Wednesday, September 29, 2010

Re-Writing Economic History

From Lew

Rewriting Economic History

by Thomas J. DiLorenzo

One thing that can never be admitted in polite academic company is the notion that economics had anything to do with the American War between the States. This may seem strange, since wars throughout all of economic history have had important economic components, but it is true nevertheless. For example Richard Ferrier, a critic of my book, The Real Lincoln, recently insisted in a WorldNetDaily interview that in the Lincoln-Douglas debates “there is not a word about [Lincoln’s] economic agenda. Not a word!’

Absolutely correct. There are many words, not just one. Such as during the July 17, 1858, debate in Springfield, Illinois, where Lincoln said to Douglas, “You remember we once had a national bank . . . the Supreme Court decided that the bank was unconstitutional. The whole Democratic party revolted against that decision. General Jackson himself asserted that he, as president, would not be bound to hold a national bank to be constitutional, even though the court had decided to do so. He fell in precisely with the view of Mr. Jefferson, and acted upon it under official oath, in vetoing a charter for a national bank.”

Lincoln here was voicing his career-long animosity toward the Democratic Party’s opposition to central banking. Ferrier’s rather hysterical claim that there was “not a word” about any economic agenda in the Lincoln-Douglas debates is simply untrue.

Indeed, a major component of the debates – Lincoln’s opposition to the extension of slavery into the new territories – had a huge economic component. One of the reasons Lincoln and the Republican Party establishment gave for their opposition was, as he stated in his October 16, 1854, speech, that “the whole nation is interested that the best use shall be made of these [new] territories. We want them for the homes of free white people. This they cannot be, to any considerable extent, if slavery shall be planted with them.”

Labor market protectionism was a basis for Lincoln’s opposition to the extension of slavery. A key strategy of the Republican Party was to buy votes from white laborers in the territories by promising to protect their jobs from competition with slave labor. This was not a very attractive position to hold, but it was indeed economically and politically motivated, despite Ferrier’s denials of any economic agenda appearing in the Lincoln-Douglas debates. Ferrier invokes the authority of James McPherson, who also said there was no talk of banks in the debates, but McPherson is clearly wrong in light of the above quotation. There was no great emphasis on monetary policy, but Lincoln did bring it up.

Ferrier also misstates my position in asserting that “neo-Rebels,” whatever that may mean, argue that “the tariff was the cause of the war” (emphasis added).” I do not say this; he is setting up a straw-man argument. What I say in the book is that the tariff issue was one among many issues in the war, and one that has been studiously ignored or downplayed by people like Ferrier.

He argues that the Morrill Tariff of 1861 was passed before Lincoln was inaugurated and uses that fact to make the case that Lincoln did not care about the tariff and that it had nothing to do with secession. He is being deceptive here, since I say the same thing in The Real Lincoln. I do not claim that Lincoln was in office when the U.S. Senate passed the tariff shortly before his inauguration. What I do say, though, is that as the leader of the Republican Party and its presidential candidate he must have had a hand in the political maneuvering that was involved in getting the tariff passed. I also quote Richard Bensel, author of the book, Yankee Leviathan (Cambridge Univ. Press, 1990), as saying that the Morrill Tariff was “the centerpiece of the Republican Party platform” of 1860. If it was not “the” centerpiece it was certainly “a”centerpiece, and Lincoln, as the party’s presidential nominee, was expected to enforce it when elected.

As the great historian of tariff history, Frank Taussig, wrote in Tariff History of the United States (p. 158), the Morrill Tariff “was passed, undoubtedly, with the intention of attracting to the Republican Party, at the approaching Presidential election, votes in Pennsylvania and other States that had protectionist leanings.”

Several southern states had already seceded, including South Carolina in December, when it was apparent that the tariff would probably pass the Senate and would be enforced by Lincoln, the career-long protectionist. Again, this is not to say that the tariff was the sole cause of the war, but it was certainly relevant.

Lincoln did play a more direct role with regard to the tariff in his First Inaugural Address, as I argue in The Real Lincoln. There he stated, “The power confided in me will be used to hold, occupy, and possess the property, and places belonging to the government, and to collect the duties and imposts; but beyond what may be necessary for these objects, there will be no invasion – no using force against, or among the people anywhere.”

I attempt to put this in historical context in my book. South Carolina nullified the 1828 Tariff of Abominations, forcing Andrew Jackson to back down and negotiate a lower tariff rate by 1833. That tariff originally had a 40 percent average rate. Southern statesmen continued to complain about tariffs, though, since according to Taussig, by 1860 the import-dependent South was paying some 80 percent of all tariffs. But by 1857, writes Taussig, the United States enjoyed the closest proximity to free trade that would exist in the nineteenth century, with an average tariff rate of around 15 percent.

Then in the 1859-1860 congressional session the House of Representatives passed the Morrill tariff, followed by the Senate in the next session, in early 1861, just before Lincoln’s inauguration. The average rate would soon be elevated to 47.06 percent, according to Taussig.

So, Southerners had been complaining bitterly about being plundered by the tariff, paying some 80 percent of it while, in their view, most of the money was being spent in the North. Then the Republican Party gains power and, before anyone expects a war, more than triples the average rate at a time when the tariff was the primary source of federal tax revenue; there was no income tax yet. Then Lincoln makes his First Inaugural Address and says it is his duty to “collect the duties and imposts” (among other things) and, as long as those much higher duties are collected, “there will be no invasion.”

My interpretation of these events is this: The tripling of the average tariff rate was the keystone of the Republican Party platform of 1860, as Richard Bensel argues. Once in power, Lincoln announced to the South, effectively: We are going to make tax slaves out of you by tripling the rate of taxation, and as long as you collect these taxes there will be no military invasion. He was not going to back down to the South Carolinian nullifiers, as Andrew Jackson did.

This was being done while the Confederate Constitution was outlawing protectionist tariffs altogether, which would have caused most of the trade of the world to be diverted from high-tariff Northern ports to lower-tariff Southern ones. Some Northern newspapers affiliated with the Republican Party were openly calling for the bombardment of Southern ports (before Fort Sumter). “Let the South adopt the free-trade system,” the Daily Chicago Times editorialized on December 10, 1860, and the North’s “commerce must be reduced to less than half of what it now is.” The Newark Daily Advertiser editorialized on April 2, 1861, that Southerners had apparently “taken to their bosoms the liberal and popular doctrine of free trade,” which “must operate to the serious disadvantage of the North.” The paper called South Carolina the “chief instigator” of these free-trade doctrines, and called for the “closing of the ports” in the South by military force. Ferrier’s casual dismissal of the role of the tariff in the war as only being of interest to “neo-Rebels” is ahistorical.

Ferrier continues to insist that economics (besides the economics of slavery) had nothing to do with Lincoln’s election and the South’s reaction to it, but the preeminent Lincoln scholar, Pulitzer Prize winning Lincoln biographer David Donald, would probably disagree. In his book, Lincoln Reconsidered (p. 106)., Donald quotes U.S. Senator John Sherman, the brother of General William Tecumseh Sherman and a major Republican Party figure in the U.S. Senate during the war, as explaining why Lincoln was elected: “Those who elected Mr. Lincoln,”said Senator Sherman, “expect him . . . to secure to free labor its just right to the Territories of the United States; to protect . . . by wise revenue laws, the labor of our people; to secure the public lands to actual settlers . . . ; to develop the internal resources of the country by opening new means of communication between the Atlantic and Pacific.”

David Donald claims to interpret this remark “from the politician’s idiom” into plain English by saying that Lincoln and the Republicans “intended to enact a high protective tariff that mothered monopoly, to pass a homestead law that invited speculators to loot the public domain, and to subsidize a transcontinental railroad that afforded infinite opportunities for jobbery.”

Donald left one thing out – the first sentence, in which the first goal of the Republican Party, according to Senator Sherman, was labor market protectionism. “To secure to free labor its just right to the Territories” meant to keep slavery out, not for moral but for purely economic and political reasons.

In conclusion, one of the most prominent Republicans of Lincoln’s time, and perhaps the most prominent Lincoln biographer of our time, are of the opinion that economics was at the heart of Lincoln’s ascendancy to the presidency. In Sherman’s interpretation, the basic stratagy of the party was to buy votes and campaign contributions from 1) protectionist manufacturers; 2) mining and timber companies who would get cheap federal land; 3) Subsidy-seeking railroad corporations and associated industries; and 4) white laborers who did not want competition for jobs from either freed blacks or slaves.

One is inclined to assume that the reason why people like Ferrier so hysterically deny that Lincoln had any economic motivations, despite having spent a 25-year political career promoting the Whig Party’s economic agenda, is that they are deathly afraid that the public will begin to develop an interest in the real Lincoln, as opposed to the fantasy Lincoln that has been created by the cartel of Lincoln scholars.

May 1, 2002

Thomas J. DiLorenzo [send him mail] is the author of the LRC #1 bestseller, The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary War (Forum/Random House 2002) and professor of economics at Loyola College in Maryland.

Copyright 2002

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