“Like a Cord through the Whole Country”: Union Bonds and Financial Mobilization for Victory

On September 18, 1863, on the eve of his trial, Union spy Spencer Kellogg Brown wrote from his Richmond jail cell to his sister Kitty, relaying to her the supreme faith he held in the Almighty. “God has been very kind to me, and for the past twelve months I have tried earnestly to please Him,” exclaimed Brown. Resigned to his fate, he attempted to put his house in order regarding “some little trinkets.” Of greatest importance was his back pay, owed by the Federal government; he left no doubt for his uncle as to where this money should go. “Tell him to invest in United States six per cent bonds,” Brown ordered. He left the purchase of such bonds to his Uncle Cozzens in St. Louis, who acted on his wife’s behalf. Brown was executed a week later, on September 25, 1863.¹

Given their broadly acknowledged importance to the Union war effort—“The Yankees did not whip us in the field, we were whipped in the Treasury Department,” one Confederate leader famously groused—it is odd that the Federal bond drives have not received more scrutiny from historians. To be sure, there is a general, if vague, consensus that the bond drives were unusually “democratic,” drawing on a significant portion of the northern populace. (Estimates range somewhat wildly, from five hundred thousand to more than 3 million northerners purchasing bonds.) But this is usually chalked up simply to the indefatigable genius behind them, Jay Cooke. Too frequently, the bond drives seem but an extension of his biography; in this narrative, we learn little of the salesmen of the world—the Willie Lomans, if you will—of the bond trade and even less about the purchasers. $2.28 billion of northern bonds found their way into the hands of millions of individual investors, large and small, strewn across the Atlantic World and at the hands of various financiers, from large bankers to small salesmen. By taking a closer look at these transactions, historians can garner a deeper appreciation for how this war spurred a financial industry that tied the people writ large into the supreme cause of Union. For in doing so, a new chapter in American finance was born, one that brought buyers and sellers together as part of a new national narrative wedded in debt.²

It is well established that American money markets underwent dramatic evolution in the Civil War period. The repatriation of American securities from Europe, domestic financing of Union bonds in close coordination with the state, the rise of a national banking system, and the abandonment of the gold standard for the fiat currency of greenbacks all fueled the new rise of an American banking class with an urge to push product. Between 1864 and 1870, the number of registered bankers and brokers in New York City alone increased from 167 to 1,800. The national debt rose during the Civil War from $65 million to $2.6 billion by 1866, with American securities sales during the war coming in at a staggering $2.28 billion. Yet the overall capital in railroads increased by only $23 million during the war itself. Thus, capital became quickly and heavily entrenched in government securities before ultimately transferring over into rail in the postwar period. The two chief bond drives were the $500 million 5–20 bond drive of 1862–64 and the $830 million 7–30 drive of 1864–65. Combined, these two drives constituted more than half of all funds raised through borrowing among the American populace. Given the broadly distributed nature of these new products, the Civil War represented what was, up to that time, the most democratic investment scheme in American history. Close coordination between the federal government and various financial firms made Americans across the North American continent believe that their purchasing power was a key to Union success.³

To be sure, the Civil War did not represent the first foray into bonds and wartime finance for the Treasury. The Revolutionary War had seen Robert Morris rise to fame...