II

Events on the battlefields affected each side's ability to finance the war. The Confederate economy had started with two strikes against it. Most of the South's capital was tied up in the nonliquid form of land and slaves. While the Confederate states possessed 30 percent of the national wealth (in the form of real and personal property), they had only 12 percent of the circulating currency and 21 percent of the banking assets. The cotton embargo prevented the South from cashing in on its principal asset in 1861–62. Instead of possessing money to invest in Confederate bonds, most planters were in debt—mainly to factors who in turn were financed by northern merchants or banks.

The South initially hoped to turn that planter debt into a means of making Yankee bankers pay for the war. On May 21, 1861, Congress enacted a law requiring Confederate citizens to pay into the Treasury the amount of debts owed to U.S. citizens, in return for which they would receive Confederate bonds. Later legislation confiscated property owned by "alien enemies." Like so many other southern financial measures, however, these laws yielded disappointing results—no more than $12 million, a far cry from the estimated $200 million owed to northern creditors. Enforcement was difficult and concealment of debts easy. And some planters preferred to retain their credit rating with northern factors as an aid to selling cotton illegally across the lines.²³

Of the three principal methods to finance the war—taxation, borrowing,

23. John C. Schwab, The Confederate States of America: A Financial and Industrial History (New York, 1901), 110–20; Richard C. Todd, Confederate Finance (Athens, Ga., 1954), 157–65, 174.

and fiat money—taxation is the least inflationary. But it also seemed the least desirable to southerners in 1861. Antebellum Americans had been one of the most lightly taxed peoples on earth. And the per capita burden in the South had been only half that in the free states. A rural society in which one-third of the people were slaves, the South had few public services and therefore little need for taxes. Except for tariff duties —which despite southern complaints were lower in the late 1850s than they had been for almost half a century—virtually all taxes were collected by state and local governments. The Confederate government possessed no machinery for levying internal taxes and its constituents had no tradition of paying them. Congress enacted a tiny tariff in 1861, but it brought in only $3.5 million during the entire war. In August 1861 a direct tax of one-half of one percent on real and personal property became law.²⁴ The Richmond government relied on states to collect this levy. Only South Carolina actually did so; Texas confiscated northern-owned property to pay its assessment; all the other states paid their quotas not by collecting the tax, but by borrowing the money or printing it in the form of state notes!

Loans seemed a better and fairer way to pay for the war. Risking their lives for liberty, southerners expected future generations to bear the financial cost of the independence won for them by the men of '61. The first bond issue of $15 million was quickly subscribed. Subsequent action by Congress in May and August of 1861 authorized the issuance of $100 million in bonds at 8 percent interest. But these sold slowly. Even those southerners with spare cash to invest had to dip deeply into their reserves of patriotism to buy bonds at 8 percent when the rate of inflation had already reached 12 percent a month by the end of 1861. Recognizing that willing investors might lack cash but possessed cotton, tobacco, and other crops, Congress permitted them to pledge the proceeds from such crops in return for bonds. This "produce loan," the brainchild of Treasury Secretary Christopher Memminger, was more ingenious in concept than successful in results. Some planters, having pledged part of their cotton, changed their minds and sold it instead on the open market or to agents of northern purchasers for higher prices. Only $34 million was eventually realized from the produce loan.

Investors bought most of the remainder of the $100 million bond issue with treasury notes. These notes came off the printing presses in

24. By exempting a head of family if his property was worth less than $500, this tax was partly progressive in nature.

ever-increasing volume. The South resorted to this method of financing the war from necessity, not choice. Memminger warned in 1862 that the printing of notes was "the most dangerous of all methods of raising money. . . . The large quantity of money in circulation today must produce depreciation and final disaster."²⁵ Indeed it did. But from the onset of war, bills accumulated on Memminger's desk faster than he could pay them with the proceeds of loans or taxes. He had no choice but to ask Congress to authorize treasury notes. Congress did so in amounts of $20 million in May 1861, another $100 million in August, a further $50 million in December, and yet another $50 million in April 1862. During the first year of its existence the Confederate government obtained three-quarters of its revenues from the printing press, nearly a quarter from bonds (purchased in part with these same treasury notes), and less than 2 percent from taxes. Although the proportion of loans and taxes increased slightly in later years, the Confederacy financed itself primarily with a billion and a half paper dollars that depreciated from the moment they came into existence.

These notes were to be redeemable in specie at face value within two years of the end of the war. In effect they were backed by the public's faith in the Confederacy's potential for survival. Some congressmen wanted to make the notes legal tender—to require by law all persons to accept them in payment for debts and obligations. But a majority of Congress, along with Memminger and President Davis, considered this unconstitutional, inexpedient, or both. A law to compel acceptance of the notes, they reasoned, would rouse suspicion, undermine confidence, hasten depreciation, and hence defeat the very purpose it sought to accomplish. The promise to redeem in specie after the war, said Memminger, was a better way to assure acceptability.

Southern states, counties, cities, even private businesses also began to issue notes and small-denomination "shinplasters." Shortages of high-quality paper and skilled engravers in the South meant that these as well as the Confederate notes were crudely printed and easily counterfeited. Some counterfeit notes could be detected because of their superior quality to the real thing. Awash in a sea of paper, the South experienced runaway inflation. At first the currency depreciated slowly, because Confederate victories in the summer of 1861 bolstered confidence. In September the price index stood only 25 percent above its January level.

25. Eugene M. Lerner, "The Monetary and Fiscal Programs of the Confederate Government, 1861–1865," Journal of Political Economy, 62 (1954), 509–ion.

But the issuance of new notes caused the index to jump 35 percent in the next three months. Military reverses in the spring of 1862 moved the index up 100 percent in the first half of the year; continued expansion of the currency caused it to double again in the second half. By the beginning of 1863 it took seven dollars to buy what a dollar had bought two years earlier.

This kind of inflation became, in effect, a form of confiscatory taxation whose burden fell most heavily on the poor. It exacerbated class tensions and caused a growing alienation of the white lower classes from the Confederate cause. Wage increases lagged far behind price increases. In 1862 wages for skilled and unskilled workers increased about 55 percent while prices rose 300 percent. Conditions on the small farms where most southern whites lived were little better. Although farm families grew much of what they consumed, the absence of adult males from many of the farms reduced crop yields and caused severe hardship.

The worst problem on many farms was the shortage of salt (the only means of preserving meat) and its catastrophic rise in price—from $2 a bag before the war to $60 in some places by the fall of 1862. Prior to 1861 the South, despite plentiful saline deposits, had imported most of its salt from the North or abroad. The war forced the rapid development of southern salt mines, but transportation priorities for war matériel, the deterioration of southern railroads, and shortages of labor kept supplies scarce and prices high. "There is now in this country much suffering amongst the poorer classes of Volunteers families," wrote a Mississippian in December 1862, "for want of corn and salt. . . . In the name of God, I ask is this to be tolerated? Is this war to be carried on and the Government upheld at the expense of the Starvation of the Women and children?" A rise in desertions from the army in 1862 resulted in part from the distress of the men's families. A mother of three children whose father was in the army wrote to Jefferson Davis in March 1862 that she could get no food. "If I and my little children suffer [and] die while there Father is in service I invoke God Almighty that our blood rest upon the South." A soldier from Mississippi who had overstayed his furlough wrote to the governor on December 1, 1861: "Poor men have been compelled to leave the army to come home to provide for their families. . . . We are poor men and are willing to defend our country but our families [come] first."²⁶

26. The first and third letters are quoted in Charles W. Ramsdell, Behind the Lines in the Southern Confederacy (Baton Rouge, 1944), 28–30; the second letter is quoted in Escott, After Secession, 122. For the salt problem, see Ella Lonn, Salt as a Factor in the Confederacy (New York, 1933).

Anguished southerners sought scapegoats to blame for their woes. They accused "speculators" and "extortioners" of cornering the market in essential items until the rise in price enabled them to sell for fantastic profits. "We have in fact two wars upon our hands," declared a Georgia newspaper in September 1862. "Whilst our brave soldiers are off battling the Abolitionists . . . a conscienceless set of vampires are at home warring upon their indigent families." This "band of harpies preying on the vitals of the Confederacy," these "contemptible wretches" who "would bottle the universal air and sell it at so much a bottle" had "caused the present high prices, and they are determined to make money even if one-half of the people starve."²⁷ Jefferson Davis himself stated that the "gigantic evil" of speculation had "seduced citizens of all classes from a determined prosecution of the war to a sordid effort to amass money." The Richmond Examiner lamented in July 1862 that "native Southern merchants have outdone Yankees and Jews. . . . The whole South stinks with the lust of extortion."²⁸

Despite this condemnation of "native" merchants, the Examiner and many other southerners focused on Jews as the worst "extortioners." Jewish traders had "swarmed here as the locusts of Egypt," declared a congressman. "They ate up the substance of the country, they exhausted its supplies, they monopolized its trade." Jews were said to be more numerous in Charleston than in Jerusalem; the streets of Wilmington "swarmed" with "unctuous and oleaginous" Jews who bought up the cargoes of blockade runners. War Department clerk John B. Jones fulminated in his diary against "Jew extortioners" who had "injured our case more than the armies of Lincoln. Well, if we gain our independence, instead of being the vassals of the Yankees, we shall find all our wealth in the hands of the Jews."²⁹

27. Quotations from Moore, Conscription and Conflict, 150; Eugene M. Lerner, "Money, Prices, and Wages in the Confederacy, 1861–65," in Ralph Andreano, The Economic Impact of the American Civil War (Cambridge, Mass., 1962), 30; Coulter, Confederate States, 225.

28. O.R., Ser. 4, Vol. 2, p. 810; Richmond Examiner, July 22, 1862.

29. Coulter, Confederate States, 227; W. Buck Yearns and John G. Barrett, eds., North Carolina Civil War Documentary (Chapel Hill, 1980), 74–75; Jones, War Clerk's Diary (Swiggett), I, 221.

Such diatribes were hardly unique to the Confederacy. As in other times and places, people suffering from causes beyond their comprehension fastened on an identifiable minority as scapegoats. There were Jewish merchants in the South, of course, and some of them speculated in consumer goods. So did a much larger number of southern-born Gentiles. But most merchants—Jewish and Gentile—were as much victims as perpetrators of shortages and inflation. To be sure, many of them sold goods at markups of 50 percent or more. But when inflation was running at 10 or 15 percent a month, they made little if any profit in real terms on much of what they sold.

By 1862 the Confederate economy had become unmanageable. The futility of trying to bring it under control was illustrated by the attempts of several states to curb "monopolies" or fix maximum prices. Anti-monopoly laws were aimed at speculators who tried to corner markets in any of several necessities, or to charge "exorbitant" prices for them. But these laws proved unenforceable, for they either created a black market or further exacerbated shortages. Richmond's czar of martial law, General John Winder, established maximum prices for several categories of food in April 1862. Farmers and fishermen immediately ceased to sell at these prices. After three weeks Winder admitted failure and lifted the controls, whereupon prices doubled or tripled. Under the pressures of blockade, invasion, and a flood of paper money, the South's unbalanced agrarian economy simply could not produce both guns and butter without shortages and inflation.

The northern economy proved more adaptable to the demands of war. But for a time in the winter of 1861–62, fiscal problems threatened to overwhelm the Union cause. Lincoln's administration entered the war with at least two financial advantages over the Confederacy: an established Treasury and an assured source of revenue from the tariff. But the lower rates enacted by the tariff of 1857 and the depression following the panic of that year had reduced revenues by 30 percent. From 1858 to 1861 the federal budget ran four consecutive deficits for the first time since the War of 1812. Secession produced a new panic. Specie fled the Treasury and the government's credit rating plunged. When Lincoln took office the national debt was the highest in forty years. Secretary of the Treasury Salmon P. Chase was a political appointee without prior financial experience—in contrast to the Confederacy's Memminger, who was an expert in commercial and banking law.

But Chase was an adept learner and turned out to be a good treasury secretary. His principal tutor was Jay Cooke, head of a Philadelphia banking firm, whose brother had been an ally of Chase in Ohio politics. Chase kept the Treasury afloat in the war's early months with short-term bank loans at 7.3 percent. Cooke persuaded some of his moneyed associates to buy longer-term bonds at 6 percent. Chase pioneered the concept of selling bonds to ordinary people, as well as to bankers, in denominations as small as $50 to be paid in monthly installments. Cooke undertook to market these bonds by patriotic advertising that anticipated the great war-bond drives of the twentieth century. Although this policy of financing a democratic war by democratic means got off to a slow start, Cooke eventually achieved great success in selling $400 million of "five-twenties"—6 percent bonds redeemable in not less than five or more than twenty years—and nearly $800 million of "seven-thirties"—three-year notes at 7.30 percent. Newspapers occasionally accused Cooke of getting rich from the commissions he earned on these sales. In fact his firm did earn some $4 million for marketing these bonds. But this amounted to a commission of about three-eighths of one percent, out of which Cooke paid all expenses for agents and advertising, leaving a net profit of about $700,000. This was a cheaper and more efficient means of selling bonds to the masses than the government could have achieved in any other way.³⁰

Unlike the Confederacy, which relied on loans for less than two-fifths of its war finances, the Union raised two-thirds of its revenues by this means. And while the South ultimately obtained only 5 or 6 percent of its funds by actual taxation, the northern government raised 21 percent in this manner. Congress revised the tariff upward several times during the conflict, but wartime customs duties averaged only $75 million a year—scarcely more, after adjustment for inflation, than the $60 million annually in the mid-1850s. Far more important in potential, though not at first in realization, were the new internal taxes levied in the North, beginning with the first federal income tax in American history enacted on August 5, 1861. This revolutionary measure grew from a need to assure the financial community that sufficient revenue would be raised to pay interest on bonds. The Republican architects of the 1861 income tax made it modestly progressive by imposing the 3 percent tax on annual incomes over $800 only, thereby exempting most wage-earners. This was done, explained Senate Finance Committee Chairman William

30. Ellis P. Oberholtzer, Jay Cooke: Financier of the Civil War, 2 vols. (Philadelphia, 1907); Henrietta M. Larson, Jay Cooke: Private Banker (Cambridge, Mass., 1936).

Pitt Fessenden, because the companion tariff bill was regressive in nature. "Taking both measures together, I believe the burdens will be more equalized on all classes of the community."³¹

Most of these taxes would not be collected until 1862. Meanwhile the government would have to depend on loans. But the legacy of the Jacksonian divorce of government from banking created complications. Gold for purchase of bonds had to be literally deposited in a government subtreasury. An ambiguous amendment to the war-loan act of August 5 seemed to repeal this requirement and permit the Treasury to leave the gold on deposit to the government's credit in banks, where it would form part of the legal reserves to support the banks' notes. But Chase, something of a hard-money Jacksonian in his fiscal views, chose not to proceed in this manner. Instead, he required banks and other purchasers of bonds to pay in specie, which then sometimes remained idle for weeks in government vaults while bank reserves dropped toward the danger point.³²

Union defeat at the battle of Ball's Bluff in October 1861 and McClellan's failure to advance on Richmond eroded confidence in northern victory. Then came the threat of war with Britain over Captain Wilkes's seizure of Mason and Slidell from the Trent. The panic on financial exchanges caused a run on banks, whose specie reserves plummeted. The sequel was inevitable. On December 30 the banks of New York suspended specie payments. Banks elsewhere followed suit. Deprived of specie, the Treasury could no longer pay suppliers, contractors, or soldiers. The war economy of one of the world's richest nations threatened to grind to a halt. As Lincoln lamented on January 10, "the bottom is out of the tub. What shall I do?"

What indeed? Lincoln, no financial expert, played little role in congressional efforts to resolve the crisis. Chase proposed the chartering of national banks authorized to issue notes secured by government bonds. This would free the currency from direct specie requirements, pump new money into the economy, and create a market for the bonds. These ideas eventually bore fruit in the National Banking Act of 1863. But

31. CG, 37 Cong., 1 Sess., 255.

32. Bray Hammond, Sovereignty and an Empty Purse: Banks and Politics in the Civil War (Princeton, 1970), chaps. 3–5. For all practical purposes, "specie" meant gold, because the high price of silver in recent years had made a silver dollar worth more than a dollar for its metal, thus driving silver coins almost out of circulation.

Congressman Elbridge G. Spaulding of New York, chairman of the House subcommittee charged with responsibility for framing emergency legislation, believed that the immediate crisis demanded quicker action than the lengthy procedures necessary to establish a new banking system. A delegation of bankers tried to persuade Spaulding (himself a banker) to introduce legislation allowing banks to become depositories of public funds, thereby ending the wasteful practice of transferring gold from banks to subtreasury vaults, and to authorize a new issue of bonds to be sold "at the market" rather than for face value. Since such bonds would sell below par, investors would reap high interest rates and large profits at government expense. Spaulding rejected this proposal along with "any and every form of 'shinning' by Government through Wall or State streets . . . [and] the knocking down of Government stocks to seventy-five or sixty cents on the dollar."³³ Instead, he introduced a bill to authorize the issuance of $150 million in Treasury notes—i.e., fiat money.

This bill seemed to imitate the dubious Confederate example—but with a crucial difference. The U.S. notes were to be legal tender—receivable for all debts public or private except interest on government bonds and customs duties. The exemption of bond interest was intended as an alternative to selling the bonds below par, with the expectation that the payment of 6 percent interest in specie would make the bonds attractive to investors at face value. Customs duties were to be payable in specie to assure sufficient revenue to fund the interest on bonds. In all other transactions individuals, banks, and government itself would be required to accept U.S. notes—soon to be called greenbacks—as lawful money.

Opponents maintained that the legal tender bill was unconstitutional because when the framers empowered Congress "to coin money," they meant coin. Moreover, to require acceptance of paper money for debts previously contracted was a breach of contract. But the attorney general and most Republican congressmen favored a broad construction of the coinage and the "necessary and proper" clauses of the Constitution. "The bill before us is a war measure," Spaulding told the House, "a necessary means of carrying into execution the power granted in the Constitution 'to raise and support armies.' . . . These are extraordinary

33. Robert P. Sharkey, Money, Class, and Party: An Economic Study of Civil War and Reconstruction (Baltimore, 1959), 32.

times, and extraordinary measures must be resorted to in order to save our Government and preserve our nationality."³⁴

Opponents also questioned the expediency, morality, even the theology of the legal tender bill. Such notes would depreciate, they said, as the Revolutionary continentals had done and as Confederate notes were even then depreciating. "The wit of man," said Democratic Congressman George Pendleton of Ohio, "has never discovered a means by which paper currency can be kept at par value, except by its speedy, cheap, certain convertibility into gold and silver." If this bill passed, "prices will be inflated . . . incomes will depreciate; the savings of the poor will vanish; the hoardings of the widow will melt away; bonds, mortgages, and notes—everything of fixed value—will lose their value." One banker insisted that "gold and silver are the only true measure of value. These metals were prepared by the Almighty for this very purpose."³⁵

Supporters of the bill exposed the hollowness of such arguments. "Every intelligent man knows that coined money is not the currency of the country," said Republican Representative Samuel Hooper of Massachusetts. State banknotes—many of them depreciated and irredeemable—were the principal medium of exchange. The issue before Congress was whether the notes of a sovereign government had "as much virtue . . . as the notes of banks which have suspended specie payments."³⁶

By early February most businessmen and bankers had become convinced of the necessity for the legal tender bill. So had Treasury Secretary Chase and Finance Committee Chairman Fessenden. "I came with reluctance to the conclusion that the legal tender clause is a necessity," Chase informed Congress on February 3, 1862. "Immediate action is of great importance. The Treasury is nearly empty." Fessenden considered the measure "of doubtful constitutionality. . . . It is bad faith. . . . It shocks all my notions of political, moral, and national honor." Nevertheless, "to leave the government without resources in such a crisis is not to be thought of." Fessenden voted for the bill.³⁷ So did three-fourths of his Republican colleagues in Congress, who readily overcame

34. CG, 37 Cong., 2 Sess., 523, 525.

35. Ibid., 551; Hugh McCulloch, Men and Measures of Half a Century (New York, 1888), 201.

36. CG, 37 Cong., 2 Sess., 691; Sharkey, Money, Class, and Party, 32.

37. CG, 37 Cong., 2 Sess., 618; Fessenden quoted in Hammond, Sovereignty and an Empty Purse, 213–14.

the three-fourths of the Democrats who voted against it. With Lincoln's signature on February 25, the Legal Tender Act became law.

This act created a national currency and altered the monetary structure of the United States. It asserted national sovereignty to help win a war fought to preserve that sovereignty. It provided the Treasury with resources to pay its bills, it restored investor confidence to make possible the sale at par of the $500 million of new 6 percent bonds authorized at the same time, and unlocked the funds that had gone into hoarding during the financial crisis of December. All these good things came to pass without the ruinous inflation predicted by opponents, despite the authorization of another $150 million of greenbacks in July 1862. This brought the total to $300 million, nearly equal to the amount of Confederate Treasury notes then in circulation. But while the southern price index rose to 686 (February 1861 = 100) by the end of 1862, the northern index then stood only at 114. For the war as a whole the Union experienced inflation of only 80 percent (contrasted with 9,000 percent for the Confederacy), which compares favorably to the 84 percent of World War I (1917–20) and 70 percent in World War II (1941–49, including the postwar years after the lifting of wartime price controls). While the greenbacks' lack of a specie backing created a speculator's market in gold, the "gold premium" did not rise drastically except in periods of Union military reverses. During the four months after passage of the Legal Tender Act, the gold premium rose only to 106 (that is, 100 gold dollars would buy 106 greenback dollars).

Three main factors explain the success of the Legal Tender Act. First: the underlying strength of the northern economy. Second: the fortuitous timing of the law. It went into effect during the months of Union military success in the spring of 1862, floating the greenbacks on a buoyant mood of confidence in victory. The third reason was the enactment of a comprehensive tax law on July 1, 1862, which soaked up much of the inflationary pressure produced by the greenbacks. The Union ultimately raised half again as much war revenue from taxes as from the issuance of paper money—in sharp contrast with the Confederate experience.³⁸

The Internal Revenue Act of 1862 taxed almost everything but the air northerners breathed. It imposed sin taxes on liquor, tobacco, and

38. The total value of greenbacks issued was $447 million. Taxes during the war amounted to nearly $700 million.

playing cards; luxury taxes on carriages, yachts, billiard tables, jewelry, and other expensive items; taxes on patent medicines and newspaper advertisements; license taxes on almost every conceivable profession or service except the clergy; stamp taxes, taxes on the gross receipts of corporations, banks, insurance companies, and a tax on the dividends or interest they paid to investors; value-added taxes on manufactured goods and processed meats; an inheritance tax; and an income tax. The law also created a Bureau of Internal Revenue, which remained a permanent part of the federal government even though most of these taxes (including the income tax) expired several years after the end of the war. The relationship of the American taxpayer to the government was never again the same.

The Internal Revenue Act was strikingly modern in several respects. It withheld the tax from the salaries of government employees and from dividends paid by corporations. It expanded the progressive aspects of the earlier income tax by exempting the first $600, levying 3 percent on incomes between $600 and $10,000, and 5 percent on incomes over $10,000.³⁹ The first $1,000 of any legacy was exempt from the inheritance tax. Businesses worth less than $600 were exempt from the value-added and receipts taxes. Excise taxes fell most heavily on products purchased by the affluent. In explanation of these progressive features, Chairman Thaddeus Stevens of the House Ways and Means Committee said: "While the rich and the thrifty will be obliged to contribute largely from the abundance of their means . . . no burdens have been imposed on the industrious laborer and mechanic. . . . The food of the poor is untaxed; and . . . no one will be affected by the provisions of this bill whose living depends solely on his manual labor."⁴⁰

Whether northern wage-earners appreciated this solicitude is hard to tell. By the time the internal revenue act went into effect many of them were suffering the pinch of inflation. While far less serious than in the South, price increases did cause an average decline of 20 percent in real wages of northern workers by 1863 or 1864. In classical economic theory, the labor shortage caused by a wartime decline of immigration and by the enlistment of workers in the army should have enabled wages to keep up with the cost of living, if not exceed it. Three factors seem to have prevented this from happening. The first was some slack

39. Revised in 1864 to 5 percent on incomes from $600 to $5,000; 7½ percent from $5,000 to $10,000; and 10 percent on incomes over $10,000.

40. CG, 37 Cong., 2 Sess., 1576–77.

in the economy left from the aftershocks of the Panic of 1857 and a renewed panic and downturn caused by secession in 1861, which meant that a labor surplus did not become a labor shortage until 1862. Second, a wartime speedup in mechanization of certain key industries helped alleviate the tight labor market: for example, more reapers and mowers for harvesting grain and hay were produced during the war than ever before, easing the demand for agricultural labor; the sewing machine multiplied the productivity of seamstresses making army uniforms and other clothing; and the Blake-McKay machine for sewing uppers to the soles of shoes reduced the time consumed in that process one hundredfold. Third was a great increase in the employment of women, in occupations ranging from government civil service and army nursing to agricultural field work and manufacturing. In agriculture, the increased use of farm machinery enabled women to fill much of the gap left by the enlistment of nearly a million northern farmers and farm laborers in the army. "I met more women driving teams on the road and saw more at work in the fields than men," wrote a traveler in Iowa during the fall of 1862. As evidence of "the great revolution which machinery is making in agriculture," reported another observer the following year, he saw "a stout matron whose sons are in the army, with her team cutting hay. . . . She cut seven acres with ease in a day, riding leisurely on her cutter." In northern industry women worked mainly in occupations where they were already prominent—textiles, clothing, shoemaking—but increased their proportion of the manufacturing labor force from one-fourth to one-third during the war. Because women earned much less than men for the same or similar jobs, their expanded proportion of the wartime labor force kept down the average of wage increases.⁴¹

The wage lag behind cost-of-living increases fueled protests and strikes, especially in 1863–64. A good many strikes succeeded in winning substantial wage gains, especially in skilled trades and heavy industries where machinery and women could do little to redress a now-acute labor shortage. By the last year of the war real wages in many of these trades

41. Quotations from Emerson D. Fite, Social and Industrial Conditions in the North during the Civil War (New York, 1910), 8; and George W. Smith and Charles Judah, eds., Life in the North during the Civil War (Albuquerque, 1966), 167. For other sources on which this and the following paragraphs are based, see Philip S. Foner, History of the Labor Movement in the United States, Vol. 1 (New York, 1947); and David Montgomery, Beyond Equality: Labor and the Radical Republicans, 1862–1872 (New York, 1967).

had returned to prewar levels and were poised for postwar increases. For unskilled workers and women, however, low wages and inflation remained a searing grievance. "We are unable to sustain life for the prices offered by contractors, who fatten on their contracts by grinding immense profits out of the labor of their operatives," wrote a group of seamstresses—who in war as in peace were the most exploited group of workers—making army uniforms in 1864.⁴²

Wartime activism and strikes, combined with labor's pride in its contribution to northern victory, caused an increase of worker militancy and organization. Several new national trade unions were organized during the war, and a number of labor newspapers sprang into existence, paving the way for the founding of the umbrella National Labor Union in 1866. The wartime impetus helped drive union membership to its highest proportion of the industrial labor force in the nineteenth century by the eve of the Panic of 1873. But that is a story for the next volume in this series.