Roger Lowenstein’s Ways and Means and David K. Thomson’s Bonds of War remind us that the Civil War energized the nation’s transformation from a modest and decentralized economic actor into the global juggernaut of the twentieth and twenty-first centuries. During the war years, banks were reorganized as national rather than state institutions, Congress introduced the first federal income tax, billions of dollars of government bonds were sold to an unprecedentedly diverse range of buyers, and the Treasury printed $450 million of “greenbacks”—the first paper currency issued by the American government since the Revolution.
These innovations undoubtedly helped the United States win the Civil War, but did they increase economic opportunity? One of the many ironies of nineteenth-century history is that the Republicans who saved the Union and destroyed slavery in the 1860s oversaw some of the biggest financial scandals of the following decades. They also ran interference for corporate and financial interests that tyrannized labor before the century was out. Both books grapple with the question of whether this unedifying outcome was a betrayal of the Civil War years or a consequence of the tools and precedents that the war had supplied to America’s political and financial elites.
From the earliest moments of the republic, political elites argued about the extent of the government’s involvement in the economy. During the 1790s Alexander Hamilton championed an interventionist approach that would settle Revolutionary War debts, assist nascent industries and businesses, and establish a national bank along the lines of the Bank of England. Hamilton’s detractors—including Thomas Jefferson and James Madison—warned that his prescriptions would concentrate economic power and squander the republic’s greatest advantage over Europe: its vast reserve of western land, with the potential to support industrious farmers rather than an industrial proletariat.
As these arguments played out from the 1790s to the Civil War, a few trends became apparent. A Bank of the United States was chartered for twenty years in 1791 and again in 1816, but its supporters struggled on each occasion to persuade Jeffersonians (and, later, Jacksonians) that it was truly working in the nation’s interest. Andrew Jackson waged war on the Second Bank in the 1830s, insisting that it served its private stockholders (who supplied more than four fifths of its capital) rather than the humble American farmer. After Jackson vetoed the renewal of its charter, the bank downsized its operations and became a state-chartered institution (under the ungainly name of the Bank of the United States of Pennsylvania) before going bankrupt in 1841.