Financial conditions in the South were even worse. With the exception of the seizure of about $400,000 in gold from the Federal mint at New Orleans, almost all of the war was funded by the printing of fiat money. Confederate notes increased in volume by 214% per year, while the volume of all money, including bank notes and check-book money, rose by over 300% per year. In addition to the Confederate notes, each of the Southern states issued its own fiat money and, by the end of the war, the total of all notes was about a billion dollars. Within the four-year period, prices shot up by 9,100%. After Appomattox, of course, Confederate notes and bonds alike were totally worthless.4
1. Galbraith, p. 90.
2. See chapter ten. The Mandrake Mechanism.
3. See Paul and Lehrman, pp. 80-81; Groseclose,
4. See Galbraith, p. 94. Also Paul and Lehrman, p. 81.
GREENBACKS AND OTHER CRIMES 389
As usual, the average citizen did not understand that the newly created money represented a hidden tax which he would soon have to pay in the form of higher prices. Voters in the Northern states certainly would not have tolerated an open and honest tax increase of that magnitude. Even in the South where the cause was
perceived as one of self defense, it is possible that they would not have done so had they known in advance the true dimension of the assessment. But especially in the North, because they did not understand the secret science of money, Americans not only paid the hidden tax but applauded Congress for creating it.
On June 25, 1863, exactly four months after the National Bank Act was signed into law, a confidential communique was sent from the Rothschild investment house in London to an associate banking firm in New York. It contained an amazingly frank and boastful summary:
The few who understand the system [bank loans earning interest and also serving as money] will either be so interested in its profits or so dependent upon its favors that there will be no opposition from that class while, on the other hand, the great body of people, mentally incapable of comprehending,... will bear its burdens without complaint.
LINCOLN'S CONCERN FOR THE FUTURE
Lincoln was privately apprehensive about the Bank Act, but loyalty to his Party and the need to maintain unity in time of war compelled him to withhold his veto. His personal view, however, was unequivocal. In a letter to William Elkins the following year he said:
The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, m o r e insolent than autocracy, m o r e selfish than bureaucracy. I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country.
Corporations have been enthroned, an era of corruption will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people, until the wealth is aggregated in a few hands, and the republic destroyed.
1 • Quoted by Owen, pp. 99-100.
2- A letter to William F. Elkins, November 21, 1864. Archer H. Shaw, ed.,
390 THE CREATURE FROM JEKYLL ISLAND
In reviewing Lincoln's role throughout this painful chapter of history, it is impossible not to feel ambivalence. On the one hand, he declared war without Congress, suspended the writ of
