Saturday, April 16, 2011

The Confederates have fired on Fort Sumpter

As the nation remembers the 150th anniversary of the beginning of hostilities between the North and South, debates about the Civil War are breaking out again.  I am left out of the best of these debates because most of my friends know much more about the Civil War than I.  For all my interest in history, I have never mustered much interest this particular outbreak of madness.  There are many reasons for this but three stand out:
  • All wars tend to all look alike after a while.  The details of this one are not very interesting because the Civil War changed so little for such a short time.  The differences between slavery and Jim Crow, for example, are not great.
  • The world we live in and the one we must fix is the industrial outcome of the discovery of oil.  While the Civil War didn't change all that much, the age of petroleum changed EVERYTHING.  I find myself spending 99.9% of my energy trying to understand the world created by liquid fuels and as little time as possible trying to judge whether Pennsylvania was more enlightened and virtuous than Virginia.
  • My ancestors didn't arrive in USA until the 1880s.  My people aren't exactly newcomers but the conflicts they experienced were bankers and land speculators vs. farmers or robber barons vs. steelworkers.  The Civil War was not their fight.
Tony, on the other hand, knows about as much Civil War history as I don't know.  He's been working on me.  And he has come up with a debating point that is quite compelling.  (I paraphrase here)
If you do not believe that the Southern aristocracy was an evil influence so extreme, it had to be put down in armed conflict consider this: When the USA didn't have to deal with the backwardness of the South after they left the government in 1861, all sorts of good things got accomplished including land-grant colleges (1862) and the beginnings of the transcontinental railroad (1863).  Now that our southern brethren are (sort of) back in the fold, they have resumed their role as a cultural drag.  From Strom Thurmond and the Dixiecrats to Nixon's "Southern Strategy" to their right-wing Democratic governor-turned-presidents Jimmy Carter and Clinton, to Newt Gingrich and Phil Gramm as "intellectuals", Southern cultural backwardness still defines this country.
The most interesting policy innovation that occurred as a result of the Progressive opening that happened during the Civil War has to be Abe Lincoln's Greenbacks--easily the most enlightened monetary policy in the nation's history.  When the Greenbacks went out of circulation in 1873, it created an economic catastrophe out here in the heartland.  Trust me on this--my forebears WERE interested in this subject.

In the days when folks still foolishly assumed that our new black president would have to represent Northern Progressivism, Ellen Brown wrote this optimistic letter explaining the genius of Lincoln's Greenbacks.

Dear President Obama:
The world was transfixed on that remarkable day in January when, to poetry, song, and dance, you gazed upon Abraham Lincoln’s likeness at the Lincoln Memorial and searched for wisdom to navigate these difficult times. Indeed, you have so many things in common with that venerable President that one might imagine you were his reincarnation in different dress. You are both thin and wiry, brilliant speakers, appearing on the national stage at pivotal times. Fertile imaginations could envision you coming back dressed in that African heritage you freed, to help heal the great scar of slavery and prove once and for all the proposition that all men are created equal and can achieve great things if given a fighting chance.
As Wordsworth said, however, our birth is but a sleep and a forgetting; and if that is true, you may have forgotten a more subtle form of slavery from which Lincoln tried less successfully to free his countrymen. You may have forgotten it because it has been omitted from our popular history books, leaving Americans ill-equipped to interpret the lessons of our own past. This letter is therefore meant to remind you.
President Obama, we are now met on another battlefield of that same economic war that visited Lincoln and the Founding Fathers before him. For you to finish the work Lincoln started would be a poetic triumph no American could miss. The fate of our economy and the nation itself may depend on how well you understand Lincoln’s monetary breakthrough, the most far-reaching “economic stimulus plan” ever implemented by a U.S. President. You can solve our economic crisis quickly and permanently, by implementing the same economic solution that allowed Lincoln to win the Civil War and thus save the Union from foreign economic masters.
Lincoln’s Monetary Breakthrough
The bankers had Lincoln’s government over a barrel, just as Wall Street has Congress in its vice-like grip today. The North needed money to fund a war, and the bankers were willing to lend it only under circumstances that amounted to extortion, involving staggering interest rates of 24 to 36 percent. Lincoln saw that this would bankrupt the North and asked a trusted colleague to research the matter and find a solution. In what may be the best piece of advice ever given to a sitting President, Colonel Dick Taylor of Illinois reported back that the Union had the power under the Constitution to solve its financing problem by printing its money as a sovereign government. Taylor said:
“Just get Congress to pass a bill authorizing the printing of full legal tender treasury notes . . . and pay your soldiers with them and go ahead and win your war with them also. If you make them full legal tender . . . they will have the full sanction of the government and be just as good as any money; as Congress is given that express right by the Constitution.”
The Greenbacks actually were just as good as the bankers’ banknotes. Both were created on a printing press, but the banknotes had the veneer of legitimacy because they were “backed” by gold. The catch was that this backing was based on “fractional reserves,” meaning the bankers held only a small fraction of the gold necessary to support all the loans represented by their banknotes. The “fractional reserve” ruse is still used today to create the impression that bankers are lending something other than mere debt created with accounting entries on their books. more

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