The gray-haired William Seward was, in Henry Adams’s memorable account, “a slouching, slender figure; a head like a wise macaw; a beaked nose; shaggy eyebrows; unorderly hair and clothes; hoarse voice; offhand manner; free talk, and a perpetual cigar.”28 A convivial wine drinker and raconteur, Seward eventually grew close to Lincoln. But in the months leading up to Fort Sumter, he sometimes overreached his position. Evidently, he still held a grudge over having lost the Republican nomination in 1860. He told a European diplomat that Lincoln was like a hereditary monarch, a mere figurehead in a government whose true leader, Seward himself, was equivalent to a prime minister. Charles Francis Adams Jr. recalled that Seward, who viewed Lincoln as “a clown, a clod,” planned to “steer . . . the nerveless president” by “subtle maneuvering, astute wriggling & plotting.”29 From Washington, Seward wrote to his wife, “I am the only hopeful, calm, conciliatory person here.”30
Despite his outward calmness, Seward’s alarm over the imminence of civil war led to his frustrated words in an April 1 memo to Lincoln titled “Some thoughts for the president’s consideration.” Seward wrote, “We are at the end of a month’s administration, and yet without a policy, either domestic or foreign.”31 Seward confusingly recommended that Lincoln surrender Fort Sumter to the Confederates but reinforce other US forts in the South. Seward also proposed a quixotic plan to rally the South to unified military action with the North by declaring war against France, Spain, and possibly other European nations that were making incursions into the western Caribbean. If the president could not undertake the task, Seward added, the president should “devolve it on some member of his cabinet.” Lincoln answered the secretary of state by restating his intention, formerly supported by Seward, of holding all the federal forts, including Fort Sumter. He ignored Seward’s suggestion about entering into a war with Europe. He did not want to quarrel with Seward, whose presence in the administration he valued greatly. For one thing, he knew that Seward was an unswerving antislavery radical who was enlightened on race. In 1861, Seward started issuing passports to American blacks in the belief that they were American citizens.32
And he was useful to Lincoln in other ways. He became the main enforcer of the president’s policy of suspending habeas corpus in cases of Northerners arrested on suspicion of disloyalty to the Union. Despite Seward’s bravado just before the war, he went on to treat international affairs with sensitivity and nuance. He performed sensibly when many Americans called for the retention and punishment of Confederate envoys who had been taken from a British schooner, the Trent, in December 1861. So much tension arose from the seizure of the envoys that England was poised for war with the United States, while Northerners called for a trial of the captured Confederates. Seward thought carefully about the situation and decided that permitting the Southern envoys to make their trip to England was the best course of action—an argument that won over Lincoln and indeed proved to be a judicious decision.
It was largely due to Seward’s negotiating skills that neither England nor France became involved in the Civil War. Also, in 1862, Seward worked out with England the Lyons-Seward Treaty, which laid down strong measures aimed at ending the international slave trade. He had other major achievements as well: he prevented England from continuing to build ships like the Alabama, the Florida, the Georgia, and the Shenandoah, Confederate commerce raiders that wreaked havoc on the Union’s merchant fleet; he dealt deftly with France over its attempted intervention in Mexico; and he developed a farsighted Latin American policy. He also opened vistas by airing an idea about a canal across Central America and by advancing the open-door policy to the Far East. Later, under Andrew Johnson, he famously managed the acquisition of Russian America (Alaska) and began negotiations for reparations from England for its shipbuilding for the Confederacy, leading to a $15.5 million settlement.
Seward became Lincoln’s boon companion. Warm and outgoing, Seward lived in a home diagonally across Lafayette Square from the White House. He led virtually a bachelor’s life in Washington because his wife, Frances, a sickly woman who disliked the political scene, had remained home in Auburn, New York. Seward regularly dropped in to see the president, who returned the visits, spending many an evening relaxing in Seward’s parlor. Lincoln loved stretching his long legs before Seward’s fire while the effervescent secretary sipped wine and puffed cigars. The friends discussed many subjects and traded stories and jokes, frequently off-color ones. During Emerson’s weekend in Washington, Seward, despite Lincoln’s warning to avoid being “smutty,” told Emerson a story with the punchline “I can’t say I have carnal knowledge of him,” which the staid philosopher called an “extraordinary exordium.”33 On another occasion, Lincoln was in a carriage whose driver cursed vehemently. Lincoln asked what church he attended. When the driver said Methodist, Lincoln replied, “Oh, excuse me, I thought you must be an Episcopalian, for you swear just like Secretary Seward, and he’s a church-warden!”34
Lincoln’s closeness to Seward, however, created some difficulties. It was commonly thought that the New Yorker had succeeded in his original plan of becoming the “Premier” of the Lincoln administration, acting as the puppeteer of the president. Some of the bitterness the other cabinet members felt toward Seward signaled envy of his friendship with Lincoln. Also annoyed was Mary Todd Lincoln, who saw Seward as a power-hungry schemer who wanted to supplant her husband. She went so far as to avoid driving by Seward’s house in her carriage rides.
Treasury secretary Salmon Chase, who lived a mile from the White House and whose stiff personality stymied warm relationships, especially resented the easygoing Seward’s intimacy with the president. Lincoln had to exercise far more forbearance with the aggressive Chase than with the gregarious Seward.
After his victory in the 1860 election, Lincoln had been warned by the Springfield businessman John W. Bunn against appointing Salmon Chase to his cabinet. Lincoln asked, “Why do you say that?” Bunn replied, “Because he thinks he is a great deal bigger than you are.” For someone less sure of himself than Lincoln, this statement would have raised red flags about Chase’s possible disloyalty. But Lincoln asked Bunn, “Well, do you know of any other men who think they are bigger than I am?” Bunn: “I do not know that I do, but why do you ask me that?” Lincoln: “Because I want to put them all in my Cabinet
Humorless and reserved, Salmon Chase never surrendered his sense of superiority over Lincoln. Senator Benjamin F. Wade remarked: “Chase is a good man, but his theology is unsound. He thinks there is a fourth person in the Trinity.”36 Chase’s desire for the presidency led to his attempt to become the Republican presidential nominee in 1864. On learning of his effort, Lincoln told a story about him and his stepbrother once trying to plow a cornfield with a lazy horse. Lincoln swept a stinging chin-fly off the horse’s neck, but his stepbrother objected, saying, “Why, that’s all that made him go.” “Now,” said Lincoln, “if Mr. Chase has a presidential chin-fly biting him, I am not going to knock him off, if it will only make his department go.”37
Actually, Lincoln had great respect for Chase, who had been a path blazer in the fight against slavery. As a Cincinnati lawyer known for the pro bono counsel he gave to runaway blacks and Underground Railroad agents, he earned a reputation as the Attorney General for Fugitive Slaves. He was associated successively with the Whigs, the Liberty Party, the Free Soil Democrats, and the Republican Party, under whose mantle he served as the governor of Ohio and then as a US senator from that state. He coined the famous Republican slogans “Free Soil, Free Labor, and Free Men” and “Freedom is national; slavery only is local and sectional.”38 Lincoln deeply appreciated Chase’s vigorous campaign speeches on his behalf in the 1858 Senate race in Illinois against Douglas. Chase’s well-reasoned interpretation of the Constitution as antislavery in spirit anticipated Lincoln’s Cooper Union Address. During the war, Chase objected when his financier friend Jay Cooke opened a Washington streetcar line from which black people were banned.
Lincoln also admired Chase’s competence as a Treasury secretary. The president said he thought that Chase’s maneuvering for the presidency “was very bad taste, but that he had determined to shut his eyes to all these performances: that Chase made a good Secretary and that he would keep him where is: if he becomes Presdt., all right. I hope we may never have a worse man.” Lincoln added: “I am entirely indifferent as to his success or failure in these schemes, so long as he does his duty as the head of the Treasury Department.”39 Chase indeed performed his Treasury duties competently, but his strategizing for the presidency in time soured his relationship with Lincoln, who in June 1864 accepted his offer to resign. However, Lincoln sought to keep Chase’s radical voice alive by appointing him chief justice of the Supreme Court in December 1864.
FINANCING THE WAR
Chase’s greatest contribution came in an area in which he entered the Civil War with little previous experience: economics. By applying his native intelligence and adapting to the rapidly changing conditions of war, Chase, with regular input from Lincoln, established a government-backed fiscal structure that proved to be a major factor in the North’s victory.
Lincoln inherited a weak economy. His predecessor, James Buchanan, had begun his administration in March 1857 with a surplus in the Treasury of $1.3 million and a modest debt of $28.7 million. Wasteful spending and corruption during his presidency led to a large deficit and a debt of $76.4 million by the time Lincoln took office.40 American currency was in a state of “paper anarchy”—what amounted to financial centrifugalism. Many varieties of paper currency were issued in the states by individual banks, creating what has been called “a crazy quilt of money.” By 1861 there were no fewer than seven thousand different legitimate bills in circulation, more than 80 percent of which had been successfully counterfeited.41
Given the depleted Treasury and the chaotic currency, how was the Union to pay for the sudden military buildup in the months just after Fort Sumter?
This was the dire situation that confronted Lincoln’s Treasury secretary, Salmon Chase. With his background in the law and antislavery politics, Chase did not have much preparation in fiscal matters. Confronted with the fiscal confusion of the opening months of the Civil War, he took economic action that was repellent to him. He had always been devoted to metallic currency. He confessed to “a great aversion to making anything but coin a legal tender in payment of debts.”42 Nonetheless, he quickly realized that funding must come from somewhere, and so he turned to paper money. With the help of an association of eastern bankers led by the Philadelphia financier Jay
Cooke, Chase devised issuances of government bonds, securities, and legal tender that provided much needed revenue for the Union. In August 1861 came demand notes, so called because they could be exchanged on demand for gold or silver. When the supply of hard currency ran out at the end of the year, Chase argued for cash backed by government promises rather than specie. The Legal Tender Act, passed by Congress on February 25, 1862, authorized the printing of $150 million in government money as bills known as greenbacks. In the course of the war, some $500 million of greenbacks (about $7 billion today) were printed. Chase did not feel comfortable with them, and in fact as chief justice of the Supreme Court in 1869 he ruled that paper money was unconstitutional, a decision that was later overturned. But he considered greenbacks a wartime necessity.
Lincoln did, too, especially because many state banks continued to issue their own currency. When in January 1863 Lincoln approved a fresh printing of greenbacks, he predicted that “continued issues of United States notes, without any check to the issues of suspended banks,” could have “disastrous consequences.”43 Despite his qualms about paper money, he saw the need for a national currency, and he recognized its value for cultural stability and cohesion. He implemented another of Chase’s ideas, a national banking system, in May 1863. This system required state banks to hold federally produced currency. In December 1864 Lincoln reported to Congress that 584 national banks (many of them converted state banks) had been established during the past year. “The national banking system,” he declared, “is proving to be acceptable to capitalists and to the people. . . . [I]t is hoped that, very soon, there will be in the United States, no banks of issue not authorized by Congress, and no bank-note circulation not secured by the government. . . . The national system will create a reliable and permanent influence in support of the national credit, and protect the people against losses in the use of paper money.”44
Also important to the Northern economy were the interest-bearing government bonds sold by Chase’s financier friend Jay Cooke. Known as five-twenties and seven-thirties because of their differing interest rates and maturity periods, the bonds became a symbol of patriotism and democracy. Cooke’s many agents fanned out through the North, appearing in cities, towns, and villages, where they promoted the purchase of the bonds as an act of patriotism. Newspaper ads, signs, and broadsides invited Northerners of all social grades to buy government bonds in order to fund the military and the government. A typical advertisement announced, “Money is the great power in war and will conquer at last, and he who contributes his money to aid his country in her hour of danger may thereby evince as much patriotism as he who marches to the battle field.”45 Outside Cooke’s Washington office was an American flag and a banner that read:
The Bravery of our Army
The Valor of our Navy
Sustained by our Treasury
Upon the Faith and
Substance of
A Patriotic People.46
One problem with so much paper currency was that it accelerated inflation. An item that cost one dollar in the North in 1860 had risen to $1.75 by the end of the war. However, the economic situation in the South was far worse. There, an item that was one dollar in 1860 cost ninety-two dollars in 1865—an astounding 9,000 percent inflation rate over the course of the war.47 Seven series of Confederate banknotes were issued, with no backing in hard currency. Because the greybacks, as they were called, were credit notes that promised payment to bearers once peace came and the Confederacy was firmly established as an independent nation, the notes became virtually worthless by early 1865, as the South’s defeat loomed. Counterfeiting the greybacks was easy and widespread. Relatively speaking, then, the North was in strong fiscal shape, thanks in part to the work of Salmon Chase, under Lincoln.
Notably, the Treasury under Chase also oversaw the first national income tax in US history. In August 1861 Lincoln authorized a 3 percent tax on annual income above $800. The following July he signed a bill that lowered the exemption to $600 and raised the tax on income above $10,000 to 5 percent, including moneys earned from property, rents, dividends, or other sources. In 1864 there came another graduated tax, which taxed incomes between $800 and $10,000 at 5 percent, then 7.5 percent for incomes between $10,000 and $25,000, and 10 percent above that.48 The income tax was seen as a people’s tax, for it did not affect many Americans in a time when the average annual wage was around $600 for skilled workers and $400 for laborers.49 Also democratic were excise taxes imposed during the war on luxury items such as jewelry, watches, refined sugar, and carriages.
Lincoln’s administration, therefore, centralized and standardized currency and banking in ways that did not lose sight of average Americans. The greenback was the ancestor of today’s dollar, and government bonds would continue to have a vibrant place in the US economy. Chase and Lincoln also played lead roles in introducing types of taxation that were adopted, in revised form, by later administrations.
DEMOCRATIZING COLLEGE EDUCATION AND LAND IMPROVEMENT
If these initiatives raised revenue for the war, another program under Lincoln opened the way to practical education for generations of Americans. It is often forgotten that Lincoln was the president who authorized land grant colleges and universities. Before his presidency, there had been efforts toward federally funded higher education, but none had gained traction. In 1857, Senator Justin Morrill of Vermont had introduced a bill that would allocate federal land to each state for the development of institutions of higher learning in agriculture and mechanics. His bill passed Congress two years later, but President Buchanan vetoed it.
During Lincoln’s first term, Senator Morrill reintroduced his bill, which was approved by Congress and signed by the president on July 2, 1862. The Morrill Land-Grant Colleges Act distributed public land for the endowment of colleges devoted primarily to “agriculture and the mechanic arts” but “without excluding other scientific and classical studies, . . . in order to promote the liberal and practical education of the industrial classes in the several pursuits and professions in life.”50 In 1890, a second Morrill Act expanded the program and stipulated that race must not be a factor in admission to the state colleges. Over time, more than three hundred land grant institutions were founded, among them Cornell, Ohio State, Michigan State, Penn State, Texas A & M, the University of California, and many historically black and Native American colleges and universities. Land grant colleges reflected Lincoln’s deep interest in agriculture, which fit economic reality in an age when more than half of all Americans lived on farms.
Given Lincoln’s interest in merging technological advance with economic prosperity, it is fitting that in 1862 he created the Department of Agriculture, committed to improving farming techniques, gathering statistics, and performing experiments that might lead to agricultural progress. “The
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