These measures not only kept the Union solvent even as its national debt reached unprecedented levels, but they also bolstered the Union government’s credibility at home and abroad. Over the next four years, Chase lobbied Congress to levy new taxes, including the nation’s first income tax, pushed for a paper currency known as “greenbacks,” and, with the help of Philadelphia financier Jay Cooke, arranged a mass selling of bonds to private investors. (Mar.Ways and Means: Lincoln and His Cabinet and the Financing of the Civil War by Roger Lowenstein Penguin Press, 448 pp., $30.00īut in March 1861, the federal government had no authority to borrow in the hodgepodge of state-issued bank notes acting as currency and, save the tariff, no way to increase revenue through taxation.

Full of fascinating historical tidbits and clear explanations of complex financial and political matters, this is a must-read for American history buffs. As Lowenstein notes, in addition to waging the war, Congress also passed legislation for a transcontinental railroad, established departments of education and agriculture, and enacted the 1862 Homestead Act to promote the development of lands west of the Mississippi River. Lowenstein’s lucid, character-driven narrative delves into these and other developments, explaining how crucial economic reforms were to winning the war, and how Republican legislation during Lincoln’s presidency greatly increased federal power and fulfilled his vision of how a strong national government could better the lives of ordinary Americans. Chase initiated America’s first federal use of “fiat” money (currency not backed by gold), a new system of national (rather than state) banks, the Bureau of Internal Revenue (the precursor of today’s IRS), and the progressive income tax.

In order to help pay for the war, Treasury Secretary Salmon P. government had spent on the country’s three previous wars combined, Lowenstein notes. Adjusted for inflation, President Lincoln’s requested $400 million budget for the Union Army in 1861 was more than the U.S. Journalist Lowenstein ( The End of Wall Street) argues in this masterful history that the financing of the Civil War was as crucial to the shaping of American history as the Emancipation Proclamation and the defeat of the Confederacy.

Ways and Means by Roger Lowenstein