THE CIVIL WAR

The military successes of the United States in its Civil War maintained the Union, but entailed readjustments in politics, finance, and business that shifted the direction of public affairs for many years. In the eyes of contemporaries these changes were obscured by the vivid scenes of the battlefield, whose intense impressions were not forgotten for a generation. It seemed as though the war were everything, as though the Republican party had preserved the nation, as though the nation itself had arisen with new plumage from the stress and struggle of its crisis. The realities of history, however, which are ever different from the facts seen by the participant, are in this period further from the tradition of the survivor than in any other stage of the development of the United States. As the Civil War is viewed from the years that followed it, the actualities that must be faced are the facts that the dominant party saved neither the nation nor itself except by changing its identity; that economic and industrial progress continued through the war with unabated speed, and that out of the needs of a new economic life arose the new nation.

The Republican party, whose older spokesmen had been trained as Whigs or Democrats, had by 1861 seasoned its younger leaders in two national campaigns. It had lost the first flush of the new enthusiasm which gave it birth as a party opposed to the extension of slavery. The signs of the times had been so clear between 1856 and 1860 that many politicians had turned their coats less from a moral principle than from a desire to win. When Lincoln took up the organization of his Administration, these clamored for their rewards. There was nothing in the political ethics of the sixties that discountenanced the use of the spoils of office, and Lincoln himself, though he resented the drain of office-seeking upon his time, appears not to have seen that the spoils system was at variance with the fundamentals of good government.

It was a Republican partisan administration that bore the first brunt of the Civil War, but the struggle was still young when Lincoln realized that the Union could not stand on the legs of any single party. To develop a general Union sentiment became an early aim of his policy and is a key to his period. He was forced to consider and reconcile the claims of all shades of Republican opinion, from that of the most violent abolitionist to that of the mere unionist. In the Democracy, opinion ranged from that of the strong war Democrat to that of the Copperhead whose real sympathies were with the Confederacy.

To conciliate a working majority of the voters of the Union States, a majority which must embrace many Union Democrats, Lincoln steadily loosened the partisan bonds. The congressional elections of 1862 showed that he was still far from success. His overtures to the Democrats of the border States fell into line with his general scheme. His tolerance of McClellan and his support of Stanton, both of whom by sympathy and training were Democrats, reveal the comprehensive power of his endurance. As the election of 1864 approached to test the success of his generalship, he had to fight not only for a majority in the general canvass but for the nomination by his own party.

There were many men in 1864 who believed that the war was a mistake and that Lincoln was a failure. The peace Democrats denounced him as a military dictator; to the radical Republicans he was spineless and irresolute. Within his own Cabinet there was dissension that would have unnerved a less steady man. Chase, the Secretary of the Treasury, wanted to be President, and had allowed his friends to intrigue in his behalf, yet had not withdrawn from the counsels of his rival. At various times he had threatened to resign, but Lincoln had shut his eyes to this infidelity and had coaxed him back. Not until after the President had been renominated did he accept the resignation of Chase, and even then he was willing to make the latter Chief Justice of the Supreme Court.

Chase, in the Cabinet and in touch with dissatisfied Republicans outside, was a menace to impartial administration. Less distressing, but noisier than he, was John C. FrÉmont, the first nominee of the party, who had sulked in the midst of admiring friends since Lincoln had removed him from important military service in 1861. About him the extreme abolitionists were gathered, and in his favor there was held a convention in May, 1864. But this dissenting movement collapsed upon itself before the elections in November.

The Republicans went into convention at Baltimore, on June 7, 1864. The candidacy of Chase had faded, that of FrÉmont was already unimportant, and the renomination of Lincoln was assured. But the party carefully concealed its name and, catering to loyalists of whatever brand, it called itself "Union," and invited to its support all men to whom the successful prosecution of the war was the first great duty. It was a Union party in fact as well as name. Delegations of Democrats came to it from the border States, and from one of these the convention picked a loyal Democrat for the Vice-Presidency. With Lincoln and Andrew Johnson on its ticket, with a platform silent upon the protective tariff, and with an organization so imperfect that no roll of delegates could be made until the convention had been called to order, the Administration party of 1864 was far from being the same organization that had, in 1856, voiced its protest against the Kansas-Nebraska Bill.

The excesses of the Democrats aided Lincoln almost as much as the efforts of the party which nominated him. A convention at Chicago, in August, presided over by Governor Seymour, of New York, and under the dominance of Clement L. Vallandigham, did not need to denounce the war as a failure in order to disappoint the Union Democrats. Not even the nomination of McClellan, nor his repudiation of the platform, could undo the result of such leadership. It was far from certain which ticket would receive the greater vote in November, but it was clear that union against disunion was the issue, and that men would vote according to their hopes and fears. The former were in the ascendant when the polls were opened, for Sherman had gained a decisive victory in his occupation of Atlanta, while Farragut had gained another at Mobile Bay. On the strength of these successes the Union ticket carried every State but Delaware, Kentucky, and New Jersey.

Chase, who left the Treasury during the presidential campaign, had by that time finished the work which carried the financial burdens of the Civil War and provided party texts for another generation. He had come to his task without special fitness, but had speedily mastered the essentials of war finance. In his reports he outlined the policy which Congress followed, more or less closely. Taxes ought to be increased, he urged, to meet all the costs of civil administration, interest on the debt, and sinking fund for the same. These were current burdens which the country ought not to try to escape. But the extra cost of the war, which was to be regarded as a permanent investment by the Union for its own defense, might fairly be made a charge upon posterity. To meet these he urged the creation of a sufficient bonded debt.

The Thirty-seventh Congress (1861-63) had been more ready to borrow than to tax. In all its experience until 1861 the United States had met no crisis in which large revenues had been required. In the thirty preceding years its total annual receipts had ranged from $20,000,000 to $81,000,000, while in the fiscal year in which the war began the total had reached $83,000,000, of which $41,000,000 were loans rather than revenue. Since the panic of 1857 the Treasury had faced a deficit at the end of each year, and had been compelled not only to spend its accumulated surplus on current needs, but to borrow heavily. The tariff duties, collected at the custom-houses, were, as they always had been, the mainstay of the revenue. But these had not met the needs of the three lean years before the war.

Had there been no war, the disordered finances of the United States might, in 1861, have called for corrective measures and new taxes, and these could not have become effective before 1862 or 1863. As it was, loans were resorted to for first-aid. In 1862 they alone were more than six times as great as the total receipts of 1861; in 1865 they were nearly three times as great as in 1862. Taxes were authorized more reluctantly than loans, they became profitable more slowly, and did not, until the last year of war, reveal the fiscal capacities of the United States.

The favorite national tax of the United States had always been the tariff. Supplemented by miscellaneous items which included no internal revenue after 1849, and no direct tax after 1839, it carried most of the financial burdens. Whether parties preferred it high or low, or levied it for protection or for revenue, they had continued to cherish it as a fiscal device, and had acquired no experience with alternate sources of supply. Like the army of the United States, which in time of war had to break in its volunteer levies before it could win victories, the Treasury and Congress had to learn how to tax before they could bring the taxable resources of the United States to supplement the loans.

The tariff was revised and increased several times between 1861 and 1865, and yielded its greatest return, $102,000,000, in 1864. The result was due to both the swelling volume of imports and the higher rates. Like all panics, that of 1857 had lessened the buying capacity of the American people. In hard times luxuries were sacrificed and treasury receipts were thereby greatly curtailed. A return to normal conditions of business would have been visible by 1861 had not war obscured it. Steadily through the war a prosperous North and West bought more foreign goods regardless of the price.

The rate of tariff was based upon the probable revenue, the protective principle, and the tax burdens already imposed upon American manufacturers. Not until 1863 were the internal or direct taxes noticeable, but in 1864 these passed the tariff as a source of revenue, with a total of $116,000,000. In 1866 this total was swollen to $211,000,000. Like the tariff, the income, excise, and direct taxes were often revised and raised, and many of the tariff increases were dependent upon them. When the American manufacturer, who already declared that he could stay in business only because the tariff protected him from European competition, found himself burdened with a tax on his income and with others upon his commercial transactions and his output, he complained bitterly of the disadvantage at which he was placed. To equalize his burdens, the import rates were repeatedly raised against the foreigner. By the end of the war, the tariff exceeded anything known in American experience, and was fixed less with the intention of raising revenue than of enabling the American producer to pay his internal tax. Less than $85,000,000 were collected from the customs in 1865; while $211,000,000 came from internal sources.

By taxing and borrowing the United States accumulated $88,000,000 in 1861, $589,000,000 in 1862, $888,000,000 in 1863, $1,408,000,000 in 1864, and $1,826,000,000 in 1865. The Treasury, unimportant in the world's affairs before 1861, suddenly became one of the greatest dealers in credit. Its debt of $2,808,000,000, outstanding in October, 1865, affected the interests and solidity of international finance, and indicated, as well, resources of which even boastful Americans had been unaware in 1861. One item in the debt, however, was a menace to the security of the whole, which was but little stronger than its weakest part.

The physical currency in which the debt was to be created and the expenses paid was as difficult to find in 1861 as the wealth which it measured. After Jackson destroyed the second Bank of the United States there had been no national currency but coin, and too little of that. Gold and silver had been coined at the mint, and the former had given the standard to the dollar. In intrinsic worth the gold dollar, as defined in 1834 at the ratio of sixteen to one, was slightly inferior to its silver associate, and by the law of human nature, which induces men to hold the better and pass the cheaper money, the value of the gold coin had become the measure of exchange.

The coined money did not circulate generally. It was devoted to a part of the business of government, and to the needs of the banks which provided the actual circulating medium. Scattered over all the States, hundreds of state and private banks issued their own notes to serve as money. At best, and in theory, these were exchangeable for gold at par; at worst, they were a total loss; yet as they were, variant and depreciated since the panic of 1857, they were the money of the people when the Civil War began. Before the end of 1861 the banks gave up the pretense of redeeming their notes in coin. The United States Treasury suspended the payment of specie early in 1862, and thereafter for seventeen years the paper money in circulation depended for its value on the hope that it would some day be redeemed.

The needs of the Treasury, in the crisis of suspension, induced Congress to authorize the emission of $150,000,000 of legal-tender paper money. These notes, soon known as the "greenbacks," became the measure of the difference between standard money and coin. Issued at par, they sank in value and fluctuated until in the darkest days of 1864 a dollar in gold could be exchanged for $2.85 in greenbacks. Yet they were called dollars, and the creditor was forced to accept them in payment of his debts. They were themselves a forced loan, borrowed by compulsion from the people, and constituting $433,000,000 in the total debts of the United States in 1865.

The greenback element in the national debt threatened the integrity of the whole. Should redemption take place at par, and at once, the credit of the United States could not fail to be strengthened. But should the greenbacks be allowed to remain below par, should more of them be issued, or should the United States avail itself of its technical privilege to pay off part of the bonded debt in "lawful money" manufactured by the printing-press, the weakest item in the total might easily depress the whole.

The future of American politics after 1865 was largely determined by the methods through which the revenue had been increased and by the fate of the greenbacks, but more important for the immediate future than either of these was the great fact that in five years the United States had been able to incur its net debt of $2,808,000,000, and had raised in addition more than $700,000,000 through taxation. It was a prosperous Union that emerged from the Civil War, and every region but the South was strong in its conscious wealth.

The whole of the United States had shared in the unusual growth in the period following the Mexican War, in which the new railroads were tying the Mississippi Valley to the seaboard. The census of 1860 reported an increase of 36 per cent in total population in ten years, somewhat unevenly divided, since the Confederate area had increased but 25 per cent, as compared with 39 per cent in the North and West, yet large enough everywhere to keep up the traditions of a growing population. The growth continued in the next decade, despite the Civil War. It is not to be expected that it should have touched the record of the fifties, for 2,500,000 men were drawn from production for at least three years—the three years in which most of them would have grown to manhood and married, had there been no war. The South, desolated by war, and with nearly every able-bodied white man in the ranks, stood still, with under 9 per cent increase. But the whole country grew in population from 31,443,321 to 38,558,371 (22 per cent), while the North and West, in spite of war, grew 27 per cent,—more than the South had done in its most brilliant decade.

How far the North and West would have gone had they not been hampered by the depression after 1857 cannot be stated. These regions had suffered most from the panic, since in them railroads and banks, factories and cities, and all the agents of a complex industrial organization had been most active. The industrial disturbance had disarranged for the time the elaborate Northern system. The simpler South, with its staple crops, its rural population, and its few railways, had suffered less. Southerners before the war had seen in their immunity from the effects of panic a proof of their superiority over other social orders; they had misread the times and prophesied the disintegration of the industrial organization of the North.

The South seceded before the rest of the United States emerged from the panic period. In the next four years the treasury receipts show the resources of the loyal States. Industry, recovered from its depression, went ahead unnoticed in the noise of war, yet little impeded by the fact of war.

Communication by rail brought the most significant of the single changes into the Northern States. Before the panic of 1857 the trunk-line railways had completed their net of tracks between the Mississippi and tidewater. Nearly ten thousand miles had been built in the Old Northwest alone in the ten preceding years. But the effect of this on business, certain to come in any event, was not seen until secession closed the Mississippi to the agricultural exports of the Northwest. For a part of 1861 and 1862 traffic piled up along the young railroads extending from St. Louis and Chicago to Buffalo, Pittsburg, New York, and Philadelphia. But before 1863 these lines, notably the New York Central, the Erie, and the Pennsylvania, had adapted themselves to the trade which the South had thrust upon them; and never since secession has New Orleans regained her place as the great outlet of the Mississippi Valley.

The fundamental change in the direction of its trade added to the prosperity of the North. In the additions to the transportation system, made to accommodate the new business, new railroads were less prominent than second tracks, bridges, tunnels, and terminal facilities. The experimental years of railroading had passed before most of the lines learned the importance of city terminals. The growth of the cities and the rising price of land made the attainment of these more difficult than they need have been, while city governments and their officials learned that illicit profits could be made out of the necessities of the railroads. The great lines, active in the development of their plants, and consolidating during the sixties to get the benefits of unified management, added to the bustle in the cities in the North.

railways

THE RAILWAYS OF THE "OLD NORTHWEST"
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Showing the development between 1848 and 1860, upon which the Civil War prosperity of the region was based

The United States was an agricultural country until the beginning of manufacturing and the revolution in communication made it profitable to concentrate people and capital in the cities. Between 1850 and 1880 the number of cities with a population of 50,000 more than doubled. The actual construction of the houses, the water and lighting systems, and the sewers for these communities gave employment to labor. As cities grew, their more generous distances brought in the street-car companies, whose occupation of the public streets added to the temptations and opportunities of the officials of government. The swelling manufactures increased the city groups and gave them work.

The country life itself began to change. The typical farming families, developed by pioneer conditions, had remained the social unit for several generations, but these felt the lure of the cities which drew their boys and girls into the factories. Domestic manufactures could not compete in quality, appearance, or price with the output of the new factories. The farmer began to give up his slaughtering and butter-making, as he had already abandoned his spinning and weaving, and devoted himself more exclusively to raising crops. Here, too, the mechanical improvements touched his life. Agricultural machinery was coming into general use, while the new railroads carried off his produce to the great markets which the rising cities created.

The number of employees of American factories increased more than half between 1860 and 1870, while the capital invested and the goods turned out were more than doubled. The United States was for the first time looking to a day when all the ordinary necessities of life could be made within its limits. At Chicago, St. Louis, New York, Boston, Philadelphia, and a host of cities in the interior, men were not disturbed by the war in their attempt to exploit the abundant resources of the continent. The manufacture of food began to shift from the household to the city factory, to the advantage of the cities lying near the great fresh areas of farm lands. The flour mills of the Northwest, the meat-packing establishments at Chicago and elsewhere, the distilleries of central Illinois, utilized the agricultural staples and transformed them for export. The presence of factories forced upon the city governments, East and West, already embarrassed by the pains of rapid growth, the problems of police power and good government. Charters written for semi-rural villages were inadequate when the villages became cities.

Clothing, no less than food, passed into the factory, thanks to Elias Howe and his sewing-machine and the shoe machinery of McKay. Before the war the influences of this change were visible in the increasing demand for cotton. Now came the great growth of the textile regions of the East, around Fall River and Philadelphia, and of the shoe factories in the Lynn district.

The use and manufacture of machines gave new stimulus to those regions where coal and iron, placed conveniently with reference to transportation, had fixed the location of smelters and rolling-mills. In the middle of the sixties Henry Bessemer's commercial process for the manufacture of steel marks the beginning of a revolution in the construction of railroads and bridges, as well as in public and private architecture. Pittsburg became the heart of the steel industry, and the young men who controlled it fixed their hands upon the commercial future of the United States. The newest of industries, the trade in petroleum and its oils, reached fifteen millions in Pittsburg alone in 1864.

The trunk-line railways with their spurs and branches adjusted themselves early in the war to the new direction of business currents. They then began to carry the new inhabitants into the cities, the new manufactures to their markets, and to press upon iron, coal, and timber for their own supplies. Men of business laid the foundations of huge fortunes in supplying the new and growing demands. The stock company, with negotiable shares and bonds, made it possible for the small investor to share in the larger commercial profits and losses.The growth and elaboration of companies and commerce were projected upon a legal system that was most accustomed to small enterprises and local trade. Not only had the corporations to establish customs and precedents among themselves, but courts, legislatures, and city councils had to face the need for an amplification of American law. The speed with which the new life swept upon the country, the inexperience of both business men and jurists, the public ignorance of the extent to which the revolution was to go, and the cross-purposes inevitable when States tried to regulate the affairs of corporations larger than themselves, make it unnecessary to search further for the key to the confusing half-century that followed the Civil War.

The rapid changes in manufacturing, transportation, urban life, and business law that came with the prosperity of the early sixties gave to these years an appearance of materialism that has misled many observers. None of the developments received full contemporary notice, for war filled the front pages of the newspapers. The men who directed them were not under scrutiny, and could hardly fail to bring into business and speculation that main canon of war time that the end is everything and that it justifies the means. But though war was not the sole American occupation between 1861 and 1865, and though a new industrial revolution was begun, material things often gave way in the American mind to altruistic concepts and the service of the ideal.

Congress endowed the agricultural colleges in the early years of the war, and the state universities, though thinned by the enlistment of their boys, established themselves. The creation of new universities, the endowment of older foundations, and the beginning of an education that should fit not only for law, medicine, and theology, but for business, agriculture, engineering, and teaching, all bear testimony to the real interests of American democracy. The ideal was as yet far removed from the fact, and the intellectual leaders of the United States were yet to pass through a period of black pessimism, but the people were still firm in their faith that education is the mainstay of popular government, and gave their full devotion to both.

The four years of the Civil War carried the United States over a period of social and economic transition and left it well started on the new course. They enlarged and expanded the activities of government, hastening that day when there should exist a public conviction that government is a matter of technical expertness and must be run in a scientific manner for the common good. They raised the problems of taxation and currency to a new importance, and impressed their significance upon the men who directed the industries of the country. In their prosperity they made it possible to save the Union; and at their close a Union party, uncertain of its strength and its personnel, faced the problems of a united country which included an industrial North, a desolated South, and a vanishing frontier.

BIBLIOGRAPHICAL NOTE