Tuesday, January 1, 2019

The Palmer Raids (aka: the Red Scare) in Chicago.

Named after Attorney General A. Mitchell Palmer, with assistance from J. Edgar Hoover, and fueled by paranoia generated by revolutions overseas and social unrest at home. Chicago saw some of the worst of the violence. Chicago police swooped down upon the gathering places of political dissenters and labor activists, arresting about 150 communists, socialists, and anarchists, plus a few more-or-less-innocent bystanders on New Year's Day 1920.

The feds got into the act, arresting thousands more nationally and confining many of the foreign-born pending deportations at New York's Ellis Island, where many had first landed in America.
About 200 people viewed as radicals were rounded up in Chicago as part of nationwide raids at the local and federal level to wipe the Communist Party out of existence. Law enforcement raided multiple meeting places and residences, taking both men and women into custody.
Those raids on union halls and bookstores stocking radical literature marked the apex of the Red Scare, as it was dubbed, a period when morbid fears of subversives targeting the American way of life led government officials to put civil liberties on hold. It was a time of sporadic violence and mass arrests. Police and Justice Department officials broke into homes for no other reason than those who lived there were foreign-born and held unpopular views, like opposing America's involvement in the recently concluded World War I. Others had agitated for better wages and working conditions. Hundreds were deported, many without having their day in court. And all of this was justified by officials announcing they had uncovered plots to overthrow the government, the supposed details of which would have seemed laughable in more sober times.
Authorities confiscate literature as evidence at an alleged gathering place for communists during the Red Raid in Chicago on January 1, 1920.
When some of those rounded up in the Chicago raids on New Year's Day 1920 went on trial, the prosecutor told the judge and jury of a nefarious scheme to shut off Chicago's electricity. According to the Tribune's report, he said, "With the city in darkness, the food supply would be seized by the victorious Reds and soup kitchens established where only the comrades and those who surrendered to the cause would be fed."
Industrial Workers of the World (IWW) union members were arrested during a raid on January 1, 1920. The Tribune reported, "Most of the Reds are said to have freely confessed membership in the society, confessions assuring their early exile."
What kind of person would do such a thing? According to the Trib's reporter, their facial expressions gave them away: "The picture of mothers begging husbands to join with the revolutionists in order to get milk for the baby caused smirks to appear on the faces of many of the defendants."
William Bross Lloyd of Wilmette was a socialist and millionaire who supported the Industrial Workers of the World union. Lloyd was listed among 35 men and three women indicted and charged in January 1920 with conspiracy to overthrow the government.
Federal authorities had planned a nationwide crackdown on suspected revolutionaries to begin Jan. 2, but the Cook County state's attorney and Chicago's police chief jumped the gun. In those paranoid times, public officials were even suspicious of other public officials. Explaining why he staged his raids a day early, State's Attorney Maclay Hoyne accused U.S. Attorney General Mitchell Palmer of dragging his feet in a moment of crisis, accusing him of a "petty, pusillanimous and pussyfoot policy," according to the Tribune. Hoyne also claimed the feds had tipped off Chicago's Reds, enabling some to escape Chicago's cops.
Fifty-five male and female "students" were arrested at the "soviet college" at 1115 N. Robey St. (now Damen Avenue) on January 2, 1920. Chicago police raided several establishments on January 1 and 2 and rounded up 200 "radicals" in an effort to wipe out the Communist Party in Chicago. The Tribune reported Edward J. Brennan, superintendent of the Department of Justice's local offices, as saying, "We mean we are going to deport most of them."
In the years leading up to 1920, a perfect storm of reasonable anxieties and irrational conspiracy theories brewed. In 1917, Vladimir Lenin and the Bolsheviks seized power in Russia and called upon the working class of other countries to follow their lead. In response, an American Communist Party (which quickly split in two) formed at a 1919 convention in Chicago, long the center of political dissent in this country. Seattle witnessed a general strike, a phenomenon that, in radical and conservative ideology alike, was thought to be a harbinger of revolution. The Boston police went on strike, as did steelworkers in Gary and other mill towns. A series of spectacular bombings and attempted bombings in April and June 1919 indicated that some radicals weren't willing to wait until election victories enabled them to put into place their theories of a society of equals. Among the targets was the Washington home of Palmer himself, and, as the mastermind of the anarchist bombers was an Italian immigrant, not only was he deported but immigrants in general also came under suspicion.
William "Big Bill" Haywood, seated left, in court on January 5, 1920, with George T. Speed, seated right, both members of the Industrial Workers of the World union executive board. The two were arrested during the Red Raids that rounded up socialists and "radicals" on suspicion of espionage. Haywood was a founding member and leader of the IWW who skipped bail and fled to Russia in 1921 while out on appeal.
Encouraged to come to labor at U.S. factories, millions of recent arrivals from Southern and Eastern Europe didn't seem like "real Americans" to citizens of older stock. Editorializing on a supposed Communist plot in 1920 to blow up an Illinois Central train, the Tribune noted: "That was the scheme of a group of foreigners who could not even speak English."
William "Big Bill" Haywood, center, appears in court January 5, 1920, to get his bond fixed after the Red Raid in Chicago in 1920. Haywood's bond was set at $10,000.
In fact, not all of America's radicals were foreigners. William Bross Lloyd had impeccable establishment credentials: a home in Wilmette and a grandfather, William Bross, who had been a publisher of the Tribune. That didn't stop Lloyd from serving as sergeant of arms at the Communist convention in 1919. The Tribune dubbed him "the man who would be king of the proletariat." When he was tried in July 1920, evidence was introduced of a previous conviction for flying the Communist flag from his automobile. According to the Tribune, Lloyd noted that he also flew an American flag, though "the Stars and Stripes were only for protection, while the other expressed his true feelings."
Edgar Owens, alleged state secretary of the Communist Labor Party, was arrested on January 8, 1920, in Moline, Ill. According to the Tribune, it was believed that Owens was training his son, Arvid, 14, to be a leader of the revolutionary orchestra at the first session of the American revolutionary assembly. "My sole ambition for him is that he shall be a rebel. I feel that I could rest content if he could contribute to the overthrow of this system that makes slaves of the masses."
Lloyd was sentenced to up to five years in prison, of which he served eight days before being pardoned by Illinois Gov. Len Small. Others didn't get off so lightly — or even have trials. Even before the New Year's Day raids, prominent radicals were deported aboard a ship dubbed the "Soviet Ark." From the high seas, Emma Goldman, a pioneering feminist, and other leftist luminaries telegraphed their solidarity with those awaiting deportation.

When authorities were putting together the passenger list for a new deportation ship, dubbed the "Chicago Ark," two sisters from Gary were included. According to a Tribune reporter: "The Dubrow sisters appeared in court with their mother and insisted she go with them." Historians estimate that during the Red Scare upward of 4,000 people were arrested nationwide, 500 of whom were deported.
Maurice Grodin explains the Industrial Workers of the World union headquarters during the Red Raids of January 1, 1920.
Those numbers would have been higher if Palmer hadn't been opposed by Secretary of Labor William Wilson, who objected to Palmer's methods and whose department had jurisdiction over immigrants. The U.S. attorney for eastern Pennsylvania resigned, saying that repressive measures were wholly unnecessary against "a handful of Russians and Jews in love with the Soviet form of government."

Jane Addams thought Palmer's methods were counterproductive. "The remedy for the feeling of unrest is conciliation and education, and free speech is the great safety valve," said Addams, who knew immigrants firsthand through her pioneering Hull House social center.

Faced with growing criticism, Palmer doubled down his bet, asserting that radicals planned a revolution for May Day, the international labor holiday. When it failed to happen, his ambitions to run for president were shattered. On May 1, the Tribune dispatched a reporter to likely spots for the uprising to begin. At an Italian restaurant on Jackson Boulevard he spotted "a girl of 16 with a red rose pinned on a necktie of scarlet," adding that "in Jefferson Park, numerous holders of the Red card were playing baseball."

Accordingly, he concluded: "The revolution just didn't happen."


The Palmer Raids Explained.

Palmer raids were a series of violent and abusive law-enforcement raids directed at leftist radicals and anarchists in 1919 and 1920, beginning during a period of unrest known as the “Red Summer.” Named after Attorney General A. Mitchell Palmer, with assistance from J. Edgar Hoover, the raids and subsequent deportations proved disastrous and sparked a vigorous debate about constitutional rights.

RED SCARE
Following the Russian Revolution in 1917, America was on high alert, fearing Communist revolutionaries on their own shores.

The Sedition Act of 1918, which was an expansion of the 1917 Espionage Act, was a direct result of the paranoia. Targeting those who criticized the government, the Sedition Act set into motion an effort to monitor radicals, especially labor union leaders, with the threat of deportation looming over them.

Anyone who was a member of the Industrial Workers of the World union was, particularly at risk.

1919 ANARCHIST BOMBINGS
In the spring of 1919, a series of bombs targeting government and law enforcement officials were discovered.

In April, a package bomb was delivered at the home of former U.S. Senator Thomas Hardwick in Georgia. It exploded, but Hardwick, his wife and the maid who opened the package survived (albeit with severe injuries).

Later in the month, the office of Seattle mayor Ole Hanson received a mail bomb sent from New York City that failed to explode.

BOMBINGS CONTINUE
Days later, a postal worker read a newspaper item about the Georgia bombing, and the description of that package reminded him of a group of parcels he had dealt with a few days before that lacked proper postage.

The clerk, Charles Caplan, intercepted 36 mail bombs targeting Oliver Wendell Holmes, John D. Rockefeller, J.P. Morgan, and other notable citizens.

The headlines that followed pushed a conspiracy narrative and set off a Red Scare wave in the country. There were riots in New York City and Cleveland centering around labor union-supported May Day celebrations.

On June 2, 1919, a bomb exploded at the home of  Judge Charles Cooper Nott Jr. In New York City, killing two people.

The very same day, a bomb exploded in front of Palmer’s home in Washington, D.C. The anarchist planting the bomb, Carlo Valdinoci, was the only casualty of the explosion.

Other devices detonated in Boston, Cleveland, and Philadelphia. Two anarchists working in a print shop traced to a flyer contained in each package were suspected but were never convicted due to lack of evidence.

J. EDGAR HOOVER
A special division of the Bureau of Investigation—a precursor to the FBI—charged with collating all information on leftist radicals was created by Palmer in 1919 in response to the bombs.

J. Edgar Hoover, a Justice Department lawyer at the time, was put in charge of the group. Hoover coordinated intelligence from various sources to identify those radicals believed most prone to violence.

EMMA GOLDMAN
Hoover’s analysis lead to raids and mass arrests under the Sedition Act in the fall of 1919, with well-known anarchist figures Alexander Berkman and Emma Goldman among those arrested.

Police raided locations like the Russian People’s House in New York City, where Russian immigrants often gathered for educational purposes. Department of Justice agents stormed a meeting room and beat the 200 occupants with clubs and blackjacks.

An algebra class was interrupted by armed agents, with the teacher being beaten. The detained were ordered to hand over their money to agents, who were then directed to tear the place apart.

Dragged and shoved into patrol wagons and taken into custody, agents searched among the detainees for members of the Union of Russian Workers. The questioning that followed revealed that only 39 of the people arrested had anything to do with the union.

PALMER RAIDS CONTINUE
Raids across the United States continued, with police pulling suspects out of their apartments, often without arrest warrants. One thousand people were arrested in 11 cities. Seventy-five percent of the arrestees were released.

In Hartford, Connecticut, 100 men were held for five months, during which time they weren’t allowed lawyers and were not informed of the charges.

Many of the alleged Communist sympathizers that were rounded up were deported in December 1919. The boat utilized for this, the USAT Buford, was nicknamed the Soviet Ark and the Red Ark. A total of 249 radicals were deported aboard the ship, including Goldman.

More violent abuses abounded: New York City deportee Gaspar Cannone was held secretly without being charged and beaten when he would not inform on others. When Cannone refused to sign a statement admitting to being an anarchist, his signature was forged.

During Goldman’s deportation hearing, she defiantly accused the government of violating the First Amendment and warned them of the mistake they were making. She would not return to America until 1940 when her dead body was shipped for burial.

SECOND WAVE OF PALMER RAIDS
More raids followed on January 2, 1920. Justice Department agents conducted raids in 33 cities, resulting in the arrest of 3,000 people. Over 800 of the arrested suspected radicals were living in the Boston area.

In Chicago, the state’s attorney and the police chief believed Palmer had tipped off local targets and thought rounding them up a day early was the only way to achieve the desired arrests.

Around 150 Chicagoans were arrested on January 1 in raids on union halls and radical bookstores. Only a portion of those went on trial, with the prosecutor alleging a hysterical Communist plot to shut off the city’s electricity and steal its food supply.

Abuses of arrestees were routine: In Detroit, nearly 1,000 men were detained and starved for almost a week in a small area without windows on the top floor of the federal building.

They were later transferred to Fort Wayne to be tortured during questioning. Family members of prisoners were assaulted in front of them as part of the interrogation.

ACLU IS CREATED
The American Civil Liberties Union, or ACLU, was created in 1920 as a direct result of the Palmer Raids. It was suggested in a January 13 meeting to reorganize the National Civil Liberties Bureau as the ACLU, which held its first meeting on January 19.

Palmer raids were a series of violent and abusive law-enforcement raids directed at leftist radicals and anarchists in 1919 and 1920, beginning during a period of unrest known as the “Red Summer.” Named after Attorney General A. Mitchell Palmer, with assistance from J. Edgar Hoover, the raids and subsequent deportations proved disastrous and sparked a vigorous debate about constitutional rights.

DOWNFALL OF PALMER
Though the first raids were popular with American citizens, they eventually elicited much criticism, particularly after the second wave of raids, and Palmer faced rebukes from numerous sources, including Congress.

Palmer defended his actions in the press, but a subsequent report from a group of lawyers and judges revealing the extent to which due process had been disregarded caused further damage.

Assistant Secretary of Labor Louis F. Post joined in the chorus of criticism after reviewing deportation cases, claiming that innocent people were punished under Palmer’s efforts. Post invalidated well over 1,500 deportations. Only 556 arrestees remained deported.

An attempt by Palmer’s Congressional allies to impeach Post backfired, instead of providing an opportunity for Post to publicly outline and decry Palmer’s abuses.

During hearings, Palmer questioned Post’s patriotism and refused to admit wrongdoing.

He predicted an armed Communist uprising on May 1, 1920, to justify further raids and other actions. When that never materialized, his plans fell apart and he was subject to near-universal mockery.

A career politician, Palmer sought the Democratic nomination for president in 1920 but lost to James M. Cox. Palmer died in 1936.

Compiled by Neil Gale, Ph.D. 

Sunday, December 30, 2018

Abraham Lincoln ridiculed State Auditor James Shields, who challenged Lincoln to a duel to the death in 1842.

On September 22, 1842, the Mississippi River levee in Alton, Illinois, was crammed full of spectators awaiting the results of a highly anticipated duel on an island in the middle of the river which belonged to Missouri — a smackdown between Abraham Lincoln and political rival James Shields. Only one man could emerge victoriously. Onlookers held their breath in suspense as they spotted a boat approaching with a blood-soaked body draped over the bow.
 Abraham Lincoln                                                James Shields
It had all started where so many skirmishes do: the Illinois state legislature. Though at the time Lincoln was a Whig and Shields was a Democrat, the two politicians had an amicable relationship and worked together to address the state’s enormous debt problem.

The relationship cooled, however, when Shields became the State Auditor. He passed a number of controversial measures and even instituted a policy whereby the state stopped accepting its own paper money as payment for taxes and other debts.

Lincoln expressed his disapproval in the most professional, statesman-like fashion he could think of: by anonymously lampooning Shields in print. He began composing letters to a Springfield paper deriding Shields' character as well as his policies.

Between August 19 and September 9, a series of letters addressed to the editor of the Whig paper, Sangamo Journal, from a fictitious farmer’s wife named Aunt Rebecca, pointed an accusatory and defaming finger at James Shields and the Democratic party. The letters were followed by a September 16th poem (related to the Rebecca letters), signed by fictitious Cathleen. The poem and likely two of the Rebecca letters were written by Mary Todd and her friend Julia Jayne. Mary was quite a satirical writer, and she was already very opinionated about politics. Lincoln only admitted to writing the second Rebecca letter, which landed a blow directly at Shields. The letter was a doozy! Read this complete "Rebecca" letter; Lost Townships, August 27, 1842.

Poking fun at Shields wasn’t hard to do. He was notoriously pompous, vain, and a tad eccentric. Opponents dubbed him “an irresistible mark for satire.” He also poked fun at Shields' lack of romantic game. One letter signed "Rebecca," quoted Shields as saying, “Dear girls, it is distressing, but I cannot marry you all... It is not my fault that I am so handsome and so interesting.”

Before sending his note off to the editor, Lincoln shared it with his soon-to-be-wife Mary Todd and her friend Julia Jayne. The two women contributed a few quips to Lincoln’s letter and even began writing memos of their own.

The letters soon became the talk of the town. Though Shields was generally well-liked, people got a kick out of Lincoln’s hilariously spot-on satire. Shields, however, didn’t get the joke. Incensed, he contacted the paper’s editor and demanded to know “Rebecca’s” identity. The editor gave him Abe’s name — as per Lincoln’s instructions.

Upon learning the identity of his defamer, Shields decided to settle the matter by challenging Lincoln to a duel to the death. Though Lincoln thought the whole thing was absurd, he knew that backing down from a duel was never the honorable thing to do.

Duel Rules
As the one who’d been challenged, Lincoln got to select the conditions of the duel. He had a grand old time conjuring up the most ridiculous set of circumstances possible. To begin with, he named the cavalry broadsword as the weapon of choice. (“I didn't want the damned fellow to kill me, which I think he would have done if we had selected pistols,” he later explained.)
Next, Lincoln decided that the duel should be held on an island across the Mississippi (dueling was illegal in Illinois). He also stipulated that the two men face off in the bottom of a 12-foot-deep pit divided by a wooden plank that neither man was allowed to cross.

These conditions gave the 6’4” Lincoln a serious advantage over his 5’9” opponent. Lincoln was sure Shields would back down.

Not the case.

On September 22, 1842, Shields arrived at the duel site near the city of Alton, ready to face any challenger who might be foolish enough to face him.

While the two men were gearing up to face off, one spectator noted how grave and serious Lincoln looked. “I’d never seen him look so long before making a joke, and began to believe he was getting frightened.” But all of a sudden, Lincoln reached up and casually sliced off a branch with his sword. Again, it was an effort to scare Shields into submission.
But his opponent’s impressive display of arm-span still didn’t deter the scrappy Shields. The duel was about to commence when a few mutual friends arrived and intervened. Colonel John Jay Hardin helped the two reach a face-saving compromise, working it out with words instead of swords. Lincoln offered up a mea culpa and admitted that he’d authored the letters.

Everyone standing on the levee was relieved (but probably a hair disappointed) to learn that the “body” on the boat returning from the island was really just a log in a red shirt – a simple prank set up by a mutual friend.

When the boat reached land, Lincoln and Shields stepped off together, chummily chatting away. Upon viewing spectators’ horrified reactions, they both broke into fits of laughter at how absurd the whole situation had been.

The two men buried the hatchet (or broadsword) and remained friends from then on. Lincoln wasn’t exactly proud that he’d almost dueled against a political opponent. In fact, he was pretty embarrassed. When an officer asked him about the event years later, he replied, “I do not deny it, but if you desire my friendship you will never mention it again.”

Lincoln never again got tangled up in the makings of a duel. Shields, on the other hand, found himself involved in such proceedings in 1850, when on behalf of Democratic Congressman William H. Bissell, he presented the acceptance of a challenge to a duel issued by future Confederate president Jefferson Davis. But he immediately set to work settling the matter without violence. He was successful. 

The Sport of Pistol Dueling in the 1900s.

Compiled by Neil Gale, Ph.D. 

President Abraham Lincoln institutes a centralized banking system to fund the Union in the Civil War, with notes by Lincoln on Banking in his own words.

Andrew Jackson vetoed the "Bank Bill" to the Senate in 1832. Jackson, when asked what he felt was the greatest achievement of his career replied without hesitation "I killed the bank!"

With the Central Bank killed off, fractional reserve banking moved like a virus through numerous state-chartered banks instead causing the instability this form of economics thrived on. When people lose their homes someone else wins them for a fraction of their worth. Depression is good news to the lender; but war causes even more debt and dependency than anything else, so if the banks couldn't have their Central Bank with a license to print money, a war it would have to be. We can see from this quote of the then chancellor of Germany that slavery was not the only cause for the American Civil War. "The division of the United States into federations of equal force was decided long before the Civil War by the high financial powers of Europe. 

These bankers were afraid that the US, if they remained as one block, and as one nation, would attain economic and financial independence, which would upset their financial domination over the world."

Unlike today, when the Federal Reserve System can increase or decrease the money supply in response to perceived economic needs through such mechanisms as changes to mandatory bank reserve requirements or changes in interest rate policies, there was little to no central management or intervention possible through techniques that while today subject to vigorous political debate, are nonetheless largely accepted practice in our political and economic system.

Wars are expensive. It takes money to wage successfully and require a marshaling of resources to defend the political system under armed attack. Weapons and munitions need to be purchased in large quantities. Naval forces need to be augmented. Such seemingly mundane actions as clothing and feeding large numbers of men enlisted for the defense effort need to be attended to. All these activities and functions take a considerable amount of money.

On the eve of the Civil War on April 12, 1861, the financial and banking system in the United States bore little resemblance to current institutions and practices. There was no central bank. The Federal Reserve System had yet to come into existence. Banking was largely a state regulated function. Money consisted of a myriad of private bank issues of paper money, as well as merchant scrip and, at the core of the monetary system, coins issued by the federal government whose value in commerce was predicated on and closely related to its inherent metallic value.
Predictably Lincoln, needing money to finance his war effort, went with his secretary of the treasury to New York to apply for the necessary loans. The banks wishing the Union to fail offered loans at 24% to 36%. Lincoln declined the offer. An old friend of Lincoln's, Colonel Dick Taylor of Chicago was put in charge of solving the problem of how to finance the war. His solution is recorded as this. "Just get Congress to pass a bill authorizing the printing of full legal tender treasury notes... and pay your soldiers with them and go ahead and win your war with them also."

On February 25, 1863, President Lincoln signed what was known as the National Currency Act. The system was quite simple. A federally chartered bank would purchase federal government bonds and leave them on deposit with the Treasury Department. This resulted in a temporary decrease in local area capital in the area of the bank and an increase in capital available for the federal government. Money that had yesterday been available to finance commercial needs in Belleville, or Chicago, Illinois or Omaha, Nebraska was now in Washington, D.C.
The chartered bank, however, now collecting interest on the money it had sent to Washington, could immediately issue National Bank Notes up to 90% of the value of the bonds it had purchased and left on deposit, loan the money represented by those notes out in its local community and begin collecting interest on those loans. Where before the bank had $100,000 to loan out, it now had $190,000, the original value of the bonds it had purchased, plus the $90,000 in new money it was able to create virtually out of thin air, now collecting interest on its original money as well as its newly issued National Bank Notes.

Under its provisions a system was established under which the federal government issued charters – essentially a grant of authority to operate under the newly established national bank system — to banks that agreed to meet certain capital and other regulatory requirements. One of the central features of the March 3, 1863 National Currency Act was a provision under which federally charted banks participating in the system were able to purchase federal government bonds – as actually any individual or institution could – but the federally chartered banks could then issue their own money, what was call "National Bank Notes," that constituted obligations of the federal government and would be redeemed by the government itself in the event of a bank failure. The security for this pledge was the value of the federal bonds purchased by the issuing bank, which was authorized to print National Bank Notes up to 90% of the value of the federal securities left on deposit with the government as security to back the bank issues.

When Lincoln asked Colonel Taylor if the people of America would accept the notes, Taylor said. "The people or anyone else will not have any choice in the matter, if you make them full legal tender. They will have the full sanction of the government and be just as good as any money; as Congress is given that express right by the Constitution."

Lincoln agreed to try this solution and printed 450 million dollars worth of the new bills using green ink on the back to distinguish them from other notes.
Issued on March 10, 1862 with the image of current President Lincoln on this $10 bill.
"This note is a legal tender for all debts, public and private, except duties on imports and interest on the public debt, and is receivable in payment of all loans made to the United States."
"The government should create, issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers... The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government's greatest creative opportunity. By the adoption of these principles, the long-felt want for a uniform currency medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts and exchanges. The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power."
From this we see that the solution worked so well Lincoln was seriously considering adopting this emergency measure as a permanent policy. This would have been great for everyone except the banks who quickly realized how dangerous this policy would be for them. They wasted no time in expressing their view in the London Times. Oddly enough, while the article seems to have been designed to discourage this creative financial policy, in its put down we were clearly able to see the policies goodness.
"If this mischievous financial policy, which has its origin in North America, shall become endurated down to a fixture, then that Government will furnish its own money without cost. It will pay off debts and be without debt. It will have all the money necessary to carry on its commerce. It will become prosperous without precedent in the history of the world. The brains, and wealth of all countries will go to North America. That country must be destroyed or it will destroy every monarchy on the globe."
The American economy has been based on government debt since 1864 and it is locked into this system. Talk of paying off the debt without first reforming the banking system is just talk and a complete impossibility. That same year Lincoln had a pleasant surprise. Turns out the Tsar of Russia, Alexander II, was well aware of the banks scam. The Tsar was refusing to allow them to set up a central bank in Russia. 
If Lincoln could limit the power of the banks and win the war, the bankers would not be able to split America and hand it back to Britain and France as planned. The Tsar knew that this handing back would come at a cost which would eventually need to be paid back by attacking Russia, it being clearly in the banks sights. The Tsar declared that if France or Britain gave help to the South, Russia would consider this an act of war. Britain and France would instead wait in vain to have the wealth of the colonies returned to them, and while they waited Lincoln won the civil war. With an election coming up the next year, Lincoln himself would wait for renewed public support before reversing the National Bank Act he had been pressured into approving during the war. Lincoln's opposition to the central banks financial control and a proposed return to the gold standard is well documented. He would certainly have killed off the national banks monopoly had he not been killed himself only 41 days after being re-elected. The banks were pressing for a gold standard because gold was scarce and easier to have a monopoly over. Much of this was already waiting in their hands and each gold merchant was well aware that what they really had could be easily made to seem like much much more. Silver would only widen the field and lower the share so they pressed for it.

Under the system originally established by the Act of March 3, 1863, 14,348 charter numbers were issued to qualifying banks. Although the system was statutorily modified from time to time, the essential element, i.e. a money issuing privilege granted to participating institutions related to the value of their underlying purchases of federal debt obligations remained largely unchanged. One significant modification was the Aldrich-Vreeland Act of May 30, 1908, which permitted banks to issue on the basis of other securities left on deposit in addition to federal government debt obligations. This modification was occasioned by needs to increase the money supply in response to the economic contraction attendant on the Panic of 1907. The “other securities” privilege expired in 1915.

In excess of 12,000 individual banks took advantage of the issuing privilege prior to the end of the National Bank Note era on August 1, 1935, when the last bonds authorized to support the issue of what are called “Nationals” by collectors, were called for redemption.

Abraham Lincoln on Banking, in his own words.
1.) Speech Concerning the State Bank, January 11, 1837. In this, his first published speech, Lincoln argued from the floor of the Illinois House of Representatives against a motion to “investigate” the State Bank of Illinois as a prelude to killing it – much as President Andrew Jackson had killed the second Bank of the United States, another joint public-private venture. In his speech, Lincoln defended both institutions, expressing his core conviction that strong banks and a reliable, flexible currency, preferably under Federal organization and supervision, were essential to economic opportunity.
“I make the assertion boldly, and without fear of contradiction, that no man... has ever found any fault with the Bank. It has doubled the prices of the products of their farms, and filled their pockets with a sound circulating medium, and they are all well pleased with its operations.”
2.) Speech on the Sub-Treasury, Dec. 26, 1839. This lengthy speech, the only speech of Lincoln’s to survive from the period, was one he probably delivered in dozens of variations while campaigning for William Henry Harrison in his successful 1840 bid for the White House. It compared the second Bank of the United States to the hard money-only “sub-treasury” system with which Jackson’s followers had replaced it – producing, according to Lincoln, vastly inferior results. The speech, which was widely reprinted, thrust Lincoln (and the banking question) into the national spotlight.
“The [National] Bank was permitted to, and did actually loan [public revenues] out to individuals, and hence the large amount of money annually collected for revenue purposes, which by any other plan would have been idle a great portion of time, was kept almost constantly in circulation. Any person... will reflect, that money is only valuable while in circulation, [and] any device which will keep the government revenues, in constant circulation, instead of being locked up in idleness, is no inconsiderable advantage.

By [contrast, under] the Sub-Treasury, the revenue is to be collected, and kept in iron boxes until the government wants it for disbursement, thus robbing the people of the use of it, while the government does not itself need it, and while the money is performing no nobler office than that of rusting in iron boxes. The natural effect of this change of policy, everyone will see, is to reduce the quantity of money in circulation... [resulting in] distress, ruin, bankruptcy, and beggary.

We do not pretend, that a National Bank can establish and maintain a sound and uniform state of currency in the country, in spite of the National Government, but we do say, that it has established and maintained such a currency, and can do it again, by the aid of that Government, and we further say that no duty is more imperative on that Government, than the duty it owes the people, of furnishing them a sound and uniform currency."
3.) Address to the People of Illinois, March 4, 1843 While Lincoln’s Whigs had won the White House in 1840, they went down to defeat in Illinois, owing in part to the lingering effects of the economic downturn in 1837. Seeking to regroup, the party leadership called on Lincoln to formulate a statement of principles easily understood by the public. One of those resolutions concerned banking.
"The third resolution declares the necessity and propriety of a National Bank.... The first National Bank was established chiefly by the same men who formed the constitution, at a time when that instrument was but two years old, receiving the sanction, of the immortal [President[ Washington. [T]he second [national bank] received the sanction of [President] Madison, [holder of] the proud title of ``Father of the Constitution;" and subsequently the sanction of the Supreme Court, the most enlightened judicial tribunal in the world.

Upon the question of the expediency, we only ask you to examine the history of the times, during the existence of the two Banks, and compare those times with the miserable present.”
As a wartime president, Lincoln focused on his role as commander-in-chief, leaving most non-military decisions to the discretion of Congress. On the handful of domestic issues that really mattered to him, however, Lincoln provided determined leadership. A safe and sound national banking system and a reliable national currency were among those issues, as he said in a message to Congress from 1862.
"... it is peculiarly the duty of the national government to secure to the people a sound circulating medium... furnish[ing] to the people a currency as safe as their own government."
For Lincoln, as he told a confidant, the creation of a national banking system was a “special interest” – special enough for him to bend every effort to persuade Congress to pass the founding legislation prepared by Treasury Secretary Salmon P. Chase. The President thus took great satisfaction in signing into law the National Currency Act, which created the national banking system and the Office of the Comptroller of the Currency as its supervisor. Although promoted partly as a wartime measure (the new national banks were required to purchase government bonds as security for the bank notes they issued), Lincoln, in his message to Congress of December 1864, left no doubt that his intention was to create a system that would serve the country long into the future.

The national banking system is proving to be acceptable to capitalists and to the people... That the government and the people will derive great benefit from this change in the banking systems of the country can hardly be questioned. The national system will create a reliable and permanent influence in support of the national credit, and protect the people against losses in the use of paper money.

Compiled by Neil Gale, Ph.D.