In Defense of Abraham Lincoln and the Greenbacks

Splitting the Difference Between American Fame and Infamy

This is the second entry in a new series: Part 1 focused on Alexander Hamilton.

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“[Let] those who toil up from poverty … beware of surrendering a political power which they already possess, and which if surrendered will surely be used to close the door of advancement against [them] and to fix new disabilities and burdens upon them till all of liberty shall be lost. — Abraham Lincoln

In my last paper I introduced the figure of Alexander Hamilton (first Treasury Secretary and founder of the American System of political economy).

In that location, I contrasted Hamilton’s system which tied the value and behaviour of money to the increasing powers of production of a society through manufacturing and internal improvements, to the opposing system of British free trade which tied value to hedonistic impulses and the worshiping of money.

In this sequel, I’d like to take a moment to explore another figure of American history who has become the cause of serious arguments among patriots … Abraham Lincoln.

Some citizens love him as an angelic savior of America and others hate him as a wicked tyrant, even going so far to celebrate his 1865 murder to this very day… yet, upon scratching behind the surface of both popular narratives, I contend that both extremes of this narrative war have been duped.

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What did Lincoln Actually Face?

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Beyond the dangers of secession, Lincoln had to contend with the Wall Street financiers and anglophile families who worked tirelessly to sabotage the president’s ability to acquire the funds necessary to execute the war.

To make matters worse, the state of economic affairs was impossibly unmanageable, with over 7,000 recognized bank notes in the USA, and over 1,496 banks each issuing multiple notes. Under this highly de-regulated system made possible by the 1836 killing of the national bank years earlier under Andrew Jackson and the passage of the 1846 Independent Treasury Act, which prevented the government from influencing economic affairs, every private bank could issue currencies with no federal authority.

With such a breakdown of finances, no national projects were possible, international investments were scarce, and free market money worshipping ran rampant. Manufacturing collapsed, speculation took over and the slavocracy grew in influence between the 1837’s bank panic and 1860.

In his pioneering book Who We Are: America’s Fight For Universal Progress volume 2, Anton Chaitkin writes of the artificial crisis of 1837-1860:

“Under anti-national economic regimes since the 1830s, there had been no national currency and no federal regulations on banks.

State-chartered banks used deposits for dangerous speculation. To make loans, they issued paper notes in various dollar amounts, promising to pay off in gold or silver coins (“specie”) if a note were cashed in (a promise that could be kept only if the bank did not overextend itself). These notes circulated as a kind of money, but they were often not accepted for payment far from the locality of the issuing banks.

In the crisis of the Union, fear for the future had shriveled credit and investment. Southerners had stopped paying most debts they owed to northern business. The bigger northern banks were trying to hoard gold. In these chaotic circumstances, depositors and note-holders across the country were often left with nothing.”

By the onset of the Civil War, the City of London was obviously not interested in allowing the USA to get out from under water, and with the gold-backed pound sterling, ensured the manipulation of gold prices and orchestrated the buyout of U.S. gold reserves. When Lincoln sought loans to execute the war, whether from Wall Street or International banking houses, the loans were granted only at excessive interest rates of 20-25%.

Russian Ambassador to London de Brunow reported to Moscow of England’s desire to break the Union, writing in January 1861:

“The English government, at the bottom of its heart, desired the separation of North America into two republics, which will watch each other jealously and counterbalance one the other. Then England, on terms of peace and commerce with both, would have nothing to fear from either; for she would dominate them, restraining them by their rival ambitions.”

Historian Robert Ingraham described this impossible situation in 2002:

“In January 1862, Gallatin [head of the NY Associated Banks] presented the bankers’ ultimatum to the Treasury:

1) pay for the war effort through a massive increase of direct taxation of the population;

2) deposit all U.S. government gold in the private New York banks and make those banks the sole (monopoly) agent for the marketing of U.S. government debt (primarily bonds sold in London);

3) suspend the “sub-treasury laws” (government regulation of banks); and

4) withdraw all government-issued paper currency so that only gold and private bank notes would circulate as currency.”

Although 150 years of revisionist historians have obscured the real Lincoln and the true nature of the Civil War as a British-run operation to undo the revolution of 1776. The martyred president was always an opponent to slavery, and always situated himself in the traditions of the American System of Hamilton, describing in 1832 a policy which he later enacted 30 years later:

“My politics are short and sweet, like the old woman’s dance. I am in favor of a national bank. I am in favor of the internal improvement system, and a high protective tariff. These are my sentiments and political principles.”

In 1859, Lincoln described himself

“I was an old Henry Clay tariff whig. In old times I made more speeches on that subject, than on any other. I have not since changed my views.”

Lincoln’s committment to the Hamiltonian system of national banking was showcased brilliantly during his 1840 campaign speeches promoting Harrison’s Whig presidency and the restoration of the bank, which had been cancelled by Andrew Jackson four years earlier.

American System Now president Nancy Spannaus writes of this effort to revive a national bank:

“Lincoln’s 1840 campaign was successful, in the sense that not only was Harrison elected, but a bill establishing a new National Bank was passed by the incoming Congress. But the move was aborted when the President died of a mysterious illness, and his vice-president, John Tyler, took the Jacksonian position of vetoing the legislation.”

From this period in the Congress where he became a leading ally of John Quincy Adams, and played a leading role in opposition to the unjust U.S.-Mexican War, Lincoln committed himself consistently to ending not only systems of slavery, but also all hereditary power structures internationally, which he understood were inextricably connected, saying during an 1858 debate with the slavocracy’s Judge Douglas:

“That is the issue that will continue in this country when these poor tongues of Judge Douglas and myself shall be silent. It is the eternal struggle between these two principles – right and wrong – throughout the world. They are the two principles that have stood face to face from the beginning of time, and will ever continue to struggle. The one is the common right of humanity and the other the divine right of kings.“

The means needed to break both systems of empire and slavery were located in the American System of political economy.

Pro slavery senator Stephen Douglas and his nemesis Abe Lincoln

Lincoln Revives the American System

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Putting this economic policy into action during the height of the war occurred in a 3-step operation, which began with Banking and Currency Acts in 1862 and 1863. These acts established the thousands of local state banks under a federal charter with federal supervision for the first time in decades. By imposing a 10% tax on state bank notes, private independent state banks shrank from 1466 in 1861 to only 297 by 1865, and over 1630 national banks took their place.

The Bank Act of 1863 established reserve requirements for the first time, and also capped the interest rates in order to destroy usury within the nation itself. In order to eliminate international interference and manipulation from Wall Street financiers, the Bank Act also forced 75% of all bank directors to reside in the state in which the bank was located, and all directors had to be American citizens.

The most important step in this fight was the sovereign control of credit issuance, which, according to Article 1 section 8 of the U.S. constitution can only be affected through the U.S. treasury (an important lesson for anyone serious about ending the privately run Federal Reserve controls over national finance today). Following this constitutional principle, Lincoln issued a new form of currency called Greenbacks, which could only be issued against U.S. government bonds. These began being issued with the 1862 Legal Tender Act.

Nationally-chartered banks were now obliged to deposit into the federal treasury, totalling at least one third of their capital in exchange for government notes issued by the Mint and Treasury (in order to qualify for federal charters needed to avoid the tax on state bank activities, banks found themselves lending to the government, which gave Lincoln an ability to avoid the usurious loans from London and Wall Street.)

New bonds were issued under this scheme called 5:20 bonds (due to their 5-20 year maturation), which citizens purchased as investments into their nations’ survival. These bonds, which united “personal self interest” with the general welfare of the nation provided loans to manufacturing, and as well served as the basis for the issuance of more Greenbacks.

Organized by Lincoln’s ally Jay Cooke (a patriotic Philadelphia banker), the 5-20 bonds were sold in small denominations to average citizens who then had a vested interest in directly participating in saving their nation.

Jay Cooke (1822-1905), American pro-industrial financier

Between 1862-1865, these bonds accounted for $1.3 billion.

Lincoln described the success of this new approach to finance, saying:

“The patriotism of the people has placed at the disposal of the government the large means demanded by the public exigencies. Much of the national loan has been taken by citizens of the industrial classes, whose confidence in their country’s faith and zeal for their country’s deliverance from present peril has induced them to contribute to the support of the government the whole of their limited acquisitions. This fact imposes peculiar obligations to economy in disbursement and energy in action.”

These measures were accompanied by a strong protective tariff to grow American industries as well.

By the beginning of 1865, $450 million in Greenbacks were issued, making up over half of all currency in circulation.

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In Defense of Abraham Lincoln and William McKinley

Matthew Ehret

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June 24, 2022

Both Abraham Lincoln and William McKinley lived their lives according to certain fundamental principles and identities which are desperately needed in today's crisis-ridden world, and without the which any hope for redemption of either the republican party, or the United States of America were lost.

Read full story

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Greenbacks and 5-20 bonds financed not only the arming, feeding and payments to soldiers, but also the often-overlooked large scale industrial and rail programs begun during the peak of the war itself … namely the trans continental railway (started in 1863 and completed in 1869, linking for the first time in history a continent from east to west).

This was financed through grants and subsidies made possible by the greenbacks, which increased government spending power by 300%!

In his 1865 essay How to Outdo England Without Fighting Her, Lincoln’s economic advisor Henry C Carey stated, “The ‘greenback’ has fallen on the country as the dew falls, bringing with it good to all and doing injury to none.”

Unfortunately, the subversion of Lincoln’s American System began quickly with Lincoln’s murder (carried out from Confederate intelligence operations run through British Canada).

Rather than impose full reconstruction of the defeated south after the war, as Lincoln planned, a new war was waged against Greenbacks led by the City of London and its American agents in Wall Street, which ultimately subverted American productive credit with the 1871 Specie Resumption Act. This act killed the greenbacks and tied the republic’s currency to gold, submitting the nation to London’s speculative controls while contracting the means of credit from large scale, long term infrastructure projects.

Anton Chaitkin writes of the Wall Street/London efforts to destroy the greenbacks via the Specie Resumption Act:

“At the end of the war, immediately after the President’s assassination, the Anglo-American financier faction ramped up their attack on Lincoln’s national-sovereign economic policy. They demanded “honest money.” They clamored for the accursed greenbacks to be taken quickly out of circulation, and for gold to be restored to its throne. Shrinking the money supply by this “specie resumption” would sharply reduce consumer demand, bringing hard times to workers, farmers and businessmen. But America might thus be stopped from what they viewed as its dangerous race to an unnaturally high place in the world order.”

In his 1865 inaugural address, Lincoln’s treacherous Vice-President Andrew Johnson attacked protectionism, and said, “Free trade with all the markets of the world is the true theory of government.”

Contemplating the international scope of the Civil War, Lincoln stated in 1862:

“Fellow citizens, we cannot escape history. We of this Congress, and this administration, will be remembered in spite of ourselves. No personal significance, or insignificance, can spare one or another of us. The fiery trial through which we pass, will light us down, in honor or dishonor, to the last generation.

We say we are for the Union. The world will not forget that we say this. We know how to save the Union. The world knows we know how to save it. We even here–hold the power and bear the responsibility.

In giving freedom to the slave, we assure freedom to the free–honorable alike in what we give and what we preserve. We shall nobly save, or meanly lose, the last, best hope of earth.

Other means may succeed–this could not fail. The way is plain, peaceful, generous and just–a way which, if followed, the world will forever applaud and God must forever bless…

If we do this we shall not only have saved the Union, but we shall have so saved it, as to make, and to keep it forever worthy of the saving. We shall have so saved it, that the succeeding millions of free happy people the world over shall rise up and call us blessed, to the latest generations.”

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Matthew Ehret is the editor-in-chief of The Canadian Patriot Review, Senior Fellow of the American University in Moscow and Director of the Rising Tide Foundation. He has written the four volume Untold History of Canada series, four volume Clash of the Two Americas series and Science Unshackled: Restoring Causality to a World in Chaos. He is also host of Pluralia Dialogos (every second Sunday at 11am ET, and co-host of Breaking History on Badlands Media where this article was first published