By Sam Labrier

“I am humble Abraham Lincoln. I have been solicited by many friends to become a candidate for the Legislature. My politics are short and sweet, like the old woman’s dance. I am in favor of a national bank. I am in favor of the internal improvement system, and a high protective tariff.”

-Abraham Lincoln Announcement of his candidacy for State Representative 1832

“I was an old Henry Clay Tariff Whig. In old times I made more speeches on that subject than any other. I have not since changed my views.”

-Abraham Lincoln Letter to Dr. Edward Wallace 1859

“To British free trade it is, as I have shown, that we stand indebted for the present Civil War. Had our legislation been of the kind which was needed for giving effect to the Declaration of Independence, that great hill region of the South, one of the richest, if not absolutely the richest in the world, would long since have been filled with furnaces and factories, the laborers in which would have been free men, women, and children, white and black, and the several portions of the Union would have been linked together by hooks of steel that would have set at defiance every effort of the ‘wealthy capitalists’ of England for bringing about a separation. Such, however, and most unhappily, was not our course of operation.”

-Henry C. Carey The Way To Outdo England Without Fighting Her 1865

The name Abraham Lincoln evokes many images in peoples’ minds, but seldom does it conjure thoughts of economics. However, Lincoln adhered economically to a rich American tradition handed down to him and the Republicans by the Federalists and the Whigs who preceded them[1]. This school of economic thought emphasized freely available public credit, and high protective tariffs for developing the nation’s manufacturing capabilities and funding infrastructure improvements. Contemporary with Lincoln, the aristocracy of the British Empire advocated almost to a man for free trade, a laissez-faire regulatory system, and a monetary gold standard. One of the most famous organs for disseminating these views of the imperial elite was the Times of London. How would the guardians of the empire react to this new, protectionist turn in America? To put it kindly, it can be reasonably estimated that their reaction would be unfavourable.

Since the Confederacy was so vehemently free trade that they mandated in their constitution that it be the only economic system permitted[2], did the British aristocracy display signs that they favoured the Confederate cause to the Union. After all, despite the professed abhorrence to slavery by the British Empire, 75% of the cotton purchased by the British Empire came from the South [3]. And it is a matter of common knowledge that the British Empire did not side with the Union, but remained neutral throughout the war. It displayed a willingness to recognize the Confederacy on several occasions, and even illegally supplied the South with material aid, most notoriously with the building of the CSS Alabama.

So would love of free trade trump love of liberty for these colonial managers?

This essay will endeavour to determine whether this hypothesis holds true, through inspection of the archives of the Times of London, with a focus on editorial comment.

A short discussion of the economic history of the early Republican Party is necessary to situate the thinking of Lincoln and his protectionist allies within the broader American canvas. Lincoln modeled himself on the famous Whig leader Henry Clay, who a generation before had fought for what he called the American system of economics. Clay was himself continuing an example set by founding father Alexander Hamilton, and his American school of economics, the platform that Hamilton fought for as leader of the Federalist Party. During his tenure as the first Secretary of the Treasury, Hamilton advocated for and created a system of national banking, with low interest, freely available public credit for public and private good, with money coined in gold, silver, and copper through the mint[4], as well as paper notes issued as credit to the nation from the national banks[5]. He argued for a national system of “internal improvements,”[6] one of the most famous terms in American history, and he argued that transportation improvements were the greatest of all, since they tended to improve the welfare of the greatest number of citizens [7]. He argued explicitly against free trade and laissez-faire economics, which British economists had been arguing for since 1776 with Adam Smith’s Wealth of Nations, arguing instead for a protectionist system of tariffs, and other governmental encouragement of advanced industrial development, to improve what he termed “the productive powers of labour,”[8] and the nation as a whole.

 

Henry Clay and his allies like John Quincy Adams and Mathew Carey fought to restore Hamilton’s national banking system to the United States. After the war of 1812 was fought with no national bank, Americans saw the consequences of foregoing a national source of public credit, and the public mood shifted so dramatically it became what is known as the Era of Good Feelings, when even Jeffersonians got behind the Hamiltonian economic program [9]. In 1816 the national bank was re-chartered, and a tariff system along with internal improvements was brought back to the United States, and it reigned until the destruction of the Second Bank of the United States at the hands of Andrew Jackson, Martin Van Buren, and Roger Taney, of the later infamous Dred Scott decision. Henry Clay was able to salvage some of the internal improvement system financed through federal land sales[10], but absent the credit creation mechanism of the national banking system it shrank considerably. Thus it remained more or less until 1860 when Abraham Lincoln was elected and the South seceded from the Union. Suddenly, the South, which was always the biggest impediment to the American system, was no longer participating in Congress, and the Republicans finally had the chance to implement the system their Whig and Federalist forefathers had fought for.

During Lincoln’s administration the Republicans passed several tariffs, each time increasing their severity on the cheap, poor quality European goods being dumped on their markets. They instituted a national banking system with remnants that survive to this day. They issued low interest and abundant public credit through the “greenback” paper money system. They passed the Homestead Act and encouraged the settlement and development of the interior. They passed the Morrill Land-Grant Acts to build state colleges and “teach such branches of learning as are related to agriculture and the mechanic arts (…) in order to promote the liberal and practical education of the industrial classes in the several pursuits and professions in life.” They created the Department of Agriculture, encouraging scientific farming methods to improve and diversify crop yields. Lastly, internal improvements, though deprived of funds by the necessities of war, still saw the light in great projects such as the Transcontinental railroad, which decreased the travel time from New York to San Francisco from several months to just nine days. The railroad proved a huge boon to commerce and industry while simultaneously improving the quality of life of all Americans in a myriad of ways. This was the essence of Hamilton’s notion of the increase in the productive powers of labour, kept alive by Lincoln and his allies like Henry C. Carey, his chief economic advisor, and the son of Henry Clay’s ally Mathew Carey.

 

Beginning in the antebellum period, we find from the Times editorial staff a great deal of praise for the last official act of President Franklin Pierce, lowering tariff rates in 1857[11]. Already there is substantial evidence that according to the economists of the British Empire, free trade is the only economic choice possible. They refer to it on several occasions as scientific truth, while theories of protection are compared with alchemy[12]. A disdain for democracy is also demonstrated, since it is remarked “that Democracy must not claim among its merits the support or development of Free Trade.

Our own Chartists opposed it, Democratic America clings to a protective tariff, while free commercial ideas find refuge in the slave holding South, and we are much mistaken if under the rule of universal suffrage England would be able to maintain the liberal principles of her tariff.”[13] In other words, democracy is deficient, because it does not recognize the virtues of free trade.

The Times attempted to rebut its opponents who argued that free trade is a theory of elites and has never been popularly adopted “by any people in the world.” Agreeing with their opponents, the Times lamented “we fear that scientific truth, of which free trade is a part, is only the property of classes qualified by education to comprehend.”[14] If only free trade were adopted worldwide, “there will be no limit to the range of British enterprise.”[15]

Leading up to the elections the Times criticized the “protectionist errors which cloud the understanding of the Republicans.”[16] Upon Lincoln’s election, the first move of the Republicans in Congress was an increased tariff. The brainchild of Henry Carey, it was sponsored in the House by Carey ally Justin Morrill of Vermont. Passed just two days before Lincoln took office, it infuriated the British Empire. In articles and editorials they oscillated between blaming it for certain future economic upheaval and assuring their readership that England will find new outlets “for our cheaper and superior goods,” and “America will be the only loser.” They claimed that free trade is the “natural system” of the South, because they are agricultural and export-driven economies[17]. A letter to the Times agrees that “Southern people are clearly in favor of free trade, and the Morrill bill, if passed, will render a reconstruction or a pacific compromise more impossible than before.”[18] A day earlier an editorial stated that “in Newcastle it is considered that it will be impossible to do business with the United States on the terms set out in the tariff.”[19] A week after that, the Times was declaring that Lincoln ought to recognize the Confederacy, and that he should deal with things as they are, not as they ought to be, and that the tariff renders the return of the seceding states virtually impossible[20]. As the tariff was implemented one letter to the editors from an American was printed assuring them that the tariff is almost as unpopular in America as it is in Europe and will most certainly be repealed by the incoming Congress [21].

The Times reprinted an article from New York Commercial and Shipping List critical of the Morrill Tariff as prone to errors and too overly complicated [22]. An article by their unnamed American correspondent called it “the obnoxious measure” and referenced unnamed “injurious effects attributed to it.”[23] And a letter from Sir William Gregory advocated British recognition of the Confederacy and was highly critical of the Morrill tariff[24]. Despite all the hyperbole, by the end of 1861, the Times was editorializing that the war is a war over slavery, and not tariffs, and even seemed to imply that free trade and slave labour were synonymous, as were protection and free labour, without realizing it[25].

As 1862 rolled around the Times was focused on new economic initiatives spearheaded by the Treasury Secretary Salmon P. Chase. They claimed America would be ruined by its present debt and paper money issuance, until its citizens submit to taxes and excises “upon every necessary and convenience of life [sic].”[26] An article from their Money Market and City Intelligence section wailed that “not a practical suggestion for real economy is urged from any quarter,” and that Secretary Chase is revered for his “boldness in creating money out of paper,” and deemed to be “a worthy successor of Alexander Hamilton.”[27]

Treasury Secretary Salmon P Chase

By midyear the Republicans were looking to increase tariffs further than the Morrill Tariff already had. The Times wrote in early July of 1862 that America is proposing a new revised Tariff, which was “to be in effect a prohibition of all European goods,” and “compared with which the Morrill Tariff is a declaration of free trade.” In the same article the Times advocated for disunion, writing that the Union and the Confederacy “seem to be fast approaching that point when they must become two reasonable nations, or go on to anarchy and dissolution.” Having no security under the suspension of Habeus Corpus, and “when money is no longer a thing of intrinsic value,” America’s doom seemed imminent to the Times, and “what a destiny are these degenerate and insensate people preparing for themselves!”[28]

July and the rest of 1862 saw much of the Times’ economic protestations directed at the Revised Tariff. Comparing the Manchester school and the Protectionist Northern states, the Times echoed many of the contemporary defenses of modern globalization, speaking of “the interference of government in matters of private trade and manufacture,” and that “everything is best administered by private industry.” Again the Times seemed to admit that free trade is only in the interest of agrarian, exporting societies, stating that the South are “all free traders, not because the South possesses any greater amount of logical acumen or power of generalization than the North, but because each acts only for its own interests.”[29] The Times took pains to assure America that they will be the ones destroyed by their economic policies and that England will trade with countries like France instead of the North[30], and can obtain cotton from India and Egypt rather than the South[31].

Due to their belief in the paucity of American manufacturing, the Times predicted a never ending series of calamities befalling the republic, and said that England sees in America’s economic perversion “only the aberrations of a mind and nature so thoroughly perverted that it can exclaim, “Evil, be thou my good.””[32] However, despite all predictions of doom, by December 1862 the Times was reporting that Britain was largely unaffected by the happenings in America, and that their trade numbers were almost equal to 1861[33]. At the beginning of 1863 the Times conceded that “for one reason or another the trade [with America,] which was only nine millions two years ago, was fourteen millions last year in spite of an illiberal and retrograde tariff.”[34]

Also beginning in 1863 were the Republican moves towards a true National Banking system in America issuing a paper credit system. The Times editorialized that “the principal of a Bank connected with the Central Government has always been denounced as insidious and dangerous,” but were somewhat sympathetic, as the state banking system which preceded it appeared to Europeans “a barbarism,” and “if the social storm sweeps away the “wild cat” and “bogus” Banks of the Union, it will have left some small compensation for the wreck of better things.[35]” A Times correspondent wrote of Lincoln’s issuance of 100 million dollars in new greenbacks, with a note from Lincoln attached regretting such a large issuance of paper, and suggesting the establishment of a national banking system as a solution. The correspondent continued that “the message was unfavourably received by both Houses,” offering no further detail[36].

The Times again oscillated between criticizing the National Banking system, and claiming that it would not have been possible without the British precedent of “our own Banking acts,” though conceding “there are some strikingly American improvements on them.”[37] By fall 1863 the Times was reporting intelligence from New York suggesting that the national banking scheme of the Secretary has great opposition from certain quarters but seems to be growing in popularity, and though some in banking question the federal government’s right to regulate banking, most seem to be adopting the new government regulations quickly[38]. By March of 1864 the Times reported that the number of national banks was “somewhat over 300, with an average capital of upwards of $40,000,000.”[39]

National banking did dominate the Times editorials in regards to American economy in 1863, but it was by no means the only issue written about. In April they chastised the American plans to support the construction of a transcontinental railroad “in the midst of its gigantic struggle,” adding that the project “will add materially to the prosperity of California at the expense (…) of the general government.”[40] In a historical bit of irony, the Times wrote only days after Gettysburg that the war was proving the South stronger, adding that the South produces all the good soldiers, generals and statesmen, and that qualified statesmen cannot get elected in the tariff loving North, since according to the Times, a qualified statesmen is by definition someone who supports free trade[41]. But by far the national banking proposals dominated the year, concluding with a Times reprinting of Lincoln’s annual message to Congress in December, which spoke favourably on national banking and its capacity for issuing “public credit,” adding that “some amendments may be required to perfect existing laws, but no change in their principles or general scope is believed to be needed.”[42] The remarks of Secretary Chase were also noted, which advocated “additional legislation to secure the safety, the permanency, and the universality” of the paper currency, which he, in common with his countrymen, regards as the best currency the United States have ever had[43]. 1864 brought forth renewed attacks on the protectionist system as a whole. Again we see references to free trade being equivalent to scientific truth, with one editorial going on to deride as so-called protectionist principles “that the interest of the consumer is entirely subordinate to the interest of the producer, and that it is a legitimate object of taxation to increase the profits of a particular business.”[44] American economics is lambasted as incomprehensible to Europeans, adding that for Americans no tariff is too high, and that if America comes out of this still viable, the rest of the world will gladly learn a lesson from this protectionist example, but that is doubtful[45]. Secretary Chase will resign in July, but he is highly criticized both before and after for bringing inevitable ruin to the country with raising tariffs, depreciating the greenback and taxing all they can, adding “like Kings and Courts jealous of probity and truth, they wish to banish gold as a fixed standard of value.”[46] [47]

As late as December of 1864, despite all Northern military victories, the British continued urging a recognition of the Southern Confederacy[48], as well as an immediate peace, hoping strongly for Lincoln to reverse “the forfeiture of the whole landed property of the South and the forcible emancipation of the negroes,” and “restore to the rebels by one Proclamation what he has taken from them by another.” Earlier in September they claimed that as the North overreached in its desire to punish the South, so too it did with implementing the protectionist system. They immodestly pointed out that they had earlier predicted that maintaining such a high tariff would prove impossible, but that those warnings were treated “as the dictates of interested malevolence,” and lamented that democracies  are “incapable of profiting from the experience of others,” or of learning “the great economical truths which determine the policies of enlightened nations.”[49] Ironically, by December, they were instead writing “in spite of blockades and protectionist tariffs in America, the exports of this country have increased beyond all expectation.”[50] Upon Lincoln’s re-election, the readers of the Times were undoubtedly displeased to read Lincoln’s December address to Congress, in which he spoke proudly of the success of the national banking system[51].

It should be briefly noted that there was very little reaction from the Times over the creation of the Department of Agriculture and the passage of the Homestead Act, though the latter did receive one mention in an article from the Times’ unnamed American correspondent, claiming that “this Homestead Law (…) is now much regretted by many financiers in the country,” and that federal “revenues might be immensely increased by repealing the Homestead Law.”[52]

In summary, we find in the Times Archive much evidence to suggest that a love of free trade trumped a love of liberty in Britain’s hostility to the North and support for the South during the Civil War. Throughout the war, and despite supposed British hostility to slavery, the Times produced a nonstop flow of articles and editorials, if not outright calling for recognizing the Confederacy, then at least lionizing the Confederacy and demonizing the Union, not on any moral grounds, since they had none to stand on, but on purely economic ones. In modern America, Lincoln’s economic legacy seems to be all but lost, as contemporary leaders extol the virtues of free trade and laissez-faire. From Dick Cheney stating that free market, supply and demand economics is “the backbone of our economy,”[53] to President Obama defying his own party to push the secretive Trans Pacific Partnership[54], to former Fed chairman Alan Greenspan claiming that protectionist policies are “doomed to failure,” and advocating free trade since it “enhances standards of living through the effects of competition on productivity,”[55] it would seem that America has come to imitate the British Empire of old, not just militarily, but economically as well. Perhaps a useful course of investigation for future historians to undertake would be delineating exactly how American economic theory came to mimic British imperial axioms so thoroughly in the twentieth century, after being so opposed to them in the nineteenth.

Footnotes

[1] Gabor S. Boritt, Lincoln and the Economics of the American Dream (Champaign: University of Illinois Press, 1994), pg. 270.

[2] “Constitution of the Confederate States of America, Article 1, Section 8(1),” accessed online June 09, 2015, http://en.wikisource.org/wiki/Constitution_of_the_Confederate_States_of_America

[3] Frenise A. Logan, “India—Britain’s Substitute for American Cotton, 1861-1865,” The Journal of Southern History, Vol. 24, No. 4 (Nov 1958): 472

[4] Alexander Hamilton, Report on the Establishment of a Mint, (Washington, D.C: American State Papers, 1831), pg. 98, accessed June 09, 2015, http://memory.loc.gov/cgi-bin/ampage?collId=llsp&fileName=009/llsp009.db&Page=98

[5] Alexander Hamilton, Report on a National Bank, (Washington, D.C: American State Papers, 1831) pg. 67, accessed June 09, 2015, http://memory.loc.gov/cgi-bin/ampage?collId=llsp&fileName=009/llsp009.db&Page=67

[6] Alexander Hamilton, Report on the Subject of Manufactures, (Philadelphia: William Brown, 1827),  pg. 57, accessed June 09, 2015, https://books.google.ca/books?id=3srvO_cYTCsC

[7] Hamilton, Report on the Subject of Manufactures, pg. 59.

[8] Hamilton, Report on the Subject of Manufactures, pg. 13

[9] “The Era of Good Feelings and the Two-Party System,” Independence Hall Association, accessed June 09, 2015, http://www.ushistory.org/us/23a.asp

[10] Michael Lind, What Lincoln Believed (New York: Anchor Publishing, 2007), pg. 83.

[11] Editorial. The Times (London, England), Tuesday, Mar 24, 1857; pg. 8; Issue 22636

[12] Editorial. The Times (London, England), Saturday, Mar 03, 1860; pg. 9; Issue 23558.

[13] Editorial. The Times (London, England), Tuesday, Feb 14, 1860; pg. 9; Issue 23542.

[14] Editorial. The Times (London, England), Saturday, Mar 03, 1860; pg. 9; Issue 23558.

[15] Editorial. The Times (London, England), Friday, Feb 24, 1860; pg. 7; Issue 23551

[16] Editorial. The Times (London, England), Thursday, Oct 11, 1860; pg. 6; Issue 23748

[17] Editorial. The Times (London, England), Tuesday, Mar 05, 1861; pg. 9; Issue 23872.

[18] F.T. & Co.,“The United States Tariff,” Letters, The Times (London, England), Wednesday, Mar 13, 1861; pg. 10; Issue 23879.

[19] Editorial. The Times (London, England), Tuesday, Mar 12, 1861; pg. 9; Issue 23878.

[20] Editorial. The Times (London, England), Tuesday, Mar 19, 1861; pg. 9; Issue 23884.

[21] Editorial. The Times (London, England), Wednesday, May 01, 1861; pg. 12; Issue 23921.

[22] New York Commercial and Shipping List, “The Rival American Tariffs,” The Times (London, England), Saturday, Apr 06, 1861; pg. 7; Issue 23900

[23] Times Correspondent, “America,” The Times, (London, England),Tuesday, Apr 16, 1861; pg.5; Issue 23908

[24] W.H. Gregory, “The United States and Southern Confederacy,” Letters, The Times (London, England), Wednesday, Jun 12, 1861; pg. 12; Issue 23957

[25] Editorial. The Times (London, England), Wednesday, Nov 20, 1861; pg. 8; Issue 24095

[26] Editorial. The Times (London, England), Thursday, Feb 20, 1862; pg. 8; Issue 24174.

[27] Money Market and City Intelligence. The Times (London, England), Tuesday, Jan 28, 1862; pg. 7; Issue 24154

[28] Editorial. The Times (London, England), Wednesday, Jul 09, 1862; pg. 9; Issue 24293

[29] Editorial. The Times (London, England), Thursday, Jul 10, 1862; pg. 10; Issue 24294.

[30] Editorial. The Times (London, England), Tuesday, Aug 26, 1862; pg. 6; Issue 24334.

[31] Editorial. The Times (London, England), Tuesday, Aug 19, 1862; pg. 8; Issue 24328

[32] Editorial. The Times (London, England), Friday, Jul 11, 1862; pg. 9; Issue 24295

[33] Editorial. The Times (London, England), Thursday, Dec 04, 1862; pg. 6; Issue 24420.

[34] Editorial. The Times (London, England), Thursday, Feb 26, 1863; pg. 10; Issue 24492

[35] Editorial. The Times (London, England), Thursday, Jan 08, 1863; pg. 8; Issue 24450

[36] Times Correspondent, “America,” The Times (London, England), Tuesday, Feb 03, 1863; pg. 12; Issue 24472

[37] Editorial. The Times (London, England), Wednesday, Mar 18, 1863; pg. 8; Issue 24509

[38] Commercial Intelligence. From the New York Shipping and Commercial List. The Times (London, England), Monday, Sep 21, 1863; pg. 8; Issue 24669

[39] Times Correspondent, “America,” The Times (London, England), Wednesday, Mar 23, 1864; pg. 12; Issue 24827

[40] Times Correspondent, “California,” The Times (London, England), Saturday, Apr 04, 1863; pg. 10; Issue 24524

[41] Editorial. The Times (London, England), Thursday, Jul 09, 1863; pg. 8; Issue 24606.

[42] President Lincoln’s Message. The Times (London, England), Wednesday, Dec 23, 1863; pg. 5; Issue 24749.

[43] Times Correspondent, “The Civil War in America.” The Times (London, England), Monday, Dec 28, 1863; pg. 4; Issue 24753

[44] Editorial. The Times (London, England), Thursday, Jan 21, 1864; pg. 8; Issue 24774

[45] Editorial. The Times (London, England), Monday, Apr 04, 1864; pg. 8; Issue 24837

[46] Editorial. The Times (London, England), Wednesday, May 11, 1864; pg. 8; Issue 24869

[47] Editorial. The Times (London, England), Tuesday, Jul 19, 1864; pg. 11; Issue 24928

[48] Editorial. The Times (London, England), Wednesday, Dec 14, 1864; pg. 6; Issue 25055.

[49] Editorial. The Times (London, England), Saturday, Sep 10, 1864; pg. 8; Issue 24974

[50] Editorial. The Times (London, England), Wednesday, Dec 14, 1864; pg. 6; Issue 25055.

[51] The President’s Message. The Times (London, England), Tuesday, Dec 20, 1864; pg. 4; Issue 25060

[52] Times Correspondent, “The United States,” The Times (London, England), Monday, Aug 14, 1865; pg. 9; Issue 25263

[53] “Interview with Vice President Dick Cheney,” PBS, accessed June 09, 2015, http://www.pbs.org/wgbh/pages/frontline/shows/blackout/interviews/cheney.html

[54] Siri Srinivas, “Trans Pacific Partnership: Obama Ready to Defy Democrats to Push Secretive Trade Deal,” The Guardian, January 21, 2015, accessed June 09, 2015, http://www.theguardian.com/business/2015/jan/20/barack-obama-trans-pacificpartnership-republicans

[55] Rex Nutting, “Greenspan Lauds Free Trade,” CBS News, April 16, 1999, accessed June 09, 2015, http://www.cbsnews.com/news/greenspan-lauds-free-trade/