Sea Power and the American Interest: From the Civil War to the Great War

By John F Morton

From the Civil War to the Great War, the transatlantic commercial trading system that dated from the nation’s colonial times continued in America. By 1900, the sustainability of this Atlantic System was in the material interest of an industrial America on which its aggregate national prosperity depended. The principal beneficiary of this political-economic reality was the American moneyed interest centered in the Northeast, with New York City at the heart.

Author John Fass Morton explains how this country came to put a value on commercial opportunities overseas in support of America’s steel industry. Europeans and Americans alike pursued informal empires for resource acquisition and markets for surplus capital and output. Morton looks at how U.S. policy found consensus around the idea of empire, taking stock of the opening of Latin American and Chinese markets to American commerce as a means for averting socially destabilizing economic depressions.

Republican administrations reflected Wall Street finance and America’s other three Madisonian interests—commercial, manufacturing, and agrarian—with the Open Door and Dollar Diplomacy policies to establish fiscal protectorates in Central America and the Caribbean. Undergirding Dollar Diplomacy was their commitment to “a great navy” that would be the “insurance” for an ongoing American interest that Dollar Diplomacy represented. With the strategic arrival of the petroleum sinew and the Wall Street reassessment of the Open Door in China, the Wilson administration tilted toward protecting American investments in the hemisphere—notably in Mexico—with a “Big Navy.” With Wilson, a progressive foreign policy establishment arrived while continuing to reflect the transatlantic internationalism of the Northeast moneyed interest. As a twentieth century progressive institution, the Navy would thus sustain an American expansion that was now progressive.

The Navy story from the Civil War to the Great War reveals a truth. The foundational and dynamic sectors of a great nation’s economic base—its sinews—give rise to policy consensus networks that drive national interest, long-term strategy, and the characteristics of its elements of national power. It follows that the attributes of sea power must be material expressions of those sinews, allowing a navy better to serve as a sustainable and actionable tool for a great nation’s interest.

• Language: English
• Publisher: Naval Institute Press
• Release date: Apr 15, 2024
• ISBN: 9781682479124

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Cover: Sea Power and the American Interest by John Fass Morton

SEA POWER

AND THE

AMERICAN

INTEREST

From the Civil War to the Great War

JOHN FASS MORTON

Naval Institute Press

Annapolis, Maryland

Naval Institute Press

291 Wood Road

Annapolis, MD 21402

© 2024 by the U.S. Naval Institute

All rights reserved. No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying and recording, or by any information storage and retrieval system, without permission in writing from the publisher.

Library of Congress Cataloging-in-Publication Data

Names: Morton, John Fass, author.

Title: Sea power and the American interest : from the Civil War to the Great War / John Fass Morton.

Description: Annapolis, Maryland : Naval Institute Press, [2024] | Includes bibliographical references and index.

Identifiers: LCCN 2023045983 (print) | LCCN 2023045984 (ebook) | ISBN 9781682479117 (hardback) | ISBN 9781682479124 (ebook)

Subjects: LCSH: Sea-power—United States—History. | United States. Navy—History.

Classification: LCC E182 .M877 2024 (print) | LCC E182 (ebook) | DDC 359.00973—dc23/eng/20230929

LC record available at https://lccn.loc.gov/2023045983

LC ebook record available at https://lccn.loc.gov/2023045984

Print editions meet the requirements of ANSI/NISO z39.48-1992 (Permanence of Paper). Printed in the United States of America.

32 31 30 29 28 27 26 25 24           9 8 7 6 5 4 3 2 1

First printing

For

Margaret & Nic

(USNA ’10 & ’09)

Sir Walter Raleigh declared in the early seventeenth century that whoever commands the sea, commands the trade; whosoever commands the trade of the world commands the riches of the world, and consequently the world itself. This principle is as true today as when uttered, and its effect will continue as long as ships traverse the seas.

—Chester W. Nimitz (1948)

CONTENTS

List of Illustrations

Introduction. Setting the Course

Part I. An Industrial Republic in Pursuit of Expansion and Sea Power

Chapter 1.The Wartime Arrival of National Systems: Railroads, Communications, and Banking

Chapter 2.The Antebellum Navy Charts a Course for Informal Empire

Chapter 3.Steel Becomes the Sinew for Rail and Sea Power

Chapter 4.The Hemispheric American System: From Railroad Development to Financial Protectorates

Chapter 5.Investment Empire: The Emerging American Interest

Chapter 6.The Promise of an American Pacific System

Chapter 7.The American Interest in China: Beneficent, but Premature

Part II. The Navy and the Progressive Institutions of the American Century

Chapter 8.Progressive Institutionalization of the Financial Element of National Power

Chapter 9.Progressivism: The Pragmatic Ideology of the Industrial Republic

Chapter 10. The Arrival of America’s Oil Sinews and the Petroleum Interest

Chapter 11. The Navy and the Pacific Fuel

Chapter 12. Mexican Oil Becomes a Major Security Interest

Chapter 13. From Respectable Defense to Preparedness for War: Toward a Peacetime Standing Army

Chapter 14. In Search of a Twentieth-Century U.S. Naval Policy

Chapter 15. A General Policy of National Defense

Part III. Internecine European War and the Arrival of America’s Navy Second to None

Chapter 16. The American Interest on the Eve of the Great War

Chapter 17. British Commerce Warfare Co-opts American Neutrality

Chapter 18. The Naval Policy Shortcoming: The U.S. Merchant Marine Sea Power Disconnect

Chapter 19. The Progressive Embrace of Sea Power

Chapter 20. Progressive Adoption of a Navy Second to None

Epilogue. Ex Scientia Tridens

Notes

Bibliography

Index

ILLUSTRATIONS

1.1.Excavating for a Y at Devereux Station on the Orange and Alexandria Railroad

2.1.The Paraguay Squadron, 1858

3.1.The White Squadron, 1889

4.1.T. R. and his Big stick, 1904 cartoon

6.1.The Philippines Are Only the Stepping-Stone to China, 1900 cartoon

7.1.Portrait of Secretary of War William Howard Taft’s 1905 diplomatic mission to the Far East

8.1.The Jupiter of Wall Street, J. P. Morgan, 1902 cartoon

11.1.Destroyer Paulding, the Navy’s first oil-fired warship, 1910

12.1.USS Utah battalion marches along the Veracruz waterfront, 1914

14.1.Battleships of the Great White Fleet enter San Francisco harbor, May 6, 1908

15.1.The U.S. Navy General Board, ca. 1902

17.1.U-boat attack on a British commercial freighter during World War I, 1915 illustration

18.1.Auxiliary cruiser St. Paul, 1898

20.1.The Return of the Mayflower: American Destroyers Arrive at Queenstown, May 4, 1917, 1918 painting

Epilogue.1.U.S. Naval battleships at sea, November 1, 1939

Introduction

Setting the Course

FROM 1789 INTO THE NINETEENTH CENTURY, a revolutionary and expansionist America, separated and protected by sea, pursued its New World commercial and agrarian republicanism in competition with the monarchical and aristocratic Old World imperialism. At the same time, for most of that century to the Great War a continuing transatlantic commercial trading system proved to be an inherent American political-economic reality. Materially reinforcing this Atlantic System,¹ Europeans—primarily the rival British—invested in their trading partner’s internal improvements and latterly its railroad development. Old World financing of much of the U.S. buildout of its transportation infrastructure expedited European sourcing of American output, primarily agricultural, notably in cotton and later wheat. By 1900, the sustainability of this Atlantic System was in the material interest of the industrial America on which its aggregate national prosperity depended. The principal beneficiary of this political-economic reality was the American moneyed interest centered in the Northeast, with New York City at the heart.

This Atlantic System functioned in tension with another politicaleconomic conception that emphasized American separateness from Europe. Its genesis was in Washington’s farewell address and Thomas Jefferson’s sectional vision, which reflected the agrarian interest of Virginia, the South, and, in time, the Midwest. Articulated after the War of 1812 as the American System, this autarkic envisioning eschewed European entanglements as America grew its sinews of domestic commerce and pursued continental and hemispheric expansion.

In the early republic, the U.S. Navy had served as a military element of national power to protect America’s expanding maritime commerce. Along with the U.S. merchant marine, the Navy was then a material expression of the wooden shipbuilding interest of the Northeast. By the 1840s, America turned from the sea to emphasize continental expansion and domestic commerce. The Navy and eventually the merchant marine went into decline, and Americans lost their sea habit. Half a century later, a now continental America of rapidly maturing sinews—notably of steel—came to put a value on commercial opportunities overseas. Worldwide, transformative industrialization in the 1880s brought dramatic economic expansion and uneasily problematic social upheaval, driving Europeans and Americans alike to pursue informal empires for resource acquisition and markets for surplus capital and output. High-level U.S. policy consensus networks in part viewed the opening of Latin American and Chinese markets to American commerce as a means for averting socially destabilizing economic depressions.

In 1905, progressive Democrat Royal Meeker observed, The export trade of the United States iron and steel industries is looked upon as a mere safety valve to relieve the pressure of over production.² At the time, the Great Powers and America had been rivaling each other for overseas concessions and investments in internal improvements, notably in railroad development, facilitated by the abundant output of steel. Republican administrations reflected Wall Street finance and America’s other three Madisonian interests—commercial, manufacturing, and agrarian—with the Open Door and Dollar Diplomacy policies to establish fiscal protectorates in Central America and the Caribbean while pointedly funding construction of the Panama Canal. The Venezuela Debt Crisis of 1902–3 revealed that the Great Powers in this first era of modern globalization were prepared to challenge the Monroe Doctrine and deploy navies to emplace their own fiscal protectorates in the hemisphere. This perceived threat furthered the argument for the Big Navy, enabled by America’s burgeoning steel production. As the Republican progressive Frederic C. Howe put the case for undergirding Dollar Diplomacy, The country must commit itself to a great navy … in order that we may be ready to meet any one of the great powers with which we may come into conflict in the further partition of the world, in the division of which the great powers of Europe have heretofore had an unchallenged monopoly.³

The Navy was the insurance (to use Howe and the Britisher H. N. Brailsford’s term) for an ongoing American interest that Dollar Diplomacy represented. Though Woodrow Wilson supposedly abandoned this Republican policy, in late 1913 his administration leveraged the impending opening of the Panama Canal to embrace the American System as a missionary vision for hemispheric expansion of progressivism to counter Great Power concession-building. Reflecting the maturing of southern, midwestern, and especially Texan equities in his administration, the strategic arrival of the petroleum sinew and the Wall Street reassessment of the Open Door in China, Wilson tilted toward an activist, though supposedly moralistic policy for Latin America. Setting aside the president’s rhetoric, Howe would later characterize this focus shift as but further evidence of financial imperialism at work, buttressed by navalism:

There is no doubt that the primary motive behind the demand for intervention in Mexico was the fact that American investors claimed privileges, concessions, and investments in that country in excess of $1,000,000,000, or an amount greater by more than $200,000,000—according to [U.S.] Consul Marion Letcher—than the property and possessions of all the Mexicans combined. The protection of such investments involves a great navy for the enforcement of our demands. This explains in part the rapid growth of navalism in the United States in recent years.⁴

The cumulative political-economic effect of progressivism leading into the Great War had a transformative impact on American institutions that arguably brought forth a second American Revolution in governance. The Wilson administration and the Democrats came to power after a long Republican Party dominance that in effect had represented the victors of the Civil War. With Wilson, a progressive foreign policy establishment arrived. In truth, progressivism had already transformed American institutions. In turn, American institutions had worked to co-opt progressivism. In power, progressives by 1916 continued to reflect the transatlantic internationalism of Morgan and the banking interest that Wall Streeters Elihu Root and Henry Stimson had represented for Roosevelt and Taft. Progressive institutions—including the Navy—would sustain an American expansion that was now progressive.⁵

What had been Republican high-level, public, and private consensus networks with institutional power for policy-planning would, in the American Century, be progressive and bipartisan. Through and within the consensus networks, representatives of the leaderships—and on occasion members of the leaderships themselves—drove and sustained the interests of America’s core sinews, shaping the institutions of governance and directing their processes as applied to the Navy and all the elements of national power. In the first several decades of the century, steelmen reigned as the primary nodes in the foreign policy networks to which the Navy was vitally connected. Fully intertwined with the moneyed interest, the steel industry was the foundational and dynamic sector in the American economic base. Dramatically increasing production of steel fed the explosive growth in railroads, infrastructure projects, skyscrapers, the Steel Navy, and—in wartime 1915—the overly ambitious visions of the American International Corporation, for example. In 1915, U.S. Steel reported its largest earnings in history, and its takings surged further in 1916.

The era’s steelmen—Edmund C. Converse, Charles M. Schwab, and James A. Farrell—together with the Morgans drove the determination of the American interest. Though himself a nickel baron, Col. Robert M. Thompson was the networks’ central player for steel’s interface with the Navy. Further into the American Century, next-generation networks would transmute into the means to forge what would be called national security policy.

The DNA in these policy networks would continue through the interwar years and World War II and reproduce through most of the Cold War. With Theodore Roosevelt’s Tennis Cabinet an inspiration for Franklin Roosevelt’s Brain Trust, a through line in people and ideas ran from the TR’s Square Deal and Wilson’s New Freedom to FDR’s New Deal. To make the point: in 1945, senior New Dealers—who had once been youthful Wilsonians—guided establishment of the postwar international financial regime at Bretton Woods.⁶ Three years later, America would export a fully loaded progressivism with the Marshall Plan. Progressive institutions—repurposed and established in the late 1940s—are the institutions still with us to this day.

PART I

An Industrial Republic in Pursuit of Expansion and Sea Power

1

The Wartime Arrival of National Systems

Railroads, Communications, and Banking

MIDCENTURY AMERICAN expansionism most benefited the commercial, financial, and manufacturing interests of the Northeast. The North had competed with the slavery-based South and its own expansive pursuit of a different interest, centered on agriculture. Southern secession after Abraham Lincoln’s 1860 election released the nation’s capital from the sectional paralysis that had frozen national governance for decades. Lincoln’s chief economic adviser was Pennsylvania’s developmental capitalist Henry C. Carey, who carried forward Henry Clay’s American System ideas. Influenced thus, Lincoln’s wartime Republican policies cemented the foundations for America’s postwar transformation into an industrial political economy that replaced the old commercial and agricultural ideal of a nation of artisans, merchants, and farmers.

The Railroad-Industrial Complex and Mobilization for War

By the 1850s, Ohio had come into its own as an agricultural, extractive, and manufacturing enterprise interconnected with the East via three routes: New York’s Erie Corridor, Maryland’s National Road (the only one of the three funded by the federal government), and Pennsylvania’s canal system. Through the decade, three competing state-chartered rail lines—the Baltimore & Ohio (B&O), the New York and Erie, and the Pennsylvania Railroad—expanded to serve the commercial interests of Baltimore, New York, and Philadelphia, respectively.

These rail lines advanced on the internal improvements to transportation and communication begun under Jefferson to bind the nation together. Robert Fulton had pursued steam navigation monopolies in states and territories. Republicans, however, would opt for a different approach for railroad and telegraph internal improvements. The national government—not just the states—would charter railroad and telegraph monopolies while awarding them most generous land grants.

Telegraphy development had begun in 1838, the year that Samuel Morse sent his first telegram across two miles of wire at Speedwell Ironworks near Morristown, New Jersey. In 1843, Morse got a congressionally funded demonstration line that ran between the U.S. Capitol, along the Baltimore & Ohio Railroad’s tracks, and the B&O’s Mt. Clare Depot in Baltimore. A year later, Morse transmitted his first message, the Bible verse Numbers 23:23: What hath God wrought?

By 1851, ten firms offered telegraph services between New York City and Philadelphia, Boston and Buffalo. Philadelphia had two lines to Pittsburgh; Buffalo and Chicago had two lines; and New Orleans had three running to the Midwest. Nationally, seventy-five companies were providing telegraph services, and in 1857, six of the largest firms formed the Six Nations Alliance cartel. Founded in part by the inventor Ezra Cornell, the developer of telegraph wire insulation, Rochester’s Western Union Telegraphy Company in 1861 became the first nationwide telegraph company, having completed the first transcontinental telegraph line.

The Navy’s prescient Lt. Matthew Fontaine Maury was among the first to appreciate and articulate the strategic military importance of the telegraph and railroads. After the Mexican War, lawmakers were considering upgrades to the Third System of coastal fortifications in light of the advances in steam and ordnance technology. Congress commissioned a War Department study on land defenses, reported in 1851. One school of thought held that, instead of fortification upgrades, funding for strategic defense should go to a coastal defense Navy. Naval officers were resistant, suspicious that the Army was pulling the Navy further into the coastal defense mission to enable it to shift funds to its western roles. Naval policy of the day espoused maritime defense for the merchant marine and offensive operations against enemy commerce. Much of the Navy input to this congressional study came from reform-minded officers and steam advocates in Commo. Matthew Perry’s Lyceum circle. In addition to Maury, who was then the director of the Naval Observatory, they included Cdr. Samuel F. Du Pont, a strong proponent of a navy that focused on offensive capabilities against enemy fleets, and Lt. John A. Dahlgren, the Navy’s celebrated ordnance chief.¹ Dahlgren’s position was that steam warships, concentrated by telegraphy, could indeed best serve coastal defense. Having just submitted his designs for the 11-inch Dahlgren gun, he was an advocate for large-caliber guns and the use of shell over shot.

Maury, however, opposed prioritizing a Navy coastal defense mission. Like Dahlgren, he recognized the telegraph’s utility for concentrating forces. Yet he reconceived the whole coastal defense problem in light of the arrival of railroads. Maury saw how the telegraph and railroads could transform national mobilization by converting whole states into compact, armed masses. The Union would thus benefit from interconnected railroad systems that could rapidly convey militia forces from one section to another to reinforce defenses.² Now that California statehood gave the United States a presence on the Pacific, Maury recommended a transcontinental railroad as the most effective measure for Western coastal defense.

Although Samuel Morse used Ezra Cornell’s wire and the B&O, America’s first state-chartered railroad, to demonstrate magnetic telegraphy, the B&O did not recognize its hugely significant potential for railroad dispatching and control—the commercial application of Maury’s military point. At the time, the B&O was Baltimore’s initiative to overtake New York’s Erie Canal and Pennsylvania’s canal system as the preferred route for the lucrative Pittsburgh and Ohio Valley trade. Pennsylvania’s Main Line Canal from the Susquehanna River to Hollidaysburg and its connecting railroads and canals to Pittsburgh and Philadelphia would open in 1834. The Baltimore & Ohio rail line would reach Wheeling in 1852. Ezra Cornell, however, had shopped his technology to the New York and Erie Railroad’s superintendent Charles Minot. Cornell and Minot were thus the first to link telegraphy and the railroads. In 1851, the New York and Erie became America’s first full-length railroad that ran between Piermont on the Hudson, just upriver and across from New York City, and Dunkirk on Lake Erie. It used telegraphy to coordinate the movements of its trains.

The first to exploit fully the conjoined promise of railroads and telegraphy was, however, the Pennsylvania Railroad, a decision that eventually propelled the line into the forefront of the Ohio railroad trade. The initial center of excellence was its junction at Hollidaysburg, which linked the railroad to its western division and Pittsburgh. In 1855, its young transportation agent, Thomas A. Scott, introduced the telegraph to direct train movements. Scott’s key telegrapher was Andrew Carnegie, an equally young former telegraph operator for Atlantic and Ohio Telegraph, the company that had previously provided telegraph services to the railroad. Carnegie became Thomas’ instructor for the railroad’s telegraph corps and in 1860, at the age of twenty-five, would rise to be superintendent of the Pittsburgh division.

By 1861, the nation had 30,000 miles of railroad, 20,000 of which had been built in the 1850s. Two-thirds of these railway miles were in the North. This network of railroad systems and telegraphy represented the first businesses that were big. They drew on large amounts of capital, cutting-edge technologies, and diversely skilled manpower. Moreover, their operations were interstate, making for what could be called a railroad-industrial complex.

These interstate railroad systems were holding companies that functioned via agreements, leases, operating contracts, or joint ownership of connecting lines.³ At the start of the 1850s, Pennsylvania’s transportation system was a publicly owned system of canals and inclined-plane railways. The state worried that Baltimore’s B&O and New York City’s Erie appeared to be gaining the upper hand in the competition for Pittsburgh and the burgeoning confluence of transportation and manufacturing in northeastern Ohio and along Lake Erie. Through the decade, Pennsylvania shifted to support a privately owned, state-chartered railroad system to connect Philadelphia and New York with Pittsburgh, Cincinnati, St. Louis, and Chicago. By 1861, Pennsylvania Railroad had become the most extensive railroad system in the North.⁴

The railroad now looked to expand southward. In February 1861, it acquired the Northern Central Railway, whose spine was a line that ran from Harrisburg to Baltimore. This acquisition gave the Pennsylvania Railroad a connection to Washington. Northern Central’s cofounder and president was Pennsylvania senator Simon Cameron, an 1860 contender for the Republican presidential nomination.

Cameron’s rail line was key to getting Lincoln to Washington prior to his inauguration. Rumors were circulating of an assassination plot in Baltimore while he was en route by rail to Washington. In late February, Lincoln was in Harrisburg, Pennsylvania. By arrangement with Lincoln’s security chief, Allan Pinkerton, Pennsylvania executives and their telegraph operators temporarily severed the telegraph lines along the tracks to mask the president-elect’s movements in order to bring him incognito through Baltimore by night. The day after his March 4 inauguration, Lincoln nominated Cameron to be his secretary of war.

The Lincoln administration was thus predisposed to trust Pennsylvania Railroad executives to provide the Union with wartime financial, administrative, and engineering expertise. Many had been tied to the Republican Party and would serve in Cameron’s War Department as mid-nineteenthcentury dollar-a-year men. Foremost was Thomas A. Scott, who had played a major role in the railroad operation that got Lincoln safely to Washington for his inauguration. At thirty-six, Scott had risen to be the railroad’s vice president.

Railroads and the Defense of Washington

The April 12, 1861, Confederate bombardment of Fort Sumter unraveled Lincoln’s Unionist administration in Washington. The nation’s capital was in crisis, surrounded by states that sympathized with the South. All of Washington’s rail and telegraph links to the northern states ran through Baltimore. Secretary of War Simon Cameron looked to his state’s interest and the interest of his railroad, the Northern Central, now a Pennsylvania Railroad subsidiary. Two days into the bombardment, Cameron appointed Thomas A. Scott as general manager of military railroads and telegraphs. Scott made Andrew Carnegie his assistant.

The crisis deepened on April 17 when Virginia voted for secession. Former Virginia governor Henry A. Wise, the official who had hanged the abolitionist John Brown, planned to raise a militia to seize the Harpers Ferry arsenal before Washington could organize a defense. Some seven hundred National Volunteers, a secessionist Maryland militia led by a member of the conspiratorial Knights of the Golden Circle, were part of a related plan to receive arms from the seizure.⁵ The following day, the arsenal’s commander preemptively ordered its destruction. Nevertheless, secessionists were able to salvage part of the site and ship firearms and machinery to Richmond and Fayetteville, North Carolina.

In this rapidly deteriorating situation, Cameron entrusted Scott with the security of the Northern Central and its telegraph lines to provide the immediate transport of mustered Pennsylvania troops for the defense of Washington. By arrangement with Pennsylvania governor Andrew Curtin, a strong Unionist, Cameron authorized Scott to stand up to the Union’s first military telegraph office in the governor’s office in Harrisburg.⁶ Scott thus controlled railroads, telegraphs, and transportation of all troops into and out of Harrisburg, ensuring that Pennsylvania Railroad’s Northern Central became a primary conduit for Union troops and matériel throughout the war.

Scott’s immediate task was to direct the first Pennsylvania volunteers from Harrisburg to Washington. In Baltimore, they successfully made the transfer from Northern Central’s Bolton Street Station to the B&O line’s Camden Street Station and arrived in Washington as the first northern infantry companies to defend the nation’s capital. Hereafter, they were known as the First Defenders.

Notorious for decades as an unruly mobtown, a secessionist-leaning Baltimore was outraged that northern troops were passing through the city en route to Washington. The following day a disorderly rabble attacked a second contingent, five unarmed companies of Philadelphia volunteers mustered as the Washington Brigade and the 6th Massachusetts Regiment that became known as The Minutemen of ’61. Traveling from Philadelphia on the Philadelphia, Wilmington & Baltimore Railroad, they had arrived at the line’s President Street Station. As they marched across town to the B&O depot, the rioters assaulted them. In the melee, the mob killed three Pennsylvania volunteers and four Massachusetts soldiers. Twelve civilians also died. These deaths in the so-called Pratt Street Riot were the first casualties of the Civil War.

Baltimore received reports that more troops were en route from Harrisburg and Philadelphia. Fearing greater bloodshed, the city authorities, supported by the Maryland governor, issued orders to a city militia unit and city police to destroy the railroad bridges north of the city and cut telegraph lines. In charge of Baltimore’s defenses was Isaac Ridgeway Trimble, a West Pointer with the Corps of Engineers. Trimble took command of Baltimore’s militia companies immediately after the riot. Having left the Army thirty years before to go into railroad construction, Trimble knew the lay of the land. He had helped survey the B&O’s western lines and was the chief construction engineer for the Baltimore and Susquehanna Railroad and later superintendent of the Philadelphia, Wilmington & Baltimore Railroad. Trimble, however, was a known Confederate sympathizer. Several days later, the secessionist Baltimore County Horse Guard destroyed the Northern Central’s bridges between Cockeysville and the Pennsylvania state line.

These bridge destructions forced Scott to change the rail routes. On April 20, the 7th New York and the 8th Massachusetts Regiments coming on the Philadelphia, Wilmington & Baltimore Railroad had already opted to embark on steamers from Perryville on the eastern shore of the Susquehanna River at Havre-de-Grace to transit to Annapolis. The following day, however, lines and telegraphs from Annapolis were severed, breaking the B&O railroad and telegraph connection to Washington.

Scott turned to managing this waterborne route between Havre-de-Grace and Annapolis and took charge of restoring rail communication between Washington and Annapolis. Relocating to Washington, he rebuilt the Annapolis line, repaired the bridges north of Baltimore, and reopened the B&O, Northern Central, and Philadelphia, Wilmington & Baltimore rail services. By mid-May, rail communication between Washington and the North was again operational. Washington now had the means for credible defense and resupply.

When Cameron put Scott in charge of all government railroads and telegraphs, he also made him responsible for organizing Washington’s military telegraph corps. Scott launched with four Pennsylvania Railroad employees. Funding and equipment initially came from his colleague, E. S. Sandford, president of the American Telegraph Company. Sandford’s firm in early 1861 controlled telegraph lines that extended from Nova Scotia to New Orleans. For six months, Sandford privately financed the Union’s telegraph services, including connecting the War Department to the Washington Navy Yard and Arsenal. He also served as Scott’s chief censor.

Pennsylvania Railroad men now led the War Department’s transportation services. Scott brought to Washington his former secretary, Frank Thomson, and R. F. Morley, former president of the Allegheny Valley Railroad, as acting assistant quartermasters. Scott’s men would initially focus on the management of government railroad lines around Washington. Also on the team was Andrew Carnegie. Following the First Battle of Bull Run on July 21, 1861, Carnegie directed all routine railroad and telegraph matters. In August, Cameron got Congress to establish an assistant secretary of war. The first candidate for the job, Col. William Tecumseh Sherman, declined, and the post went to Scott. As Scott’s assistant, Carnegie assumed complete control of the military telegraph lines. As assistant secretary, Scott prepared a uniform system of troop accounting for the governors, important now that the federal government was increasingly responsible for equipping the Army. Scott also assisted Cameron in purchasing arms and munitions.

Railroad experience also figured into initial military appointments. In November, Maj. Gen. George B. McClellan assumed command of the Army of the Potomac. McClellan had left the Army in 1857 to become the chief engineer and later vice president of the Illinois Central Railroad. Three years later, he was in Cincinnati as the president of the Ohio and Mississippi River Railroad. Cameron’s legal adviser was a Washington attorney, Edwin M. Stanton, reputably the ablest railroad lawyer of the country.⁷ When Stanton succeeded Cameron in January 1862, he brought into the War Department two especially qualified railroad men, Daniel Craig McCallum and Herman Haupt, following authorization under the Railway and Telegraph Emergency Act. The measure authorized the Army to federalize railroads and telegraph systems for wartime use as the U.S. Military Railroad.

Under the Corps of Engineers, Colonel McCallum became the military director and U.S. Military Railroad superintendent. Formerly the railroad engineer and general manager of the New York and Erie Railroad, he was the architect of the McCallum Inflexible Arched Truss Bridge. As the lead organizer for railroad reconstruction, he had the authority to enter upon, take possession of, hold and use all railroads, cars, locomotives, equipments, appendages, and appurtenances, that may be required for the transport of troops, arms, ammunition, and military supplies. To assist him, Stanton appointed West Pointer Herman Haupt, the superintendent of transportation for the Pennsylvania Railroad, renowned for his Haupt Iron Truss Bridge. In the field, Brigadier General Haupt oversaw the operations and maintenance of the military railroads, the reconstruction of bridges and tracks, and the transportation of troops. Haupt’s activities were particularly critical in the rebuilding of the B&O lines, the rail system that suffered the most from Confederate destruction.

Scott and Carnegie returned to the Pennsylvania Railroad in early 1862. Carnegie would ultimately manage heavy government transportation in Pittsburgh. In 1863, Scott established an intelligence service in Harrisburg to help prepare for the defense of the state. In June, Pennsylvania officials worried that Robert E. Lee’s Army of Northern Virginia was intent on capturing the city and destroying its railroad hub. Harrisburg was a vital link between the Northwest and East. Through it, the Pennsylvania Railroad provisioned the Union Army with men, food, and munitions and the Union Navy with anthracite coal from Pennsylvania mines. Scott’s efforts supported Stanton and the northern defense plan. By commandeering lines into the U.S. Military Railroad, Scott facilitated the transportation of troops for the Battle of Gettysburg.

After the September 1863 Union defeat in the Battle of Chickamauga in northwestern Georgia, Stanton turned again to Scott. Commissioned as a colonel and assistant quartermaster of volunteers, the Pennsylvania Railroad executive organized a one-thousand-mile railroad transport of troops across different lines to relieve Maj. Gen. William S. Rosecrans’ Army of the Cumberland later that autumn at Chattanooga, saving the Union Army in the West.

1.1 Excavating for a Y at Devereux Station on the Orange and Alexandria Railroad. Brig. Gen. Hermann Haupt, chief of construction and transportation, U.S. Military Railroads, is standing on the bank supervising the work. The General Haupt, the engine pulling the train in the photograph, was named in his honor. Photographed by Capt. Andrew J. Russell. National Archives and Records Administration, College Park, MD

Most of the lines of the U.S. Military Railroad were lines captured in the Confederacy. McCallum reconstructed all of them, and Haupt kept the trains running with Pennsylvania Railroad personnel loaned by Scott. Over the course of the war, the Military Railroad operated on sections of seventeen railroads in Virginia, Maryland, and Pennsylvania and twenty-three in Tennessee, Georgia, Mississippi, Arkansas, and North Carolina. With the possible exception of the Navy Department, McCallum’s Military Railroad was said to be the most efficient government agency during the war.⁸

Wartime Institutionalization of Whig Policies

Formerly a Whig, Abraham Lincoln was long associated with the cause of federally funded internal improvements. As an Illinois state legislator in the mid-1830s, he supported state funding of the Illinois and Michigan Canal. He also stood for railroad development through the sale of federal public lands and state funding, a position he advanced as a U.S. representative. In the first federal land grant sale to a railroad, Congress in 1850 awarded 2 million acres to the state-chartered Illinois Central Railroad, Lincoln’s most important client. By 1861, its rail network spanned from Cairo in the south to Galena in the north, militarily important as a primary supplier of lead for shot. Its seven hundred miles of track was the longest total in the country.

In the 1850s, Lincoln had shifted to align his political fortunes with railroads over steam navigation. In a signal 1857 case involving the first railroad bridge to span the Mississippi River, he successfully defended the Rock Island Railroad against a challenge that its bridge was a hazard to steamboat navigation. This Davenport, Iowa, bridge ultimately linked a line from Chicago to the state’s Council Bluffs, what would be the eastern terminus of the first transcontinental railroad.

Language for a transcontinental railway was in the 1860 Republican platform, as were resolutions on other Whig priorities, notably increased protectionism. (Two days before Lincoln’s inauguration, Congress enacted the highly protective Morrill Tariff.) Arguing that Pacific states had neither ironclads nor fortifications to defend them, Western Republicans made Matthew Fontaine Maury’s coastal defense case for the rail line. Within a year, the Lincoln administration put forth wartime legislation to authorize the first transcontinental railroad and telegraph line to run from the Missouri River to the Pacific.

In granting the first national franchise since the 1816 charter of the Second U.S. Bank, the 1862 Pacific Railway Act financed construction by the sale of public lands and later sales of government bonds. Charters, significant land grants, and bonds went to two lines, the Union Pacific and Central Pacific. Two years later, follow-on legislation provided for a second route, and this time charters, land grants, and bonds went to the Northern Pacific and the Southern Pacific railroads. Construction of the first line completed in 1869 at Promontory, Utah, where the Central Pacific line from Sacramento connected to the Union Pacific’s from Omaha. The land grant policies were an expansionist boon. Between 1850 and 1870, eighty railroad companies received grants for over 129 million acres, mostly west of the Mississippi River—representing territory totaling approximately 7 percent of the continental United States.

The Whig-inspired approach to wartime railroad financing coincided with another Whig policy priority, the restoration of a national banking system—the preferred Republican means to fund Union prosecution of the war. The drivers of the wartime national banking legislation were two Ohio Republicans, Treasury Secretary Salmon P. Chase and Senator John Sherman. In the 1860 presidential campaign, Cincinnati’s Chase was a Republican contender. Chase owed his national profile to his friend, Ohio newspaper publisher Henry Cooke, who backed his 1860 candidacy and subsequently promoted him for the Treasury post.

Henry Cooke’s brother, Jay, was a transplanted Ohioan in Philadelphia with the notoriety as a canal and railroad financier. Once war engulfed the Union, Jay Cooke shifted from railroad financing to representing wartime government bonds. He founded his own independent house, Jay Cooke & Co., and partnered with a Philadelphia rival, A. J. Drexel’s Drexel & Co., initially to sell Pennsylvania bonds for the military defense of the state. The first offering was a May 1861 $2 million Pennsylvania loan. Their success prompted Cooke to open with his brother Henry a Washington office, from which they pitched their services to a suddenly needy Chase in July. After its defeat that month in the First Battle of Bull Run, a financially rickety Union realized that the war would not be brief and would require wartime government loans. Chase made Cooke & Co. one of his general subscription agents for the Union’s first loan.

For the rest of the year, Chase struggled to come to a mutually satisfactory bond arrangement with New York banks and failed. The New York bankers were not disposed to finance the war through Chase’s initial plan for the loan, unless the government pursued a peace policy. Chase came to accept the necessity of federal paper money—America’s first fiat money, tagged greenback dollars—on which to base the sale of national bonds. With the support of his fellow Ohioan, Senator John Sherman, elected to the Senate with Henry Cooke’s help, Chase secured the passage of the Legal Tender Act in February 1862.

That summer, Chase awarded Cooke a monopoly on underwriting the public debt, enabling him to represent exclusively the sale of the wartime bonds. It was still not an easy sell. By the end of 1862, the administration was ready to propose the first National Currency Bill. It was the first of three national banking acts that, as a Henry-Carey Whig, Lincoln could politically embrace. All together, these measures, driven in Congress again by John Sherman, created a system of national banks that could issue greenbacks—now the only legal paper currency, backed not by gold or silver specie but only by the credibility of the national government. In creating this national currency, secured by a pledge of United States bonds, the February 1863 National Bank Act provided for an active secondary market for Treasury securities—exploited by Cooke—to help the Union finance the war. This first of three successive wartime measures reestablished the central banking system of national banks chartered by the federal government—a Whig goal since the demise of the Second U.S. Bank.

The New York banks, however, were slow to support the program, jealous of the inside track granted to Cooke and his fellow Philadelphia financiers. Indeed, the system needed big, central reserve city banks in New York to serve as the base for the structure’s inverted three-tiered pyramid, whose top tiers were the reserve city and smaller country banks. Initially, New York bankers established only three national banks, none of which was large enough to leverage this new national banking system. Having already established in 1863 the First National Bank of Philadelphia and the First National Bank of Washington and national banks in smaller towns in the West, Cooke stepped forth the following year with $5 million to capitalize his Fourth National Bank of New York. Subsequent revisions in the National Banking Act of 1864 were sufficient inducements to Manhattan bankers: language allowed reserves held by country and reserve city banks to flow to New York’s central reserve city banks. By the end of the war, New York national banks numbered twenty-two.

Throughout the war, Cooke’s approach was to go not to bankers and investors but to the people. With appeals to patriotism, reinforced by brother Henry’s newspaper network, he created demand for what was called a popular loan. Cooke & Co. coordinated their nationwide bond selling operation in Philadelphia, using an army of 2,500 subagents innovatively connected by telegraph.⁹ In this first offering, Cooke sold some $360 million that the public could purchase with greenbacks. Over the course of the war, the three