The four years during which the United States of America and the Confederate States of America waged a long, trying civil war were ones in which the governments in both regions attempted to deal with common issues: conscription, inflation, racial tension, financing the war, divisiveness between political parties and disparity of ideals and goals between the presidents of the regions and those they governed. Both Congresses passed conscription acts and attempted not only to raise armies but also to maintain and supply them. Both areas experienced elation in the beginning, which turned to fear and despair as the years passed. When the war ended, the Union had survived, and its capital city was spared; the Confederacy was destroyed, with nothing left of Richmond or, indeed, of most of the South.
Politics in the Union States
Northern unity in the first year of the war, like unity in the South, was tenuous, at best. The Republican Party was relatively new: a “coalition of men” according to James McPherson, “who a few years earlier had been Whigs, Democrats, Know-Nothings, Free Soilers or abolitionists.” When the Civil War began, the U.S. Congress was not to meet for eighty days; Lincoln thus began his presidency, as the head of a new, untried political party, “with a virtual monopoly of emergency powers.” Almost immediately he released a series of executive orders, some constitutionally based, some not. First, he declared that an insurrection existed and called out the state militias, increasing their number to number 75,000. Second, he issued two proclamations that created blockades of southern ports. Then, knowing that additional troops would be needed, he expanded the number of military troops, a power that the president did not hold under the Constitution as the Constitution gives the power to raise an army and navy to Congress. Ohio Representative John Sherman remarked at the time, “I never met anyone who claimed that the President could, by a proclamation, increase the regular army.” As a whole, Congress found these actions to be extraconstitutional. Lincoln’s subsequent actions in the summer of 1861 with respect to paying Union soldiers and seizing transportation resources did not allay their fears as he once again seemed to step beyond the president’s powers as laid out in the Constitution.
As the new Congress assembled for a special session to deal with issues raised by the conflict with the seceded states, Lincoln assessed the coming struggle in his address to Congress when he explained:
Our popular government has often been called an experiment. Two points in it, our people have already settled—the successful establishing and the successful administering of it. One still remains—the successful maintenance against a formidable [internal] attempt to overthrow it…And this issue embraces more than the fate of these United States. It presents to the whole family of man the question, whether a constitutional republic or a democracy—a government of the people, and by the same people, can maintain its territorial integrity against its own domestic foes.
Congress then passed a declaration of war against the Confederate States, and John C. Crittenden added a resolution specifying that the purpose of the war on the part of the Union would be to “defend and maintain the supremacy of the Constitution.” In other words, no state could choose to nullify the Constitution, thus secession was not only unconstitutional, it was also treasonous. The war, in the words of Historian C. Vann Woodward, would be one “against secession, a war to maintain the Union—that and nothing more.” One last piece of legislation came out of this special session of Congress: a law authorizing the president to call for the enlistment of 500,000 troops to serve for a period of not less than six months or more than three years.
Civil Liberties Curtailed
When Congress met in regular session, it passed two confiscation acts that defined and specified punishment for treason and a separate, less severe punishment for insurrection. The latter included as part of one’s punishment the liberation of his slaves. All property held by the officers of the Confederate government and by those who supported the rebellion was to be seized after a sixty-day warning.
Neither of the confiscation acts, the second being the Treason Act, addressed the question as to what should be done to and about anti-war activities in the North, and Lincoln, instead of working through the courts and the legislative branch, decided to suspend habeas corpus, thus providing for arrest and punishment of “all Rebels and Insurgents, their aiders and abettors within the United States and all persons discouraging volunteer enlistments, resisting militia drafts or guilty of any disloyal practice.” In such cases the individual involved would lose his right to habeas corpus and would be subject to martial law. Historian David Donald comments that the numbers of those arrested was in the tens of thousands. And finally, before it adjourned, Congress abolished slavery in the District of Columbia.
Opposition from the Peace Democrats
Throughout the war, the political parties divided over Abraham Lincoln’s leadership as it related to the war. The three main factions included the Republican Party from New England, New York, and Pennsylvania; the “Peace” Democrats, who drew their support mostly from the Midwest; and the “War” Democrats, who supported a more aggressive policy against the South. Northern Democrats, especially the Peace Democrats soundly criticized Lincoln for exercising powers that went far beyond those given to the president by the Constitution. While most historians say that Lincoln stopped short of creating a dictatorship in the twentieth century sense of the word, there was no doubt that the powers he claimed for the presidency were extraordinary. On the other hand, though he suspended habeas corpus, he did not suspend freedom of speech or the press, and so civil liberties continued to exist, even if they were curtailed during the enforcement of the treason and confiscation acts.
Lincoln also faced criticism throughout his first administration regarding emancipation from the “Peace” Democrats. Christened the “Copperheads” by their detractors, the “Peace” Democrats were a diverse socioeconomic group, drawing membership mainly from the southern Midwest and the immigrant Catholics of northern cities. One of the leading proponents of the Copperhead cause was the Ohio Representative Clement Vallandingham, who frequently denigrated Lincoln and emancipation in the same breath. And dislike of emancipation became the hallmark of most northern Democrats, who favored a United States that would be “the white man’s home.” Antislavery measures passed through Congress reflected a sharp division by party; on each bill, Republicans voted in favor of the measures, while Democrats stood firmly against them.
As the election of 1864 approached, the North was caught up in a peace movement that reflected the sentiments of a “war-weary and heartsick nation.” The peace movement gained wide recognition in 1863 and 1864, and as anti-war sentiment built in the Union, the Copperheads became the most vocal wing of the Democratic Party. They favored the Union, but demanded immediate peace and the ousting of Abraham Lincoln. At times they threatened violence, but none ever materialized. The Copperheads had several newspapers at their disposal, and when Horace Greeley became associated with the peace movement, other northerners also focused on the issue. Greeley wrote to Abraham Lincoln in spring 1864, “I venture to remind you that our bleeding, bankrupt, almost dying country also longs for peace; shudders at the prospect of fresh conscriptions, of further wholesale devastations, and of new rivers of human blood. And a widespread conviction that the government and its…supporters are…doing great harm.” Lincoln made public his own his own thinking about peace in a memo in July 1864:
To Whom it may concern: Any proposition which embraces the restoration of peace, the integrity of the whole Union, and the abandonment of slavery, and which comes by and with an authority that can control the armies now at war against the United States will be received and considered by the Executive government of the United States, and will be met by liberal terms on other substantial and collateral points.
Fearing that he would not be reelected, Abraham Lincoln submitted to his Cabinet on August 23 the following memorandum: “This morning, as for some days past, it seems exceedingly probable that this Administration will not be reelected. Then it will be my duty to cooperate with the President elect, as to save the Union between the election and the inauguration; as he will have secured his election on such ground.” Lincoln was sure that the Democrats would nominate retired Union general, George McClellan, whose opposition to the war and the Lincoln administration was well known.
Election of 1864
The Democrats met in Chicago in August 1864. As Lincoln predicted they nominated George McClellan and adopted a platform that focused on bringing an end to the war. The platform, written by the Peace Democrats, denounced the practices of wartime: arbitrary military arrest;” “suppression of freedom of speech and the press;” and “disregard of State rights.” In his acceptance letter, McClellan stressed the need to preserve the Union as the nation’s first priority.
For their part, the Republican Party worked toward greater unification, since half of their members were “opposed to the war and wholly opposed to emancipation.” Looking at the Democratic platform, War Republicans suddenly realized that Lincoln was their “only alternative” to a disastrous defeat for the Union. And so Abraham Lincoln was nominated by his party, with a platform that stressed abolition as a necessary precursor to peace. The Republican Party, in an effort to win the support of the “War” Democrats, changed its name to the National Union Party and nominated the incumbent president and “former” Republican Abraham Lincoln for president and “former” War Democrat Andrew Johnson for vice president. As a result, many War Democrats could support Lincoln’s Civil War policies, while avoiding the “Republican” ticket.
During the fall campaigns, the Democrats touted the need for peace and the Republicans did their best to prove that their opponents were traitors to the future of the Union. General Grant was convinced that the South appeared set on holding out until after the election, relating in a dispatch from the front that “deserters come into our lines daily who tell us that the men are nearly universally tired of war…but that they believe peace will be negotiated after the fall elections.” Alexander Stephens, Vice President of the Confederacy, commented that the Democratic platform was “the first ray of light I have seen from the North since the war began,” and a Confederate secret service agent wrote to Richmond from his post in Canada that the Democratic platform “means peace unconditionally…McClellan will be under the control of the peace men…At all events, he is committed by the platform to cease hostilities and to try negotiations.”
Much was made by Republicans of a series of “conspiracies” to which the Democratic leadership was linked, and headlines accused the Sons of Liberty, founded in 1864 and most of whom were Northern Democrats, of plots to overthrow the government and to create a diversion in the Northwest so that the Union would have to divert its troops from the South to defend the Union elsewhere. Headlines screamed, “REBELLION IN THE NORTH!! EXTRAORDINARY DISCLOSURE.” Pamphlets provided additional details as they adopted such titles as Copperhead Conspiracy in the Northwest: An Exposé of the Treasonable Order of the Sons of Liberty. Thus, Democratic “treason” became an additional focus of the Republican message.
When Atlanta fell to Sherman in September, 1864, it appeared that victory would go to the Republicans. On November 8, 1864, Lincoln won by over 400,000 popular votes and easily secured an electoral majority of 212 to 21 for McClellan. McClellan won just three states: Kentucky, Delaware, and his home state of New Jersey. Lincoln won almost two-thirds (64 percent) of the 1,118 counties in the 25 states where popular voting occurred; the Democrats claimed victory in the remainder.
Politics in the Confederate States
On February 4, 1861, the seceded southern states met to create a government for their new nation, the Confederate States of America. At that meeting, they drafted a constitution and elected provisional leaders, Jefferson Davis and Alexander Stephens. Throughout the summer, the provisional government worked in Montgomery, Alabama and, later, in Richmond, Virginia, where the capital moved, to manage the war effort. On November 6, 1861, voters in the Confederate states elected Davis as the permanent President of the Confederacy and Stephens as the permanent Vice President. As stated in the Constitution, they would serve for six years and could not stand for re-election. The Constitution also created a cabinet, along the lines of Lincoln’s Cabinet, to help Davis manage the government’s functions. However, Davis also had to work with the Confederate Congress and the state governors, a requirement which often proved problematic for the southern leader.
Jefferson Davis and the Confederate Congress faced many issues from the outset as the new government began to examine its financial and political options. First, Davis sent emissaries to the North to purchase machinery and munitions. Second, it was necessary to raise and equip an army. In the opening months of the war, the Confederacy had been overrun with volunteers, almost too many to handle, as Southerners clung to the idea that the war would be short-lived. One volunteer from Virginia commented to his governor, “All of us are…ripe and ready for the fight…I shall be shoulder to shoulder with you whenever the fight comes off.” Davis confirmed that volunteers were coming from all corners: “From Mississippi I could get 20,000 men who impatiently wait for notice that they can be armed.” He regretted that he did not have enough arms to supply all of those who wanted to volunteer.
Jefferson Davis, like Lincoln, did not glide smoothly through the war years, and, like Lincoln, he faced fierce political opposition, not from an opposing political party as was the case with some of Lincoln’s opponents, but from states’ rights supporters who had embraced secession and now guarded the rights of their states as ardently as they had against Union encroachment. The states’ rights movement was centered in Georgia and North Carolina. Their governors, Joseph E. Brown of Georgia and Zebulon Vance of North Carolina, challenged Davis on everything from his reaction to the Bread Riots in Richmond to conscription, taxes, and the most onerous issue: suspension of habeas corpus.
In 1862, the Confederate Congress gave Davis the right to suspend habeas corpus when a situation dictated such action. Davis then proceeded to suspend the writ in several areas of the South. This action led to an outcry of “military despotism,” especially in Georgia. Alexander Stephens, Vice President of the Confederacy, who devoted much attention to criticizing Davis’s every move, decried the suspension of habeas corpus, insisting, “Away with the idea of getting independence first, and looking for liberty afterwards…Our liberties once lost, may be lost forever.” And most opponents of Davis “cloaked their opposition in the rhetorical garb of states’ rights,” arguing that they had joined the secession movement to “sustain the rights of the states.”
Problems of Financing the War
During the Civil War, both the Confederate and Union governments faced difficult choices about what financial policies to implement since waging total war is an expensive undertaking. In order to pay for wars, governments have only so many options open to them. They can tax, borrow, print money, confiscate supplies, and conscript labor. All of these choices can have a negative effect on a nation’s economy; however, printing money usually has the worst impact because it causes inflation, whereas taxation usually causes the least disruption to the people’s lives. Confederate and Union leaders implemented a variety of these options, based on their military needs as well as the expectations the people had about the relationship between the government and its citizens.
Southern Experiments in Financing
Jefferson Davis and his advisers, especially Treasury Secretary Christopher G. Memminger, needed to find a means to finance the effort to defend secession when the Confederacy had few resources to draw from. Some of the southern states gifted the new government money confiscated from the Union, but such donations provided only a short term solution. The Confederate Congress then authorized the sale of war bonds totaling $15 million. They sold quickly because of patriotic sentiment, but a second issue of $100 million did not, leaving the government short of needed funds to pay its bills. So in May, Congress permitted the Treasury Department to issue $20 million in treasury notes or paper currency, which people could not convert into specie (gold or silver coin) until two years after the conflict ended. The Confederate Congress, however, resisted making the treasury notes legal tender. Therefore, citizens did not have to accept the money as a form of payment. These events, in early 1861, set a precedent for the Confederacy; it constantly struggled to manage the economic issues brought on by war.
Memminger hoped the bonds and the currency issued in 1861 would increase patriotism in the South by giving the people a stake in the success of the war effort. However, as the war dragged on southerners did not want to invest in their government. Fiat money, currency not backed by specie, only holds value when people have faith in the government, and the people’s faith in their government declined. Therefore, Confederate treasury notes lost value almost as soon as the government issued them. By war’s end, $1 in Confederate currency equaled about $.02 in Union currency. To offset the problems of printing more money, Confederate leaders attempted to make war bonds more attractive and create a comprehensive tax policy, but nothing really improved the financial situation in the South.
Loans, mostly in the form of war bonds, failed to bring in large amounts of revenue because of the nature of the cotton economy. In the antebellum years, cotton made southern landowners a good deal of money, which they reinvested in more land and more slaves. Therefore, when war came they did not have specie on hand to invest in the government. When they did purchase bonds, they paid with paper currency issued by the Confederate government or by the state governments.61 The Confederacy also succeeded in setting up loans from European nations, especially France, but again the cotton economy impeded their efforts as the war dragged on. Cottonbacked bonds sold well to European investors when it looked as though the Confederacy might win the war and they needed southern cotton. When the fortunes of war changed and the demand for southern cotton decreased because the Europeans found other source of cotton, the bonds ceased to be a good investment, suggesting the limits of cotton diplomacy. War bonds, sold domestically or internationally, ultimately only accounted for about 21 percent of the South’s wartime revenue.
The Davis administration tried to adopt a comprehensive tax policy during the war to meet its financial obligations. In 1861, the Confederate Congress enacted a tariff, but because international trade declined it brought in little revenue. The government also placed a small direct tax on personal property, such as real estate. Seeing as southerners had no real tradition of paying taxes and they fervently supported states’ rights, most people resisted paying the direct tax because it expanded the role of the national government. The majority of states paid by confiscating northern property or by printing state notes. In 1863, the Confederate Congress approved a new tax program to raise revenue, which included a tax-in-kind on agricultural produce where farmers had to give the government 10 percent of what they raised. Not surprisingly, many farmers loathed the tax-in-kind because they paid more percentage-wise in taxes than non-agricultural laborers. Not to mention, the yeoman disliked the fact that the government did not tax slave property; to them, the government was failing to spread the tax burden evenly. All told, taxes only accounted for about 10.5 percent of the South’s wartime revenue and did not seem worth the price, given the hostility caused.
Unfortunately, printing fiat money became the easiest way to finance the war effort when loans and taxation did not bring in enough revenue. In fact, the Confederacy financed over 60 percent of their war effort through the printing press. Southern leaders understood printing excess amounts of paper currency could lead to massive inflation and create economic hardship for the people. James M. McPherson, however, suggests, “the South resorted to this method of financing…from necessity, not choice.” The treasury had a limited amount of specie on hand, so they could not back the currency. In 1863, the Confederate Congress approved a measure allowing treasury notes to be exchanged for interest bearing bonds, but the proposal required the government to issue more fiat money to be exchanged for the bonds. Given the declining faith in the Confederate war effort, the government only exchanged $21 million for bonds of the $500 million it printed for the program.
Northern Experiments in Financing
When the Civil War began, financially speaking, the North had two things working in its favor. It had an established treasury and a source of income. However, Abraham Lincoln and his advisers, especially Treasury Secretary Salmon P. Chase, still faced challenges in financing the war against the South. Secession caused a slight economic downturn, making the Union government’s financial situation tenuous because the nation was already spending more money than it made. While Chase knew little about the world of finance, he proved more adept as the country’s fiscal manager than people expected. To raise money to support the war in 1861, Chase turned to financier Jay Cooke who arranged short-term bank loans and encouraged his wealthy friends to purchase long-term government bonds. Once it became clear the war would last longer than a few months, Chase laid plans that helped the government pay for the war while also providing for economic growth.
The North financed the war by the same means that the South financed it, through loans, treasury notes, and taxes. However, the North relied more on loans and taxes than it did on treasury notes because it could rely on credit from European banks and the American people. In fact, the Union financed almost 65 percent of the war through loans and bonds. The Lincoln administration believed loans provided the best means to finance the war without adding to the nation’s pre-existing debt. While the Bank of England, as well as other European financial institutions, continued to loan money to the United States, Chase and Cooke developed a program to make the purchase of war bonds a patriotic venture. In February 1862, Chase made Cooke the official marketer of war bonds. Cooke’s bond issues raised almost $1.2 billion. To encourage ordinary northerners to buy war bonds, Cooke sold them in denominations as low as $50 and almost 1 million northerners took advantage of the program. While contemporaries criticized Cooke for profiting off the war, James McPherson maintained it “was a cheaper and more efficient means of selling bonds to the masses than the government could have achieved in any other way.”
In 1862, the Lincoln administration also reluctantly turned to printing treasury notes, often called greenbacks, to help finance about 16 percent of the war’s costs. Beginning in the 1830s, the treasury only issued notes backed by specie. However, financing the war drained the gold reserves, which limited the amount of new currency the government could issue. The government tried to boost its specie reserves by requiring people to pay for their bonds in gold. When that failed, Chase worked with Congress to come up with a solution that would allow the government to issue more money without further draining the gold reserves from banks. Republicans proposed a bill to make $150 million of newly printed fiat money legal tender in the United States in January 1862. Under the terms of the proposal, the government and the people had to accept treasury-issued paper currency as a form of payment for almost all business transactions except interest on government bonds and customs duties. Debate over the bill in Congress was fierce. Opponents, mostly Democrats, declared the measure unconstitutional. They tended to take the founders’ permission to coin money literally. Supporters, mostly Republicans, saw the measure as a necessary and proper solution to the wartime financial crisis. Ultimately, Congress accepted the Legal Tender Act, and the president signed it into law on February 25, 1862. Later in the year, Congress approved issuing another $150 million.
Alongside the efforts to fix currency problem, Congress worked to extend more federal control over the banking system because the Legal Tender Act did nothing about the numerous state notes that circulated alongside the new treasury notes. Congress passed the National Bank Acts of 1863 and 1864, which Salmon Chase encouraged Lincoln to sign. Collectively the measures created a national banking system and a uniform national currency. The laws allowed the federal government to charter banks and required those banks to purchase U.S. bonds equivalent to one-third of their lending capital. In return, the national banks could issue banknotes worth up to 90 percent of their bond holdings. The measures also helped finance the war because if a bank wanted to issue more notes, it had to purchase more government bonds.
Finally, the U.S. government relied on taxes to finance a little over 16 percent of the war’s costs. Congress avoided turning to taxes until 1862 because it wanted to steer clear of the political pitfalls taxes sometimes caused. In 1861, national leaders raised the tariff in order to bring in additional revenue. But with the financial situation still deteriorating, the Republicans considered additional taxes. Congress approved, and Lincoln signed the Internal Revenue Act of 1862, a comprehensive tax measure to revise the income tax and implement excise taxes. The measure also created the Bureau of Internal Revenue to collect the taxes. The revised income tax provisions set up a progressive rate structure; how much a taxpayer earned determined the percentage they paid. Moreover, the government also began to tax inheritances. The excise duties taxed luxury items not necessities; so northerners paid taxes on liquor, tobacco, playing cards, carriages, yachts, billiard tables, jewelry, and dividend income. They also paid on patents, professional licenses, and other official documents. However, the government did not make any of these taxes permanent.
The wartime political problems faced by the Confederate States of America and the Union were similar, as was the manner in which the two Congresses tackled the problems. Ultimately, however, despite the fact that the South was able to create a new Constitution and a new government, the overwhelming resources of the North were more than the Southern Confederacy could withstand. The Confederate and the Union governments also dealt with challenges in their effort to finance the Civil War. The South relied mostly on treasury notes to cover wartime expenses. While they attempted to use loans and taxes, political leaders found both too risky as they tried to hold their nation together. The North relied mostly on bank loans and war bonds to pay for wartime expenses. However, they also raised taxes and issued treasury notes.
When the war broke out, Lincoln announced that the war was being fought to free those who were enslaved in the South.
The Copperheads were
- War Republicans.
- Peace Democrats.
- Southern deserters.
- Northern abolitionists.
Habeas Corpus, which is guaranteed in the Bill of Rights, is the right of individuals to:
- A speedy trial.
- Be charged with a crime if arrested.
- Bear arms.
- Practice the religion of his or her choice.
Lincoln’s opponent in the 1864 Presidential election was
- General Grant.
- General Sherman.
- General McClellan.
- General Lee
The South financed its war effort primarily through
- selling war bonds.
- seizing northern assets.
- printing money.
- implementing an income tax.
The North financed its war effort primarily through
- selling war bonds.
- implementing an income tax.
- securing foreign loans.
- printing money.