the Democrats dominated Congress. What happened thereafter reinforced Lincoln’s understanding of economics. Jackson’s policies of destroying the Bank of the United States, cutting internal improvements and tariffs, and winking at massive corruption and insider trading led to an economic catastrophe—a speculative boom that imploded with the Panic of 1837, followed by a devastating economic depression that ground on for a half-dozen years and left countless people bankrupted, jobless, homeless, or at least substantially poorer. But Jackson’s policies simply accelerated an inevitability.
History reveals that markets sooner or later self-destruct; the freer the market, the sooner its self-destruction. The reason is simple. Market Darwinism driven by “survival of the fittest” and “greed is good” values lead either to monopolies or oligopolies that devour all rivals and then gouge consumers with high fixed prices or to booms fueled by speculative bubbles that eventually burst, hurting most producers and consumers alike.
Another lesson of history is equally clear. Federal government policies are crucial to the fate of the economy and thus every American, more or less. As with other elements of his philosophy, Lincoln’s economic views appeared simple at first glance but were actually sophisticated and complex. His outlook was grounded in one simple value: “I want every man to have a chance.”4 Foremost he was a libertarian dedicated to “genuine popular sovereignty” in which the relationship between the people and government allowed “that each man shall do precisely as he pleases with himself, and with all those things which exclusively concern him. Applied to government this principle would be that a general government shall do all those things which pertain to it, and all the local governments shall do precisely as they please in respect to those matters which exclusively concern them.”5
Few Americans of any political stripe could find fault with this view. And this was his intent. He typically wanted to unite his audience on a common ground before he explained just what he believed “all those things” were that “a general government shall do.” But before doing that, he sought to expand the common ground so that folks nodded enthusiastically in agreement.
He expressed his understanding of the “relation between capital and labor. . . . That men who are industrious and sober and honest in the pursuit of their interests should after a while accumulate capital, and after that should be allowed to enjoy it in peace, and also if they choose . . . to use it to . . . hire other people to labor for them.” Yet a potential problem lurked in this relationship. He noted an unavoidable conflict of interest and class. “The world has never had a good definition of the word liberty. We all declare for liberty but in using the same word we do not all mean the same thing. With some the word liberty may mean for each man to do as he pleases with himself and the product of his labor; while with others the same word may mean for some men to do as they please with other men and the product of their labor. Here are two not only different but incompatible things called by the same name—liberty.”6
So where does government come in? Government arbitrates conflicts among different interest groups while promoting those that best advance America’s “general welfare.” The ideal policy “clears the path for all . . . and by consequence, enterprise and hope to all.” To Lincoln “the legitimate object of government is to do for a community of people, whatever they need to have done, but cannot do at all, or cannot so well do for themselves—in their separate and individual capacities.”7 Where did the role of government end? He explained, “I do not mean to say that this General Government is charged with the duty of redressing or preventing all the wrongs in the world; but I do think that it is charged with preventing and redressing all wrongs which are wrongs to itself. This government is expressly charged with the duty of providing for the general welfare.”8
The dilemma for policy makers, of course, is that interests clash. When this happens, government must judiciously weigh the relative merits of all interests involved, then deliver a policy that at once enhances the “general welfare” while ensuring that each individual has a chance to advance. This obviously is no easy task. For instance, Lincoln’s belief that “it is best for all to leave each man free to acquire property as fast as he can” had a limit: “Some will get wealthy. I don’t believe in a law to prevent a man from getting rich; it would do more harm than good. So while we do not propose any war upon capital, we do wish to allow the humblest man an equal chance to get rich with everybody else.”9 Ideally, “a worthy object of any good government” was “to secure to each laborer the whole product of his labor, or as nearly as possible.” But this raises the question, “How can a government . . . effect this?” Lincoln distinguished among “useful labor, useless labor, and idleness,” of which “the first only is meritorious.” The “remedy” was for government “to drive useless labor and idleness out of existence.”10
Within four years, Lincoln and congressional progressives enacted nearly the entire Republican agenda into law and policy. In doing so, Congressional leaders and committees played the decisive role, while the president encouraged their efforts. The number of laws passed by Congress indicated just how active government had become. The Thirty-Seventh and Thirty-Eighth Congresses, of 1861 to 1863 and 1863 to 1865, passed, respectively, 428 and 411 bills. The previous record was the Twenty-Seventh Congress, of 1841 to 1843, which passed 201 bills. Meanwhile the federal budget skyrocketed from $78 million in 1860 to $1.1 billion in 1865, with the amount of nonmilitary spending more than tripling, from $49 million to $161 million. Congress got so much done because the Republicans enjoyed huge majorities in the Senate and House throughout the war.11
Among Washington’s most daunting challenges was somehow finding enough money to both pay for the war and develop the economy.12 As with other wars, the politicians paid for it largely by borrowing most of the money from future generations. As a result, the national debt soared from $64.8 million, or $2.06 per capita, in 1860 to $2.8 billion
, or $75.42 per capita, in 1866.13
Plenty of “money” was available to borrow. The trouble was that much of it was of dubious value. Although the American gold dollar existed, it accounted for only a tiny fraction of business. Virtually all “money” that circulated was issued by over sixteen hundred banks, among which many were get-rich-quick, fly-by-night operations. By 1861 there were more than twelve thousand types of banknotes circulating.14
So Washington faced the conundrum of borrowing worthless script from unscrupulous lenders or paying sky-high interest rates for hard coin from prudent lenders. This hodgepodge financial “system” did not just confound the federal government, it was a deadweight on America’s economic development. The difficulty in finding enough sound currency to borrow at reasonable rates to pay its bills forced the Treasury Department to suspend specie, or hard coin, payments on December 30, 1861. This in turn forced banks to suspend their own payments and sharply raise interest rates. The United States teetered on the brink of a financial panic or collapse that would implode the economy.
Lincoln conceived a means of averting economic catastrophe that would cripple the war effort. He wielded “military necessity” to demolish the existing inefficient, wasteful, underperforming system and replaced it with something much better. He had Treasury Secretary Salmon Chase forge a series of policies with congressional leaders. The first decisive step came on February 25, 1862, when Congress passed the Legal Tender Act, which empowered Washington to issue $150 million in paper money, or “greenbacks,” backed solely with the promise to repay them at face value. Greenbacks could be used by anyone for any type of business transaction except two—only gold would pay for import duties or interest on bonds. Later Congress authorized the issuance of another $300 million greenbacks, bringing $450 million into circulation. Yet all these greenbacks paid for only a sliver of the government’s spending.
The Age of Lincoln and the Art of American Power, 1848-1876 Page 19
