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War Is Good Business

By David Goldfield
11/7/2017 • America's Civil War Magazine

As Southern prospects crumbled both on the field and in the marketplace, Northern interests thrived—permanently changing the face of American government and commerce.

By 1863, Richmond, the city of seven hills, had fallen into a valley of despair. The downward spiral of Confederate military fortunes infected the capital’s mood and appearance. Strapped for money and overwhelmed with needs, the city government could not keep up with basic maintenance. Infrastructure crumbled, crime escalated, the homeless population grew, prices soared and want walked everywhere. Richmond’s leading industry was health care. Every spare building became a hospital. The largest hospital, Chimborazo, named after a volcano in Ecuador for an unknown reason, sprawled over 40 acres on one of Richmond’s hills. Hollywood Cemetery, the city’s largest burial ground, perched on another hill. Frequent discourse occurred between the two. In the early months of the war, solemn military funeral processions made their way up to Hollywood, accompanied by a brass band deserving of dead heroes. By the second year of the war, deaths escalated and the ritual ceased.

Civility, for which the Old South was allegedly famous, became another casualty of war in the Confederate capital. Consumers charged that merchants hoarded goods to drive up prices; merchants blamed currency inflation and the deteriorating distribution system; and everyone blamed the government. Confederate impressment policies exacerbated the problem as farmers hid food crops or grew less. A Louisiana farmer confessed he preferred “seeing the Yankees to seeing our cavalry.” Regardless of fault, there was genuine distress in Richmond, especially among the working class. A Richmond diarist recorded this conversation: “A poor woman yesterday applied to a merchant in Carey Street to purchase a barrel of flour. The price he demanded was $70. ‘My God!’ exclaimed she, ‘how can I pay such prices? I have seven children; what shall I do?’ ‘I don’t know, madam,’ said he, coolly, ‘unless you eat your children.’”

Deferential women, another Southern staple, could no longer defer starvation. Living without men meant living without livelihood for many women. On the morning of April 2, 1863, a group of working-class women met at a Baptist church in Richmond. Unable to feed their families, they resolved to march to the governor’s mansion to seek redress. Their numbers grew as they walked, joined also by men and boys. A Richmond woman happened on the procession and asked a young girl,“Is there some celebration?” “There is,” the girl replied. “We celebrate our right to live. We are starving. As soon as enough of us get together we are going to the bakeries and each of us will take a loaf of bread. This is little enough for the government to give us after it has taken all our men.”

“Bread riots” spread to cities across the Confederacy from the spring through the fall of 1863. When rumors of impending trouble surfaced in Mobile, Ala., in September, the local newspaper assured,“There is enough food to carry army and people through to the next harvest.” Two days later, a mob surged through the streets of the city bearing signs demanding “bread or blood” and looting shops along the way.

The desperation of the women was evident and understandable. After Greensboro, N.C., authorities arrested 20 armed women about to descend on city shops, Nancy Mangum, a member of the group, wrote to Governor Zebulon Vance, “A crowd of we Poor women went to Greenesborough yesterday for something to eat as we had not a mouthful meet nor bread in my house what did they do but put us in gail—I have 6 little children and my husband in the armey and what am I to do?” Other women of higher social standing understood the dilemma. Anne Morehead, relative of a former governor of the state, wrote,“I do not see how our poor women & children are to be fed, & we have so many whose husbands are now in this unholy war, & no hope of its ending shortly.”

Poor women, it turned out, had leverage to reduce the Confederacy’s ability to wage“this unholy war.”As Nancy Mangum put it to Governor Vance, “We wimen will write for our husbans to come home and help us we cant stand it.” A Georgia woman watching her daughter growing thinner and thinner, and her son crying out in hunger, wrote to her husband serving in the Army of Northern Virginia, “My dear Edward—I have always been proud of you.…I would not have you do anything wrong for the world, but before God, Edward unless yo come hom we must die.” Edward came home.

Most letters to the front did not put the choice so starkly. Southern women were aware of society’s expectations of them as uncomplaining supporters of their men regardless of the hardships they endured. They could not, however, conceal their emotions or the reality of their situation for long. Marion Fitzpatrick’s wife wrote that their children went without shoes and her spinning wheel had broken down with no spare parts available. She tried to make ends meet by killing a hog, but how much of it she should sell, and when, she was uncertain. Her husband could not help. “I am at a loss how to advise you about anything now. Just do the best you can.” When she wrote of her loneliness and of how difficult it was to manage a household and a farm, he replied,“You must cheer up and hope for brighter days.” The letters gnawed at him. He was helpless. As a man, he should be there to support his family. And he missed them terribly. When his wife wrote that their young son cried out for him, he wept.

Most rural Southern women, regardless of class, lived with a sense of foreboding as the war progressed. Deserters and Union armies raided farms. Despite all the brave talk about loyal slaves, women on plantations worried about their safety. Mary Chesnut wrote of her butler,“He looks over my head—he scents freedom in the air.”As for the other slaves,“They go about in their black masks, not a ripple or an emotion showing—and yet on all other subjects except the war they are the most excitable of all races.” Another plantation mistress admitted she was“always thankful, when morning comes, that the house has not been fired during the night.”

A vigorous barter system emerged. Sorghum substituted for molasses and sugar. Rye, wheat and peanuts comprised a coffee substitute. Women learned to cure bacon with ashes instead of salt. In an unintentional upgrade, families replaced calomel (basically mercury) as a standard medicine with roots and herbs from the forests. Straw and palmetto became raw materials for hats. As the weather turned colder in the fall of 1863, women lined their old dresses with rags and newspapers to keep the wind out.

Creativity could only go so far. Middle-class women did not typically participate in the bread riots, but everywhere in the urban South, merchants reported an alarming rise in shoplifting. In early 1864, a Confederate official informed Jefferson Davis that civilian “deaths from starvation have absolutely occurred.”

By early 1864, there were fewer signs of bravado among Southern civilians. A woman wrote to the Montgomery (Ala.) Advertiser in June 1864 that during the early months of the war women had rivaled “the other sex in patriotic devotion,” but “Oh what a falling off is there!…The Aid Societies have died away.…The self-sacrifice has vanished; wives and maidens now labor only to exempt husbands and lovers from the perils of service.” “The Confederacy!” Emily Harris confided to her diary in 1864, “I almost hate the word.”

Life was different in the North. Walt Whitman had spent the better part of 18 months shuttling from his office to hospitals in Washington. Heading back to Brooklyn in November 1863 on his self-imposed furlough, he quickly left the war behind. Passing through Baltimore and Philadelphia, he marveled at the scenes out his train window. “It looks anything else but war, everybody well dressed, plenty of money, markets boundless & the best, factories all busy.”

When Whitman stepped out of his rail car in Manhattan, the pace of the city nearly overwhelmed him. Southerners had predicted the loss of the cotton trade would beggar New York. The city scarcely missed a beat. Shipyards boomed, building vessels for the naval blockade. Local contractors and manufacturers supplied the Army. Brooks Brothers, a Manhattan clothier already notable for its ready-made clothing, won a contract to provide 12,000 blue uniforms at $19.20 apiece in four sizes for the state’s soldiers. The sewing machines of Elias Howe and Isaac Singer mechanized the garment trade. Shoemaking machines allowed manufacturers to produce several hundred shoes a day instead of the few finished by hand. The city’s railroad companies handled record shipments of grain from the West, sending manufactured goods back in the other direction. Crop failures in Europe and the feeding of 1 million soldiers spurred a lively grain trade. New York became the export center for petroleum, a new industry that emerged after the discovery of oil at Titusville, Pa., in 1859. Thousands of Northern families lit their homes with kerosene lamps during the war, a marked improvement over other forms of illumination such as candles and whale oil. “There never was a time in the history of New York when business prosperity was more general,” the New York Sun boasted in early 1865.

Cyrus McCormick, the Virginian who revolutionized wheat harvests with his mechanical reaper, moved his factory to Chicago before the war. Taking advantage of greater proximity to wheat and the skilled labor and technology to build his machines, he could not turn out reapers fast enough once the war began. Farmers all over the Midwest, buoyed by the high prices of grains and short of labor, mechanized their operations, gaining efficiency and volume. The nation, including the South, produced 173 million bushels of wheat in 1859. In 1862, the Northern states alone exceeded that total.

Had Whitman visited Chicago, he would have seen the western version of New York’s energy. The crop bonanza, the need to feed a large army—the beginning of the city’s reputation as “hog butcher of the world”—and the line of boxcars heading east generated a construction boom. Chicago shipped twice as much grain and meat east in 1862 as it did in 1860. The Chicago Tribune reported,“On every street and avenue one sees new building going up: immense stone, brick, and iron business blocks, marble palaces and new residences everywhere.…The unmistakable signs of active, thriving trade are everywhere manifest.” Men became wealthy overnight. One enterprising young man, Philip Armour, became a millionaire selling pork to the Army.

In the Far West, gold and silver generated an economic surge. The Pike’s Peak gold rush of 1859 set off a stampede to Colorado. Two years later, Congress granted Colorado territorial status, and Denver was the nation’s newest instant city, a raucous boomtown where every fifth building was a saloon. In Nevada, the Comstock silver strike in 1859 touched off another wave of migration. Nevada became a state in 1864. By then, silver mines had produced $43 million for the U.S. Treasury. Gold flowed from Montana, Idaho and the Dakotas as well, all benefiting the Union cause.

Quartermaster General Montgomery C. Meigs, a West Pointer and a talented engineer, orchestrated the procurement of government contracts that helped to generate such wealth. Meigs assumed the position when his predecessor, Joseph E. Johnston, joined the Confederacy. The Lincoln administration could not have hoped for a more efficient and honest official to organize a system that dealt with hundreds of firms, large and small, transportation logistics involving trains, ships and wagons, and attending to quality control and financial issues. By the end of the war, Meigs’ department had distributed over $1 billion in U.S. Treasury funds, accounting for over 90 percent of all government spending.

Meigs drew on established firms for many of the Army’s needs. New England, for example, led the world in small-arms technology. Supplementing the U.S. government’s Springfield Arsenal in Massachusetts were the factories of Colt and Sharps in Hartford, Conn. For gunpowder, Meigs relied heavily on the Delaware-based firm DuPont. When these companies could not supply weapons fast enough, the quartermaster’s office purchased guns from abroad, a vanishing option for the Confederate government, with its devalued currency. The South had few established firms for military ordnance and lacked the technology employed by Northern factories. The Davis administration had to build from scratch, a difficult and expensive strategy. The output of the Tredegar Iron Works in Richmond and the artillery firms in Selma, Ala., was remarkable given the limited resources. But time and money were not on the Confederacy’s side. Machines lacked parts, and distribution became increasingly difficult.

The federal government was a willing and enabling partner in many of these enterprises. The Republican- dominated Congress passed a series of measures that transformed the nation’s economic landscape for all time. The weakness of the Northern Democratic minority and the defection of Southern lawmakers enabled Republicans to enact legislation that significantly expanded the role and financial reach of the government and helped to create a national economy that dwarfed its predecessor both in scale and in wealth.

When Lincoln took office, the main role of the federal government was to deliver the mail. The government also conducted foreign policy, defended the frontier with a small army and collected import duties, but primarily, Washington was a post office. By the end of the Civil War, the government supported an army of a million men, carried a national debt of $2.5 billion, distributed public lands, printed a national currency and collected an array of internal taxes. This transformation in national power was not the “new birth of freedom” Lincoln envisioned at Gettysburg, but it overshadowed the liberation of 4 million slaves in terms of its long-range impact on all Americans.

The Republicans did not set out to establish a strong national state or to facilitate the Industrial Revolution. They believed strongly in the American dream of hard work and upward mobility. They saw no contradiction between capital and labor, between wealth accumulation and equality. Even in the exigencies of war, they directed their legislation to their political base, the farmers and the small-town merchants. Their vision assumed the virtue of rural and small-town America. The majority of Republicans who enacted the legislation grew up on farms. Yet they created an industrial juggernaut that flung railroads across the continent and grew great cities from seaboard to seaboard that attracted thousands from those small towns and farms. These results must be counted among the most sterling examples of unintended consequences in American history.

The 1862-63 congressional session was among the most productive ever. A number of Republican leaders (including Lincoln) had benefited from western migration. They transformed their personal stories into the Homestead Act that offered 160-acre tracts of public land for a $12 registration and filing fee. If a home steader lived on it for five years, built a house and farmed, he owed an additional $6. Over time, the act helped to settle 10 percent of the entire land area of the continental United States.

The war sparked an interest in science. The telegraph, the sewing machine, vulcanized rubber, the mechanization of agriculture and the introduction of ready-made clothing and shoes fueled the widespread impression that this was the age of invention. Science and scientific inquiry, efficiency and professionalism all received boosts from the war effort. Venerable Harvard modified its classical education and introduced the nation’s first science curriculum before the war ended.

The Union became a synonym for “modern,” and a ready counterpoint to the “unmodern” South. Slavery was not a progressive institution. It was a relic from a bygone era that strangled man’s ambition. Herbert Spencer, the British philosopher who would coin the phrase “survival of the fittest,” believed that slavery’s elimination was emblematic of man’s progress. An American admirer wrote to him in affirmation in 1864, “The great slave system…had well-nigh paralyzed the mind of the nation, but the war has broken the spell.” Like the Indian, slavery and the slaveholder were stale mementos from a primitive past that must be eliminated if mankind were to progress.

Congress passed the Morrill Land Grant Act, another measure designed to further science and efficiency. The federal government granted public lands to the states to finance colleges that would offer training in scientific agriculture and the mechanical arts. Creating the Department of Agriculture fulfilled scientific objectives, too. Lincoln hoped that such a department would generate statistics and publicize best practices that would help not only the farmer but merchants and manufacturers as well.

The Lincoln administration employed lavish grants of public lands to finance a transcontinental railroad. Many Americans had dreamed of a railroad spanning the country. Stephen A. Douglas had acted on that dream with disastrous political consequences for himself and the country. With Southerners absent from Washington and slavery no longer a sticking point, Republicans resurrected the vision in the Pacific Railway Act of 1862. The Union Pacific Railroad could not afford to build across the vast and lightly populated Plains unless the government subsidized the project with land grants. Republicans viewed the railroad as a military necessity to move troops quickly against the Indians and secure the West for the Union, as well as to stimulate commerce with Asia. The railroad never realized the Asian trade, but it helped settle the West and, like the telegraph, created a country more closely resembling a national state than a series of disparate regions. The Lincoln administration gave away 158 million acres to railroads during the war.

Giving away land, the federal government had to rely on tariffs and taxes for revenue. In wartime, however, these streams were insufficient. Among the ways the Republican administration raised money was the passage for the first time in American history of a progressive income tax, raising $55 million during the war. The government also floated large bond issues, sold not to banks but to the general public. The bonds not only raised money to wage the war but also drew Northerners closer to the Union cause by giving them a financial stake in victory.

The Treasury Department hired Jay Cooke, a Philadelphia banker, to market $500 million worth of bonds at 6 percent interest to the public. The bonds were redeemable after five years and matured after 20. The so-called five-twenties were wildly successful thanks to Cooke’s effective advertising and his army of agents. At one point, Cooke was selling $1 million worth of bonds per day. One out of four Northern households invested in the instruments. The bonds, however, were not enough to cover the war’s mounting expenses. The Army spent more than $1 million a month just on forage for its horses, or more than the cumulative federal budget for the first two decades of the 19th century.

The Lincoln administration resorted to the printing press and churned out $150 million in “greenbacks” (they were printed on green paper). To heighten confidence in the paper money, the government made them convertible to the five-twenties. The increased flow of gold and silver from the West also helped public confidence. After Gettysburg and Vicksburg, there was such a run on the five-twenties that the Treasury Department had to close the sale. By the end of the war, the Lincoln administration had run up a national debt of $2.5 billion, much of it absorbed by Northern citizens.

The National Bank Act of 1863 resurrected the Hamiltonian idea of a national banking system. It established a national currency and permitted the creation of a network of national banks. The banks issued federal greenbacks as well as their own “national” banknotes, driving out the confusing array of state-issued money and increasing the stability of financial markets. Lincoln heartily approved these measures, predicting accurately,“Finance will rule the country for the next fifty years.”

All told, the war’s direct costs amounted to $6.7 billion. If, upon Lincoln’s inauguration, the government had purchased the freedom of 4 million slaves and granted a 40-acre farm to each slave family, the total cost would have been $3.1 billion, leaving $3.6 billion for reparations to make up for a century of lost wages. And not a single life would have been lost. No one, of course, foresaw the enormous cost of the war in dollars and lives in 1861.


Adapted from America Aflame, copyright 2011 by David Goldfield. Reprinted by permission of Bloomsbury Press.

Originally published in the September 2011 issue of America’s Civil War. To subscribe, click here

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