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  • Give Lincoln Credit: How Paying for the Civil War Transformed the United States Financial System

    We know him as the Great Emancipator and the Savior of the Union, but we could add Financier Extraordinaire to complete Abraham Lincoln’s trinity of titles. Prosaic as money may seem, Lincoln could not have recaptured the South and released the slaves from bondage had he not figured out how to finance the War. His pragmatic approach first preserved and then replaced the U.S. banking system, presented a model of America-first money management for future Presidents, and paved the way for a broad interpretation of the Necessary and Proper Clause in the U.S. Constitution. It also set the country on a course that led to an intertwining of the financial sector with the federal government. Centralization of power at the national level saved the Union, but it also led people to look to Washington in money matters. What follows is a description of the U.S. financial system at the time Lincoln became President and evidence of his opinions about its flaws. The article then turns to Lincoln’s options for financing the War and the choices he made, along with an analysis of the strength of his influence. It ends with a discussion of Lincoln’s financial legacies.