Blueprint for Modern America: Homestead Act, Pacific Railroad Act, 1862 Banking Act

by Michael S. Green

A key component of the Republican Party’s ideology was a desire to expand the power and scope of the federal government, and to galvanize it on behalf of national economic growth. During the Civil War the Republicans did not simply address military matters but also approved federal projects and laws that implemented their ideology. The result was what one author called a Blueprint for Modern America that remade the federal government, the nation’s role in the world, the economy, and the relationship between all of these. The Republicans who passed these acts saw the possibility of benefits from a more activist federal government that would encourage and enhance industrial, financial, and agricultural development. The Blueprint for Modern America consists of six Act of Congress passed by the 37th Congress, as follows: 1 Revenue Act of 1861 Introduced the first Federal income tax . 2 Homestead Act (1862) Granted 160 acres of western land to anyone who farmed it for 5 years and established the Department of Agriculture. 3 Revenue Act of 1862 Established the Department of Internal Revenue. 4 Pacific Railroad Act (1862) Promoted the construction of the transcontinental railroad. 5 Morrill Land Grant Colleges Act (1862) Provided funding for new colleges in each state (or improvements to existing colleges) from the sale of federal lands. 6 National Banking Act (1863) Established a system of national chartered banks and a national currency.

The Congressional Globe - First Session Thirty-Seventh Congress

Image courtesy of The Internet Archive at https://archive.org/details/congressionalglo7380unit

Slavery was the issue that gave rise to the Republican Party, but its members thought far more broadly. Advocating a transcontinental railroad as a member of Congress during the Civil War, Radical Republican Thaddeus Stevens declared, “We must either agree to surrender our Pacific possessions to a separate empire or unite them to the Atlantic by a permanent highway of this kind. The Romans consolidated their power by building solid roads from the capital to their provinces.” In the decade before he became Abraham Lincoln’s secretary of state, the more conservative William Henry Seward offered similar sentiments: “Open up a highway through your country from New York to San Francisco. Put your domain under cultivation, and your ten thousand wheels of manufacture in motion. Multiply your ships and send them forth to the East. The nation that draws most materials and provisions from the earth, and fabricates the most, and sells the most of productions and fabrics to foreign nations, must be, and will be, the great power of the earth.” [1]

Nor were they alone. From the Republican Party’s formation in the mid-1850s, its members shared a unifying ideology. The Free-Soil Party, one of its predecessors, had adopted the slogan “Free Soil, Free Labor, Free Men,” to which Republicans added “Frémont” in 1856 to include their first presidential candidate. Republicans believed that opening land to free labor would enhance the cultivation of the soil and the prospects of those who tilled it and adopted the old Whig Party support for a homestead act to encourage settlement in western lands occupied by Native Americans. Stopping the spread of slavery, and possibly ending it eventually, would enhance opportunity for all—especially whites, whose prospects concerned Republicans more than those of African Americans—and spark individual independence and national economic and political power. [2]

These statements reflected a key component of the Republican Party’s ideology: a desire to expand the power and scope of the federal government, and to galvanize it on behalf of national economic growth. During the Civil War, they could have abandoned these goals to address military matters alone. Instead, they and their fellow Republicans saw the opportunity to pass the legislation that they long had advocated, and that southerners and Democrats would have blocked. The result was what one author called a “blueprint for modern America” that remade the federal government, the nation’s role in the world, the economy, and the relationship between all of these. [3]

The Republican Party grew from the ashes of the Whig Party and the anger of Democrats who opposed the spread of slavery. In addition to their general lack of success, Whigs came apart over slavery: their party leaders believed in activist government, but the party’s southern branch could hardly support federal interference in the economy when that might lead to interference with the peculiar institution. When President Franklin Pierce and Senator Stephen A. Douglas of Illinois demanded party loyalty to pass the Kansas-Nebraska Act of 1854, a large number of northern Democrats opposed the bill. Northern Democrats ended up dividing, with those opposed to the spread of slavery joining northern Whigs and Free-Soilers to form the Republican Party.

But the coalition was shaky. Republicans differed on the extent of their opposition to slavery: some wanted to abolish it, others simply to stop it from spreading. They also argued over other matters. Whigs long had advocated legislation for internal improvements like roads and canals, while some Democrats—but not all—were leery of government spending and more inclined to support individual entrepreneurship. Former Democrats tended to endorse free trade while ex-Whigs leaned toward protective and revenue-raising tariffs—a divide that was hard to bridge even under the best of circumstances.

When Republicans held their convention in 1860 and nominated Abraham Lincoln, though, the economic elements of their platform combined the two old parties by reflecting both the Whig tradition of activism and the Democratic desire to promote individualism. It lauded “the complete and satisfactory homestead measure which has already passed the House,” where Republicans enjoyed tenuous control. It supported “river and harbor improvements of a national character” as “authorized by the Constitution and justified by the obligation of Government to protect the lives and property of its citizens.” Given that the division over a transcontinental railway had been over location more than over necessity, refugees from both of the major parties took heart in a platform plank that declared “That a railroad to the Pacific Ocean is imperatively demanded by the interests of the whole country; that the federal government ought to render immediate and efficient aid in its construction.” Yet the platform committed Republicans to no specifics—just to pursue plans for the railroad and other internal improvements. [4]

During the 1860 campaign, Republicans stayed united while others divided around them. The Constitutional Union Party, an offspring of the anti-immigrant American Party and conservative former Whigs uncomfortable with joining another party, nominated a former U.S. senator from Tennessee, John Bell. The Democratic Party wound up with two candidates because members disagreed over slavery. Northern Democrats nominated Douglas and stood by his belief in popular sovereignty, which permitted the residents of Territories to vote on whether to allow slavery. Southern Democrats turned to Vice President John Cable Breckinridge, a Kentuckian who stood by the Dred Scott decision, which permitted slavery to enter Territories, regardless of the popular will. As long as Republicans avoided internal divisions and their opponents proved unable to come together behind one candidate, Lincoln figured to win easily—and he did.

The result was southern secession, which meant more than just the creation of the Confederate States of America. Seven southern states seceded before Lincoln even took the oath of office on March 4, 1861, with four more following after the firing on Fort Sumter. In addition to the obvious military results, their departure also handed Republicans control of Congress, which they would have lacked; although Republicans already had a majority in the House, the Senate would have been almost evenly split, or tilted toward Democrats. With Republicans now controlling the White House and the Senate and tightening their grip on the House, they would have a better opportunity to create that blueprint for modern America. [5]

As the Thirty-Seventh Congress ended in 1863, Senator Charles Sumner, the Massachusetts abolitionist, looked back at its achievements and said, “Here is enough for an epoch.” That Congress had acted to build a military and to tear down slavery, ranging from the Confiscation Act, which enabled the United States Army to take Confederate property, including slaves, to supporting the recruitment of African American soldiers. But it also passed legislation that dramatically shifted the federal government’s role and powers to deal with the war and its effects and set precedents for the future. [6]

Some of the legislation resulted from the necessities of fighting the war. Old Whigs had long wanted a national bank and old Democrats had long feared and opposed one, but Republicans agreed that the banking system that then existed was too unregulated to fight a war for the country’s existence. In 1863, Congress passed, and Lincoln signed the National Banking Act, which permitted the creation of national banks the federal government would charter but avoided creating another national bank like the one that Alexander Hamilton guided into existence in 1791. To encourage national banks and discourage state banks from undercutting them, the bill included a tax on state bank notes that drove many state banks out of business or into pursuing a federal charter. In addition to expanding the federal government’s role in the banking industry, the measure laid out a system for a national currency. The federal government also issued greenbacks, over the objections of old Democrats in particular who believed in specie or coin as the best and only money to circulate because its value was real, as opposed to paper that was worth whatever the government said. Another banking law in 1864 created the office of the comptroller of the currency to supervise national banks. While neither of these laws went so far as to create anything resembling the Federal Reserve Act of 1913, and the federal government began withdrawing the greenbacks from circulation after the war, the Civil War banking laws expanded the federal government’s role in regulating banks and determining the value of the currency.

Financing the war required additional measures, and Republicans took them, further shaping the nation’s future economic development. They approved changes in the Morrill Tariff of 1861 to raise revenue, maintaining its protectionist policies to keep foreign competition from harming domestic industry. They passed two laws to tax income, the Revenue Act of 1861 (essentially a 3 percent flat tax on incomes greater than $800 a year), and then the Revenue Act of 1862, which took a much broader approach: it created a commissioner of Internal Revenue to run the department in charge of tax collection; imposed a variety of excise taxes on consumer goods; and changed the Revenue Act of 1861 to make the income tax progressive, increasing it according to the amount of an individual’s annual income. Although the federal income tax ended with the war, adding the income tax amendment to the Constitution certainly affected what the federal government could and did do. As Representative Elbridge Gerry Spaulding, a Republican member of the Ways and Means Committee—a key financial committee—said during the war, “Congress must shape its legislation as to incidentally aid all branches of productive industry, render the people prosperous, and enable them to pay taxes imposed for the ordinary expenses of the Government and interest on the extraordinary war debt incurred from day to day in support of the Army and Navy.” While Spaulding obviously referred to wartime expenses, he made equally clear that his party pursued policies that would have an impact beyond the war. [7]

Even as they sang the praises of the subsistence or yeoman farmer, Republicans also saw that agriculture was evolving with the country’s economy and needs. The North and South had gone to war over the future of the West, and Republicans were determined to win the West for their antislavery views. After years of effort by New-York Tribune editor Horace Greeley and Republicans such as Representatives Galusha Aaron Grow of Pennsylvania and Owen Lovejoy of Illinois, in 1862, Congress passed and Lincoln signed the Homestead Act, which awarded 160 acres of western land to anyone who settled on the land and farmed it—“improved it” in the language of the Act—for five years. They created a federal department of agriculture to promote scientific farming and education. Justin Morrill, the congressman from Vermont who was a key architect of Republican tariff policies, pushed through the Land Grant College Act, which awarded each state 30,000 acres of public land for each of its members of Congress, with the land or proceeds from its sale to be used to fund a college that would teach agriculture, technology, or the mechanical arts; such institutions as Iowa State, Kansas State, and Cornell started under this plan.

The largest project that Republicans supported during the war was the building of a transcontinental railroad. The North and South had long fought over where to build the line. The South preferred to construct it west from a major city such as New Orleans, while northerners wanted it to go west from Chicago or possibly St. Louis. Both parties and regions had reason to back a railroad and had done so: Douglas had introduced the Kansas-Nebraska Act in hopes of organizing those territories for the project, prompting historian David Potter to call the measure and its effect, known for how they affected the issue of slavery, “a railroad promotion and its sequel.” [8]

The ultimate sequel was the Pacific Railroad Act of 1862. Republicans shaped the bill for the construction of the railroad so that it was, historian Heather Cox Richardson has written, “an unprecedented expansion of the government’s role in economic development.” The measure issued land grants and 30-year government bonds to the railroad’s builders, the Union Pacific and the Central Pacific, with a follow-up bill in 1864 increasing both. Still other legislation provided loans and more land. As Secretary of the Treasury Chase observed, “The importance to the whole country of the earliest practicable completion of the Pacific Railroad justifies liberal aid … to the enterprise.” Republicans still grasped that other modes of transportation would bring economic benefits and went beyond steel rails to fund construction of the Niagara Ship Canal and improvements in the Illinois and Michigan Canal. [9]

The railroad would have an enormous impact on the country’s future. Its construction linked the Atlantic Ocean to the Pacific Ocean, and thus the U.S. became—or had the potential to become—more closely connected with Europe and Asia. The Union and Central Pacific and other operators built feeder lines, so named because they fed into the transcontinental railway. The railroad corporations literally created cities where none had stood before, in part by providing transportation, more often by selling the land the federal government had given them. They encouraged migration to the West, which, combined with the construction itself, prompted the federal government to expand its military presence there to assure against Native American interference—and to force Native Americans off of the land that the railroads, their employees, and the travelers and farmers who depended on the transcontinental line wanted to control. Rather than eliminating most of the army, as the U.S. had tended to do after previous military actions, the War Department would have plenty to do in the post-Civil War West.

All of these actions required an expansion of the federal government’s powers and personnel. Whether Republicans foresaw what was to come in the twentieth and twenty-first centuries seems unlikely, but their platform and the actions they took to support it demonstrated that they approached their duties with definite goals in mind. As their party’s position on limiting the spread of slavery and expanding free labor suggested, Republicans were reform-minded. They believed in the benefits, whether economic or moral or political or all of these, of limiting slavery, and they saw the possibility of similar benefits from a more activist federal government that would encourage and enhance industrial, financial, and agricultural development.

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  • [1] Henry V. Poor, The Pacific Railroad: The Relations Existing Between It and the Government of the United States (New York: S. W. Green, 1871), 25; Frederick W. Seward, Seward at Washington as Senator and Secretary of State: A Memoir of his Life with Selections from his Letters 1846-1861 (New York: Derby and Miller, 1871), 200.
  • [2] The key historical work for understand this ideology remains Eric Foner, Free Soil, Free Labor, Free Men: The Ideology of the Republican Party Before the Civil War (New York: Oxford University Press, 1970).
  • [3] Leonard P. Curry, Blueprint for Modern America: Non-Military Legislation of the First Civil War Congress (Nashville, TN: Vanderbilt University Press, 1968).
  • [4] The Republican Party Platform of May 17, 1860 can be read here: http://www.presidency.ucsb.edu/ws/?pid=29620 , accessed June 1, 2018.
  • [5] The Blueprint for Modern America consists of six Acts of Congress passed by the 37th Congress, as follows: Act Main Provisions Full Text of the Act (all accessed June 1, 2018) 1 Revenue Act of 1861 Introduced the first Federal income tax. http://legisworks.org/sal/12/stats/STATUTE-12-Pg292.pdf 2 Homestead Act (1862) Granted 160 acres of western land to anyone who farmed it for 5 years and established the Department of Agriculture. http://legisworks.org/sal/12/stats/STATUTE-12-Pg392.pdf 3 Revenue Act of 1862 Established the Department of Internal Revenue. http://legisworks.org/sal/12/stats/STATUTE-12-Pg432c.pdf 4 Pacific Railroad Act (1862) Promoted the construction of the transcontinental railroad. http://legisworks.org/sal/12/stats/STATUTE-12-Pg489.pdf 5 Morrill Land Grant Colleges Act (1862) Provided funding for new colleges in each state (or improvements to existing colleges) from the sale of federal lands. http://legisworks.org/sal/12/stats/STATUTE-12-Pg503a.pdf 6 National Banking Act (1863) Established a system of national chartered banks and a national currency. http://legisworks.org/sal/12/stats/STATUTE-12-Pg665.pdf
  • [6] Edward Lilly Pierce, Memoirs and Letters of Charles Sumner, 4 vols. (Boston, MA: Roberts Brothers, 1893), 4:83.
  • [7] Heather Cox Richardson, The Greatest Nation of the Earth: Republican Economic Policies during the Civil War (Cambridge MA: Harvard University Press 1997), 136.
  • [8] David Morris Potter completed and edited by Don E Fehrenbacher, The impending crisis : America before the Civil War : 1848-1861 (New York: Harper and Row, 1976), chap. 7 (title).
  • [9] Richardson, The Greatest Nation, 173; Salmon P. Chase to John Conness, Washington, March 22, 1864, Chase Papers, Historical Society of Pennsylvania, quoted in Michael S. Green, Freedom, Union, and Power: Lincoln and His Party during the Civil War (New York: Fordham University Press, 2004), 306.

If you can read only one book:

Richardson, Heather Cox. The Greatest Nation of the Earth: Republican Economic Policies during the Civil War. Cambridge MA: Harvard University Press 1997.

Books:

  • Boritt, Gabor S. Lincoln and the Economics of the American Dream. Memphis, TN: Memphis State University Press, 1986.

  • Curry, Leonard P. Blueprint for Modern America: Non-Military Legislation of the First Civil War Congress. Nashville, TN: Vanderbilt University Press, 1968.

  • Green, Michael S. Freedom, Union, and Power: The Mind of the Republican Party During the Civil War. New York: Fordham University Press, 2004.

  • Paludan, Philip S. The Presidency of Abraham Lincoln. Lawrence: University Press of Kansas, 1994.

Organizations:

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Web Resources:

  • A one-hour lecture on The Civil War and Blueprint for Modern America by Professor Matthew Mason of Brigham Young University.

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  • Revenue Act of 1861 Introduced the first Federal income tax.

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  • Homestead Act (1862) Granted 160 acres of western land to anyone who farmed it for 5 years and established the Department of Agriculture.

    Visit Website

  • Revenue Act of 1862 Established the Department of Internal Revenue.

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  • Pacific Railroad Act (1862) Promoted the construction of the transcontinental railroad.

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  • Morrill Land Grant Colleges Act (1862) Provided funding for new colleges in each state (or improvements to existing colleges) from the sale of federal lands.

    Visit Website

  • National Banking Act (1863) Established a system of national chartered banks and a national currency.

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Other Sources:

No other sources listed.