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from the magazine


The economic mind and policies of Abraham Lincoln Spring 2021
Politics and law
Economy, finance, and budgets

You know who was into Karl Marx?” asked the title of Gillian Brockell’s Washington Post op-ed on July 27, 2019. “No, not AOC. Abraham Lincoln. The two men were friendly and influenced each other.” Not only was Lincoln “regularly reading Karl Marx,” Brockell maintained, but “they had many mutual friends, read each other’s work and, in 1865, exchanged letters.” Brockell is a journalist, not a historian, and no actual evidence exists that Lincoln “read” Marx. Brockell assumes that Lincoln read the New-York Tribune; she then claims that Marx wrote “nearly 500 articles for the paper” after being hired in 1852 as a stringer to report on European politics; ergo, Lincoln must have “regularly” read Marx. But in the seven years that Marx wrote for the Tribune, he contributed exactly seven signed pieces, all energetic but straightforward political reporting from London. No Communist Manifesto, no Eighteenth Brumaire of Louis Bonaparte, no Grundrisse. Whether Lincoln read any of these articles is pure conjecture; whether he would have recognized Marx’s name as an off-the-shelf brand is even more conjectural. And the only letter of Marx’s that Lincoln may have read was a petition that Marx helped draft for the International Workingmen’s Association in support of the Emancipation Proclamation.

It’s tempting to write off Brockell’s plea for Lincoln the Marxist as just another example of enthusiasts who hope that linking their cause to Lincoln will somehow make it more palatable, or at least more mainstream. Yet Marxists of various shades have been unusually persistent in their efforts to bring Lincoln and Marx into alignment. “There was an affinity,” claimed Marxist historian Robin Blackburn in 2012, between Marx and the “free labor doctrine of the newly-established U.S. Republican Party.” And Blackburn found further evidence of that “affinity” in how “a number of Marx’s friends and comrades not only became staunch supporters of the Northern cause but received senior commissions.” (No clarification was offered about what constituted a “senior commission” or how conscious Lincoln was of appointing “comrades” of Karl Marx to them.) In the heyday of the Communist Party USA in the 1930s, strenuous efforts were made to claim Lincoln for a Popular Front, and Communist newspapers appropriated Lincoln’s “of the people, by the people, for the people” as a slogan. And the American volunteers who fought on the Soviet side of the Spanish Civil War in 1937 called themselves the Abraham Lincoln Brigade.

This persistence is surprising because Abraham Lincoln does not yield himself with any ease to recruitment by the paladins of the Left. There is vanishingly little in Lincoln that resembles any formulation of the classic Marx doctrines—the seizure by the bourgeoisie of the “means of production”; the reduction of the proletariat to wage laborers, transformed into a debased and downtrodden working class by wage competition; the uprising of the proletariat, the overthrow of the bourgeoisie, and the advent of a new society, in which the proletariat happily controls production and equal distribution of the world’s material goods. None of these forms any part of “Lincolnomics.” There was, Lincoln agreed, “a certain relation between capital and labor,” but it was one of harmony, not conflict. His own experience proved it—and his political career would embody it.

“Twenty-five years ago, I was a hired laborer,” he reflected in 1859. “The hired laborer of yesterday, labors on his own account to-day; and will hire others to labor for him to-morrow. Advancement—improvement in condition—is the order of things in a society of equals.” Rather than declaring “any war upon capital, we . . . wish to allow the humblest man an equal chance to get rich with everybody else.” He had no illusions that this guaranteed equal outcomes for everyone; but he had no illusions, either, about where the fault for unsuccess lay. “If any continue through life in the condition of the hired laborer, it is not the fault of the system,” he declared, “but because of either a dependent nature which prefers it, or improvidence, folly, or singular misfortune.” It would have struck Marx’s ears as the most callous brand of capitalist indifference to hear Lincoln say that “some of you will be successful . . . ; others will be disappointed, and will be in a less happy mood. To such, let it be said, ‘Lay it not too much to heart.’ Let them adopt the maxim, ‘Better luck next time’; and then, by renewed exertion, make that better luck for themselves.”

Abraham Lincoln was born in 1809, while Thomas Jefferson was still president and George III was still king. It was a world lit by candlelight (the kerosene lamp would not be invented until 1855), in which travel and information proceeded no faster than horse or sail. In 1820, 97 percent of the American workforce labored on farms. With no technology for preserving farm produce (the Mason jar was not invented until 1859), farmers did not buy and sell to producers, processors, or distant consumers; they consumed what they produced or swapped with one another. Anywhere beyond the reach of American towns, a subsistence economy rather than a market economy (where people bought and exchanged goods with others at a distance for cash or credit) prevailed. “There was very little time spent in what deserves the name of business as now understood,” remembered an octogenarian survivor of those times in Lincoln’s Illinois. “Trade, barter, and exchange of commodities, and swapping work in corn planting and harvest time for work back in corn-husking and hay-making time, were the only commerce known in very early times.” No “ledger . . . recorded balances of money and labor due,” but only memory.

But a new economic world was already being born. From time out of mind, European society had been structured as an interlocked hierarchy—as a “great chain of being”—with kings on top, nobility in the middle, and commoners on the bottom. Nothing threatened to unbalance hierarchy more subversively than a market economy, so every energy had to be bent toward regulating, limiting, and, if necessary, punishing commerce. But the idea of hierarchy was overthrown by the seventeenth century’s scientific revolution; tumbling down after it came the idea of political and economic hierarchy. As Adam Smith demonstrated in The Wealth of Nations, the “propensity to truck, barter and exchange one thing for another” was as natural a law of human nature as gravity was of physical nature. Suddenly, a market economy acquired respectability. “Commerce,” wrote the French philosophe Montesquieu, cures “destructive prejudices” and “produces in men a certain feeling for exact justice.”

“The bulk of Lincoln’s law practice was in civil, not criminal, law—and most of that involved oiling the wheels of markets.”

In no place was commerce better fitted for takeoff than in the new American republic, which had no hierarchies to slough off. “The United States,” explained a British agricultural textbook, was “superior to every other” country “on account of its form of government; by which property is secure, and personal liberty greater than any where else, consistently with public safety, and both maintained at less expense than under any government in the world.” Yet the U.S. had little in the way of interior market networks, largely because of three obstacles peculiar to the American environment: the sheer physical size and disconnectedness of the American nation; the persistence of an agrarian mentality, which treated a market economy with suspicion and disdain and whose chief voice was Thomas Jefferson’s; and human slavery. The solution for all three would, in varying degrees, be provided by Abraham Lincoln.

Even as Lincoln grew to maturity, the first obstacles to the spread of markets—time and distance—were already being surmounted by three dramatic technological innovations: the steamboat, the railroad, and the telegraph. The first steam-powered navigation of the Ohio and Mississippi River system was introduced in 1811; by 1834, 230 steamboats were nudging up to St. Louis’s wharves every year. Lincoln saw the wonders of this new innovation—and the easy connection to markets that it carried—when he was only a boy on a flatboat, paddling passengers from the Ohio River shore to intercept steamboats. “Two men came down to the shore in carriages with trunks,” quickly hired him to row out to the steamboat in midstream, and then each flipped him “a silver half dollar.” Lincoln was astonished. “I could scarcely credit that I, a poor boy, had earned a dollar in less than a day and that I had earned it by honest work.” Lincoln had made his first encounter with cash as a medium of exchange, and from that moment, “the world seemed wider and fairer before me.” In 1832, after he had moved to New Salem, Illinois, Lincoln helped pilot the steamer Talisman up the Sangamon River to open up central Illinois to the Mississippi River traffic. And in his first bid for elected office in the Illinois legislature that year, he campaigned on building avenues for markets through the “opening of good roads, and . . . the clearing of navigable streams within their limits.”

Lincoln’s eagerness to push commerce across distance contrasted sharply with his family’s agrarian outlook. His father, Thomas Lincoln, was a subsistence farmer with no particular thought for economic advancement and even less comprehension of his son’s ambitions. Thomas Lincoln, said the son of a half-cousin, “was like the other people in that country. None of them worked to get ahead. There wasn’t no market for nothing. . . . The people raised just what they needed.” But Thomas Lincoln’s son was of a different mind. As soon as he turned 21, he left his father’s farm in central Illinois and never looked back. Setting up in New Salem, he hired himself out as a farmworker and flatboatman, twice went into business—and twice failed—and then became a lawyer, one of what Charles Sellers once called “the shock troops of capitalism.” Though Lincoln’s popular image as a lawyer usually stands upon a few high-profile murder cases, the bulk of his law practice was in civil, not criminal, law—and most of that involved oiling the wheels of markets. Breach-of-contract suits took up fully a quarter of his professional time, followed by debt collection, mortgage foreclosure, ejectment, and replevin. Lincoln was, we might say, a “repo man.”

It was in the Illinois state legislature, where he served four terms between 1834 and 1842, that Lincoln’s interest in commercial development found its largest outlet. From his arrival there, he was an eager proponent of “internal improvements”—of government-funded infrastructure that would bring markets and producers closer together—and a state banking system that would bring the state and commerce into partnership by doubling “the prices of the products” of Illinois farmers and issuing a reliable paper currency that would fill “their pockets with a sound circulating medium.” In a bid to become “the De Witt Clinton of Illinois,” Lincoln urged the state funding of an Illinois & Michigan Canal to link Chicago with the Mississippi River. And when he finally wangled a seat in Congress in 1846, his first moves were to advocate the construction of a railroad “from Alton to Springfield” as part of “a great chain of rail road communication,” then to speak “briefly and happily” at a Harbor and River Convention in Chicago on “internal improvements,” and finally to draft an elaborate defense of tariffs for American manufacturing. He was already using the telegraph in the summer of 1849 (just five years after Samuel F. B. Morse had tapped out the first message between Washington and Baltimore), and his boost to national notice in the Lincoln-Douglas debates of 1858 was largely the result of the telegraph’s ability to wire complete transcripts of each debate to East Coast newspapers within 48 hours.

The 1862 Homestead Act represented the greatest privatization of government-owned property in American history. (GRANGER)

Lincoln’s interest in market infrastructure allied him with the newly emerging Whig Party of Henry Clay, and Clay’s three-part “American System” for promoting economic independence—“internal improvement” projects to speed the connection of markets, a national bank (on the model of Alexander Hamilton’s First Bank of the United States), and protective tariffs to shield infant American industries from foreign dumping of cheap goods on America’s shores. (He would remain an “old Henry Clay Whig” until the Whig Party foundered over slavery in 1856; he then joined other Northern Whigs in the new antislavery Republican Party.) Embracing Clay’s “system” also forced him into conflict with what was then the dominant party in Illinois politics, Andrew Jackson’s Democrats—militantly hostile to banking, allergic to tariffs, and deeply suspicious of commerce. “Those who labour in the earth are the chosen people of God, if ever he had a chosen people,” wrote the figurehead of the Democrats, Thomas Jefferson, in 1787, and nothing in that attitude had changed by 1829, when a New England agricultural newspaper warned farmers that “the market is a canker that will, by degrees, eat you out, while you are eating upon it.”

The hidden hand in Democratic and agrarian resistance to commerce and markets was slavery. Slavery depended on the stability that resulted from an immobilized and oppressed workforce, and slavery’s principal product was agricultural—cotton, the white gold of British industry. (Slaveholders did not mind commerce when conducted on their behalf in Liverpool; they only objected to its setting a bad example at home.) The slaveholding South was an oligarchy, intensely Democratic in its politics and built on a ruthlessly subordinated base of black slaves, dominated by a handful of white plantation owners. (The South’s minuscule urban professional class and its large pool of poor white farmers were regularly bought off by the planters with visions of slave-owning for themselves and reminders that they enjoyed a racial identity with the plantation overlords.)

This was a world that Lincoln loathed. From his earliest speeches in the Illinois legislature, he attacked slavery as “founded on both injustice and bad policy.” By the 1850s, he would declare that he hated slavery “because of the monstrous injustice of slavery itself. I hate it because it deprives our republican example of its just influence in the world.” And he hated to see fugitives from slavery “hunted down, and caught, and carried back to their stripes, and unrewarded toils.”

But what Lincoln particularly resented was the boast of the slaveholders and their apologists that slave labor was actually more merciful to the slaves than “wage slavery” was to hired laborers in the free North. The Virginian George Fitzhugh insisted that “the unrestricted exploitation of so-called free society is more oppressive to the laborer than domestic slavery.” After all, “the subsistence of a slave is safe; he cannot suffer from insufficient wages, or from want of employment; he has not to save for sickness or old age; he has not to provide for his family.” This, Fitzhugh cheerfully admitted, was not capitalism. To the contrary, “a Southern farm is the beau ideal of Communism.” In fact, it was “the only practicable form of socialism.” Socialists were simply “afraid yet to pronounce the word.”

To this, Lincoln retorted angrily that “although volume upon volume is written to prove slavery a very good thing, we never hear of the man who wishes to take the good of it, by being a slave himself.” Slavery apologists like Fitzhugh may “declare that their slaves are better off than hired laborers amongst us,” but “how little they know, whereof they speak!” Lincoln did. He “himself had been a hired man” and “didn’t think he was worse off than a slave.” Those who started out working for wages and were “industrious and sober, and honest in the pursuit of their own interests” would in time “accumulate capital” and use that capital to “hire other people to labor for them.” Free labor promised mobility, movement, aspiration. “The hired laborer with his ability to become an employer, must have every precedence over him who labors under the inducement of force,” Lincoln said. Why? Because “free labor has the inspiration of hope,” while “pure slavery has no hope.”

What we would call economics was understood in Lincoln’s day as political economy. Lincoln’s natural intellectual curiosity fed on political economy more than any other subject. “Lincoln I think liked political Economy—the study of it,” recalled his law partner, William Henry Herndon, a recollection echoed by Shelby Cullom, who served with Lincoln in the Illinois legislature and then in Congress. “Theoretically, Mr. Lincoln was strong on financial questions,” Cullom remembered. “On political economy he was great.” And the backbone of Lincoln’s reading in the 1840s and 1850s was the basic texts of classical liberal political economy: “[John Stuart] Mill’s political economy, [Henry] Carey’s political economy . . . [John Ramsey] McCullough’s political economy, [Francis] Wayland, and some others.” Nothing of Proudhon, Saint-Simon, or Fourier, much less Marx.

What distinguished political economy was its attention to the intersection of government and economic policy. In the most general sense, Lincoln had a minimalistic view of government. In a short “fragment” he composed in 1854, Lincoln defined “government” as simply “a combination of the people of a country to effect certain objects by joint effort.” It seeks “to do for the people what needs to be done, but which they can not, by individual effort, do at all, or do so well, for themselves.” But everything government could do was geared toward enablement rather than regulation. Government, Lincoln explained, needs to involve “making and maintaining roads, bridges, and the like . . . and disposing of deceased men’s property.”

One of his favorite examples of enablement was the governmental monopoly of the granting of patents, which Lincoln elevated to a plane equal to the invention of “the arts of writing and of printing” and “the discovery of America.” Absent patent laws, “any man might instantly use what another had invented.” But with the protection that government threw around new inventions through patents, “the inventor” enjoyed “for a limited time, the exclusive use of his invention; and thereby added the fuel of interest to the fire of genius, in the discovery and production of new and useful things.” (Lincoln took out a patent himself in 1849, for a flotation device to enable steamboats like the Talisman to free themselves from shoals.)

Lincoln’s patent application for a new method to improve the buoyancy of ships in shallow waters (GRANGER)

The other role that Lincoln reserved to government was protection—military protection from those who would “make war upon another” but also legal punishment for those who flouted rules of commerce, as when “some men will kill, or beat, or constrain others, or despoil them of property, by force, fraud, or noncompliance with contracts.” Even here, Lincoln saw government as the champion of economic self-improvement.

Lincoln carried his Whiggish understanding of political economy into the White House with his election in 1860 as the first Republican president. His most obvious problem was with slavery and the war triggered by the secession of Southern states that sought to protect it—and that makes it easy to lose sight of the aggressive domestic agenda that he and his fellow Republicans put into place. The Republican national platform called for tariffs that would “encourage the development of the industrial interests” and permit the flourishing of American markets, and Lincoln had scarcely been inaugurated before a new tariff bill, designed by Justin Smith Morrill, slapped import duties, eventually averaging over 46 percent, on more than 1,500 products. In 1862, Morrill introduced a second tariff bill to protect “American labor, American skill, and American soil,” followed by yet a third tariff bill in 1864. All these, Lincoln signed without a demur. “In the days of Henry Clay I was a Henry Clay–tariff man,” he wrote, “and my views have undergone no material change upon that subject.”

Nothing had changed, either, in his views about banks. The heavy hand of Andrew Jackson still had enough weight to make impossible any proposal to re-create a Hamilton-style Bank of the United States. But in February 1863, the Republican Congress adopted a National Bank Act that would bring the North’s 1,400 banks (and the plethora of private paper money they issued) into a single system, which would replace the private money issues with federally printed currency and, in turn, capitalize the banks with federal deposits. He had no illusions, however, that a currency could be created merely by printing presses; the new currency had to be convertible to a gold standard—if not during the wartime emergency, then as soon as possible thereafter. “A return to specie payments,” he told Congress, “at the earliest period compatible with due regard to all interests concerned, should ever be kept in view,” since “prompt and certain convertibility into coin, is generally acknowledged to be the best and surest safeguard against . . . fluctuations in the value of currency.” The Bank Act, argued its prime mover in the Senate, John Sherman, would substitute a new national “issue that will be safe, uniform, and convertible in all parts of the country” and create “a community of interests between the stockholders of banks, the people, and the Government.” Lincoln not only signed this bill but also issued a statement to support its passage, asking “the special attention of Congress” to the creation of “banking associations, organized under a general act of Congress.”

Nor did Lincoln’s resurrection of Clay’s “American System” stop there. The first Republican Congress to assemble after Lincoln’s election had hardly been gaveled into order before Lincoln’s strongest political ally in the House, Owen Lovejoy, introduced the Homestead Act, which opened vast stretches of government-owned public lands in the West to any claimant willing, for little more than a filing fee, to occupy and improve up to 160 acres of land. For 20 years, bills had emerged in Congress for opening the public lands to homesteading. They had been just as routinely stopped cold by Southern Democrats, who feared that opening the public lands to homesteading would lead only to an influx of free settlers and exclude slavery from the West. But by 1862, slavery’s allies were gone, and the dream of free homesteads offered the ultimate fulfillment of Lincoln’s vision of the hired laborer turning into his own self-employer, as well as the employer of others. Lincoln described the public lands as “our abundant room—our broad national homestead” and the nation’s “ample resource,” and he signed the Homestead Act on May 20, 1862. In less than 20 years, nearly half a million homestead claims were filed, embracing over 55 million acres—the greatest privatization of government-owned property in American history.

The apex of Lincoln’s economic agenda was the railroads. Lincoln’s administration, unlike its Confederate counterparts, resisted the temptation to nationalize the 22,000 miles of railroads that carried the North’s passenger and freight traffic. Instead, they struck a deal with the principal rail operators that set a basic troop-transportation rate, standardized gauges and signals, and allowed the railroads to move soldiers and supplies fast enough around the frontiers of the Confederacy to overcome the Confederacy’s defensive advantage. Lincoln also urged Congress to fund new railroad construction in North Carolina, Kentucky, and Tennessee as “a valuable permanent improvement.” And in 1862, Lincoln and Congress plunged ahead into the grandest “internal improvements” project of them all: a transcontinental railroad that would link the flood of homesteaders to markets and suppliers across the continent.

“It is obvious,” lamented Iowa Republican Samuel Curtis, “that no private enterprise will take hold of a work of such magnitude, without some demonstration on the part of Government to lend aid and assistance to the project.” That enablement was precisely what Lincoln had always associated with “internal improvements,” and legislation was introduced to support the construction of the great east–west railroad with grants to the Union Pacific and Central Pacific Railroads from the public lands and installments of U.S. bonds ranging from $16,000 to $48,000 per mile. Lincoln signed the railroad legislation on July 1, 1862, and proceeded to set a uniform gauge (of five feet), recommend civil engineers whom he had known to the builders, and designate Omaha and Sacramento as the jumping-off points for construction. Had he lived to see the completion of the railroad at Promontory Point, Utah, on May 10, 1869, it might have been Abraham Lincoln rather than Leland Stanford, president of the Central Pacific, who drove the ceremonial golden spike that spanned the American continent.

Lincoln’s assassination, in April 1865, cut short his life but not the trajectory of his economic reconstruction of the Union. Even without civil war, Lincoln’s administration would likely still be regarded as a hinge presidency in American history, if only for the way his economic policies inaugurated a new political generation that embraced free labor, protective tariffs, and federal encouragement for infrastructure. Yet he was not entirely free from the anxiety that “finances”—not markets—“will rule the country for the next fifty years.” Lincoln’s image of a market economy was a system of small producers (at a time when the average number of employees in a New England factory was only 14), where the transition from hired laborer to employer seemed to have few obstacles, especially in Lincoln’s Illinois. Protecting that small-producer economy made him suspicious “alike . . . of crowned-kings, money-kings, and land-kings.” When he suspected Wall Street financiers of betting against Northern victory, he wished “every one of them had his devilish head shot off!” And deep as his hands were in establishing a banking system that created a new uniform paper currency to finance the Civil War, he fully expected a return to a gold system after the war was over.

Even this makes him no friend to Marx. What Lincoln most nearly resembles in the nineteenth century is not Marx but the Manchester School of Richard Cobden and John Bright. Like the Manchester School thinkers, Lincoln was a governmental minimalist; but even within that minimum, he understood that government was a powerful source of enablement for upwardly aspiring free laborers. And that enablement was what ran through his administration’s legislation, even in the Emancipation Proclamation, where he urged freed slaves to “labor faithfully for reasonable wages.” His most fundamental economic argument was not with capitalism but with the profoundly un-capitalistic Southern plantation economy. When he announced in 1860 that he was “glad to know that there is a system of labor where the laborer can strike if he wants to,” Lincoln was not hailing a proletarian overthrow of the bourgeoisie but the independence of free labor to leverage its labor to serve its own interests.

We live now in an economy where it often seems that few people see Lincolnian independence as their goal—our society is one of permanent wage earners, living paycheck to paycheck, with educations almost entirely geared to training them to work for someone or something other than themselves. It is often an economy, too, where government sees itself more as a restrainer of economic independence than an enabler of it. Yet we have not drifted so far from Lincoln’s horizons that his economics have lost all possibility of realization. More than 30 million small businesses operate in America, as opposed to just 18,500 large ones (large, in this case, meaning 500 or more employees), and of those 30 million, an astonishing 73 percent are sole proprietorships. Even after a century and half, we’re not as far removed as we think from the free laborer Lincoln described, who “saved means to buy land of his own, a shop of his own, and to increase his property.” This, Abraham Lincoln believed, “was the true, genuine principle of free labor . . . and so it may go on and on in one ceaseless round so long as man exists on the face of the earth!”

Top Photo: Rather than declaring “any war upon capital,” Lincoln said, “we . . . wish to allow the humblest man an equal chance to get rich with everybody else.” (NATIONAL PORTRAIT GALLERY, SMITHSONIAN INSTITUTION; FREDERICK HILL MESERVE COLLECTION)

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