Ways and Means: Lincoln and His Cabinet and the Financing of the Civil War

by Roger Lowenstein

From renowned journalist and master storyteller Roger Lowenstein, a revelatory financial investigation into how Lincoln and his administration used the funding of the Civil War as the catalyst to centralize the government and accomplish the most far-reaching reform in the country's history

Upon his election to the presidency, Abraham Lincoln inherited a country in crisis. Even before the Confederacy's secession, the United States Treasury had run out of money. The government had no authority to raise taxes, no federal bank, no currency. But amid unprecedented troubles Lincoln saw opportunity--the chance to legislate in the centralizing spirit of the "more perfect union" that had first drawn him to politics. With Lincoln at the helm, the United States would now govern "for" its people: it would enact laws, establish a currency, raise armies, underwrite transportation and higher education, assist farmers, and impose taxes for them. Lincoln believed this agenda would foster the economic opportunity he had always sought for upwardly striving Americans, and which he would seek in particular for enslaved Black Americans.

Salmon Chase, Lincoln's vanquished rival and his new secretary of the Treasury, waged war on the financial front, levying taxes and marketing bonds while desperately battling to contain wartime inflation. And while the Union and Rebel armies fought increasingly savage battles, the Republican-led Congress enacted a blizzard of legislation that made the government, for the first time, a powerful presence in the lives of ordinary Americans. The impact was revolutionary. The activist 37th Congress legislated for homesteads and a transcontinental railroad and involved the federal government in education, agriculture, and eventually immigration policy. It established a progressive income tax and created the greenback--paper money. While the Union became self-sustaining, the South plunged into financial free fall, having failed to leverage its cotton wealth to finance the war. Founded in a crucible of anticentralism, the Confederacy was trapped in a static (and slave-based) agrarian economy without federal taxing power or other means of government financing, save for its overworked printing presses. This led to an epic collapse. Though Confederate troops continued to hold their own, the North's financial advantage over the South, where citizens increasingly went hungry, proved decisive; the war was won as much (or more) in the respective treasuries as on the battlefields.

Roger Lowenstein reveals the largely untold story of how Lincoln used the urgency of the Civil War to transform a union of states into a nation. Through a financial lens, he explores how this second American revolution, led by Lincoln, his cabinet, and a Congress studded with towering statesmen, changed the direction of the country and established a government of the people, by the people, and for the people.

Genres: History, Economics, Nonfiction, Civil War, American History, Politics, Finance

448 pages, Hardcover

First published March 8, 2022

About the author

Roger Lowenstein is an American financial journalist and writer. He graduated from Cornell University and reported for The Wall Street Journal for more than a decade, including two years writing its Heard on the Street column, 1989 to 1991. Born in 1954, he is the son of Helen and Louis Lowenstein of Larchmont, New York. Lowenstein is married to Judith Slovin.
He is also a director of Sequoia Fund. In 2016, he joined the board of trustees of Lesley University. His father, the late Louis Lowenstein, was an attorney and Columbia University law professor who wrote books and articles critical of the American financial industry.
Roger Lowenstein's latest book, Ways and Means: Lincoln and His Cabinet and the Financing of the Civil War, was released on March 8, 2022, and won the 2022 Harold Holzer Lincoln Forum Book Prize.

Reviews

[Bill · Rating 5 out of 5]

This is a wonderful book, but first, a brief word of caution - its subtitle is a little misleading in a couple of ways. “Lincoln and his Cabinet…” suggests a focus on, well, Lincoln and his Cabinet, when in reality the central figure is far and away Lincoln’s Treasury Secretary Salmon P. Chase, with Lincoln himself playing only a supporting role. The remainder of the subtitle, “...and the Financing of the Civil War,” suggests a far drier and narrower approach than this book actually delivers.

It almost put me off reading this book altogether, as I am not much of a finance guy and wasn’t sure how much I wanted to dig into Civil War-era monetary policy and bond yields and interest rates and all that. But if you’re considering the book, don’t make the same mistake I almost did. Lowenstein has written a thoroughly readable, fresh, fact-filled but easily digestible account of the Civil War through a unique financial lens. The fighting and the politicking happen mostly offstage, as the book provides what amounts to an economic history of the Civil War, and beyond.

Lowenstein’s account of the war incorporates the major battles, the personalities, the debates over emancipation, and everything you’d expect in a Civil War book. But all of it is in service of the financial story, as the narrative always circles back to the larger economic picture. From the very beginnings of the conflict, Lowenstein explains how secession put the financial stability of both the North and the South in peril - the Union government was almost entirely dependent on import duties for revenue, and losing the South meant losing a significant revenue source. The Southern agrarian economy, meanwhile, gave it an "utter dependence on the outside world" for everything else, which put it in a precarious financial situation when trying to go it alone. The division of the competing, but up til then complementary, regions exposed the reality that prior to the war, "in a financial sense, there was no Union."

Lowenstein goes on to ably describe the financial motives of all stakeholders - from Northern business leaders who favored conciliation with the South, to Southern slaveholders who feared a loss in their slaves’ value if the spread of slavery into the territories was banned. Further, from Lincoln’s belief that free labor was not only morally but economically superior to slavery, to the Southern planter class’s push for secession and war as a way to preserve their way of life, Lowenstein makes a compelling argument that there was an economic motive behind just about everything that everyone did leading up to the war.

As the war gets underway, Lowenstein writes that "Lincoln thought more about the purse than is credited; he considered a robust Treasury vital to winning the war." Yet Lincoln was largely hands off, and the book focuses mostly on Chase's efforts to finance the war and keep the government afloat, and how his efforts proved to be far superior to parallel efforts by the Confederacy. Under Chase’s leadership at Treasury, the Union came to embrace direct taxation via an income tax, which was a novel and largely untested idea at the time; national banks, for the first time since the Jackson era; a standard national paper currency, neither backed by gold nor interest-earning, which we take for granted today but was unheard of back then; and the marketing of interest-earning bonds to ordinary citizens, which introduced many in the middle class to the concept of investing.

Lowenstein also spends a good deal of time contrasting the North’s ultimately successful approach with the South’s far less effective economic efforts. From the start, the Confederacy faltered with a mistaken strategy of withholding cotton exports in an attempt to earn leverage, instead of selling as much cotton as possible as early as possible, which “could have bankrolled the war economy for years.” It also failed in creating a viable national currency or economic plan, boxed in by its commitment to a states’-rights, decentralized government.

Economically and militarily, then, the conflict essentially consisted of "parallel wars," Lowenstein writes. Even early on, when the South was winning on the battlefield, it was already losing the economic war. At the same time, the lack of Union battlefield victories spooked investors and put U.S. credit at risk, which endangered its efforts to win the war. The victor would ultimately have to win on both fronts, as financial and military success were intertwined.

At times, the discussions of numbers and percentages and inflation rates and balance sheets can get a little numbing. But it’s necessary and unavoidable information, and Lowenstein always keeps his audience of laymen in mind and gets back into the story as soon as possible. In keeping with his economic theme, he also includes anecdotes about everything from the economic roots of the New York draft riots, to the financial origin of the word “Dixie.”

I realize I haven’t mentioned Chase very much, but he’s present in the book a lot more than he is in this review. The book almost serves as a combination of a Chase biography and a complete account of his tenure as Treasury Secretary, as a lens through which to view the financial history of the war. We learn of his successes, his frustrations, his ambitions, and his alternating admiration for, and clashes with, Lincoln.

In the end, the financial and centralization efforts introduced during the war transformed American society, North and South, long after the war ended - not only when it came to taxation, banking, and currency, but with the major economic-related achievements of the wartime Congress: the Homestead Act, Pacific Railway Act, Land-Grant College Act, and the creation of the Agriculture Department. "Winning, and financing, the war had demonstrated the federal government's potential," Lowenstein writes. And from then on, "the government became a more conspicuous - some would say meddling - presence" in everyday life.

There are plenty of military and political histories of the Civil War out there. And while the economic history is not exactly an unexplored topic in Civil War studies, Lowenstein has succeeded here in shining the spotlight on the economic part of the story in a way that’s compelling, understandable and highly readable for a general audience. Regardless of your level of financial literacy, if you have any interest in a fresh take on the Civil War, I highly recommend this.

[Alex · Rating 4 out of 5]

I'm having difficulty pulling together a cohesive review, so rather than continue the struggle I'm just going to list a spattering of observations and hope that they help you get a sense of the book.

• I love a book with a strong thesis. Lowenstein opens by describing Jefferson's vision of a quaint, reserved central government—a vision, he says, which largely won out over the Federalists'.

"Then came the "rupture." The Republicans―elected on the eve of the Civil War vastly enlarged the government, not only to defeat the Confederacy but to carry out an agenda for industry and growth, and to foster opportunity, especially for those at the bottom. They accomplished a revolution that has been largely overlooked."

Here we are on page 2. A second American Revolution. Strong thesis. Compelling hook. Let's go.

• Titling a book must be hard. I therefore say this with sympathy. The cover understates, undersells, and undermines what the book is actually about. It has a portrait of Lincoln stretched from top to bottom. It's not a book about Lincoln. Don't expect much biographical material. The subtitle is "Lincoln and his cabinet..." Closer. It's less about his cabinet and more about Salmon Chase, Secretary of the Treasury, but it's not really about a person. Even though the book's main material is in fact "the financing of the civil war" (quoted from the second half of the subtitle), there are far larger questions at stake: What is a country? What are its core values? What is money—really, what is money? This is big stuff here. And while the sense of those questions is everywhere pervasive, Lowenstein never brings them to the fore.

• Bonds. Bonds, bonds, and more bonds. All types of bonds. If you don't have at least a little knowledge of finance, then I expect your eyes will be glazed over in short order. (But that goes two ways of course. If you're financially-minded, then you have found a treat.)

• If you were to divide the book into thirds, the first third is basically setup and the last third reads like an extended epilogue. The middle third, though—Yes. You can tangibly feel Lowenstein come to life. It really is electric. It's an engaging narrative, and Lowenstein offers brilliant financial commentary without ever getting in the way.

• He seems quite convinced that, to Lincoln, the war was not principally over slavery.[1] As Lowenstein sees it, even though slavery was inescapably intertwined in the issue, to Lincoln, it was a war first about economics and economies. This was striking, and has spurred curiosity in reading more about Lincoln's motives.


__________

[1] Some samples.

"Had the South surrendered at this point—before Lincoln committed to emancipation—the war might have ended without a clear mandate to abolish slavery." (p. 130)

"Nine days later, on July 22, Lincoln divulged his plan for a proclamation to the full cabinet. In a sign of deference to Congress, he said he would base it on the recent Confiscation Act. Like the act, his proclamation would apply only to slaves in states (or parts thereof) engaged in rebellion. Somewhat lost to history, Lincoln intended the proclamation to be proffered as an inducement, however unlikely, for southern surrender. In any states that laid down arms before it took effect, emancipation would not occur. (p. 142)

"On August 20, less than a week after the group's visit, Horace Greeley accused the President of bending to the will of border-state politicians in failing to use the new law to emancipate. 'We think you are strangely and disastrously remiss with regard to the emancipating provisions of the new Confiscation Act,' Greeley wrote...Lincoln, skirting the main issue, replied that his purpose remained to save the Union. 'If I could save the Union without freeing any slave I would do it, and if I could save it by freeing all the slaves I would do it; and if I could save it by freeing some and leaving others alone I would also do that.'" (p. 145)

"Lincoln waffled on slavery, suggesting that slave states loyal to the Union be given until the remote year 1900 to adopt compulsory emancipation. But as often, when he considered slavery in economic terms, he radiated with understanding." (p. 162)

[Shereadbookblog · Rating 5 out of 5]

I’m not a big fan of non fiction, but I heard Lowenstein interviewed on NPR and found what he had to say quite interesting so I tried his book in which he outlines the influence of economic strategies on the progress and outcome of the Civil War. I found it fascinating. Well written, Lowenstein took what could have been a dry subject and kept my interest throughout. He explained some complex subjects in a way that made them easily understood. It is all here…the role of the central government, the differences between what is tolerated in the north and the south, finances, services, taxation. I gained more insight into not only the Civil War era, but also into some of our politics today.

Thanks to NetGalley and Penguinpress for the DRC

[Richard Thompson · Rating 4 out of 5]

I have a never-ending fascination with the Civil War that I inherited from my father. This book gave me a different point of view from the many other books that I have read that were largely focused either on the military or on particular outsized personalities or on things in the South. Some people may find this book's focus on financing to be a bit dry, but for me it was interesting, and I learned a lot.

I had not previously had a sense of how relatively primitive government financing was before the Civil War and how little the antebellum federal government actually did. Regular government bond issues, fiat currency, income tax and selling government debt to the general public were new ideas. These things are such an embedded part of our economic system today that we take them for granted, and if you had asked me before I read this book, I probably would not have guessed that they largely stemmed from the need to raise unprecedented amounts of money to finance the Civil War. The other interesting message of this book, which is something that I did already know but that I now understand better, is that the main reason that all of these innovative financing structures worked was the underlying productivity, strength and resilience of the economy of the North. Of course, the wartime spending was an economic stimulus, but no amount of stimulus would have been enough to overcome the disruption of the war without such a fundamentally rich and strong economy.

I had also not understood how the Civil War marked the beginning of an activist federal government, with things like support for railroads, homesteading and the land grant colleges. I would have guessed that those things largely came later after the end of the war, but they were a basic part of Lincoln's philosophy that Mr. Lowenstein traces back to the defunct Whig Party. They had huge impacts on strengthening the country and broadening economic opportunity. That these programs could be implemented at a time when the country was fighting for its life is a tribute to Lincoln's farsighted leadership.

The character who is the main focus of this book is the Secretary of the Treasury, Salmon P. Chase. He was a smart man and a tireless worker who managed to push through innovative financial programs and to keep enough money flowing to support the Union army, but it is clear that most of this was done without any big vision or master plan. He was just muddling through, and necessity was the mother of invention. I had not realized that Chase went on to be Chief Justice of the Supreme Court and the founder of the Chase Manhattan Bank. He had his flaws, but he also had the spark of genius.

[David Kent · Rating 5 out of 5]

The Civil War was unequivocally about slavery. It was also about the economics of slavery. While the northern states had largely eradicated slavery from its borders, the South was almost entirely dependent on it. In the decade prior to the war, cotton production jumped from 2.8 million bales to more than 4 million, and the unit value of the South’s nearly four million enslaved people doubled. While the North invested in machinery and improved varieties of wheat and corn, the South invested in expanding cotton acreage and breeding more people to enslave. In both the North and the South, the costs of war were extraordinary. But while the North innovated and prospered during the war, the South simply consumed its resources.

Financial journalist Roger Lowenstein digs into the financing of the war. He writes a remarkably accessible book on Lincoln and his cabinet (by cabinet, he means Salmon P. Chase; the others are barely mentioned and only in passing), who somehow, against all odds, kept the economy from collapsing while finding creative ways to pay for the massive costs of war. As Lowenstein demonstrates, this chore was no minor matter. Before the war the federal government had little means of raising money. By the end, the North had instituted taxing power, a new banking system, and was enjoying a vibrant commercial life. Northern elite continued to have access to the theater, to philharmonic orchestras, and to a variety of social niceties. While many northern men were off fighting, those at home saw only rare battlefield action occur on northern soil, thus limiting the local economic and infrastructure destruction seen in the South. By the third year of the war, Chase and others had helped not only fund the war effort but helped the North recover from the initial economic depression caused by loss of southern markets. As the northern war economy picked up steam, the Union’s infrastructure and industrial might gave it an overwhelming edge. Even with a million men in uniform, northern farms effortlessly met the increased demand for food. They also turned to mechanization to increase productivity.

Lowenstein addresses war financing in the South as well. He argues that the South, for all its other failings, failed even more miserably when it came to financing the war. It may have been the main reason they lost. Plantations slowly switched from cotton to corn and grain production (soldiers have to eat), but not enough to alleviate shortages. In-fighting between the southern states did not help the cause. Southern diarist Edmund Ruffin suggested that the blockade of supplies from overseas may have damaged the South more than northern armies. The southern disdain for economic and industrial development before the war doomed them during the war. In short, they were wholly incapable of financing the war effort.

Overall, this is a surprisingly accessible book for one that focuses on the rather dry issue of war funding. Who knew finance could be so interesting?

[Joseph · Rating 5 out of 5]

Although this is more a biography of treasury secretary Salmon P. Chase than a general history book, it was still very good. The author details how the war effort was financed and how Lincoln dealt with debt during the conflict. Definitely not a book for the general reader; more likely this book caters to the nuanced diehard Civil War buff looking to dive deep. Overall a very good effort.

[Jakub Dovcik · Rating 5 out of 5]

This book presents a fascinating narrative that blends together the military and financial history of the Civil War, the biography of Treasury Secretary Salmon P. Chase with a narration of the developments that created modern money and financial markets. Lowenstein shows how the Union won the war by being better prepared but also making better financial decisions, and on the other hand, how the South mismanaged even the little advantages they before the war had and could exploit (namely the export of cotton to England).

Roger Lowenstein manages, as usual, to blend the monetary history and theory with the personal stories of the people making the decisions, showing how so much of what we now consider as "given" or natural, was first created in wartime circumstances. While his focus is naturally on Chase and his creativity in finding more and more novel ways to fund the war effort (from loans from banks, through tariffs and first income taxes, all the way to selling bonds directly to people home and abroad), he also looks at other fascinating figures of that effort, like the Ways and Means Committee chair Thaddeus Stevens or salesman of the first popular bond issues, Jay Cooke.

This book is fascinating because it shows how the Civil War presented an opportunity to enact so many of the Whiggish ideals and ideas of the first half of the nineteenth century, such as the transcontinental railway, the Homestead act, liberal immigration policies, the Morrill Act (creating land-grant colleges that opened the door to opportunity for the middle class in America) or agricultural support from the federal government directly to the farmers through the Department of Agriculture. As such it thus shows how the modern face of the united states, with its expansive government that aims to actually solve people's problems (well, on its better days, I have to admit), was actually created and put into law.
It also shows how slavery was intertwined with the southern society and much of what is now presented as "the southern way of life" was not just too dependent on a drastically unequal society dominated by rich planters, but also actively harmful to the common people in the South.

[David · Rating 5 out of 5]

A masterful book that examines the financial state of the nation, both north and south, before, during and after the Civil War. The need to finance the war was so great that both sides created financial instruments and institutions that remain with us today. In the Union, especially, these United States became the United States. With Lincoln’s leadership and the energy of the 37th Congress, the Union became the nation we recognize today.,That Congress created land grant colleges, the transcontinental railroad, paper money, the national banking system, to name just a few minor things. The South tried to stay true to the Jeffersonian vision of these United States: a severely limited confederate government with most decisions coming from the States. We see how well that turned out.

Lincoln’s greatness shines through. The middle class man of a middle class nation felt strongly that government’s job was to foster opportunity for the less fortunate. What an idea!

Lowenstein’s writing is clear and enjoyable. He intertwines the military side of the war with the financial side since the fortunes of the military had a direct impact on the nation’s finances. He provides a good overview of the war with a detailed look at the amazing changes fighting the war brought to the nation.

The decisions made in the 1860s inform the debates we have today about the nature of our government and the financial system we all live with. This is a great book to read to understand how our world came to be.

[Joey Politano · Rating 5 out of 5]

"The Yankees did not whip us in the field—we were whipped in the Treasury Department" bemoaned one Confederate officer. The man was half right, as the well-earned American victories on the battlefield would not have been possible without the financial and economic power of the Union government. Lowenstein's Ways and Means is an exceptional narrative account of the financial innovation and strategy that built those advantages for the Union, everything from the creation of paper dollars to the implementation of America's first income tax to the building of a truly national US banking system. So many of the durable institutions that made modern America rich—the Homestead Act, Land-grant colleges, the Union-Pacific railroad, and much more—owe their origins to the US financial and economic reforms made to win the war. The contrast with the Confederacy, bumbling forward by financing the war almost entirely through printing money to the point of hyperinflation, could not be more stark.

The book also functions as a partial biography of Treasury Secretary Salmon P Chase, a brilliant and complicated man with a personality to rival Lincoln's. Chase invented America's first truly national paper currency in the Greenback, redesigned the country's banking system, and raised millions to finance the war through one of the first major bond campaigns to target the general public. He was a staunchly principled anti-slavery advocate, a man so progressive for his time that he wrote furious letters opposing the segregation of streetcar lines in DC, who was continually frustrated by Lincoln's relative gradualism. Yet he often let his frustration with gradualism get in the way of progress itself, let his strong ideological beliefs blind him to corruption or conflicts of interest, and let personal ambition cause unproductive spats within Lincoln's cabinet. Ways and Means is a brilliant and humanizing portrayal of Chase as a man thrust into an unimaginably difficult situation and still able to notch incredible achievements in the service of progress and his country.

[Emmanuel-francis · Rating 5 out of 5]

The only weaknesses I can honestly attach to this book are its title and cover. Honest Abe is only a passing character, and the book is much stronger for it. That is because it wrestles with the central questions that plague humanity. Such questions include but aren't limited to the means of organisation to sustain prosperity, adaptation to an external environment always in flux, the central importance of finance as the glue of civilisation and, likely most importantly, what exactly the constellation of individuals, families and societies we call nations must stand for.

The USA's front-facing image is as the quintessential middle-class nation. Yet, it need not have been so. After all, the American Revolution was led by the closest thing to aristocrats the 13 Colonies possessed. The republic that emerged compromised with those aristocratic interests, not least of all over their investments in slaves. But a staid society marked by calcified rank and deference was at odds with one-half of the Union.

President Abraham Lincoln and his Republican Party were the avatars of a Middle-Class revolt that sought to build a country more in their rough-hewn image than their more outwardly genteel southern neighbours.

They did not succeed fully, and many of its survivors became the establishment, as is typical of most revolutionaries, but the changes they wrought were staggering and enduring. Certainly not the least of their achievements was the establishment of American credit on a firm footing. It was funny in many parts to see the Union and Confederates struggling with 'Emerging Markets' problems and adopting many of the same solutions with the very same results.

This is a book that merits a second reading!

[Matt- History on the Hudson · Rating 4 out of 5]

Ways and Mean by Roger Lowenstien is the ultimate Amazon (Be cool the algorithm works sometimes) recommendation. I've never heard of Mr. Lowenstien, but saw his latest book Ways and Means, and read the blurb about a book detailing how the Lincoln and mainly his Treasury Secretary Salmon Chase financed the Union through the Civil War and how the south struggled to set up any sustainable economic development. Thought its was interesting and bought it. While the subtitle is Lincoln and his Cabinet Financing the Civil War, President Lincoln is very much a side character to that of Salmon Chase who was intimately involved in the fiscal crisis that accompanies war. The book is very well written, surprisingly so given how full of details and statistics from not only the Union but the Confederacy as well. While really intriguing and very readable I found myself feeling like the book was all over the place, kind of like the financial market, one moment the author is talking about bonds and the creation of currency and then to how the war is effecting the price of gold then to how Chase was working to set up a post war life for the Freed slaves, the only real through line in the overall story was Chase and how his reactions were to everything. There just seemed to be too many irons in the fire for such a specific scope, the Financing of the Civil War. But overall Lowenstien has written an interesting book and achieved its purpose and may even exceeded its.

[Ebookwormy1]

My thoughts....
https://twitter.com/Ebookwormy1/statu...

Helpful review.
"Paying for the American Civil War," Law & Liberty, Walter Stahr, May 18, 2022.
https://lawliberty.org/book-review/pa...

[R Vacko · Rating 5 out of 5]

Interesting. Lincoln is really responsible for the expanded federal government.

[Conner Paquette · Rating 5 out of 5]

Very good and learned a ton about our financial system and the civil war I didn’t know

[Jankowski · Rating 4 out of 5]

The Two Wars
The battle over who would profit from the Civil War.
Stephanie McCurry https://www.thenation.com/article/soc...

A number of years ago, in his book Yankee Leviathan, the political scientist Richard Franklin Bensel insisted that the relationship between the federal government and finance capital that was forged during the Civil War “mortgaged a radical Reconstruction” before the conflict had even ended. It is an arresting argument, and a relevant one. The idea that wars make states—because governments have to create the capacity to wage and pay for them—certainly holds true for the Civil War. The claim that the conflict saw the birth of the modern American state is also now widely accepted. But what kind of state, and what kind of economy, did the war produce? Did it create a state dedicated to emancipation, or to big business?

Books in Review
Ways and Means: Lincoln and His Cabinet and the Financing of the Civil War
By Roger Lowenstein

Roger Lowenstein’s new book, Ways and Means, provides one answer. Offering a highly readable account of how Abraham Lincoln’s government financed the Union’s efforts during the Civil War, it tells the story of two parallel conflicts, one between armies, the other within the economy. Out of each, Lowenstein shows, came a process of political centralization through which the modern American state was created. It is in many ways a fairly conventional account, albeit one well told, particularly in its emphasis on the challenges and unpredictability of the commodity markets during the war. But it is also a strangely optimistic, even boosterish account of finance for a post-2008 history of American capitalism, and one quite removed from the anti-triumphalist turn in recent scholarship on the Civil War and what it accomplished. For Lowenstein, the American fiscal and military state was an instrument of moral purpose, most notably emancipation. Taken on its own, this is a defensible argument. But Lowenstein’s liberal, economistic view of historical change separates forces that might be better understood in terms of political economy, which means that he misses the way big moneyed interests—finance capital—set the terms for free labor and stacked the political deck even at the moment of greatest democratic promise. Whatever the cause, the effect is to leave him unprepared to tackle the era that followed the war, which he covers in an 18-page epilogue that turns unexpectedly dark.

From its outset, the Civil War posed problems of scale for the Union: not just in terms of the number of men to be mustered, the amount of materiel manufactured, and the size of the armies transported, but also in terms of the war’s cost. It was staggering, and as Lowenstein tells us, the “government’s financial system…resembled that of a primitive state.” When Lincoln’s treasury secretary, Salmon P. Chase, took office in March 1861, his department’s coffers were empty; the country had no currency of its own, no ability to borrow in the money that did exist (the notes of private banks), and no taxing mechanism except a tariff on imported goods. As the nation geared up for war, expenses far outran revenue: In Chase’s first three months at the Treasury, the government spent $24 million while collecting about $6 million. Chase sold the last of the bonds authorized by Lincoln’s predecessor, James Buchanan. Then, after the shooting started, he went hat in hand to Wall Street to sell $8 million more in long-term bonds and short-term notes, but the capital markets were not receptive. Far from rising to the challenge, investment bankers navigated the market as they had always done and, regarding the federal government as a poor credit risk, agreed to lend only on short, highly discounted terms. As Chase learned, New York bankers were not to be relied on: As in 1861, they would continue to be fair-weather friends of the Union cause; for them, patriotism was a market value. As the war went into its second, third, and fourth years, the financial pressure was unrelenting. Upon the news of the Emancipation Proclamation, the markets plunged. The Treasury Department careened from crisis to crisis. The cost of the war was unprecedented, and the means devised to meet it amounted to nothing short of a revolution.

There are, Lowenstein tells us, only three ways to finance a war: You can tax; you can borrow; you can print money. In his attempts to do any of these things, Chase faced the same constraints as his Confederate counterpart, Christopher Memminger, although they chose different paths. By a constant process of innovation, Chase managed to leverage all three fiscal strategies, while Memminger resorted to printing money at a frantic pace, sending the Confederacy into an inflationary spiral.

Chase’s strategy required political will and coordination—in particular from Lincoln and Congress—and he did all he could to persuade Lincoln of his cause. In July 1861, Lincoln summoned Congress into special session to raise men and money. With war expenses running at about $1 million a day, he called for at least 400,000 men and $400 million. It was “a frightful sum,” but one required for what, after Bull Run, was clearly going to be a long war. Chase proposed to raise $80 million through taxation while borrowing the rest. At first he worked through existing channels, teaming up with the congressional Ways and Means Committee to authorize $250 million in government debt to be offered through private banks as 20-year bonds and three-year notes. New York bankers were wary of the scale of capital required and the drain on their liquidity. They also feared that the notes would end up like the currency in the Revolutionary War—which is to say, “not worth a continental.” They reluctantly agreed to take $50 million of the debt secured with Treasury notes but insisted on retaining the gold in their vaults as well as charging a hefty interest rate. For the rest of the sum, Chase teamed up with the Philadelphia banker Jay Cooke, who marketed the Treasury notes in small denominations directly to citizens through a network of agents. The relationship between the two became so cozy that Congress eventually investigated. Cooke’s marketing strategy paid dividends throughout the war, offering ordinary folks a stake in their government’s success, a patriotic investment in the nation.

As the pressures mounted, Chase also sought to create new ways to harness the nation’s wealth. To enhance its credit, the government had to grow its revenues, and it did so first by doubling duties on imports—the Morrill Tariff of July 1861—and, far more radically, by creating a source of “internal” revenue. In August 1861, Congress passed the country’s first income tax: a 3 percent tax on incomes above $800. Few households passed that threshold. A year later it formed the Bureau of Internal Revenue, lowered the threshold income, and raised the rate for incomes above $10,000 to 5 percent. To force compliance, the bureau published lists of taxpayers and their incomes in the newspapers. Lobbyists swarmed the capital seeking to weaken the bill. Over the course of the war, the Union raised a sixth of its revenue by taxation, but the importance of taxes went far beyond the money. Like conscription, another harsh necessity the government came to, the imposition of taxes marked an unprecedented exertion of federal authority and “eventually would redefine the average citizen’s interaction with government.” The fiscal war state made for a more centralized nation-state.

Throughout the war, Chase and his Treasury colleagues were enmeshed in a tense relationship with the nation’s bankers. In late 1862, there were 1,400 state-chartered banks in the Union states, about 8,000 different kinds of bills in circulation, no national bank, and no national currency. By that point, the drain on specie (or money in coins) was so severe that New York bankers suspended the redemption of bank notes in specie. Chase needed a currency that was not tied to the gold standard. In his first report to Congress, he ventured a plan to organize a “new system of banks, privately owned but chartered by the federal government,” that would be required to invest in government bonds and to issue a new uniform national currency. But if this plan came full-blown from the head of Zeus, as Lowenstein implies, its legislative history was fraught and stuttering.

The currency part came first, a “revolutionary” Legal Tender Act that came out of the House Ways and Means Committee. It authorized the Treasury to print US notes to pay soldiers, suppliers, and others. The paper—soon known as “greenbacks” from the color of the ink—was not redeemable in specie but was declared money by government fiat (which is to say, it was lawful for the payment of all public and private debts). Nobody liked the idea: It was “a measure of necessity, and not of choice,” and by the time the act was finished, senators had revised it to make the greenbacks redeemable in coin, but only for holders of government securities. As Lowenstein points out, it was an inegalitarian system in which soldiers would get paper and bondholders coin.

Lowenstein treads lightly here, but there can be no mistaking the power of what he calls the “financial class” to dictate terms in the creation of the US banking and currency system. Thaddeus Stevens denounced it as “a cunning scheme.” Lincoln—who was a Western loose-money man—signed it into law on February 25, 1862. With it came an unrelenting wave of inflationary pressure. Chase blamed it on the notes of the private banks, which remained in circulation even after a tax was imposed to eliminate them. The value of greenbacks (and, inversely, gold) rose and fell with the Union’s military fortunes. At the end of the war, $431 million in greenbacks were in circulation, and the return to the gold standard was one of the most divisive issues in American politics for the rest of the century.

The banking leg of the new system took even longer to enact. The National Banking Act was not signed until February 1863 and got off to a slow start. It aimed not at establishing a central bank (which Chase opposed) but rather a public-private arrangement of nationally chartered banks that would be required to invest a portion of their capital in Treasury bonds and would issue the national currency. Bankers were naturally opposed—it was their banks and notes that Chase aimed to phase out—and fought the bill. Despite their efforts, it passed, but a year later there were only 100 or so national banks in existence, which issued a total of $4 million in bank notes—“a laughable sum,” as Lowenstein notes, “for a supposedly national currency.”

Chase found himself locked in a bitter struggle with New York bankers protecting their position as the primary funnel for the country’s capital. After the Associated Banks (a New York City group) sought to block the acceptance of national bank notes, Chase pulled out the big guns, threatening to deposit federal funds only in the new banks. He also invited Cooke to open one in New York. The banking titans didn’t exactly fall into line after this, but they did deal, extracting significant concessions for their support, including lower reserve requirements (which meant bank capital would still flow into their vaults). They were also allowed to keep their names, some of which are still familiar today, including Moses Taylor’s City Bank and JP Morgan Chase, the latter in honor of the secretary himself. There would continue to be private banks issuing private notes for years after the war, but the conflict produced a new national banking system “anchored firmly on Wall Street,” Lowenstein writes. New York banks finished the war stronger than when they had started it, “poised to dominate finance during the Gilded Age.”

As the necessities of war led to the centralization of power and authority in the federal government, the architecture of the public-private partnership—of government and big capital—became the heart of the modern American economy and state. There were winners and losers, as Lowenstein acknowledges fleetingly. He notes the “disequilibria between the financial class and everyone else” created by the Legal Tender Act and the “one sizable caveat” to the Union’s booming economy: that “many workers didn’t share in it.” He also notes the cronyism of the Pacific Railroad Act, with its giveaways of land and shares; the deference of the Treasury Department to cotton speculators on confiscated land on the Sea Islands and in the Mississippi Valley; and the way the ever-heavier tariff proved to be a “Republican gift to business,” especially industry. There is even one mention of the dispossession of Native people on which the Homestead Act was premised.

In all of this, Lowenstein mildly acknowledges the sway of capital over the government and its wartime giveaways but declines to go any further. The word “class” is never used (except in reference to the “financial class”), and “capitalism” barely appears (though “capital” is often discussed). Instead, Lowenstein talks in terms of the entrenched “political geographies” of East and West and of “racial and economic fissures.”


The focus of Lowenstein’s book is finance, but fiscal policies are inseparable from the larger political economy from which wealth is drawn, and he has little to say about that, including the incredible growth of industry and agribusiness through government contracts and the partnerships with government that developed in those sectors during the war, with such profound effects for the nation afterward. Likewise, he leaves out the social forces and class conflicts that the war policies unleashed. The Civil War era was one in which a series of ascendant working classes were beginning to define themselves, including a large population of emancipated Black people, Western grain farmers, and Northeastern and Midwestern industrial workers, all seeking to protect their interests.

The limits of Lowenstein’s economistic approach are most evident in his treatment of the Confederacy, which he addresses periodically as a foil to the Union’s story. In his retelling of its formation, Lowenstein offers a straightforward if unfashionable account: Secession, he argues, was a conflict between two societies, one forward-looking and progressive, the other economically and socially backward. The argument that the slave South was the leading edge of American capitalism, made most forcefully by Walter Johnson, Edward Baptist, and Calvin Schermerhorn, is subjected to withering criticism by Lowenstein. As he argues, “present-day capitalism is the antithetical inverse of the southern system,” a position he supports with a few undeniable but recently overlooked facts. Slaveholders, he tells us, had no liquid capital, crippling industrial deficits, and assets that were “practically immobile.” In contrast to that of the Union, the Confederacy’s fiscal state was a disaster—a disaster that began with its decision to embargo cotton, its only valuable asset, and ended with the government printing money on wallpaper. As an economy, the Confederacy was all guns and no butter, which meant it basically devoured its own substance. The result was hyperinflation and, by 1863, famine. All of this is true.

Lowenstein attributes this dire state of affairs to the poor decision-making of the Confederate leadership and its rigid commitment to states’ rights and what he calls (not “slavery” but) “white supremacy.” But his grasp of the Confederacy’s political economy is too limited to identify the real source of its financial straits. He acknowledges that the Confederacy’s tax in kind was “far more intrusive than anything southerners had endured” from the federal government yet sticks to an erroneous generalization about the big, centrist Union state and the small Confederate one. As I explained some years ago, the Confederacy faced a particular set of structural problems as a slave regime at war, which forced it to adopt a series of harsh conscription, exemption, tax, and impressment policies to command resources from the center. You can only exploit the economy you have, and the Confederacy had to make war with one based on chattel slavery. The irony, which Lowenstein misses, is that the Confederacy was a more centralized state because it was less modern.

The one fascinating part of Lowenstein’s story is his account of the Erlanger loan. This was a bond issue for $15 million that the Confederate government floated in Europe in 1863 to leverage the value of cotton marooned behind the Union blockade. Lowenstein calls it a “moonshot.” It was handled by a French banker, Frédéric Émile d’Erlanger, who had ties to John Slidell, the Confederate minister to France. The bonds were 20-year instruments payable at 7 percent interest in sterling or at any time in cotton at the prewar price, a return that would quadruple the investment. They were a huge success: Investors flocked to them even though they had no way to get the cotton—Richmond had no obligation to deliver it, so in order to collect, investors either had to run the Union blockade or wait until the Confederacy won. At times, the bonds held their value better than the Union ones, and they continued to sell even after the Confederacy fell. Lowenstein takes this as a moral lesson about how investors lose their heads when presented with the potential for vast profits. But it was also likely a hangover effect of the antebellum cotton fever that had, for a brief time, made the slave South a magnet for global capital.

In the last few pages of Ways and Means, Lowenstein turns to the consequences of the revolution in finance and government that the Civil War delivered. And here the story turns dark: In quick succession, he lists the postwar policy decisions on protective tariffs, hard money, and the elimination of the income tax that show how the party of emancipation became the party of big business. Most of the how, when, and why, however, are left unaddressed, and the analysis Lowenstein does offer is suspect. Far from the counterrevolution of property that W.E.B. Du Bois described in Black Reconstruction, Lowenstein instead embraces an argument about the harsh peace that the Republican victors imposed on the conquered South, seemingly unaware of the tainted origin of this account of the “failure” of Reconstruction.Telescoping decades of history, Lowenstein lays out the bleak postwar landscape. He begins by noting, accurately enough, that the Republicans would soon abandon their progressive stance on Black people’s rights. The party of emancipation believed in opportunity, not confiscation, so....

[Chris Young · Rating 4 out of 5]

There were actually 3 fronts of the US Civil War, (not 2). First, there was the eastern campaign, led by a hesitant and bungling general McClellan. Second, there was the western campaign, led by washed up haberdasher General US Grant.

Finally, there was the third front, (what this book is about), the financial front, and that was led by none other than Lincoln’s secretary of the treasury Salmon Chase, who, almost single-handedly, figured out not only how to finance the war, but how to structure the entire U.S. currency and banking system henceforth as well. (The “Chase” in Modern day JP Morgan Chase to this day remains a nod to his contribution to modern U.S. finance.)

A great read for financial history buffs.

[Jim Gallen · Rating 5 out of 5]

Most war literature focuses on battles, armies, navies, soldiers, sailors, ships, planes or ordinance. “Ways and Means” documents the crucial role economics played in the Civil War, particularly for the Confederacy.

The strong economy on which the Union could draw is contrasted with the Confederacy’s, based on agriculture, and heavily invested in slaves. Though the Union’s tax revenues were a fraction of its monetary requirements, it did have sufficient credit to keep its forces supplied. The Confederacy’s states’ rights principles on which it was founded limited its ability to tax and forced it to rely, effectively, on confiscation keep its armies in the field.

Massive inflation plagued both sides. In the North, it took the form of a deep discount of greenbacks in relation to paper money, reaching the point at which $180 in greenbacks would be traded for only $100 in gold. Despite this, inflation did not compare unfavorably with that in later wars. In the South, drove currency into near worthlessness, with inflation reaching 9,000%, and traders into barter.

The leading figure in the story is Union Secretary of the Treasury, Salmon P. Chase. A defeated contestant for the 1860 Republican nomination won by Lincoln and a continuing rival as 1864 approached, he was tasked with the challenge of keeping the U. S. Treasury afloat through a series of tax increases, public and private bonds and currency releases. The description of offerings generates admiration for their creativeness and ingenuity. Establishment of National Banks ,in addition to state chartered banks, broadened borrowing ability and resulted in increased concentration of banking power in the North East.

Author Roger Lowenstein has skillfully woven chronicles of battles, analysis of economic developments, foreign interest in the War, social developments and the implementation of traditional Whig policy long advanced by Lincoln and others. The interactions were multifaceted. Marketing of southern cotton was touched all players. Confederates withheld it in an attempt to draw European intervention to enable its export. While in storage, it provided basis for Confederate currency and bonds. As Union armies advanced, it generated a tempting opportunity for private and public profit at the cost of financing the Southern enemy. Sales of bonds in Europe created incentives for governments to ensure repayment while, even during layoffs by cotton starved industries, working classes opposed slavery. Citizens struggled to to earn a living and pay their bills amidst currency chaos. Pre-war Whigs, including Lincoln and Chase, had long been proponents of federal support of internal improvements. Withdrawal of southern congressmen enable the enactment of the platform of the then-defunct Whig party. The Morrell Act of 1862 contributed public lands in support of “Land Grant Colleges” from Cornell to Oregon State Universities that opened the doors of higher education to the non-affluent. The Homestead Act spurred development by offering land to prospective settlers. The Transcontinental Railroad and its spurs united the continent.

I evaluate a book by its impact on my views. Does it introduce new ideas? Does it broaden my understanding of its subject? Does it whet my appetite to learn more? “Ways and Means” succeeds on all tests. I now know much more about the role of economics in the Civil War and will be more attuned to its influence in other historic events. For so long, I have viewed the ebb and flow of battlelines as determining victory and defeat. I will now view it as just one factor in a complex contest. Henceforth, whenever I read tales of war, I will want “The Rest of the Story.:” A book that can achieve that is a great read.

[Casey · Rating 5 out of 5]

A great book, providing a financial history of the American Civil War. The author, journalist and investor Roger Lowenstein, gives a chronological narrative of the conflict through the eyes of bankers, investors, and government treasurers, both north and south. Lowenstein argues that the Civil War was the major turning point for American capitalism. He shows how the country finally departed from Jefferson’s agrarian model and fully embraced the industry and easy money of Hamilton. He shows how the U.S., slowly but steadily, relaxed the gold standard, created a tax regime, issued a fiat currency, and instituted the aggressive government borrowing necessary to pay for the conflict. The Confederacy, however, remained rooted in the older system, the result being hyper-inflation and a financial meltdown. Lowenstein paints Lincoln as, at heart, a Whig, using these new financing sources to fund national investments for both post-war recovery and as a way to pull America from its morally corrupt slave-based systems. A great book for any student of wartime financing. Highly recommended for anyone interested in the development of the U.S. into an economic power.

[Rosa Angelone · Rating 5 out of 5]

Good thorough book. I liked reading about the personalities behind Lincoln. The different things they cared about, especially linking broad public school education to other infrastructure nation building projects like the Intercontinental Railroad.

He includes some efforts the rebellious states tried to take to fund and supply their war machine.

I think he misses a bit at the end by ignoring WHY wealth disappeared in the South. Since so much of their movable capital was tied up in other humans they no longer had the direct ability to own.

[Kumail Akbar · Rating 5 out of 5]

I tried my level best to complete all of this years' reviews before New Year's Eve, however I find myself failing to do so primarily due to circumstances completely in my control (I got lazy). This is why I am posting a placeholder review here, apologies for this. I will be completing and posting the complete review in a week or so.

Economic history + Roger Lowenstein + Civil War Era = this had to be fantastic, and it absolutely was. More on this in a few days.

[Joanna · Rating 3 out of 5]

3.5 stars

Not a fun read, but an informative read

[Eric Ruthford · Rating 5 out of 5]

You wouldn't think that non-fiction about government finance would be engaging, but this book kept my attention throughout, making me want to read more.

In this book I learned:

1. Currencies should be stable and they should circulate well.
2. Before the Civil War, our country minted gold coins which were stable, but their circulation was stagnate.
3. Private state banks printed their own currencies, bank notes, or little tradable loans. A dollar of this paper money was supposed to be turned in at a specific time, promising to be redeemable for $1.02 or $1.05 in a year. This system helped spur economic activity, but it could cause localized bursts of inflation.
4. The Civil War was a time when our government became much more centralized, something that America's founders had feared. They viewed a democracy or a republic as sustainable on a city-state level, like Athens, Corinth, Venice, or Florence, but if it got too big, it would devolve into a dictatorship like the Roman Empire did. They viewed each of the 13 colonies as one of these city-states. The idea of the Articles of Confederation was to get Athens, Corinth, Venice, and Florence to be good neighbors. The Constitution was intended to get them on the same team with a relatively weak national government. The Civil War made it clear this was not sustainable given the ridiculous amount of money needed.
5. The Union basically had four options for getting money: taxation, borrowing from Wall Street banks, selling bonds, and printing money. The last one of those, the U.S. Treasury printing its own notes, had been anathema for decades as it was believed would touch off hyperinflation, especially as banks refused to take notes. For the first year of the Civil War, the Union was in an almost constant state of financial crisis.
6. Congress came up with a new idea, legal tender. That is, the paper money would not pay interest, but banks would be legally obligated to accept them. These wouldn't be "little loans" like the bank notes that people and banks could choose whether to accept, they would be forced loans with no interest. They created legal tender and started paying soldiers with it, and did not touch off hyperinflation.
7. The Confederate states, on the other hand, made numerous mistakes that amounted to economic self-destruction. Early in the war, they cut off cotton exports to Europe thinking that would force Britain and France to recognize the Confederacy as a country. That did not work, and it also cut off their only source of money. Second, as the Confederacy was founded as an anti-tax cause, they didn't raise taxes. They sold some bonds, but mostly printed ridiculous amounts of money, and caused hyperinflation so bad that people demanded to be paid in cotton. Also, they destroyed the civilian economy to divert everything to the military, which made it impossible to develop any kind of industry to support their army long term.
8. The South operated much like a petrostate does today -- focused on one product, cotton, and incapable of change. During the war, famine was widespread in the south, but the planters continued planting cotton, not food, because they needed the cash they could get by putting cotton on blockade runner ships to Europe. This made it clear to poor whites that slavery had never been much use to whites outside the slaveholding class.
9. I remember my fifth grade teacher in Alabama (a Lost Cause believer) saying that American history after the Civil War was just a plot to punish the South. This book explained there was a little truth to that. After the war, the Republican Party, which had been a free trade party, let income taxes expire and went back to tariffs for getting tax revenue. Big businesses liked tariffs, farmers did not. After the war, the South received less than 10 percent of public works revenues, and the Southern economy, already ravaged by the war, remained depressed through the 1960s.

[Socraticgadfly · Rating 4 out of 5]

Easy read. (Perhaps hard if you know nothing about the U.S. Civil War, but otherwise?) Probably, to be exact, 4.25 stars, which it will get at StoryGraph.

Some reviews say this book is primarily a bio of Salmon P. Chase as Secretary of the Treasury, but it’s not even that. Congressmen such as William Pitt Fessenden and Thad Stevens have major spots as well. (The subheader is wrong in one way: The rest of Lincoln’s Cabinet is less mentioned than the key Congressional players.)

What it really is, is a “biography” of how the Union achieved the financial organization necessary to fund winning the war. Along the way, it shucked most of the Jefferson-Jackson shackles not only of finance in the narrow sense, but the broader issues of federalization behind that. As part of this, Lowenstein notes the number of times Republican leaders used the word “nation,” instead of “Union.” He also notes (which may have been also a part of a shift within American vs British English to treat collective nouns as singular not plural), phrasing such as “the United States is” rather than “are.”

The meat:

And, the scope of the Hamiltonian shift was vast. Lowenstein notes that the 27th Congress was arguably the most “activist” and successful in history.

Its work included:
1. The Pacific Railway Act
2. The Homestead Act
3. The Morrill Act for land-grant colleges
4. The original Internal Revenue Act
5. The Legal Tender Act that gave us greenbacks

And, those are just the highlights. The 28th Congress expanded on these, and also gave us the National Banking Act plus America’s first explicit immigration act. (Sidebar: For the pseudohistorians like Scott Berg claiming Wilson’s first two year were the biggest act of presidential effort in history, think again. Lincoln may not have been personally as active in pushing a program as Wilson, but he was elected on the broad outlines of this program and most pushing would have been against a largely empty door. Besides, LBJ did more in the first two years of his full term than Wilson anyway.)

Within all of this, you have Chase selling bonds via Jay Cooke and his brother, fighting for authorization to sell more greenbacks, trying to stave off depletion of US gold reserves (he would have been Grover Cleveland had he lived 30 years later) and between Cooke and his brother, and some of his patronage appointments, and turning a blind eye to Spoons Butler and his colonel brother in New Orleans, having a number of ethical challenges.

Lowenstein also puts this into today’s context. He notes inflation, and compares prices then to today. On 2 and 3, he notes the land coming from American Indians on homesteads and at least part of it from then on colleges. (He adds that a second Morrill Act came along in 1890, the racism of the South with separate HCBU colleges for it, like Prairie View A&M here in Texas, and that tribal colleges were finally added in the 1990s.)

Lowenstein looks at the contrary Confederate funding efforts, starting with the wrong decision, in hindsight, to hold back all of their 1860 cotton harvest that had not yet been sold in Europe, and an attempt to market cotton bonds, as well as the runaway paper money.

Couple of minor notes.

First, per the opening paragraphs, if you are familiar with Civil War history, there’s very little new about Chase the Cabinet member and his politics playing.

Second, while not cutting Lincoln counterfactual slack on colonization, unlike Oakes and Reynolds among others, Lowenstein doesn’t get into the issue too much. And, while Halleck may have been as much to blame as McClellan for Second Bull Run, “more to blame” might be too much.

[Kenneth · Rating 4 out of 5]

This is a very ambitious history of the Civil War told primarily, but not exclusively, from the perspective of the fiscal challenges that faced both the Union and the Confederacy. This is the area on which it is the strongest, both the sides had three legs on which to finance the war: taxation, borrowing, and currency issuance. The degree to which the state leaned excessively on one of the three affected the efficacy of the other two. In the South, where there was a philosophical opposition to centralization and the central government generally, they relied almost exclusively on issuing currency. They did this to such an extent that it eventually became impossible to either borrow or tax as major, and painful, currency reforms needed to be implemented in order to make debt instruments denominated in the Southern currency worth holding, or to make taxes denominated in currency worth collecting. The South tried this, and largely failed. There were some interesting efforts, a cotton denominated bond issued in London had some success but the military misfortunes of the South eventually tanked that as well. Lowenstein also makes the point that the decision of the South to force France and Britain into the war by refusing to export cotton to them largely destroyed the one chance the South had for financing the war.

The Union side is significantly more interesting. The Union had more luck raising money via loans and retained the central ability to levy customs and excise taxes and eventually implemented an income tax. The Union also engaged in large scale currency and banking reform during this period which laid the groundwork for the the capitalist explosion in the latter half of the nineteenth century. This was also driven largely by the Whiggish philosophy of the Republican Party at the time which had large ambitions for the role of the state in enabling people on the lower rungs of society to climb higher. The prosecution of the war both enabled and cloaked this larger project many articles of which are still with us today. It was also amazing to see how many aspects of the modern financial system, such as the fact that federal and municipal bonds are tax free, emanated from the mind of Lincoln himself.

The book is at its best in describing the financial aspects of the war and does well when talking about the consequent centralization and state expansion but it gets a bit off the rails when it starts moralizing about the Republican Party. Lowenstein takes a lot of his ideas from Heather Cox Richardson an aggressively partisan historian of the GOP whose contempt for the Republican party is extremely deep. That said, Lowenstein is judicious in the aspects of her philosophy that he chooses to highlight and in a way strengthens some of her arguments by paring them back to the facts.

[Luke · Rating 4 out of 5]

This book goes beyond just the financing of the Civil War, which at first put me off a bit, especially in the introduction. Then I realized that the telling of the financing of the war really does need a strong theme, and I actually came to appreciate it.

Lowensteins major thesis is that the Republicans/Whigs fostered in a new era of larger government alongside the financing of the war, and so a lot of the actions taken are analyzed from this perspective. Outside of this thesis he also brings in some pretty strong analysis on the war, from its origins through its post years. I’m not a huge Civil War buff (although every time I read a book on the era I feel like I want to become one), and I struggle with all the complexities and reasons for the war beyond slavery, so I don’t have a strong opinion on all Lowesteins conclusions, but I didn’t detect anything outlandish here. Overall, he created a good vessel to carry his analysis of the financing.

The financing focuses a lot on Chase’s actions in the Treasury for the North and his dealings with Cooke and selling of bonds, and this is actually what brought me to this book in the first place. The details here were great, and it will make a good reference book for me. Chase’s relationship with Lincoln is really highlighted here along the way, and how Lincoln navigated this is really interesting, and makes me want to read Team of Rivals by Goodwin to get a view of Lincoln like this outside the Treasury (it has been on my to read shelf for a long while).

Lowenstein spends a lot of time on the Confederacy situation as a contrast to the north, and the details are good but just not as thorough. I wish he would have focused a bit more here (that would have made the title even more misleading though 😂).

Finally, with respect to Cooke, it seems Lowenstein tried to stay as neutral as possible with him, detailing/implying how instrumental he was in marketing bonds for the Treasury while touching on the perhaps inappropriate relationship with Chase, all while keeping away from moral judgments of character. The author doesn’t really shy away with other players, but with Cooke I felt he did. So I still want to know more about Cooke, and perhaps will turn to a biography that is referenced in the text.

Overall I would recommend this for learning about the financing of the war and I’m glad I took the time to read this. Just know you will get more than financing, and that’s a good and probably necessary thing.

[Sophia · Rating 4 out of 5]

There are loads of books about the Civil War and finance seems like it could be a dry subject. However, i found Roger Lowenstein's Ways and Means: Lincoln and His Cabinet and the Financing of the Civil War to be informative. It explained the context behind various things that are relevant today. For example, all U.S. currency has the phrase "This note is legal tender for all debts, public and private" but how did that come to be?

We take it for granted that the currency is stable and the federal government does way more than deliver mail and collect tariffs. Yet that was not always the case. Prior to the Civil War, the federal government had a much more limited role, but the exigencies of war lead to basis of the modern national banking system and paper currency. Salmon P. Chase, Lincoln's Secretary of the Treasury from Ohio, was instrumental in helping the Union finance the war. It was fascinating to learn how finance can affect military success, similar to how disease control and prevention can affect the fate of armies. For example, the rampant inflation in the Confederacy was part of the reason they could not get supplies and sustain popular support for the war.

The title is misleading; the book focuses on Chase rather than the entire cabinet. (This is the Chase in JP Morgan Chase, which was named in his honor, but with no personal affiliation.) I also learned more about Lincoln's vision about the federal government as a government for the people, which led to a more expansive vision that it should provide the means for economic opportunity, for example, by building railroads. It also argued that Lincoln was more of a patient pragmatist who understood the country's appetite for reform rather than an indifferent person who was racist.

In summary, I found this to be an interest read beyond the usual recitation of various Civil War battles. It helped me make some connections in American history. 4+ stars.

[Jeffrey Thomas · Rating 5 out of 5]

Who is not interested in the Civil War? This book views the War Between the States in an entirely new way, through the finances, and particularly through the career of Salmon P. Chase, the unsung hero of the Union side. My US history -- and I'm a state-certified social studies teacher -- focuses on the politics and the battles of the war, spending only a few minutes on inflation and industrial might, but nothing about financing, nor about the role that Republicans played in so dramatically expanding the role of the federal government. We do discuss the importance of the 13th and 14th Amendments, Reconstruction, and the Morrill Act. But how did they pay for all of that miitary might and industrialization? The author takes us slowly through the agonizing weeks of paying the bills, bills on an incredible scale, unthinkable just a few months before. He carefully describes the historical background and the political/legal challenges to financing a huge standing army. The conclusions and opinions he writes are well-backed by extensive footnotes and new research. Salmon P. Chase was such a complicated character, pulled unwillingly to create what we still call Greenbacks! Legal Tender was blasphemous to most upstanding educated citizens of the time, an opinion now relegated to conspiratorial goldbug fringes. Further, the author draws contrasts with the failed Confederate struggle to finance their war, how they cavalierly destroyed their own economy and their limited chances for success. I read this book eagerly; my only quibble was the occasional unanticipated leap in time, or muddiness of the time sequence -- 1862? 1863? 1864?
I deem this absolutely required reading for any advanced US history course, and for any Civil War buff. It puts the battles and political maneuvers in context.

[John · Rating 4 out of 5]

A different take on the Civil War. Here Lowenstein argues, I think correctly, that the North's victory over the South owed as much to figuring out how to finance the war as how to fight it. Much of the book is about Salmon P. Chase, the Union's Secretary of the Treasury and the principal architect of the new financial structure that made this happen. In a subtle way, however, the book is about the political genius of Abraham Lincoln: his ability to manage vainglorious egos, including Chase's, in extraordinarily difficult times, not to mention holding a fractious populace together to fight a long and bloody war. Financing the war was a piece to the puzzle as it allowed him the opportunity to build a truly national national financial network through a national banking system that theretofore did not exist. Lincoln believed that equal economic opportunity was at the core of the Constitution and hence slavery was by definition evil. All of this was part of Lincoln's bigger mission to build a nation that would provide greater economic opportunity for all once the war was won.

Because of slavery, the Confederacy was founded on an economically failed system in addition to being morally corrupt. Interestingly, Lowenstein argues in the Epilogue that the South remained stagnant all through the Jim Crow years and it wasn't until the Civil Rights legislation passed in the 1960's that the South began to prosper.

One final thought: the need to finance war is universal. Wars cannot be won without money. This has applicability to Russia and Ukraine today where Russia is financing its war with oil revenues, much of which is being provided by the West, even as it provides Ukraine with weapons.

[Andrew Willis · Rating 5 out of 5]

This was a surprisingly enjoyable read. Well written and was surprisingly conducive to the audiobook medium. Here are some key takeaways:

- The Federal government had relied primarily on import and export taxes to fund its functions; so, when the South seceded, a large portion of its revenue from cotton exports needed to be replaced.

- The Union incorporated a series of modern measures to raise revenue, including the personal income tax, war bonds, paper currency that was not tied to gold or silver, and the return of the national bank.

- Northern investors watched the successes and failures of the war much like the stock market, with prices falling and rising and affecting the Union's credit. The timing of the ultimate emancipation of the slaves by Lincoln seemed to be motivated, in part, by how investors would perceive slavery.

- Wartime Congressional Republicans took advantage of the absence of the South to centralize power and expand the Federal government's reach through legislation like the Homestead Act, the Pacific Railway Act, the Land-Grant College Act, and the creation of the Department of Agriculture. Combined with the additional revenue streams, these measures made the Federal government a regular part of everyday life.

- The South constantly shot itself in the foot in regards to its own finances. It had no real taxing power (adamant states' rights ideology snuffed out any attempt to centralize power) and misplayed the appeal of cotton to Europe when seeking credit; its cotton-based agricultural economy simply could not compete with the industrialized North.

[Gerry Connolly · Rating 5 out of 5]

Roger Löwenstein has written an interesting and comprehensible tome on the economics and financing of the American Civil War. In Ways and Means the author dissects the enormity of challenges confronting the Union and the Confederacy as war necessities swamped the old order. Lincoln and his Treasury Secretary Salmon Chase had to increase government borrowing 40fold, increase taxes and stabilize gold reserves. It was a close thing. Ultimately the 37th Congress established a national currency, floated bonds and established a national banking system. By 1865 the economy was robust and revenues met the gargantuan needs of an army consuming as much as $2million a day. A remarkable achievement. They even established an income tax. In the South it was a different story. Rampant inflation would reach 9000%! (It hit 80% in the North). Bonds and currency were worthless and the civilian population paid the price. The inherent contradiction of a confederacy asserting the sovereignty of states rights while attempting centralized economic control severely circumscribed Jeff Davis and treasury secretary Memminger’s ability to finance the war. The South’s lack of industrial capacity further hampered the effort combined with the disastrous decision to withhold cotton exports from Europe. The South’s insolvency was as much or more of a cause for its doom as the outcome on the battlefield.