The Financial Lesson of the Civil War
The issue of legal-tender notes during the Civil War was of this character. The country received a deadly blow to its financial credit when that policy was adopted. Nations or peoples cannot, any more than individuals, violate the established rules of honest dealing without suffering the just penalty. If money is needed beyond current revenues, there is no other honest way to get it but by borrowing it at such rate of interest and upon such security as can be agreed upon. Besides, to leave any room for doubt or cavil about the conditions of a loan, or about the standard of money in which principal and interest are to be paid, necessarily arouses suspicion of bad faith, and hence destroys or seriously injures national credit. It is now perfectly well known to all who have taken the pains to study the subject that this false and practically dishonest policy, however innocently it may have been conceived, cost the United States many hundreds of millions of dollars, and came very near bringing disaster upon the Union cause. One of the most astounding spectacles ever presented in the history of the world was that presented by this country. It went into the war practically free from debt, and come out of it with a debt which seemed very large, to be sure, and was in fact nearly twice as large as it ought to have been, yet so small in comparison with the country’s resources that it could be paid off in a few years. It went into the war practically without an army, and came out of the war with its military strength not even yet fully developed. It had more than a million of men, nearly all veterans, in the ranks, and could have raised a million more, if necessary, without seriously interfering with the industries of the country. Yet in four short years a false financial policy destroyed the national credit, brought its treasury to bankruptcy, and thus reduced a great people to a condition in which they could no longer make any use of their enormous military strength! This lesson ought to be taught in every school-house in the United States, until every child is made to understand that there is no such thing in the world as paper money; that the only real money in the world is standard gold and silver; that paper can be used in the place of money only when it represents the real gold or silver in which it can at any time be redeemed; that even gold and silver can be used together as standard money only under the real intrinsic values as recognized by all the world; that any attempt to force either gold or silver into unlimited circulation, under any arbitrary ratio different from their real ratio, is not honest; and that dishonesty is the worst of all financial policies, as well as the most unworthy of a civilized people.
The laws of finance, like the laws of military strategy, were never invented by anybody, any more than the law of gravitation or the law of electrical attraction and repulsion. They have all been learned by the experience and study of mankind since the dawn of civilization. All alike are parts of the great laws of nature. They should be carefully and diligently studied and taught in all the schools, until the rising generation understand that all the affairs of mankind are governed by the uniform laws established by the great Creator and Ruler of the universe; and that self-appointed “leaders of the people” who would entice them to follow their own inventions cannot save them from the penalties which naturally follow the violation of any of the laws of the universe. In short, education,—wisely directed education,—both in science and in morals, is the one indispensable foundation of good popular government. The relative importance to be attached to the many branches of popular education demands the careful consideration of all educators, and still more the purity of the doctrines taught in all the schools. There is good reason for believe that this last duty has been much neglected, especially in respect to financial theories.