Mark and Lincoln: And Unfinished Revolution

funded free legal counsel for indigent defendants.”
101
 With some 
charitable assistance, the Reconstruction administrations laid the 
basis for an educational system that was to comprise university col-
leges as well as high schools, open to the freed people and their 
descendants. Th
 e social programs of Reconstruction demanded 
resources that were in chronically short supply. Raising taxes alien-
ated potential supporters. Th
  e South experienced a credit famine, as 
banks and storekeepers would advance supplies only for cotton cul-
tivation and did so in far more modest installments than they had 
before the war, when slave property could be off ered as collateral.
Th
  e empowerment of the freedmen was carried through in the 
teeth of continuing resistance from white “rifl e clubs,” the Ku Klux 
Klan, and kindred organizations. Th
  e Reconstruction administra-
tions fared best—at least for a while—in states where there was 
either a large black population (South Carolina and Louisiana) or a 
solid phalanx of white Republicans (Texas and Arkansas).
102
 Much 
depended on the quality and energy of local political leadership. 
What was needed was an alternative to Federal troops as guarantors 
of the new order.
In the few areas where there were not only Union soldiers but 
also black elected offi
  cials and police, there were instances of freed-
men’s labor associations successfully taking over and running the 
plantations. Th
  is occurred on several of the rice plantations along 
the rivers of coastal South Carolina. Th
  e planters’ practice of pay-
ing wages in “checks” at high-priced stores that they controlled had 
bred hostility to the wage system: “In Colleton County, by the early 
1870s, several large plantations were operating under what a news-
paper called “a sort of ‘communism,’ ” with black laborers forming 
societies, electing offi
  cers, and purchasing estates collectively.
103
 But 
such enclaves of labor power were precarious, and in the later 1870s 
black organization and ownership was to be targeted in South 
Carolina as it was elsewhere.
Th
 e Northern public had been disturbed by white terrorism 
and so-called “race riots” (really ethnic cleansing), but it had little 
101 Foner, 
Reconstruction, p. 364.
102 Eric 
Foner, 
Reconstruction, pp. 439–40.
103 Eric 
Foner, 
Nothing But Freedom: Emancipation and its Legacy, Baton 
Rouge 1983, p. 85.
introduction  67

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patience for the heavy costs of an extended occupation of the South 
and was demoralized by reports of carpetbagger corruption. Prior to 
the 1872 election, a group of “reform” or Liberal Republicans, led by 
Horace Greeley, mustered a challenge to Grant, but they argued for 
less rather than more engagement in the South. Grant’s reelection 
gave a little extra time, but neither the president nor the Republicans 
gave decisive support to the Reconstruction administrations. To do 
so would have been expensive and contrary to the growing view 
that the time had come for a reconciliation with Southern elites. 
Th
  e size of Union forces in the South was continually being whit-
tled down, and white vigilantism was emboldened. Some attempts 
were made in South Carolina to defend Reconstruction by rely-
ing on a local mixed militia, but eventually in the key states the 
Republican governors had to rely on Federal troops.
104
 
THE RESTORED UNION AND A 
THWARTED REVOLUTION 
Th
  e Civil War had landed Washington with a debt of $2.8 billion, and 
the bankers had extracted exceedingly favorable terms.
105
 Schuyler 
Colfax, from Indiana, proposed that the huge war eff ort required 
new taxes—a progressive income tax and a levy on the shareholders 
of the banks and the new corporations. Colfax pointed out that the 
farmer had to pay a tax on his property, so justice demanded that 
there should be a tax on capital—especially that of shareholders—as 
well as on employees and cultivators.
106
 Th
  e income tax was agreed 
upon but the plan for a tax on capital was vetoed by Wall Street 
104 Steven 
Hahn, 
A Nation Under Our Feet, pp. 302–13.
105 Th
  e total cost of the war has been estimated at $6.5 billion by Claudia 
Goldin and Frank Lewis, prompting Phillip Paludan’s comment, “Th
 at amount 
would have allowed the government to purchase and free all the 4,000,000 
slaves (at 1860 prices) give each family 40 acres and a mule and still have pro-
vided $3.5 billion as reparations to former slaves for a century of lost wages.” 
Paludan, “What Did the Winners Win?” in Writing the Civil War, McPherson 
and Cooper, p. 181. 
106 W. 
Elliot 
Brownlow, 
Federal Taxation in America, Cambridge 1996, 
p. 26. Colfax was at this time in the Radical camp. Also see Vorenberg, Final 
Freedom, pp. 206–7.
68  an unfinished revolution

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and the treasury secretary. Th
  e income tax was set at 3 percent and 
much war expenditure was paid for either by issuing war bonds or 
by printing greenbacks. Some urged that the public debt be paid 
off  in the same way, although the value of the paper currency had 
fallen by about a third. Th
  e Republicans, having contracted the 
debt, argued that paying it off  with devalued paper would be a sorry 
reward for the patriotism of those who had subscribed, whether 
bankers or ordinary citizens. Th
  eir decision to pay off  that debt in 
gold left the Treasury bare, unable to pay for Reconstruction in the 
South or ensure steady growth in the North. Neither the Lincoln 
administration nor its Republican successors seized the opportunity 
to introduce a central bank or eff ectively to regulate the thousands 
of private banks. Th
  is was to be a source of future fi nancial instabil-
ity and meant that farmers and small or medium businesses did not 
have access to reliable and reasonably-priced credit. In a book of 
letters addressed to Colfax in 1865, Henry Carey, the noted critic 
of free-trade economics, warned that a credit famine would ruin 
all hopes for successful Reconstruction.
107
 Yet nothing was done to 
meet this problem, Southern producers were starved of credit and 
by 1880 per capita income in the US South was only 50 percent of 
the national average, and it would remain so for many decades after. 
Th
  e weakness of the Southern economy was a drag on national 
performance, but the national economy also suff ered because of 
the primitive banking regime. One rather understated criticism 
of the postbellum US fi nancial system concludes: “Th
 e main costs 
to the US economy of not having a central bank were a less effi
  -
cient payments system and a greater potential for instability.”
108
 Th
 e 
North’s master fi nancier, Jay Cooke, who had marketed the Union’s 
war bonds, was himself to be bankrupted by the crisis of 1873.
 As it happened, by 1869 Schuyler Colfax was vice president 
and, one might have hoped, ready to devise a way of taxing the 
new breed of robber barons. Unfortunately, it was soon discov-
ered that he was implicated in the Credit Mobilier scandal. Th
 e 
Credit Mobilier had issued shares to large numbers of legislators, 
107 Henry Carey, Letters to the Honorable Schuyler Colfax, Philadelphia 
1865.
108  Richard Sylla, “Reversing Financial Reversals,” in Government and the 
American Economy, Price Fishback et al., Chicago 2007, pp. 115–47, p. 133.
introduction  69

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