[This article by Murray N. Rothbard follows "The Road to Civil War," and is excerpted from the same unpublished report to the Volker Fund, 1961.]

The Civil War was one of the most momentous events in American history, not only for its inherent drama and destruction, but because of the fateful consequences for America that flowed from it.

We have said above that the War of 1812 had devastating consequences for the libertarian movement; indeed, it might be said that it took twenty years of devotion and hard work for the Jacksonian movement to undo the étatist consequences of that utter failure of a war. It is the measure of the statist consequences of the Civil War that America never recovered from it: never again was the libertarian movement to have a party of its own, or as close a chance at success. Hamiltonian neo-Federalism beyond the wildest dreams of even a J.Q. Adams had either been foisted permanently on America, or had been inaugurated, to be later fulfilled.

Let us trace the leading consequences of the War Against the South: there is, first, the enormous toll of death, injury, and destruction. There is the complete setting aside of the civilized 'rules of war' that Western civilization had laboriously been erecting for centuries: instead, a total war against the civilian population was launched against the South. The symbol of this barbaric and savage oppression was, of course, Sherman's march through Georgia and the rest of the South, the burning of Atlanta, etc. (For the military significance of this reversion to barbarism, see F.J.P. Veale, Advance to Barbarism). Another consequence, of course, was the ending of effective states' rights, and of the perfectly logical and reasonable right of secession—or, for that matter, nullification. From now on, the Union was a strictly compulsory entity.

Further, the Civil War foisted upon the country the elimination of Jacksonian hard money: the greenbacks established government fiat paper, which it took 14 long years to tame; and the National Bank Act ended the separation of government from banking, effectively quasi-nationalizing and regulating the banking system, and creating an engine of governmentally sponsored inflation.

So ruthlessly did the Lincoln administration overturn the old banking system (including the effective outlawing of state bank notes) that it became almost impossible to achieve a return—impossible that is, without a radical and almost revolutionary will for hard money, which did not exist. On the tariff, the virtual destruction of the Democratic Party led to the foisting of a high, protective tariff to remain for a generation—indeed, permanently, for the old prewar low tariff was never to return. It was behind this wall of tariff-subsidy that the 'trusts' were able to form. Further, the administration embarked on a vast program of subsidies to favored businesses: land grants to railroads, etc. The Post Office was later monopolized and private postal services outlawed. The national debt skyrocketed, the budget increased greatly and permanently, and taxes increased greatly—including the first permanent foisting on America of excise taxation, especially on whiskey and tobacco.

$22 'The Civil War and the Lincoln administration achieved a neo-Federalist triumph that was complete right down the line.'

Thus, on every point of the old Federalist-Whig vs. Democrat-Republican controversy, the Civil War and the Lincoln administration achieved a neo-Federalist triumph that was complete right down the line. And the crushing of the South, the military Reconstruction period, etc. assured that the Democratic Party would not rise again to challenge this settlement for at least a generation. And when it did rise, it would have a much tougher row to hoe than did Van Buren and Co. in an era much more disposed to laissez-faire.

But this was not all: for the Civil War saw also the inauguration of despotic and dictatorial methods beyond the dreams of the so-called 'despots of '98.' Militarism ran rampant, with the arrogant suspension of habeas corpus, the crushing and mass arrests in Maryland, Kentucky, etc.; the suppression of civil liberties and opposition against the war, among the propeace 'Copperheads'—the persecution of Vallandigham, etc.; and the institution of conscription. Also introduced on the American scene at this time was the income tax, reluctantly abandoned later, but to reappear. Federal aid to education began in earnest and permanently with federal land grants for state agricultural colleges. There was no longer any talk, of course, about abolition of the standing army or the navy. Almost everything, in short, that is currently evil on the American political scene, had its roots and its beginnings in the Civil War.

Because of the slavery controversy of the 1850s, there was no longer a single libertarian party in America, as the Democratic had been. Now the free-soilers had left the Democrat ranks. But, especially after Dred Scott had pushed the Douglas 'Freeport Doctrine' to the fore as libertarian policy, there was hope for a reunited Democracy, especially since the Democrat party was still very good on all questions except slavery. But the Civil War wrecked all that, and monolithic Republican rule could impress its neo-Federalist program on America to such an extent as to make it extremely difficult to uproot.