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The Joys of Secession 

Larry Beinhart’s Body Politic

click to enlarge DION OGUST

In the various races for the top spot on the list of great presidents, Abraham Lincoln always wins, places, or shows. If you see the movie, read a biography, or go to the library and do a quick survey of the books that cover that slice of American history, you'll see it was all about the Civil War, freeing the slaves, and his deep personal angst.

Yet, there's a whole other set of things he accomplished in office. If anyone were to take notice, it would get Mr. Lincoln an additional presidential ranking, say somewhere between #5 and #8, in that cluster with Teddy Roosevelt, Harry Truman, and James Madison. He pulled our country over the line, right into modern times.

At its inception, the politics of the new country gravitated to two philosophical poles. Alexander Hamilton was in favor of commerce and industry. That required a stronger central government with greater economic powers, high tariffs, support for domestic industries, government spending, and a central bank. Government for the money grubbers, which would inevitably become government by the money grubbers.

Thomas Jefferson advocated a decentralized agrarian republic based on a vision of clean living yeoman farmers, not the big money boys from the big cities. Jefferson definitely won on style points. His rhetoric was elegant, but his actual policies represented the interests of people like himself with large plantations dependent on slave labor. As for where the money was, in the decades ahead, cotton, the cash crop of the South, would come to represent half of the nation's exports. By 1860, the value of the slaves they owned "exceeded the invested value of all of the nation's railroads, factories, and banks combined." (Industry and Economy During the Civil War, Benjamin T. Arrington, National Park Service.)

Please forgive history the hash it has made out of party labels. Hamilton was a Federalist. The Southern slave owners were the Anti-Federalists. They became the Democratic-Republicans, and then the Democratic Party. After the Civil Rights Act of 1964, they morphed into the Republican Party. In the 1850s they were very much what Tea Party Republicans are today. They blocked everything and anything that might move the nation toward modern times: industry, banking, better infrastructure, a common currency, immigration, education, and even help for the people they were supposed to idolize, those yeoman farmers.

Lincoln got very lucky—in a perverse sort of way. Before he was even inaugurated, the Southern states began to secede. They took their senators and representatives with them. That gave the new president the gift of a genuine majority, most of whom agreed with his positions and had endorsed his party's platform. True, he had to raise an army, then fire a succession of inept commanders until he found Grant, Sherman, and Sheridan, but in terms of legislation, the obstructionists had moved themselves out of the way. Legislation that had been stalled for decades could now be passed.

Even when Hamilton was the first Secretary of the Treasury and established a national bank, the United States only issued about 20 percent of the currency in circulation. Things didn't get much better under the Second National Bank. It was destroyed by Andrew Jackson in 1836. After that, from 1837-1862, the federal government used only "hard money," gold and silver coins, while state-chartered banks issued their own currencies. Such banks had a 50 percent failure rate and an average lifespan of five years.

Lincoln established our first truly national currency. The Legal Tender Act of 1862 and the National Bank Acts of 1863 and 1864 put a whole financial system in place. National banks were established that would issue the new "legal tender," money that was required to be accepted. For the first time the federal government had a monopoly on currency. It was paper money, "greenbacks," and they became the type of money that we used, essentially unchanged, until 1971.

He and the 37th Congress established the program of land grant colleges. These came to include Cornell University, MIT, Berkeley, Amherst, Rutgers, Purdue, the universities of Florida, Idaho, Kentucky, Minnesota, New Hampshire, Rhode Island, Iowa State, Kansas State, Penn State, and on and on.

They passed the Homestead Act. Anyone who wanted to be a yeoman farmer could head out to federal lands, file a deed on 160 acres, improve the property and live on it for several years, and it was theirs.

Lincoln passed the first income tax. He created a Department of Agriculture. He started the Freedman's Bureau which, after the war, would bring the first public education to most places in the South. Congress also passed the False Claims Act, for recovering damages from companies that defraud the government, establishing the basic legal precedent still in use.

We live in a day and age in which free trade is to economists what the divinity of Jesus is to Christians. Paul Krugman put it this way: "If there were an Economist's Creed, it would surely contain the affirmations, 'I believe in the Principle of Comparative Advantage,' and 'I believe in free trade.'" The principle of comparative advantage was first articulated by David Ricardo. If the English had sheep, they ought to make woolens. The Portuguese had vineyards so they could make port. They could trade, end up drunk but dressed, with more economic efficiency than if they tried to do everything themselves.

Alexander Hamilton thought that was a very bad idea. He thought Americans should make their own clothes, ships, guns, and books. High tariffs would protect newly hatched enterprises. The money collected by taxing imports could be used, in part, for roads, canals, and ports, which would help local businesses, and even subsidize them directly. Northern industrialists were for it. Southern slaveholders were against it. England, the richest, most industrialized country in the world, was very much in favor of free trade and they spread their money around to get American politicians to fight against tariffs.

Lincoln moved the tariffs back up. He restored Hamilton's program, protection, and support for domestic industry, a strong banking system and currency, and investment in infrastructure. Yes, many of those initiatives would be abused. Some of them would lead to the excesses of the Gilded Age. But all in all, along with choosing free labor over slavery, they laid the groundwork for America's emergence as an industrial and financial world power.

What is astonishing is how those divisions remain with us. Not just in policy, but in manner. The politics that are centered around Southern culture continue to do battle against change and modernity. They are still the politics of "No! Whatever you're for, we're against it!" They still want to tear the country down rather than accept change, especially if that change involves class and race.

It might be nice if they did secede for awhile. While they were out, we could get the things done that need doing. Then they could come back in a few years, without the bother of all that war, of course.

Speaking of...

  • Larry Beinhert considers Abraham Lincoln's placement in the list of great presidents.


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