A Fractional Note

The Civil War wasn’t all that popular in the North. Despite a short wave of enthusiastic enlistment, many northerners either sympathized with the South or argued Lincoln should “let the erring sisters go.” That caused Lincoln a lot of financial problems. Anticipating crisis, people hoarded gold, silver, and copper coins. When private citizens began issuing their own small denomination notes, and even using postage stamps as currency, the Union issued its own “postage currency,” small notes that looked like stamps but lacked glue. Also known as “fractional currency,” or as “sticking plasters,” these notes stayed in circulation well after the war. But fractional notes of less than a dollar made an inconvenient foundation for a large war.

Lincoln knew taxing people to fund the war would be a political loser, and so he resorted to simply printing money, the famous “greenbacks.” These bills were legal tender–you could not refuse them. Soldiers took their pay in greenbacks. Businesses selling pork or cloth or guns to the Union took greenbacks and liked it. ¹

With similar reluctance, Lincoln enlisted African Americans in the Union Army. Although African Americans volunteered for the Union army immediately after Ft. Sumter, Lincoln at first refused their service. ² Lincoln saw restoring the Union, not ending slavery, as his first priority. Necessity and practical facts forced his hand.

As the Union marched into the deep South, African Americans abandoned their plantations, declared themselves free, and sought to make themselves useful to the Union cause. By mid 1862 these de facto soldiers, along with manpower shortages, public pressure from abolitionists, and the deepening crisis of the war, persuaded Lincoln to allow African Americans to enlist in the regular army.

Critics of Lincoln’s decision claimed that it raised “colored” soldiers to a level of equality with whites; they argued that blacks lacked the basic qualities of discipline, courage, and intelligence necessary for battle. They saw the soldiers as inflated, valueless. An 1862 song attacking Lincoln criticized the “fractional currency”—paper notes for amounts of less than one dollar—that the North also issued during the war. These “Shin-plasters sure were bad enough,” the song argued:

That is when Rebels used them;
And well the Nigger-worshippers,
In consequence abused them,
But now to cap the climax, of
Our manifold disasters,
We’ve had to come to one and two
And three cent sticking plasters.

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What next I wonder? Nigger troops
Or some such abomination;
As Niggers being our equals in
The states and in the nation.3

This song sees African American soldiers, “an abomination,” as the next logical step after the issue of “cheap” fractional paper currency. It superficially makes no sense—what do “colored troops” have to do with paper money? But the author clearly saw a connection between purely “fiat” currency, a piece of paper named “three cents,” and the representation of African Americans as equal citizens through the Union uniform.

From the Library of Congress. Excerpt: We’re coming, Father Abram, nine hundred thousand strong / With nine hundred thousand darkies, sure the traitors can’t last long / With Corporal Cuff, and Sergeant Pomp, to lead us in the melee / And at their head, without a red, Our Brigadier General Greely.

Or consider The Colored Brigade, a minstrel show song written and published shortly after the enlistment of African Americans:

O when we meet de enemy I s’pec we make ‘em stare,
I tink he’ll catch a tartar when he meets de woolly hair;
We’ll fight while we are able, and in greenbacks we’ll be paid,
And soon I’ll be a colonel in de colored brigade.

Chor.—A colonel, a colonel, in de darkey brigade,
And soon I’ll be a colonel in de colored brigade.

In the 1864 Presidential campaign, these links became more explicit. “Jokes, Niggers, Greenbacks—all play’d out,” mocked the chorus of Who Will Care for Old Abe Now? McClellan stood for the return of gold, the song continued. “When ‘Little Mac’ is in the White House, Greenbacks will vanish—Gold come down!⁴

“We’re fighting for the nigger now,” went another song:

I calculate of niggers we soon shall have our fill,
With Abe’s proclamation and the nigger army bill.
Who would not be a soldier for the Union to fight?
For, Abe’s made the nigger the equal of the white.5

This song also claimed that the soldier “must be loyal, and his officers obey, / Though he lives on mouldy biscuit, and fights without his pay.… / Though he waits six months for Green-Backs, worth forty-five per cent.” The song treats greenbacks, elevated to a position of equality with gold they can’t sustain, as part of the same politics that elevated African Americans to a counterfeit equality.

For Lincoln’s opponents the return to gold meant the return to racial hierarchy, while paper money meant freedom for slaves: “Oh! we want no… ‘Greenbacks,’ such as Chase used to utter” went another campaign song:⁶ “We want no more rank niggers near the White House frying pan; / Nor to sit at the head of the table!”

This song treated greenbacks as part of a general scheme to upset the “natural” order of things. A third campaign song chided those who “while worshipping the nigger, they’d let the Union slide.” It concluded that under McClellan, “we’ll chase away all greenbacks, and gather in our gold, / And then we will prosper, as in the days of old.”7 All these critics linked paper money to a confusion of the line between thing and symbol, black and white. Paper money had helped depreciate the white man while it inflated the black; it had destabilized not just financial value but the differences between things and people.

The Lincoln administration, proclaimed a Democratic  partisan, is composed of “stock jobbers, negro fanatics, bubble blowers, [and] broken-down wildcat [banknote] distributors.” ⁸ “Negro-worshipers,” the New York Herald insisted, have pushed through a policy of financial inflation. In depreciating the currency they have also depreciated the value of white men.9  “For finance, issue Greenbacks; for war, Blackbacks,” one critic of the administration argued.¹⁰

Arguments about money are never just about money, and monetary value is never separate from what we call “values” more generally. Discussions about money are always discussions other “values:” the value of social position, the nature of self and  character, the “rightness” of hierarchy; the “order” of the world. Modern discussion of gold, or inflation, is never free of the same racial taint. Just do a google image search for “Obama” and “dollar” and see what turns up. Some samples below (and  much thanks to Adam Rothman for pointing this out.)

Historically, when Americans talked about the gold standard, they often talked about it as magical. Gold would make bad people good, banish false values, and restore virtue to the  republic.  Paper money enabled lies and false promises: gold restored honor. A letter to the Pennsylvania Gazette in 1787 lamented “dirty” paper money. “At the sight of a dirty paper bill think—how many hearts has this worried? What number of dirty actions has it done? … Away with all worthless paper money; the source of all daily corruption and misery; let gold and silver restore solid integrity, pure innocence, and splendid honor.” ¹

Gold would banish evil because it was “God’s money,” insisted DeBow’s Review in 1860. DeBow’s claimed that  “all attempts to depreciate it by alloy, or to compel the use of a paper or any other substitute, have resulted in disastrous failure…The surgeon or the anatomist who attempts to invent a substitute for the blood, is not a whit more presumptuous and charlatanic than the statesman who endeavors to force into circulation any other currency in place of the precious metals.” Money was natural, like blood. ²

Although the Bible frowns on worshiping golden idols, gold’s fans often came very close. In 1874 New York Senator Jacob Cox claimed of gold: “preciousness, cohesiveness and divisibility belong to gold as to no other element,” and “God has hardened it in the millions of years in which the mountains come and go like the rainbow. It is as true as its burnished source, the sun.“³ God had made gold to be money.

If not connected to nature or deities, gold appeared as a symbol of civilization and progress itself. “The history of money and the history of the civilization of the human race are intertwined,” argued “A Currency Primer.” “Gold is the standard of civilization and Christianity,” insisted another gold tract: “As Mexico adheres to the implements of which the farmers of the United States discarded fifty years ago, so does it adhere to a standard of value [silver] which this country…discarded in 1834.” Advanced races used gold. ⁴

In the 1890s, gold partisans could not resist making racial comparisons. An 1892 pamphlet argued that “fair tests of the state of civilization in any country” included “the kind of money it uses;” and that only the poorer nations of the world used silver. “Congress cannot cause us to be born again, and into the Hindu, Chinese, Japanese or even into the Mexican or South American silver–handling type,” it concluded. Gold money was a genetic predisposition, a biological “type.” ⁵ “What prevents Congress from legislating the value of a dollar?” asked “a financial catechism” of 1895: Is it the Constitution? “Not the Constitution of the United States,” came the answer, “but the constitution of man.” ⁶

Fantasies of gold’s “racial” or genetic value translated into real effects. By 1903, American workers on the Panama canal were segregated by task and by pay into two groups—white workers, known as “gold” workers, took their pay in gold, working on the “gold roll,” while black workers, the “silver workers” on the “silver roll,” took silver coins home. Gold and silver workers used separate restrooms; they ate and slept in segregated quarters. “If white Americans are needed, I think we should employ them on the gold roll,” wrote one canal official: “the silver roll was not created for [white] Americans any more than the gold roll was created for negroes.” Gold money was for white people: its superiority mirrored theirs. ⁷

The gold standard was never simply about money: it was always encumbered by other social anxieties about the negotiability of things and people in daily life. It was always about other standards, standards of civilization or conduct, the line separating us from them.

Gold enthusiasm waxes and wains. In the 1950s, the Daughters of the American Revolution were mocked when they claimed  liberals had stolen all the gold in Fort Knox, and demanded Truman conduct a recount.⁸ (Ron Paul recently demanded the same thing). In the James Bond film Goldfinger, love of gold is shown as a version of evil megalomania and sexual perversity. By the 1970s, even the Wall Street Journal regarded the gold standard as a relic of earlier times.

Modern gold bugs rarely advance overtly racialized arguments for gold, but they tend to invest it with magical properties in much the same way some Americans did in 1787. Or they see it as the magic antidote to generalized social decline.

“The country’s going to hell faster than when Roosevelt was in charge,” declares the fatherly, avuncular trader Lou Mannheim at the start of Oliver Stone’s Wall Street: “Too much cheap money sloshing around the world. Worst mistake we ever made was letting Nixon get off the gold standard.” Cheap money equals cheap people: Mannheim watches as the working class climber, Bud Fox, gives up his corrupt ambitions and gaudy pretensions returns to his proper place in the lower classes.

“Tune into Glenn Beck’s Fox News show or his syndicated radio program,” wrote Stephanie Mencimer in Mother Jones, and you’ll soon learn about the precarious state of the US dollar, a currency on the verge of collapse due to runaway government spending, a ballooning national debt, and imminent Zimbabwe-style hyperinflation.” ⁹

As Richard Hofstadter noted about the paranoid style, in the rhetoric of the gold standard we are always at the brink of Armageddon. Like the conspiracy theorist, the gold bug:

traffics in the birth and death of whole worlds, whole political orders, whole systems of human values. He is always manning the barricades of civilization. He constantly lives at a turning point. Like religious millenialists he expresses the anxiety of those who are living through the last days and he is sometimes disposed to set a date for the apocalypse.

Wes Vernon, blogging at RenewAmerica.com, suggests that in a second Obama administration, “the Dark Years will spread around the planet and could collapse the human future for decades, even centuries.” He describes looters in the streets and families citizens huddled behind steel bars as roving gangs terrorize the countryside. See also here, or here,  or just google “Obama, gold inflation, collapse.”

Thus the popularity of gold buying among conservatives, who often similarly want to endow gold with magical personal properties. Fox news host Brian Kilmeade endorses gold trader Rosland Capital. Kilmeade tells their customers “Gold is pure. Much like the motives, principles, and traditions of the men who founded our fine country.”

RenewAmerica references Craig R. Smith, who draws out the lurid scenario of apocalyptic collapse in his new book Crashing the Dollar. Smith, co-author, with Swift-boater Jerome Corsi, of Black Gold Stranglehold, is Chairman of SwissAmerica Trading, another gold investment firm. He sells gold as “morally-correct money” and notes “Today the U.S. dollar is on the same trajectory as Obama’s approval ratings, which have fallen one-third — from 65% to 45% — the lowest level since the election.” ¹⁰ Gold is the opposite of an African American president: “morally-correct,” naturally valuable  and uninflated, it barricades civilization itself. Smith says:

Let’s be brave enough to tell the truth here…America’s economy has been skyjacked. And it appears that the big-government crazies at the controls aim to crash the economy and the dollar. They aim to bring about a ‘fundamental transformation’ of the world in ways that will destroy everything America’s founders made, every individual freedom our … Constitution enshrines, every opportunity our children were supposed to have in a free society.

It’s not just about gold.

Since colonial times there’s been a tension between political forces that want inflation, easy credit and loose money, and political forces that want stable prices and a “naturally” limited money supply. There are arguments for both, and it’s not easy to resolve these two camps. Gold bugs made many of the same arguments in 1787 that they make today. Compare Smith’s language to economist Amasa Walker’s 1887 comments, referenced here and in full here.

Gold bugs see more than just prices at stake: they tend to see paper money as a violation of the natural order, and gold as the restoration of all that’s virtuous. It’s never just about prices: it’s almost always about the wrong kind of people being in charge.

And that rhetoric screens the class interests at work. Deflation really helps those with money. It drives down wages. It raises interest rates. It generally stagnates economic growth. But that’s not a bad thing if you’ve already grown big. Craig R. Smith’s apocalyptic arguments go hand in hand with his business selling gold.  Maybe he believes that Obama’s presidency heralds the end of civilization as we knew it. Maybe he’s just cynical.

It is certainly possible that the United States could collapse tomorrow, and paper money suddenly lose all value. It’s possible a comet will strike the earth, or the rapture will loft the chosen to heaven. Plagues,  catastrophes, disasters: we’re all only an inch away. It’s true that if paper money suddenly collapses, gold will probably have value, but so will guns and bullets, and canned beans, and power tools, and whiskey, and clothes and really any commodity that has value today. Gold is just a commodity. Stockpile it if you like, and wait eagerly for the apocalypse. Or stockpile the beans, and watch the gold guy try to eat gold.

Next: The Federal Reserve Explained!