How Lincoln’s Administration Financed the Civil War and Reformed America

Gabelli100 | May 02, 2022 | Gabelli School of Business

During the Civil War, President Abraham Lincoln and Secretary of the Treasury Salmon Chase asked banks along the east coast for loans totaling $50 million in gold to support the war effort. They agreed, but one leading banker said that the “fearsome sum was quite enough” and not to come back for more. By the war’s end, the United States spent 60 times as much, leaving the banks without any gold to spare.

Roger Lowenstein, reporter for The Wall Street Journal and author of Ways and Means: Lincoln and His Cabinet and the Financing of the Civil War, investigated how Lincoln’s administration used Civil War funding to enact laws, establish a currency, and impose taxes. In this webinar co-sponsored by the CFA Society New York, the Gabelli Center for Global Security Analysis, and the Museum of American Finance, Lowenstein discussed the lasting impact on America and Lincoln and Chase’s tumultuous partnership: the secretary of the treasury tried to resign several times during Lincoln’s presidency. Despite it all, Chase’s determination and boldness in concocting a new banking system commands respect.

“Chase created a system that, above all else, was designed to avoid the inflation or the runaway inflation that had been catastrophic to the United States in the War of 1812, and even more so in the Revolutionary War,” Lowenstein said. “I think some of the stewards of the Federal Reserve today would benefit from that conservatism.”