Erik Visits an American Grave, Part 1,104

This is the grave of Hugh McCulloch.

Born in 1808 in Kennebunk, Maine, McCulloch grew up rich. His father was a major shipbuilder, one of the wealthiest in New England. So young Hugh went to all the good schools and then was on to Bowdoin. However, he had shaky health and had to drop out after two years. So he taught school for awhile, then studied law in Boston. That led him to passing the bar and moving to Fort Wayne, Indiana to start a practice. This was an era where someone would move from Boston to Fort Wayne to improve their life, something utterly unfathomable today. In any case, this was in 1833 and he soon found success in his new home. He got a job at the Bank of Indiana and was president of it within two years. That would make his fortune. This was one of the banks created when Andrew Jackson and the Democratic Party idiotically destroyed the Bank of the United States. Most of the newly chartered state banks were complete disasters. There was no good reason why Indiana would be any different. None of the big banking eastern states were willing to run anything in Indiana, a land full of yahoos and morons. So this opened the opportunity for McCulloch to step in. He proved immensely capable and the Bank of Indiana proved to be one of the best run in the country.

McCulloch continuing running the bank as the Civil War began. There’s not that much interesting to say about these years. He was a Republican who did Republican things, building up railroads and other corporate investment. Initially, McCulloch was concerned about the growth of the federal government with the National Banking Act of 1862, which was one of Salmon Chase‘s pretty smart moves to find a way for the country to pay for the war. But he soon came around and Chase tapped him to be the first Comptroller of the Currency that year. His influence over the history of American banking cannot be overstated. The banking system was still a complete mess during these years. With Republicans controlling Congress, he sought to get his fellow party members to revamp it to actually function something like a modern banking system for the time. As he thought the National Banking Act deeply flawed, he worked up new legislation. This became the National Banking Act of 1864, which brought a lot of the nation’s banking power back to the federal government. It didn’t reestablish a Bank of the United States, but it undid a lot of the damage that Jackson had done. It created real federal supervision over American banking and permanently established the Comptroller of the Currency as a key position in the financial system. Legislation over the next two years sped up the adoption of these rules.

For all of this McCulloch was promoted to Secretary of the Treasury in 1865 after Chase’s attempt to force Lincoln out in 1864 so he could be the nominee led to the president kicking his arrogant butt up to the Supreme Court. In fact, McCulloch actually replaced William Fessenden, Lincoln’s first choice after Chase, because the Mainer wanted to return to the Senate. Even at that point, Lincoln preferred Edwin Morgan of New York, but he refused because he didn’t want his enemy in the governorship of New York to choose his replacement. So it was McCulloch. He had such influence with the states that this was a very popular choice. Like most Republicans, he pulled back immediately from the necessary financial measures of the war. He ended the greenbacks system and urged a return to the gold standard. For all that Andrew Johnson hated most Lincoln officials, he had no problem with McCulloch nor the Treasury Secretary with him and he remained in office through Johnson’s administration in 1869.

Unfortunately, like so many Republicans, McCulloch was obsessed with cost cutting, even at the same time they were making demands on the military to police the South. His plan to take out legal tender and replace it with gold started the long, convoluted, and frustrating battle for the next half-century to create a real currency in the U.S., which only ended with the creating of the Federal Reserve in 1913. Simply put, McCulloch may have been good at his job, but he was an early 19th century banker in an economy that was expanding in leaps and bounds. There were some real issues, sure. Inflation had risen and greenbacks not backed with hard currency were seen as anathema to economic figures in this period, though they had agreed to it during the war. Removing money from circulation placed tremendous hardships on debtors and lowered prices. It depended on who you wanted to help, basically, as government often operates. In fact, McCulloch did take criticism from other Cabinet members. John Usher, the Interior Secretary, lambasted McCulloch for only representing the elite classes. Usher stated, “When he came to be secretary, it appeared to many that he was not conscious that his position was changed; that he was no longer acting for the creditor class, but for the people; that his effort seemed to be to make the creditors of the government more secure and their credits more valuable, though it might be opposed to the interests of the taxpayers who had the debt to pay.”

After he left the Treasury, McCulloch, no longer some Indiana banker, got a job working as Jay Cooke’s top man. This was at the very moment when Cooke, who does deserve as much credit as McCulloch for funding war, had come to believe that whatever his own personal interests were also were the country’s interests. This blew up the economy in 1873. Anyway, McCulloch mostly worked in London during these years pushing Cooke’s interests there. He became extremely rich, one of the classic Gilded Age capitalists, if one less known today than Morgan or Carnegie or Gould.

Now a senior banking figure, McCulloch did return to the federal government one more time. In 1884, Chester Arthur asked him to return to the Treasury. He agreed, again bringing his goldbug fanaticism to the office and desperately trying to stop the coinage of silver. This eventually led to the Sherman Silver Purchase Act, which seriously constricted the economy in the 1890s and led to the rise of the Populists. McCulloch stepped down when Grover Cleveland became president. After this, McCulloch retired to a house in Maryland. He also wrote a memoir, being the last surviving member of the Lincoln Cabinet. Men and Measures of Half a Century was published in 1888. He died in 1895 at the age of 86.

Hugh McCulloch is buried in Rock Creek Cemetery, Washington, D.C.

If you would like this series to visit other Secretaries of the Treasury, you can donate to cover the required expenses here. George Boutwell is in Groton, Massachusetts and Benjamin Bristow is in The Bronx. Previous posts in this series are archived here.