Advisor David Vaught, CFA, recently enjoyed the book "Ways and Means". The work gives good financial background on fiscal matters, what it takes to issue and sell government bonds, and how to adapt the US Treasury to changing conditions - all of which grant historical context to some similar issues we see today. Excerpts of his book review follow.

The debt ceiling, the Fed, and continuing issuance of Treasury bonds appear daily in our news today. Their historic roots tell us something about how they have worked or failed in the past.
President Lincoln faced the daunting task of the Civil War with a traitorous military rebellion, a traditional limited federal budget, and a not yet complete national banking system. How he and his Treasury Secretary, Salmon Chase, confronted this multi-front crisis tells us a great deal about the successful origins of our financial system today.

Roger Lowenstein traces that history in his recent book, Ways and Means: Lincoln and His Cabinet and the Financing of the Civil War, and successfully lends understanding to events today, 160 years after the Civil War.


Conducting the war required a de-coupling of the government’s finances from an inadequate money supply measured in the value of gold in vaults. Chase issued Treasury notes and Greenback paper currency and finally persuaded Congress to declare his paper currency as “legal tender,” acceptable for the full payment of all debts. Such changes were earth shaking to bankers, foreign governments and businesspeople accustomed to relying only on the soundness of “specie” payments in gold or silver. This revolution in the definition of money and its inherent value ultimately rested on the strength of the country’s economy, which held.


Lowenstein’s book is far better reading to help understand today’s economic and fiscal challenges than the chattering on the big media that unfortunately dominates so much of our national discussion today. Twenty-four-hour news cycles with a focus on the latest culture war controversy simply fall short of creating such understanding. Economic change and the moral fortitude to make it work for all were a key part of Lincoln’s vision. The traitors and hostage takers of today, whose claim to challenge our economic and governmental system relies only on short term political whims, should take note of the result of short-sighted incompetence. It has been tried before by the rebels in the Civil War with great costs and burdens that should never be repeated.