Financial History of the United States: Fiscal, Monetary, Banking, and Tariff, Including Financial Administration and State and Local Finance

By Paul Studenski; Herman E. Krooss | Go to book overview
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CHAPTER 15: FISCAL READJUSTMENTS AFTER THE CIVIL WAR

During the twenty years after the Civil War, the nation's fiscal affairs became the subject of a sharp debate between higher and lower income groups. The fortunes of war decreed that victory in the controversy would go to the chief beneficiaries of industrial capitalism, for they presented a united front while the agrarian and labor lower income groups were badly split.

The higher income groups supported a regressive tax structure, emphasizing tariffs, and an orthodox debt policy, which would eliminate the greenbacks and help to restore specie payments. In general, lower income groups favored retention of progressive taxation and the payment of more liberal veterans' pensions. However, they disagreed over debt management. Farmers, favoring high prices and easy credit, demanded the retention of greenbacks, but urban workers, favoring lower prices, supported the industrialists in their demands for contracting greenbacks.

By themselves, the farmers could accomplish little, for the West was quantitatively weak and the South was relegated to political impotence. Hence, the Jeffersonian dream of a simple society was once and for all doomed, while the Hamitonian vision of an industrial society began to come into its full flower.

Although the war greatly expanded Federal powers, the Federal government, with popular approval, refrained from competing with private enterprise. It remained a dispenser of rights and privileges and tried to create favorable conditions for the effective operation of private enterprise. Among all the Presidents during these twenty years--Johnson, Grant, Hayes, Garfield, and Arthur-only Johnson supported the agrarian view. He saw quite clearly that "an aristocracy based on nearly two and one half billion of national securities has risen in the northern states to assume that political control which was formerly given to the slave oligarchy."1 However, Johnson was the least effective President in a period when Congress was dominant and the Presidency was superlatively ineffectual.

Most of the Secretaries of the Treasury of this period were conservative in their approach to the issues of the day. Hugh McCulloch, the first postwar Secretary, thought that the restoration of specie payments was

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1
Howard K. Beale ( The Critical Year) gives an analysis of agrarian-industrial rivalry in the first year after the war.

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