Lincoln, the Great Economist

America's 16th president was more than an emancipator.

“It had all begun long ago with a poor boy’s conviction – in a time and at a place which nurtured such convictions – that a man should receive the whole fruit of his labor so that he might get ahead in life. The boy became a man and a politician, and worked through the better part of his life to the end that government might always be dedicated to that proposition. Both politics and political economy were moral enterprises for him, and so his goal, which we call the American Dream, was a moral goal.”

These words capture the essence of Lincoln’s life as captured in Gabor Boritt’s Lincoln and the Economics of the American Dream. Published in 1978, this little-known history explores Lincoln’s life in the context of his economic views. Though primarily (and justifiably) remembered as the Great Emancipator, Lincoln spent most of his political life working towards an economic vision primarily Whiggish and particularly Lincolnite. Boritt details in compelling fashion how economics was Lincoln’s first passion, and how his dream of a modern, industrial America where a man could earn his keep became the guiding light to all his endeavors. In these economically uncertain times, Lincoln’s vision of America offers a number of suggestions we might borrow today.

Like any good Whig, Lincoln’s economics were centered on a tripartite platform of protective tariffs, internal improvements, and strong central banking. Of these, the first is most pressing on contemporary minds. An acolyte – perhaps the chief acolyte – of Henry Clay, Lincoln accepted as a given that the future of the United States was manufacturing. Such is the future of all great powers, and nationalist he was, Lincoln was determined to see the domestic industries developed so that they might compete with European (particularly British) industry. For a man to earn a keep sufficient to get ahead in life, the free labor industries of America needed to be capable of competing with serf labor [AJC1] abroad (not unlike modern conditions), and so the infant industries of Lincoln’s early days required protection to thrive. Lincoln’s support for protectionism wasbuilt on two ideas; historically, states always protected their early industries while they matured, and economically the money spent on transportation costs would be better spent at home. Manufacturers, farmers, and merchants would all be better served, he argued, by a primarily domestic market. Additionally, protection would encourage productive labor and discourage idlers – a position revealing Lincoln’s deep moral convictions about the value of honest work and its necessity for the independent life.

Lincoln was not naive to the costs of industry, however. Like Clay, he recognized and encouraged technological innovation that brought costs down and production up, assuming correctly that these things would ultimately create more value for the laborer than technological stagnation would. In his two Lectures on Discoveries, delivered in 1858, Lincoln makes great hay of the fact that man is the only creature on earth who invents, and that Americans are particularly inventive. Lincoln’s love of invention was particularly true of agriculture, an industry he cared little for and talked little of. In his one notable address on the subject, given to the Wisconsin State Agricultural Society in September 1859, Lincoln advocates for innovative farming techniques, arguing that producing more bushels per acre is a more valuable goal than bringing more acres under cultivation. In this, Lincoln was out of step with the homesteading impetus of his age. Though he ultimately signed the Homestead Act that brought the frontier under cultivation, he did so reluctantly. Lincoln believed that increased production on those lands which were already productive would better serve the future than further expansion.

In that same vein, Lincoln felt the energies of the nation should be directed toward internal improvements, the second pillar of Whig thought and what we today call infrastructure. His first recorded public address is a letter to the people of Sangamo County announcing his intention to run for the state house. Though remembered for its prophetic ending, the substance of the letter was his desire to pursue the construction of a railroad and a canal within the county to facilitate trade. During his time in the Illinois State House, Lincoln was a leading sponsor of the massive improvement plan he dubbed the Illinois System. His presidency oversaw massive advancements in railroad investment, including the beginnings of the first intercontinental railroad. His early years traversing the Mississippi and his later travels across the nation, as well as his uniquely American optimism, ingrained in his mind an abiding belief that a nation as large and varied as the United States requires robust transportation capacity, and as such it is the duty of government to build it. It also taught him a valuable lesson; no project so particular as to not have a general impact, and no project so general as to not produce local benefits.

The third pillar of Whig economics is a robust support for central banking. Though modern readers are often unaware of Lincoln’s support for these policies, it was his support and defense of the Illinois State Bank that cemented his place in the Illinois Legislature as leader of the Whigs. His first great moment in the Illinois House comes in a speech defending the state bank from frivolous investigation, articulating at length how the bank served Illinois well and accusing those attacking it of seeking partisan gain at the expense of the state’s fiscal health. His defenses of the bank helped prolong its life, until the Panic of 1837 and subsequent depression brought an end to its activities. His defense of central banking extended to supporting the Second National Bank in the face of Andrew Jackson’s attacks, and his speech on the Sub-Treasury Plan lays out in great detail the inherent corruptibility of a system in which government revenues sit idle in storehouses, rather than be put back to work through loans and bond purchases. Though less relevant in a day and age in which currency is digital and the nation runs regular deficits, the principle that revenue by the state should be put to work rather than collect dust remains valuable for states that are required to balance budgets and thus collect reserves. It remains incredibly relevant when it comes to financing public works, an area of government few think about but all benefit from. Lincoln understood that the engines of capital must be brought to bear on the public interest, and that a state-chartered bank capable of issuing bonds and raising capital benefits the state and the nation at large.

Where Lincoln digressed from orthodox Whig thought, he did so in service of the working man. A particularly poignant example for our day is his support for a 10 percent interest rate cap. Lincoln in his lifetime became a small lender of sorts, and believed that 10 percent interest was the most a bank could justifiably charge without preying on the needs of the masses. He also noted that, should emergency dictate it, the cap could be set aside without much trouble. Lincoln also took persistent stands against public indebtedness, and in my view, saw debt as a tool justifiably used for items that most people in most places believed to be a life necessity and could not expect to pay out of pocket. Business loans, land and house financing, and public improvement projects fit this bill, but beyond this Lincoln believed that a man should strive to be independent where he could be. This belief Lincoln all his life and through the great conflict which came to define his legacy.

The last Lincoln economic belief of note will arguably be the most relevant to America in the present-day. In the early 1840s, Illinois faced public ruin due to the depression and drying up of tax revenue. States across the Union were rebuking their public debts as a result, and throwing away their public credit. Lincoln, in the face of mass demands for similar policies, stubbornly insisted that the state find a way to pay its debts. The maintenance of the public credit was of paramount importance to him, and up to the day Illinois defaulted on its interest payments Lincoln submitted plan after plan to refinance the debt and thus meet its obligations. Honesty in government, and the fulfillment of its promises, were of the utmost importance to Lincoln. Such questions may soon trouble us, and we should hope to find inspiration in Lincoln’s example.

Scott Howard resides in Lake Wales, Florida, and is a graduate of the University of Florida. He is a legislative aide with the Florida House of Representatives with previous experience at National Review. In his free time, Scott reads biographies of American statesmen and the works of F. Scott Fitzgerald.