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Sunday, April 17, 2011

The Un-Civil War?

On its 150th anniversary, it seemed sensible to refresh my memory about the Civil War. I have been reading "Battle Cry Of Freedom: The Civil War Era" by historian James McPherson. Turns out, things haven’t changed all that much in 150 years.

Today, the debate is still about the power of the central government over the states and the individual, fundamental problems relating to taxation, economy, spending, and welfare. All of these issues have been argued vehemently for more than 150 years, but like racial issues which continue today, the Civil War articulated and dealt with these problems head on, violently, and starkly, providing lessons for us.

Can a government conduct a war and also provide for the welfare of its people?

Can it finance a war and also promote societal progress or must it abandon or roll back the hopes for advancement?

Can it run a deficit and continue to spend, financing war and domestic programs at the same time?

Comparisons between the policies of North versus South, with differing philosophies about the role of government "intrusion" versus "aid", had as much to do with the Civil War experience as the actual fighting.

For example, it seems that, by 1862, the Confederate government had serious financial problems. Less than a year into the war, it was deeply in debt, with inflation spiraling out of control. One cause was the refusal to increase taxes.

McPherson: "Americans had been one of the most lightly taxed peoples on earth. And the per capita burden in the South had been only half that in the free states. A rural society in which one-third of the people were slaves, the South had few public services and therefore little need for taxes."

(Contrary to populist belief, current U.S. tax rates for corporations and individuals rank below most developed countries).

The Confederacy was based on the fundamental purity of "states rights", so states were trusted to collect what taxes were ordered (tariffs and modest direct real & personal property tax of 1/2 of one percent). Only South Carolina obeyed. The other twelve states waffled, ignored or opposed in principle the idea that any central government could force them to do anything.

Just as many of today’s reactionary conservatives (self-identified as Tea Party Movement) champion causes that will hurt them and benefit the wealthy, Southern poor whites in the Civil War era suffered from policies they supported. Not only were their young men fighting the war to preserve the power of the plantation rich to keep their slave based wealth, but the inflation that occurred hurt their families far more than the rich. While they fought the war, their wives and children struggled to keep their farms going.

[Parenthetically, when inflation and scarcity led to black markets and price gouging, scapegoats were found. Guess who? A newspaper wrote: "... native Southern merchants have outdone Yankees and Jews..." Oh wait. "...We shall find all our wealth in the hands of the Jews."]

On the other hand, the Northern economy prospered during (despite or because of) the war. In addition to innovative use of bond sales (presaging the campaigns of the later World Wars), Congress passed the first income tax in our history. It was an intentionally progressive tax, 3 percent on incomes over $800 only, "thereby exempting most wage owners."

Still when the war went badly in the early years, the financial system sputtered. Confidence faltered, led to a panic, a run on banks, and a shortage of money. Lincoln, who McPherson notes was "no financial expert, played little role in congressional efforts to resolve the crisis."

The wartime Congress did act, boldly and successfully. It passed the National Banking Act and elicited the aid of bankers to supply ideas. The government backed and guaranteed loans and bonds by depositing money in the banks, leading to the concept of government bills (greenbacks) being considered "legal tender". (Just as today, there was a cry that this action was unconstitutional, violating the literal words that authorized Congress "to coin money." Paper wasn’t coin. The progressives argued that the "necessary and proper" clause plus a broader construction of "coinage" should apply. Luckily, the ultra conservatives were mostly gone South by then).

Northern inflation was far less severe than that in the rebel states. In fact, the price index of the North in the Civil War was not much different than in the World Wars, less than 100 percent increase from beginning to end, whereas in the South, it rose sixfold.

The Civil War U.S. Congress is considered to be one of the most accomplished in American history. Without obstruction from hidebound Southern conservatives, the Congress passed the Homestead Act, which granted 160 acres of public land "to a settler after five years’ residence and improvements on his (or her, since the law made no distinction of sex) claim." During the war, 25,000 settlers took advantage, by staking claims to over 3 million acres of land. After the war, the westward expansion was fueled by the hopes of a "half-million farm families who eventually settled eighty million acres of homestead land."

A Vermont congressman (Justin Morrill) for years had a pet project, a "bill to grant public lands to the states for promotion of higher education in ‘agriculture and the mechanic arts.’" Passed in 1862, it created the "land grant college movement" leading to establishment of universities such as Michigan State, Penn State, Cal, Wisconsin, Minnesota, Illinois, and many others. The law also included universities in the reunited South after the war.

Another achievement was the "Pacific Railroad Act, granting 6,400 acres of public land (later doubled) per mile and lending $16,000 per mile (for construction on the plains) and $48,000 per mile (in the mountains)" in government bonds to corporations to build the transcontinental railroad. The work began in 1863 (the same year as the Battle of Gettysburg) and was completed in 1868.

While the history of the post Civil War era included vast corruption triggered in part by the corporate power of the railroads, it is also trued that "most Americans in 1862 viewed government aid as an investment in national unity and economic growth that would benefit all groups in society."

In the most ironic parallel, like the Tea Party Movement (TPM) today, Southern secessionists claimed to be inheritors of the original founders of the American Revolution. Lincoln’s election, they cried, would deprive them of their "liberty" and they cited Patrick Henry, and other Virginians for their heritage of "freedom" and their right to "property". It was an odd argument. They fought for the freedom to enslave people as property.

Like the TPM, the CSA was fundamentally white, nativist, intolerant Christian, economically selfish and narrow minded. After the war, American mythology, abetted by romantic notions of the "Lost Cause," elevated the supposed nobility of the Ante-bellum South (e.g., "Gone With The Wind"). But contrary to romantic ideas, some causes deserve to be lost and to be remembered, not fondly but with regret and shame.

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