the economics of the Civil War

 Napoleon may have said that an army marches on its stomach, and modern armies also need a sturdy supply train with weapons and ammunition, but governments fighting wars need money. In his illuminating new book on the financing of the American Civil War, Ways and Means, author Roger Lowenstein has an epigraph from Cicero,"The sinews of war are unlimited money."

Until now, my simplistic understanding of that conflict was that the Union won because it had more people and productive capacity to prevail in a war of attrition. I know now that deft diplomacy also kept foreign powers from recognizing and supporting the Confederacy and that generalship at key times kept the Union from giving up. What Lowenstein's book tells is how fractious politicians tossed aside their traditional views of money and government and responded creatively to the challenge of wartime financing.

The Union raised revenues by raising taxes, borrowing money,and printing paper greenbacks. The Confederacy did much the same, but less smartly and less effectively. By the end of the war, the South has only raised about 5 or 6% of its spending through taxes. [It had a smaller tax base, of course, but refused to tax the property held as slaves.] The North covered 21% of its spending with taxes, about the same as in World War I. The Republican Congresses also preferred high tariffs, raising them to an average duty of 47% by the end of the war. 

When it came to borrowing money, the Union's efforts were uneven, depending on success on the battlefield and the innovative salesmanship of Jay Cooke, who earned  hefty commissions peddling federal bonds throughout the North, beyond Wall Street. The South had good returns from Europe until after Gettysburg.

Both sides printed money, but the Union showed restraint. Only 1/6th of its war spending was in greenbacks, compared to 60% by the South. As a consequence. inflation in the Union was about 80%, compared to 9000% in the Confederacy.

I was surprised to learn that the value of greenbacks compared to gold plunged 50% after Gettysburg and didn't recover until the final weeks of the war. Until the capture of Atlanta in September, 1864, faith in Lincoln and a Union victory was on the verge of collapse.

The story centers on Salmon Chase, Secretary of the Treasury, whose loyalty to Lincoln was often subordinated to his own wish to be president. One delicious irony: named Chief Justice a few months after Lincoln had accepted a pro forma resignation, Chase was part of a court majority that ruled unconstitutional the Legal Tender Act allowing paper currency, despite having championed the law and having put his own picture on the money.

Congress comes across as ignorant and mercurial when it came to financing, at one point barring trade in gold futures and then repealing that law two weeks later. Many members strongly and openly opposed some provisions, only to embrace them when the votes were taken.

Another theme in Lowenstein's book is how the Republican Congresses during the war greatly expanded the scope and size of the federal government, finally enacting the activist role originally pushed by the Whigs. Lawmakers created an Agriculture Department to help farmers; funded a transcontinental railroad; established Land Grant Colleges; gave millions of acres of land to willing farmers under the Homestead Act; and established National Banks in order to create a single national currency.

After the war, however, the dominant Republicans insisted on a return to the gold standard and presided over three decades of deflation. But they had raised the money when it counted.

how many wars are we in today?

 Though I missed it at the time -- Pearl Harbor day, in fact -- the Biden administration has sent Congress the latest in its twice yearly reports on troop deployments abroad, as required by the War Powers Resolution. It names 16 countries, the same as last time minus Afghanistan. No surprises.

using sanctions to avoid a war with Japan

 I'm always looking for good cases to illustrate the policy process. For diplomatic and military policies, the supply is vast.  For foreign economic policy, however, I haven't found many. Until this week, when I finally had a chance to read Edward S. Miller's 2007 book for the Naval Institute Press, Bankrupting the Enemy: The U.S. Financial Siege of Japan before Pearl Harbor.

Miller also has a revealing summary of U.S. economic sanctions policies starting with World War I, showing how reluctant U.S. officials were to use sanctions for foreign policy purposes. The key law empowering the president for almost any economic sanctions, the International Emergency Economic Powers Act [IEEPA] of 1977, is actually based on a section of the 1917 Trading with the Enemy Act. That law resulted from a bureaucratic fight between the Commerce Department, which historically ran export controls, and Treasury, which claimed jurisdiction over financial transactions laws. Treasury won that fight, not least because the assertive secretary was also President Wilson's son in law.

A similar bureaucratic struggle occurred in 1940-41 over Japan.Secretary of State Cordell Hull, the key interlocutor with the Japanese, resisted harsh sanctions because he considered them too provocative. Treasury Secretary Henry Morgenthau, however, favored pressure but had only an advisory role on sanctions. In key meetings with FDR in July, 1941, the president decided on freezing Japanese assets in the United States and restricting exports of various commodities but not a full embargo. Roosevelt and his cabinet officers even expected to sell oil to Japan, but only after some delay and on a case-by-case basis.

At the sub-cabinet level, however, Dean Acheson dominated the interagency committee that wrote the rules implementing FDR's executive order and did so to prevent any oil shipments to Japan, a red line that many historians argue made war inevitable. Hull was upset to learn of the impact of the rules when he returned from medical leave, but was reluctant to force a change that might be viewed as favorable to the Japanese. FDR himself was preoccupied with his meeting with Churchill in August and the growing naval conflict with Germany and did not force a change back to his original policy.

Miller cites a 1976 paper by a researcher at the National Archives which has even more details of the hawkish cabal in the bureaucracy on the broad range of export restrictions on Japan, including redefining "aviation gas" so as to prevent any oil exports.

The key lesson for me is the power of the sub-cabinet bureaucracy to shape policy by implementation rules, regardless of presidential-level decisions. It happens all the time. The formal policy was to deter Japan from greater conquest by limited but significant export restrictions, not a full embargo. The actual policy Japan faced was an existential threat.

Revenge by a White House staffer

 I followed the career of Peter Navarro in recent years with great interest. He was an outspoken China hawk who advised the Trump campaign and then was an early appointee to work in the White House. Candidate Trump had promised to create a National Trade Council to take on China and otherwise promote an America First economic policy, but he never did. As a student of the presidency, I was not surprised that other officials blocked that action in order to preserve the established system that tilted toward mainstream policies. Instead, Navarro was named head of an Office of Trade and Manufacturing Policy that had no clear authority, not even an executive order creating it, but gave Navarro a handful of aides.

Despite his weak bureaucratic position, Navarro was a hustler and he knew the president agreed with him on trade. So he wrote memos and showed up at meetings and got into fights with the more powerful figures like the secretary of the treasury and the head of the national economic council. He also maneuvered to see the president without an appointment and to ride on Air Force One, sitting in the conference room.

Navarro produced major documents criticizing China's trade policy and pushed for even tougher measures. But he repeatedly lost fights with the treasury secretary and the trade adviser, who ultimately persuaded President Trump against extreme measures.

Navarro also did valuable public service pushing the administration to recognize the danger of the coronavirus when most senior officials, including the president, were downplaying the threat. And with no clear lines of authority within the White House, Navarro wound up as the action officer for government officials and company leaders searching for protective gear and medical supplies. As he reports in his new memoir, In Trump Time, he succeeded time and time again with quick results, though he complains of many times he was thwarted by existing laws and administrative requirements.

There's a valuable case study in that memoir, though it's told in a rambling, incomplete way. Navarro tells how, in the summer of 2020, he dreamed up the idea of a special commission to investigate the causes of the pandemic and to report before election day of the human and economic costs. He believes that the virus originated in a Chinese lab and wanted to call the group the CCP Virus Commission. He wrote a draft executive order,  but then ran into resistance from several senior officials. He still can't believe that the president wouldn't agree to his brilliant election ploy.

Navarro is using his book to settle scores -- against all of Trump's national security advisers except Robert O'Brien; against Treasury Secretary Mnuchin; against Jared Kushner; against Anthony Fauci; and even against Mike Pompeo and Vice President Pence. He disparages them all in intemperate language and then describes how he thinks the Democrats stole the 2020 election and what he did to help Trump prevent a Biden inauguration. 

Navarro could have told a story of a lonely fighter for policy change. He has some victories to brag about after all. But his anger and his Trump loyalty outweigh that story.

gauzy memories of World War II

West Point professor of English Elizabeth Samet argues, in Looking for the Good War, that Americans have fundamentally misremembered World War II. The standard narrative, she says, proclaims:

1.    The United States went to war to liberate the world from fascism and tyranny.

2.    All Americans were absolutely united in their commitment to the war effort.

3.    Everyone on the home front made tremendous sacrifices.

4.    American are liberators who fight decently, reluctantly, only when they must.

5.    World War II was a foreign tragedy with a happy American ending.

6.    Everyone has always agreed on points 1-5.

While it is obviously wrong that “Everyone” shared those views, her evidence is strong that many Americans did disagree with each of the points. Opposition to intervention was strong until Pearl Harbor, at which point revenge on Japan was a far greater motivation than fighting Hitler or fascism.

Many on the home front got rich in the booming economy. Far fewer made personal sacrifices.

Samet also documents atrocities by American troops and notes the opposition at the time to the bombing of civilian targets.

I agree that we have overdone the praise of the “greatest generation,” just as I cringe at the blanket label of military personnel as “heroes.” We should keep the distinctions differing Medal of Honor heroism from ordinary honorable service. World War II should be remembered in its complexity and contradictions.

Churchill, good and bad

 Like many Americans, I grew to admire Winston Churchill as I learned more about him. Early on, I bought a recording of some of his most famous speeches and marveled at his stirring words.  I happened to be in London at the time of his funeral and felt that I was part of a great historic moment. I have often quoted some of his witty sayings, even though many now seem to be apocryphal. I was thrilled to visit the Churchill War Rooms and see the actual place where so many consequential policies were formulated.

I have just read Geoffrey Wheatcroft's critical and revisionist biography, Churchill's Shadow, which adds a lot of negative facts to the ledger assessing Churchill's legacy.  Wheatcroft savages Churchill's reputation by quoting from letters and diaries by contemporaries, who point out his flaws -- inconsistency, hypocrisy, frequent inebriation,  social isolation, and so forth. He also repeats many statements which Churchill later disavowed or pretended he never said. [And he quotes Churchill as saying of war cabinet meetings, "All I wanted was compliance with my wishes after a reasonable period of discussion."]

There has been too much hagiography about Churchill. It's time for a fuller picture of his human qualities, including his failings, as well as his political accomplishments, including their blemishes. Like most successful politicians, he was vain, ambitious,  and self-centered, better at tactical adjustments than consistency or strategy. He was a loving though patriarchal husband, but a poor parent. He drank too much and stayed in power too long.

And he was a racist, demeaning all but white, Protestant, English-speaking people much of the time. Sadly, so were many if not most of his Victorian era contemporaries. Nevertheless, I am not ready to pull his statues down or shatter the busts simply because of those abhorrent views. His political accomplishments were world-historical and worthy of honor despite their flaws.

The most useful correctives I found in Wheatcroft's books  were on lesser points.

- He was a defender of the Empire to the bitter end.

- His own history books were group-written and fabricated to enhance his roles.

- He had some surprising and consistent policy views, including support for a national health service and other social programs and support for Zionism.

- He exaggerated his friendship with FDR and his areas of agreements with the Americans.

- Many of his wartime strategy proposals were profoundly unwise [Gallipoli, Norway, Greece, Singapore].

- He strongly favored terror bombing in World War  II, despite earlier and later misgivings.

And yet...in 1940 especially he rallied a defeated force and a demoralized nation -- and onlookers in America -- to fight back and join together in common cause. He did that, and it's unlikely anyone else could have.

a policymaker looks at history

 

 

Who needs another 549-page history of American foreign policy? Maybe you do. At least you should take a look at Robert Zoellick’s America in the World (Twelve, 2020). The author is not a trained historian, but a broadly experienced Washington policymaker who has served as U.S. Trade Representative, White House Deputy Chief of Staff, and State Department Under Secretary, Counselor, and Deputy Secretary as well as President of the World Bank.

Zoellick has written an incomplete, episodic, but insightful history of the most significant American policies abroad.  Organized around key figures from Alexander Hamilton and John Quincy Adams through John Hay and Charles Evans Hughes to recent U.S. Presidents, Zoellick sees economic and trade policies as important to his analyses as the traditional security narratives. That in itself is a useful corrective and valuable addition to our histories.

Time and again he offers personal anecdotes echoing his discussions of earlier events. For example, he concludes his analysis of the failure of Lyndon Johnson’s staff to warn him of their own doubts about Vietnam by citing times when his own bosses failed to give their presidents bad news. And he tells how Secretary of State James Baker paved the way for sensitive negotiations by making repeated face-saving concessions to another diplomat.

What I found especially new and valuable were his chapters on Charles Evans Hughes and Elihu Root. The first explains how America got into the diplomacy of arms control and the second is the best I’ve ever read about how legalism came to dominate U.S. foreign policy. His Cordell Hull chapter describes how the Tennessee lawmaker brought a radical change in trade policy. He uses Vannevar Bush to explain how the U.S. government embraced technological innovation for military security and economic prosperity.

He cites other historians with alternative views of post-1945 controversies and then adds his own assessments. He sprinkles his chapters with revealing incidents.

There’s not much about 21^st century foreign policy except passing references, but his perspectives on America’s first two centuries are quite worthwhile.