Despite hisunrivaled popularity after the Civil War, Republcan Ulysses Grant won thepresidency merely three years later in 1868 by a popular vote margin of only53%-to-47%. In fact, if not for the votes of ex-slaves that had only gainedsuffrage during the preceding twelve months, he would have lost the popularvote. Thus, he was the choice of only a minority of whites. Obscure sections ofthe
1868 Republican Party Platform
and the
Fourteenth Amendment
ratified later that same yearprovide clues to explain the curiosity. They also reveal that it was more thana mere historical footnote.

Although the Platform’s second plank mandated blacksuffrage in all former Confederate states, it left it as an historical state’sright in all the others. Thus, Republicans took the position that state’srights under the Constitution were not applicable to the all states but couldbe selectively vouchsafed by their Party for political purposes. Theinconsistency resulted from doubts that Northerners would vote the Party ticketif it supported mandatory black suffrage in all states. At the end of thewar only five New England states with minute black populations permitted blacksto vote. Six additional Northern states where blacks composed just one percentof the population rejected black suffrage between 1865 and 1868. Connecticut,Minnesota, and Wisconsin did so in 1865, while Kansas and Ohio followed in 1867as did Michigan in 1868.

Althoughuniversal black suffrage would be extended to the North in 1870 by theFifteenth Amendment, the region experienced only a modest adjustment given itstiny African American population. By contrast, ex-slaves accounted for 40% ofthe population of the former Confederate states and half or more of the votersin five of them due to disfranchisement of selected ex-Confederates.

Republicans adopted two measures to get Northerners tovote for Grant even if the voters didn’t want to empower the Party to form aRepublican fiefdom in the South via universal black suffrage in the region. Thetwo factors manipulated the primal emotions of fear and greed among holders offederal war bonds. Republicans implied that the investors would lose money ifDemocrats won the 1868 election but would avoid loss, and might even get awindfall gain, if Republicans won.

First, the Fourth Section of the Republican-authoredFourteenth Amendment stipulated, “The validity of the public debt of the UnitedStates . . . shall not be questioned.” It also specifically repudiated thedebts of the Confederacy and its component states. Second, the third RepublicanParty Platform plank states, “We denounce all forms of repudiation . . . of thepublic indebtedness . . . not only according to the letter, but the spirit ofthe laws under which it was contracted.”

During the Civil War the federal government’s debtincreased 41-fold from $65 million to $2.8 billion. Most of it was in the formof bonds purchased by many patriotic Northerners to support the war effort.Banks also bought the bonds, particularly after the 1863 National Banking Actenabled them to use them as reserve collateral. Prior to the Act, gold was theonly respected bank reserve. But gold paid no interest whereas the federalbonds paid interest semiannually, in gold. Thus, the National Banking Act was aboon for Northern banks.

Grant’s campaign deliberately scared Northernbondholders by suggesting that Democrats might repudiate the federal bonds andeven require payment of Confederate bonds. The Republicans’ third Platformplank assured bond-holding voters that the Party would support full repaymentof their investment with interest. Moreover, the “letter” and “spirit” languageof the plank were code terms, implying that bondholders would get a windfallgain if they voted Republican.

Specifically, investors bought nearly all of the warbonds with greenbacks that traded at a fluctuating discount to gold during thewar. The discount was as much as 65% in July 1864 when Grant was stalemated atPetersburg and Sherman’s progress in Georgia seemed slow. Thus, at that time agreenback dollar was worth only thirty-five cents in gold. Republicans arguedthat the “spirit” under which the debt was “contracted” indicated that the thebonds must be repaid in gold, which would be a windfall gain to bondholders.Consequently, the first bill Grant signed after he became President in March1869 was the Public Credit Act, which required that the federal debt be repaidin gold.

Concerns that Democrats would require Americantaxpayers to repay Confederate debts were preposterous, but the accusationswere politically effective for the Republicans. Where fear rules, reason isimpotent.

Peeling back the onion of politically correct historyoften reveals the ancient wisdom: “Money makes the World go ’round.”