Did the Republicans centralize power in the federal government under Lincoln? No doubt. But perhaps the more important question is: Which policies did Lincoln tolerate in order to achieve his overarching goal?

Among those who consider themselves “conservatives” and/or “libertarians,” the issue of the role of government in a free society is one of the most controversial. Typically, conservatives or classical liberals maintain that government has a role to promote the general welfare, but only under the most carefully scrutinized circumstances. These groups maintain that government should not do any job that could be done more efficiently and often more inexpensively by private individuals. But, they argue, the government has a clear role in carrying out those activities that individuals or the market cannot, including national defense.

Libertarians prefer a much more limited government—to the extent that some libertarians contend that private companies should provide police services, or that military actions be conducted with militias. Admittedly, this is a highly simplified and hardly comprehensive set of characteristics, but it illustrates the problems that the so-called “Right” has labored against for years. Those differences often are at their starkest when examining certain events in history, such as Andrew Jackson’s “Bank War,” the Nullification Crisis, and, most obviously, the American Civil War.

The Civil War and its enduring results render it a most appropriate crucible within which to consider some of these differences among those groups. In that context, no figure stands out above Abraham Lincoln. Long a hero to Americans of all colors and political persuasions, a strong strain of criticism has developed against Lincoln’s role in the war from, of all places, the Right. This critical view holds that Lincoln, through his wartime measures—particularly, but not limited to, his financial policies—accelerated the centralization of power in the federal government much more rapidly than would have occurred without the ascendance of Republicans to power. The totality of Republican government measures, this position maintains, made the Republicans little more than nineteenth-century “New Dealers.” Lincoln, to say the least, emerges as the villain—a power hungry politician who perpetuated a war when other options were available.

Ironically, the measures that the libertarian school seems most upset about are the wartime acts related to banking and finance. Part of the reason the National Bank and Currency Acts of 1863 and 1864 generate such hostility among libertarians is that the measures are viewed among “hard money” groups as the predecessors of the First and Second Banks of the United States, and then as the foundations for the Federal Reserve System. To many libertarians, neither of those banking systems was constitutional. Ultimately, the modern libertarian interpretation places most of the blame for paper money—”fiat money” as it is often called—and inflation on the laws passed under the wartime Republicans. To be sure, not all self-confessed libertarians accept parts, or all, of this scenario, but through debates at many conferences, it seems clear that these views are widely held among certain groups.[1]

Another part of the reason that the Civil War Republicans are so vilified by the libertarian school is that they supposedly represented the opposite of the party often held up as the free-market ideal, the Jacksonians. The rhetoric of the Jacksonian Democrats (though not necessarily the rhetoric or the reality of the Democratic Party by the time it got to Stephen Douglas) emphasized an apparent limited role for government, culminating in Andrew Jackson’s “destruction” of the Second Bank of the United States. Jacksonians attacked special privilege and made a nineteenth-century version of “equal opportunity” their motto. Thus, the opponents of the Jacksonians, the Whigs, begat the Republicans, implying that certainly the Republicans could not have been as “market friendly” as Andrew Jackson’s party.

While no attempt will be made here to debate the reality of the expansion of federal power during the Civil War, nor deny Lincoln’s direct role in some of that expansion, this essay will focus on Lincoln’s intents and priorities, and offer perspective on the results of wartime policies. After briefly reviewing the major financial actions (and, when appropriate, other policies) taken by the Republican Congress, it shall examine Lincoln’s views on some of these matters specifically. The picture of Lincoln that emerges is one of a man totally focused on the greatest threat to democracy and freedom of the day, slavery. Only that context offers an opportunity for a reasonable assessment of Lincoln’s non-slavery-related policies—and in some cases, but not all, those of his party as well.

First, is the proposition that the Civil War-era Republicans were the antithesis of a pro-market Jacksonian heritage. Here, we need to dispel some of the myths surrounding banking and finance in the antebellum period. Those myths not only have become accepted as gospel among many libertarians in recent times, but long ago became lodged into the works of “New Deal” historians, such as Arthur Schlesinger, Jr. According to the oft-repeated interpretation of the period 1800-1865, the freedom-loving Jacksonian Democrats rose up against the extension of power by the government when President Andrew Jackson vetoed the recharter of the Second Bank of the United States. This interpretation views the Bank’s creation, like that of the First B.U.S., as an unconstitutional act legitimized by Justice John Marshall’s improper interpretation of the “necessary and proper” clause of the Constitution. By destroying the bank, libertarians argued, Jackson restored to the economy a financial system that was not subject to intrusion by a federal bank endowed with substantial operating advantages (such as federal deposits and branches).

New Deal liberals, by the same token, led by Schlesinger, found in Jackson a president willing to stand up to “big business” and to put federal power on the side of the small entrepreneur. Although Schlesinger and, more recently, Jackson biographer Robert Remini, dismissed Jackson’s infatuation with gold as harmless naiveté, nevertheless in their view Jackson provided a nineteenth-century model for government as regulator and protector. Thus, the Jacksonians received accolades from both the modern Left and Right, although for different reasons.

Libertarians, moreover, liked Jackson because they concluded that he and many of his party favored a gold standard, and modern “hard money” advocates praised the Jacksonians both for opposing “big government” and “fiat money.” New Deal liberals disagreed about the utility of a gold circulating medium, but lauded the Democrats nonetheless for their self-proclaimed unity with the “common man” and in general praised them because they were not elites.[2]

By contrast, libertarians view the Whigs (of which Lincoln was one), as pro-“big government” because the Whigs supported internal improvements; liberals view the Whigs as pro-“big business” because of their alleged elitist component. Thus, it is not surprising that Jeffrey R. Hummel, writing in the Journal of Libertarian Studies, and Schlesinger, in his influential The Age of Jackson, agree on the basic “goodness” of the Democrats and the inherent evils of their Whig counterparts.[3] Since the Republican economic and internal policies evolved largely out of the Whig platform, it is not surprising to find these same “ends” of the political spectrum unite in their criticism of the Republicans during the Civil War era.

In fact, this popular view of the Jacksonians is a myth. In several publications I have provided strong evidence that a) Andrew Jackson was not opposed to federal banks, b) most Jacksonians did not oppose banks or banking systems, and c) when given the opportunity, the Jacksonians often expanded the size, scale, and scope of the state as much or more than did the Whigs.[4] Evidence from ten Southern states in the antebellum period shows that in states dominated by the Jacksonians (where there was no substantial political opposition), the Democrats used the powers of the state governments either to create state central banks run by Jacksonian cronies or used the “faith and credit” of the state to support massive bond issues to create new banks. It is true that in several states the Democrats eventually did abolish all banks, but only after those banks had failed to deliver the prosperity their patrons thought inevitable when they were chartered. Specifically, here, I am referring to evidence from Alabama, Arkansas, and, to the north, Wisconsin. In no case—ever—did Democrats use their overwhelming dominance in these states to reduce the state’s intervention in the economy or otherwise “decentralize” power. Far from being pro-market, the Jacksonians as often as not used state and federal power to arbitrarily prohibit legitimate businesses from operating.

Apologists for the Jacksonians often made reference to remarks or statements of intent by the central spokesman for the party, or made reference to the exceptions—true pro-market Jacksonian writers, such as William Leggett.[5] But the Democrats’ actions spoke far louder than their words. Jackson himself favored a national bank, perhaps several. In 1829 he dispatched Amos Kendall to draw up a plan for an alternative national bank to the B.U.S.[6] Contrary to assertions by Remini and others, there is no evidence in the remaining letters ordering this analysis of a possible bank that suggests that it was to be a “gold bank” or anything other than a traditional bank.

Another point that suggests that Jackson had no qualms about centralizing the government was his attempt to prohibit small change notes, which circulated in lieu of small coins. Admirers of Jackson see that action as a continuation of his “hard money” policies. But David Martin and others have pointed out that, when taken in the context of Jackson’s other money policy actions, it had the look of a deliberate policy aimed at eliminating all paper money, leaving only the federal government capable of printing (i.e., coining) money.

* * *

Having a revision of the Jacksonians that leaves them looking profoundly less market-oriented than previously assumed on the surface does not seem to do much to improve the image of Lincoln from his critics “on the Right,” however. Both parties, we need to understand, were willing to use federal power to advance their agendas. From the position of modern conservatives, then, perhaps the most important questions that remains should be, “whose agenda was better?” and “whose methods and agendas left the nation with relatively less market control by government?” The Republicans had a clear agenda, but it was a prioritized one: They succeeded politically where the Whigs failed because they placed anti-slavery at the top of their list of priorities. Economic development, internal improvement, tariffs, and political reform measures fell far behind slavery in their political agenda.

In his 1858 and 1860 campaigns, Lincoln did not hesitate to raise issues other than slavery, with temperance being among the most frequently mentioned.[7] For Lincoln, temperance, or the ability for an individual to exercise self-control, represented on the micro level the opposite of what slavery represented on the larger scale. But even temperance was a minor diversion from slavery, which to Lincoln was the central political and moral question of the day.

By 1997, historians have reached general agreement on Lincoln’s views of slavery. After a blip on the interpretive screen during the 1960s, in which Lincoln was accused of racism and associated with white oppression, sanity returned to an evaluation of the evidence. Most objective readers of Lincoln have concluded that, for his day, Lincoln was much less a racist than most whites and probably more liberal in his racial attitudes than even many of the so-called abolitionists. Unlike some, Lincoln understood the long-range implications of mixing vastly different cultures—morethan races—and appreciated the social costs of trying to integrate (in the antebellum sense of the word) freed slaves into a white culture, North or South.

At the same time, Lincoln also knew that the political system that made it possible to even discuss the enfranchisement of 3.8 million slaves, along with the concurrent confiscation of the wealth of yet another class of people, was worth protecting. Both Harry Jaffa and Robert Loewenberg have shown that Lincoln took his lead from the Declaration of Independence, not the Constitution.[8] The Declaration, Lincoln maintained, pre-dated the Constitution and its embrace of liberty was the single guiding principle of the Republic.

Yet even while Lincoln held liberty as the paramount value, he cherished an abiding love for the law. Lincoln’s “law” was not the “higher law” that William Seward bandied about, nor was it what Ralph Waldo Emerson meant when he said that he followed only “his own constitution.”[9] Lincoln’s law was not temporal relativism, but rather was an eternal law of a transcendent nature. Whereas Emerson would allow anyone to do as he pleased based on his own conscience, Lincoln required that person to adapt his conscience to the permanent truths that the Declaration and Constitution represented. That was an important distinction, and one often missed: Lincoln did not view the Constitution itself as the “law,” but merely a human representation or manifestation of it. The law for Lincoln held a mystical, quasi-religious quality.

Only through an appreciation of these twin conceptual moors, liberty and the law, can we assess Lincoln’s role when it comes to Civil War economics in general and financial policies in particular. Lincoln had little specific interest in money, telling a group of New York bankers brought to Washington to discuss financial policies that “I don’t know anything about ‘money.’ I never had enough of my own to fret me, and have no opinion about it either way.”[10] While such pronouncements smacked of the self-effacing backwoods statesman, more likely Lincoln did not assign financial matters to a high priority in his universe of significant issues.

Lincoln did have an opinion about banks, although one must recall that Lincoln was a lawyer and occasionally argued positions he personally did not espouse. Nevertheless, as an Illinois state legislator, he had defended the constitutionality of the Bank of the State of Illinois, which was under investigation for misconduct in 1837. When the legislature considered the bank’s legitimacy, Lincoln suggested that even if the state supreme court ruled the bank’s creation unconstitutional, it could not compel the bank to cease operations after the fact.[11] Lincoln implied that he even favored branch banking—”in relation to a connection between our Bank and several Banking institutions in other States. I should like to see the [critics] undertake to show that there is any harm in it.”[12] Most important, Lincoln, in a strongly pro-market statement, argues that the people never called for an investigation of banks; rather, “it is the politician who is the first to sound the alarm.”[13] It is the politician, he continued, who, “by these unholy means, is endeavoring to blow up a storm that he may ride and direct. [and he] proposed to spend thousands of the people’s public treasure, for no other advantage to them, that to make valueless in their pockets the reward of their industry.”[14] Such statements sound remarkably similar to the advocates of deregulation in the 1980s and 1990s, and they hint of a deeper, more sophisticated appreciation of the market by Lincoln than with which he has previously been credited. Only recently have historians even started to reassess Lincoln in that context.[15]

Lincoln’s most substantial position statement on banking and finance came in 1839, when, as a Whig, he delivered a speech on the Sub-Treasury. In short, Lincoln argued that a gold standard was an insufficient and ineffective circulating medium; that the Sub-Treasury operations would cost the U.S. citizens money because the deposits would just sit there rather than earning interest; and that it would be less secure than a bank.[16] The government required that revenue was to be paid in specie, and, under the Sub-Treasury, the specie would be “kept in iron boxes until the government wants it for disbursement.”[17] He correctly noted that the “natural effect of this change in policy…is to reduce the quantity of money in circulation.”[18] By taking, in Lincoln’s estimation, half the specie in the nation to pay government bills—which Lincoln astutely perceived would end up in the hands of spoils-related office holders—the population would have to “get along as best they can” with less than half the specie in the country.[19]

In a remarkable argument for decentralizing federal power, Lincoln asked “was such a system for benefiting the few at the expense of the many, ever before devised?”[20] Under the B.U.S., he observed, sums of money were permitted to lie in the hands of individuals for a short period of time only; but with the Sub-Treasury, “much larger sums are to lie in the hands of individuals for much longer periods,” thereby multiplying the temptation and the risk.[21]

Lincoln also took a strong, market-oriented position for treating money as any other commodity and allowing it to bring a return when used through interest. The Sub-Treasury, he maintained, would cheat the people of the fruits of their tax money. Finally, Lincoln contended that the national bank was never intended as a mechanism to regulate the currency, and that it did not have the power to do so. But he asserted that a national bank could establish and maintain, with the aid of government, “a sound and uniform currency.”[22] Note that Lincoln never said that a national bank should furnish the only sound and uniform currency, but only that it should be an option—and that that option should be provided by the government.

As to one of the key questions for Jacksonians (and some modern libertarians), namely that the Constitution did not expressly provide for the establishment of a bank, Lincoln turned the tables on the Democrats, correctly arguing that the Constitution did not expressly provide for a Sub-Treasury. Then, by logic, the Jacksonians also should find it unconstitutional. Personally, of course, Lincoln stated repeatedly that he thought that Congress did have the authority to establish a national bank, and that the Supreme Court upheld that interpretation.

Most important of all, Lincoln, even when the Radical elements of the Republican Party tried to pull him into their fold, remained a Whig at heart. As such, he generally preferred legislative action over executive action and viewed the legislature (under normal circumstances) as more “democratic” than other branches—just the opposite of Jackson and his “imperial presidency.” Given the crisis at hand, and the complete absence of crises that Jackson faced, one could argue that it was “King Andrew” who expanded the executive powers of government and centralized government far more than did Lincoln.

* * *

As soon as the Confederates opened fire on Fort Sumter, Lincoln addressed not only the military imperatives, but he responded across the board, indicating his appreciation that the Union indeed was in a full-scale war. He had appointed a Democrat, Salmon P. Chase, as the Secretary of the Treasury. It fell to the relatively inexperienced Chase to raise the necessary finances to fight a war. Chase, badly underestimating the amount needed to finance the conflict at just over $325 million, emphasized inflation and borrowing over taxation. Although the Internal Revenue Act of 1862 eventually provided $600 million in revenues, it remained a small proportion of the total needed. A more ominous change had occurred, however, just by the government’s implementing such a tax. Given the precedent, a national income tax again appeared in permanent form fifty years later under the Democrats.

Other than taxation, Congress raised money by expanding the currency through the Legal Tender Act of 1862, which authorized the Treasury to print $150 million in paper money to pay federal debts. Successive issues of these “greenbacks” brought the total to $450 million, but still did not generate sufficient capital to fight the war. Thus, the government sold bonds as its chief method of raising funds, with Jay Cooke selling $362 million in bonds during the first year they were offered.

A hasty judgment of Chase’s strategy to used bonds and inflation as major sources of revenue in addition to taxation leads to the conclusion that Chase and the Union wanted to hide the costs of the war from the public, a charge with some basis. But a deeper analysis of most Union programs during the war, as developed by Richard Bensel in his excellent work, Yankee Leviathan, shows that the selection was made more on the basis of the mechanism by which the Union enacted its programs rather than the specific action the government took.[23] To be specific, the Union government had an exceptional advantage over the Confederacy in established businesses upon which it could count to supply goods and services for the war effort. From banking to shoes, the North held a huge numerical edge over the South in terms of sheer numbers of businesses.

While I have argued elsewhere that the quality of Southern banking institutions may have exceeded that (in some ways) of Northern banks, nevertheless, once the war broke out the South lost whatever advantage it may have had in that regard by confiscating its banks’ gold and giving to them, in return, Confederate bonds.[24] But banking is perhaps the only area where the South held a qualitative advantage over the North when it came to the stuff of a modern industrial society.

As Bensel showed, the North did not have to use the government directly to achieve its ends because the Union simply could hire private businesses to furnish whatever it needed. The South could not. Across a broad spectrum, the Confederate government found itself doing jobs that private businesses in the North did for the government. Confederate bureaucrats spread across the land, allocating resources and making policy, with no Supreme Court to control them and only a weak executive to which they had to report.

The dichotomy was apparent in the area of banking. Chase utilized the vast numbers of Northern banks as a network of bond sales agents; and passage of the National Bank Act of 1863 directly tied new national bank charters to the purchase of Union bonds. Unlike the First and Second Banks of the United States, the national banks that received charters under the National Bank Act had no interstate branching powers (indeed, except within the authority of state laws they had no branching powers at all). Their strict capital requirements actually put them at an operational disadvantage to state banks, but for one major benefit: They could issue national bank notes. The banks were still thriving businesses, and their participation in the war by the purchase of bonds hardly weakened their portfolios, compared to the position of the Southern banks. Indeed, one Comptroller of the Currency later estimated that the name “First” national bank was worth $25,000 to a bank, no small sum in the nineteenth century.[25]

Aside from the issue of greenbacks, then, Chase was able to utilize an existing system of private businesses to further the war ends without substantially changing the nature of those businesses. That proved entirely consistent with Lincoln’s view that wherever possible government should remain only a part of the economic landscape and should not attempt to dominate it.

Of course, a glaring exception existed in the prohibition of private note issue through the Currency Acts of 1863 and 1864, which ended private note issue by placing a ten percent on all non-national bank notes. That policy had Lincoln’s full support, for he thought it impossible for government paper to maintain its value in competition with state bank notes.[26] Further, the greenbacks were made legal tender, meaning that not only did the government agree to accept them for taxes, but required that they be accepted for business transactions between individuals. Between them, the national bank notes and the greenbacks constituted a somewhat uniform currency, which Lincoln deemed “almost…indispensable” to the war effort.[27]

* * *

In short, Lincoln, a staunch Whig in his economic views, understood that government had to operate in the economy and to utilize businesses as a source of goods and services. If the government attempted to divorce itself completely from economic affairs, such as had occurred with the Sub-Treasury plan, it actually resulted in a less free market than when the government participated as just one among many participants. The war, however, presented unique challenges. Lincoln did not hesitate to use extraordinary measures to obtain his goal—the end of the war and the reunification of the nation. Viewed in a broader sense, however, Lincoln had always remained totally consistent on the fact that slavery was morally wrong.

To that end, Lincoln willingly sacrificed other “rights,” reasoning that the central threat to a free society was the enslavement of a particular group by others. It is true that Lincoln considered preservation of the Union an absolute necessity, and that emancipation followed from that. It is also true that well before emancipation, he had violated personal liberty rights and exercised power beyond the then-accepted Constitutional limits of the presidency. (Even so, a recent study of Lincoln’s wartime civil rights record suggests that the military arrests “had less significance for traditional civil liberty than anyone has realized.”)[28] Finally, it also is true that to Lincoln secession and not slavery constituted the causis belli. Yet beneath it all, Lincoln knew and had said that society could remain “half-slave, half-free.” And while at one time he had espoused a geographical theory of slavery that resembled the “natural limits” theory of Charles Ramsdell, implicit in that theory was the proposition that slavery could not be allowed to expand into the territories. Ultimately, unless slavery could be prohibited from the territories, Lincoln recognized that force would be necessary.

Did the Republicans centralize power in the federal government under Lincoln? No doubt. But, as economists would ask: Which is the dependent variable, slavery or economic policy? Perhaps more important, which policies did Lincoln tolerate in order to achieve his overarching goal?

Indeed, it could be argued that Lincoln engaged in the single most free-market action ever undertaken by an American president. Merely the act of turning 3.84 million “pieces of property” into consumers made Lincoln the greatest free marketer ever to sit in the Oval Office! To do so required prioritizing liberties—something society does every day. The only argument remaining then is whether or not the South would have freed slaves on its own. There is widespread, if not unanimous, agreement among economic historians that slavery was both profitable and viable on the eve of the Civil War.[29] In short, almost no evidence exists that slaveowners had any economic basis for freeing their slaves.

Still, some have argued that the Union could have purchased the slaves, a position that would have been viewed as “bribery” to a large number of Americans in the 1860s and one that may have been far too costly for the Union to bear under normal political processes. Although it would have been cheaper than fighting the war, few Northerners would have agreed to such a “payoff” in peacetime circumstances. Moreover, considerable room would have been left for smuggling of slaves in such a way that the payoffs could have stretched indefinitely, ultimately with some resort to force anyway. Most important, though, as Lincoln said, if a thing was wrong, then it was wrong. Few people today would approve of bribing gang members with drugs to make neighborhoods “safe,” although such an approach might result in less visible violence.

Beyond all the economic hurdles involved in buying out Southern slaveowners, the overwhelming weight of historical scholarship today suggests that socially and culturally Southern society would not have accepted emancipation of the slaves at any cost. Although at one time the “needless war” interpretation had a few proponents, it has not stood up to historical criticism.[30] Some historians and economists have contended that profits in the cotton market, which declined by the 1920s, would have eradicated the economic incentives of slavery, while, at the same time, westward expansion that may have been economically feasible was not morally acceptable in the western communities.[31] But the political economy of race, as seen in studies of Southern streetcar businesses by Jennifer Roback, suggests that white control of the mechanisms of Southern government would have perpetuated slavery in the South regardless of market incentives.[32] Economic logic does not account for cultural, racial, and other attitudes that predominated. Or, as Mark Thornton has written, “slavery is always and everywhere a political rather than a market institution.”[33] Capitalism exacts a cost on racism, but it does not eliminate it; and when racism takes the form of enslavement of others, it is reasonable to assume that some racists would never have relinquished their slaves without the use of force. This is especially true if, as some libertarians have suggested, Lincoln would have allowed the Confederacy to gain independence. The continued presence of slavery after the Second World War in such places as Saudi Arabia, even after it had been prohibited decades earlier, illustrated the vitality of the “peculiar institution.”[34]

Lincoln understood this crucial market fact, too: If a society makes it possible to practice exclusion of a group, as secession would have done, peaceable and legal remedies are extinguished. Therefore, I find it perfectly consistent with free-market values to allow Lincoln a few—or even many, to give critics the benefit of the doubt—infringements on economic liberty through acts that suppressed bank notes and gave railroads subsidies when he gave America an exceptional gift of political and economic freedom by the emancipation of the slaves.

A critical difference exists here, though, between this interpretation of the market revolution in the Civil War and those of Charles and Mary Beard, or Barrington Moore, Jr., who called the conflict “the last capitalist revolution.”[35] Besides the obvious fact that I view the market as generally benign and desirable, when the Beards and Moore lament the dominance of capitalism that resulted, the significant development of the war was not the number or railroads built or shoes manufactured but the number of producers and consumers freed to expand the economy. Since a single producer can have “quantum” effects (in George Gilder’s words), the emancipation of the slaves as producers with personal incentive alone—not the vast industrial infrastructure the war created—would have sealed Lincoln’s place as a pro-market president.[36]

In that context, emancipation was directly related to the “hard money” position in two separate ways. First, as producers, the freedmen would increase the amount of real goods, bringing the money supply closer to parity with the supply of goods and services. While some—most notably Robert Fogel and Stanley Engerman in their famous Time on the Cross—have argued that the slaves produced at or beyond the levels of free whites, the multiplier effects of the freedmen alone render that contention somewhat meaningless.[37] It is hard to quantify, for example, how many freedmen invented devices or production processes that multiplied the productive power of society many times beyond their own labor, but certainly such innovation and invention occurred consistently and frequently. (George Washington Carver, Louis Temple, and Andrew Jackson Beard come to mind as freedmen who had such “multiplier” effects through their inventions.) In a second way, the freedmen enhanced the drive toward resumption of specie payments by expanding the demand for money, and they accomplished that in two distinct ways. As participants, they added to the increase in supply, resulting in a fall in prices, bringing the greenback “inflation” lower (i.e., closer to parity with gold). As people who owned and held real goods, the freedmen developed sums of wealth, further lowering prices. In the short run, then, Lincoln’s emancipation policies by themselves may have offset the monetary imbalances caused by the war. But that balance was merely a by-product of the more important revolution over which he presided.

One final point: Lincoln accomplished (admittedly at very great cost) what no other president up to that time could; yet at the same time, except for emancipation, the other systems the Republicans set up were not necessarily permanent.[38] Libertarian critics often forget that if Americans really wanted a “hard money” currency or if they really despised the national banking system, they could have voted either of them out of existence or passed specific constitutional amendments. Congress, for example, stopped the federal income tax in 1872. Once the slaves were freed, though, no one ever could re-enslave them. Thus, I think, a fair way to look at Lincoln and liberty is that he enacted a permanent free-market correction (emancipation) through the use of temporary policies that could have been undone at any time. His vision of individuals, allowed to rise in the economy through their own efforts, was advanced further—and for more people—after Lincoln took office than before. In that regard, Abraham Lincoln’s emancipation policy has been the single most long-lasting free-market action in American history.

Republished with gracious permission from Continuity: A Journal of History (Spring 1997).

The Imaginative Conservative applies the principle of appreciation to the discussion of culture and politics—we approach dialogue with magnanimity rather than with mere civility. Will you help us remain a refreshing oasis in the increasingly contentious arena of modern discourse? Please consider donating now.


[1] There is a considerable “free banking” school that does not place specific blame on the Republicans specifically, but implies that a general growth in government power resulted in fiat money. See, for example, F. A. Hayek, Choice in Currency: A Way to Stop Inflation (London, 1976); David Glasner, Free Banking and Monetary Reform (Cambridge, 1989); and George Selgin, The Theory of Free Banking: Money Supply Under Free Note Issue (Totawa, NJ., 1988). For more specifics as related to events in the U.S., see Richard Timberlake, The Origins of Central Banking in the United States (Cambridge, 1978); Robert Higgs, Crisis and Leviathan: Critical Episodes in the Growth of American Government (New York, 1987); Murray Rothbard, The Panic of 1819 (New York, 1962); Jeffrey Hummel, “The Jacksonians, Banking, and Economic Theory: A Reinterpretation,” Journal of Libertarian Studies, 2 (Summer 1978), 151-65; Lawrence H. White and George A. Selgin, “Laissez-Faire Monetary Thought in Jacksonian America,” in Donald E. Moggridge, ed., Perspectives on the History of Economic Thought, vol. 4, (Upleadon, U.K., 1990), 20-39., and their “Laissez-Faire Monetary Theorists in Late Nineteenth-Century America,” Southern Economic Journal, 56 (January 1990), 774-87. While any or all of the above mentioned authors may or may not consider themselves “libertarians,” the point is that others perceive them as typical of the libertarian position.

[2] See any of Robert Renuni’s books on Jackson, but especially Andrew Jackson and the Bank War (New York, 1967). Similar sentiments appear in Edward Pessen, Jacksonian America: Society, Personality, and Politics (Homewood, 1969).

[3] Jeffrey R. Hummel, “The Jacksonians, Banking, and Economic Theory,” passim; and Hummel, Emancipating Slaves, Enslaving Free Men: A History of the American Civil War (Chicago, 1996); Arthur Schlesinger, Jr., The Age of Jackson (Boston, 1945). In fairness to Hummel, he has since modified his position to accept the free exchange of any paper money by willing parties to constitute a legitimate use of paper money.

[4] See my Banking in the American South from the Age of Jackson to Reconstruction (Baton Rouge, 1987) and some of my articles, including “How the Jacksonians Opposed Industrialization,” Reason Papers, 12 (April 1987), 47-56; and “Jacksonian Ideology, Currency Control, and ‘Central’ Banking: A Reappraisal,” The Historian, 51 (November 1988), 78-102. Although not going quite as far as I do, David Martin in several articles has developed a powerful case for centralization by the Jacksonians. See, for example, his “Metallism, Small Notes, and Jackson’s War with the B.U.S.,” Explorations in Economic History, (Spring 1974), 227-47.

[5] Larry White, ed., Democratick Editorials: Essays in Jacksonian Political Economy by William Leggett (Indianapolis, 1984). Citing Leggett as a typical Democrat of the 1830s and 1840s is akin to citing Lowell Weicker as a typical Republican of the 1980s! A more balanced treatment of the Jacksonians by James Roger Sharp, The Jacksonians Versus the Banks: Politics in the States After the Panic of 1837 (New York, 1970) and John McFaul, The Politics of Jacksonian Finance (Ithaca, 1972) expand on the wide spectrum of differences within the party on issues such as banking and the role of the state, but neither finds the Jacksonians as sympathetic to government action and as anti-market as I have suggested.

[6] “Plan for a National Bank,” in Amos Kendall to Andrew Jackson, November 20, 1829, Box I, File 6, Tennessee Library and Archives. This letter is seldom cited, and often downplayed.

[7] Harry Jaffa, Crisis of the House Divided: An Interpretation of the Issues of the Lincoln-Douglas Debates (Chicago, 1959).

[8] Ibid.; and Robert J. Loewenberg, “That Graver Fire Bell: A Reconsideration of the Debate over Slavery from the Standpoint of Lincoln,” St. John ‘s Review, 33, (Autumn/Winter, 1982-83), 39-50.

[9] Emerson’s concepts of liberty are discussed in Robert Loewenberg, An American Idol: Emerson and the “Jewish Idea” (Lanham, 1984); and his “Emerson’s Platonism and ‘the Terrific Jewish Idea,'” MOSAIC: A Journal for the Interdisciplinary Study of Literature, 15 (1982), 93-108; and “Emerson and the Genius of American Liberalism,” Center Journal, 2 (Summer 1983) 107-28. Loewenberg also developed an intriguing comparison of the ideas of Emerson and pro-slave advocate George Fitzhugh in his Freedom’s Despots (Durham, 1986). I have provided a brief summary on these concepts, from which I borrowed extremely heavily from Loewenberg, in “Brothers in Chains: Ralph Waldo Emerson and George Fitzhugh’s Thoughts on Economic and Political Liberty,” Reason Papers, 8 (Spring 1988), 19-34.

[10] Francis B. Carpenter, Six Months in the White House with Abraham Lincoln (New York, 1867), 252 quoted in Allen C. Guelzo, The Crisis of the American Republic (New York, 1995), 163.

[11] “Speech in the Illinois Legislature Concerning the State Bank,” January 11, 1837, in Roy P. Basler, ed., The Collected Works of Abraham Lincoln (New Brunswick, 1953), I: 61-69.

[12] Ibid., I:64.

[13] Ibid., I:65.

[14] Ibid.

[15] David J. Greenstone, The Lincoln Persuasion: Remaking American Liberalism (Princeton, 1993), and David F. Ericson, The Shaping of American Liberalism: The Debates over Ratification, Nullification, and Slavery (Chicago, 1993). Both these studies find a synthesis of “liberalism” and “republicanism” in many of the antebellum thinkers, including Lincoln, although they relegate economic liberalism to a minor position.

[16] Basler, The Collected Works, I:159-79.

[17] Ibid., 160.

[18] Ibid.

[19] Ibid., I:161.

[20] Ibid., I:162.

[21] Ibid., I:169.

[22] Ibid., I:164.

[23] Richard Bensel, Yankee Leviathan: The Origins of Central State Authority in America, 1859-1877 (Cambridge, 1990).

[24] See my Banking in the American South, ch. 7, passim, as well as my “Southern Banking and Economic Growth in the Antebellum Period: A Reassessment,” Journal of Southern History, 53 (February 1987), 19-36.

[25] Lynn Pierson Doti and Larry Schweikart, Banking in the American West from the Gold Rush to Deregulation (Norman, 1991), 62.

[26] See Lincoln’s “Annual Message to Congress,” December 6, 1864, in Basler, Collected Works, VII:143-44.

[27] “To the Senate and House of Representatives,” January 17, 1863, in Ibid., VI:60.

[28] Mark. E. Neely, Jr., The Fate of Liberty: Abraham Lincoln and Civil Liberties (New York and Oxford, 1001), 138.

[29] A review of these studies appears in Jeremy Atack and Peter Passell, A New Economic View of American History from Colonial Times to 1940, 2nd ed. (New York, 1994), 299-354.

[30] For “needless war” interpretations, see James G. Randall, “The Blundering Generation,” The Mississippi Valley Historical Review, 27, (June 1940), 3-28; and Charles W. Ramsdell, “The Natural Limits of Slavery Expansion,” ibid., 16 (September 1929), 151-71. For an overview of the subject, see Thomas N. Bonner, “Civil War Historians and the ‘Needless War’ Doctrine,” Journal of the History of Ideas, 17 (April 1956), 193-216.

[31] W. Elliot Brownlee, Dynamics of Ascent: A History of the American Economy 2nd ed., (New York, 1979), 251-52.

[32] See Jennifer Roback, “The Political Economy of Segregation: the Case of Segregated Streetcars,” Journal of Economic History, 46 (December 1986), 893-917.

[33] Mark Thornton, “Slavery, Profitability, and the Market Process,” The Review of Austrian Economics 2 (1994), 21-47 (quotation on p. 42).

[34] Milton Meltzer, Slavery: A World History (New York, 1993), 281.

[35] Barrington Moore, Jr., Social Origins of Dictatorship and Democracy: Lord and Peasant in the Modern World (London, 1966); and Charles and Mary Beard, The Rise of American Civilization (New York, 1989).

[36] George Gilder, Microcosm: The Quantum Revolution in Economics and Technology (New York. 1989).

[37] Robert Fogel and Stanley Engerman, Time on the Cross: The Economics of American Negro Slavery (Boston, 1974); Paul David, et al., Reckoning with Slavery (New York, 1976).

[38] Two other issues are raised related to this point, and space does not allow a fuller discussion here. Briefly, I acknowledge that Lincoln was dead by the time emancipation and civil rights became amendments to the Constitution, but one could argue that had Lincoln lived, he could have achieved what neither the Radical Republicans nor Andrew Johnson could—the peaceful, legal acceptance of emancipation and some level of civil rights. That he could have done, as he did virtually all other tasks, with his persistence and overriding will, coupled with his abilities to manipulate people to achieve his ends. In short, a living Lincoln might have made amendments to the Constitution unnecessary. In a contrary vein, Stephen DeCanio has argued that the single greatest failure of Reconstruction politics was that of not giving the freedmen “40 acres and a mule.” Such an action. DeCanio has contended, would have put the freedmen on a more equal footing in the economy, and more important, allowed the nation to assess blame once and for all, and to assess it to the guilty parties immediately, as opposed to retrieving it 100 years later. But that view overlooks the damage such an action would have done to the Union. True guerrilla warfare could have ensued in the South for generations, and may never have healed. See his Agriculture in the Postbellum South: The Economics of Production and Supply (Cambridge, 1974).

The featured image, uploaded by Henry Wolf, is licensed under the Creative Commons Attribution-Share Alike 4.0 International license, courtesy of Wikimedia Commons.

All comments are moderated and must be civil, concise, and constructive to the conversation. Comments that are critical of an essay may be approved, but comments containing ad hominem criticism of the author will not be published. Also, comments containing web links or block quotations are unlikely to be approved. Keep in mind that essays represent the opinions of the authors and do not necessarily reflect the views of The Imaginative Conservative or its editor or publisher.

Leave a Comment
Print Friendly, PDF & Email