Hugh McCulloch (December 7, 1808 – May 24, 1895) was an American financier who played a central role in financing the
American Civil War
The American Civil War (April 12, 1861 – May 26, 1865; also known by other names) was a civil war in the United States. It was fought between the Union ("the North") and the Confederacy ("the South"), the latter formed by states th ...
. He served two non-consecutive terms as
U.S. Treasury Secretary under three presidents. He was originally opposed to the creation of a system of national banks, but his reputation as head of the Bank of Indiana 1857 to 1863 persuaded the Treasury to bring him in to supervise the new system as Comptroller of the Currency 1863–65. As Secretary of the Treasury 1865–69 he reduced and funded the gigantic Civil War debt of the union, and reestablished the federal taxation system across the former
Confederate States of America
The Confederate States of America (CSA), commonly referred to as the Confederate States or the Confederacy was an unrecognized breakaway republic in the Southern United States that existed from February 8, 1861, to May 9, 1865. The Confeder ...
. He tried but failed to make a rapid return to the
gold standard
A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from the la ...
.
He was the last surviving member of the
Lincoln Cabinet
The presidency of Abraham Lincoln began on March 4, 1861, when Abraham Lincoln was United States presidential inauguration, inaugurated as the List of presidents of the United States, 16th president of the United States, and ended upon his Assass ...
.
Biography
Early life
Born in
Kennebunk
Kennebunk is a town in York County, Maine, United States. The population was 11,536 at the 2020 census (The population does not include Kennebunkport, a separate town). Kennebunk is home to several beaches, the Rachel Carson National Wildlife R ...
,
Maine
Maine () is a state in the New England and Northeastern regions of the United States. It borders New Hampshire to the west, the Gulf of Maine to the southeast, and the Canadian provinces of New Brunswick and Quebec to the northeast and north ...
, he was the son of Hugh McCulloch Sr., one of the largest shipbuilders in New England, and Abial Perkins. He was educated at Thornton Academy in Saco, Maine, and attended
Bowdoin College
Bowdoin College ( ) is a private liberal arts college in Brunswick, Maine. When Bowdoin was chartered in 1794, Maine was still a part of the Commonwealth of Massachusetts. The college offers 34 majors and 36 minors, as well as several joint eng ...
for two years, leaving due to ill health.
He taught school, then studied law in
Boston
Boston (), officially the City of Boston, is the state capital and most populous city of the Commonwealth of Massachusetts, as well as the cultural and financial center of the New England region of the United States. It is the 24th- mo ...
, and in 1833 began practicing law at
Fort Wayne
Fort Wayne is a city in and the county seat of Allen County, Indiana, United States. Located in northeastern Indiana, the city is west of the Ohio border and south of the Michigan border. The city's population was 263,886 as of the 2020 Censu ...
, Indiana. He was cashier and manager of the Fort Wayne branch of the state chartered
Bank of Indiana
The state Bank of Indiana was a government chartered banking institution established in 1833 in response to the state's shortage of capital caused by the closure of the Second Bank of the United States by the administration of President Andrew Jac ...
and president of the larger organization from 1835 to 1857, and president of its successor, the privately owned Bank of Indiana, from 1857 to 1863. Despite his early opposition to the National Banking Act of 1862, he was selected by
Salmon P. Chase
Salmon Portland Chase (January 13, 1808May 7, 1873) was an American politician and jurist who served as the sixth chief justice of the United States. He also served as the 23rd governor of Ohio, represented Ohio in the United States Senate, a ...
to be the first
Comptroller of the Currency
The Office of the Comptroller of the Currency (OCC) is an independent bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to charter, bank regulation in the United States ...
in 1863.
During McCulloch's 22 months in office, 868 national banks were chartered and no failures occurred. As the first Comptroller, McCulloch recommended major changes in the banking law and the resulting
National Banking Act of 1864 remains the foundation of the national banking system.
Bank of Indiana
McCulloch began his banking career as the President of the
Bank of Indiana
The state Bank of Indiana was a government chartered banking institution established in 1833 in response to the state's shortage of capital caused by the closure of the Second Bank of the United States by the administration of President Andrew Jac ...
. In 1833 the bank was established in response the closure of the
Second Bank of the United States
The Second Bank of the United States was the second federally authorized Hamiltonian national bank in the United States. Located in Philadelphia, Pennsylvania, the bank was chartered from February 1816 to January 1836.. The Bank's formal name, ac ...
. Indiana was still a wilderness and no
eastern
Eastern may refer to:
Transportation
*China Eastern Airlines, a current Chinese airline based in Shanghai
*Eastern Air, former name of Zambia Skyways
*Eastern Air Lines, a defunct American airline that operated from 1926 to 1991
*Eastern Air Li ...
bank was willing take charge of the fledgling state bank. McCulloch was one of the few prominent businessmen in the young state, and although he had no banking experience, he was appointed because he was the most qualified person willing to take the position.
He ran the bank with great efficiency making it one of the most stable in the nation. He remained president until the bank was closed in 1859 and the bank's notes were exchanged for federal notes from the new national bank. He then went on to become president of the Second Bank of Indiana, where he remained until 1865.
Government career
![McCULLOCH, Hugh-Treasury (BEP engraved portrait)](https://upload.wikimedia.org/wikipedia/commons/7/72/McCULLOCH%2C_Hugh-Treasury_%28BEP_engraved_portrait%29.jpg)
On March 9, 1865, McCulloch was appointed as the 27th
Secretary of the Treasury
The United States secretary of the treasury is the head of the United States Department of the Treasury, and is the chief financial officer of the federal government of the United States. The secretary of the treasury serves as the principal a ...
by
President
President most commonly refers to:
*President (corporate title)
*President (education), a leader of a college or university
*President (government title)
President may also refer to:
Automobiles
* Nissan President, a 1966–2010 Japanese ful ...
Abraham Lincoln
Abraham Lincoln ( ; February 12, 1809 – April 15, 1865) was an American lawyer, politician, and statesman who served as the 16th president of the United States from 1861 until his assassination in 1865. Lincoln led the nation thro ...
.
[ His appointment was largely due to his influence with existing state banks. McCulloch later remarked that on the morning of Lincoln's ]assassination
Assassination is the murder of a prominent or important person, such as a head of state, head of government, politician, world leader, member of a royal family or CEO. The murder of a celebrity, activist, or artist, though they may not have ...
, "I never saw Mr. Lincoln so cheerful and happy...The burden which had been weighing upon him for four long years, and which he had borne with heroic fortitude, had been lifted; the war had been practically ended; the Union was safe."[ He continued to serve in the Presidential Cabinet of ]Andrew Johnson
Andrew Johnson (December 29, 1808July 31, 1875) was the 17th president of the United States, serving from 1865 to 1869. He assumed the presidency as he was vice president at the time of the assassination of Abraham Lincoln. Johnson was a Dem ...
until the close of his administration in 1869.
Immediately confronted with inflation caused by the government's wartime issue of greenbacks, he recommended their retirement and a return to the gold standard
A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from the la ...
.[ In McCulloch's first annual report, issued on December 4, 1865, he strongly urged the retirement of the legal tenders or greenbacks as a preliminary to the resumption of ]specie
Specie may refer to:
* Coins or other metal money in mass circulation
* Bullion coins
* Hard money (policy)
* Commodity money
* Specie Circular, 1836 executive order by US President Andrew Jackson regarding hard money
* Specie Payment Resumption Ac ...
payments. However this would have reduced the supply of currency and was unpopular during the period of postwar reconstruction and westward expansion.
In accordance with this suggestion an act was passed, on March 12, 1866, authorizing the retirement of not more than $10,000,000 in six months and not more than $4,000,000 per month thereafter. This act met with strong opposition and was repealed on the February 4, 1868, after only $48,000,000 had been retired. The battle over its revival raged for the next fifty years. McCulloch was also disappointed by the decision of the United States Supreme Court
The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point o ...
upholding the constitutionality
Constitutionality is said to be the condition of acting in accordance with an applicable constitution; "Webster On Line" the status of a law, a procedure, or an act's accordance with the laws or set forth in the applicable constitution. When l ...
of the legal tenders.
During his tenure, McCulloch maintained a policy of reducing the federal war debt and the careful reintroduction of federal taxation
A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal person, legal entity) by a governmental organization in order to fund government spending and various public expenditures (regiona ...
in the South
South is one of the cardinal directions or Points of the compass, compass points. The direction is the opposite of north and is perpendicular to both east and west.
Etymology
The word ''south'' comes from Old English ''sūþ'', from earlier Pro ...
.
Soon after the close of his term of office McCulloch went to England
England is a country that is part of the United Kingdom. It shares land borders with Wales to its west and Scotland to its north. The Irish Sea lies northwest and the Celtic Sea to the southwest. It is separated from continental Europe b ...
, and spent six years (1870–1876) as a member of the banking firm of Jay Cooke
Jay Cooke (August 10, 1821 – February 16, 1905) was an American financier who helped finance the Union war effort during the American Civil War and the postwar development of railroads in the northwestern United States. He is generally acknowle ...
, McCulloch & Co.
From October 1884 until the close of President Chester A. Arthur
Chester Alan Arthur (October 5, 1829 – November 18, 1886) was an American lawyer and politician who served as the 21st president of the United States from 1881 to 1885. He previously served as the 20th vice president under President James A ...
's term of office in March 1885, McCulloch again served as Secretary of the Treasury. During his six months in office at that time, he continued his fight for currency backed by gold, warning that the coinage of silver, used by then as backing for currency, should be halted.
After his death, McCulloch's portrait was used on several issues of $20 U.S. national bank notes (specifically the 1902 series).
![Friedberg - 639](https://upload.wikimedia.org/wikipedia/commons/5/54/Friedberg_-_639.jpg)
Reconstruction finance
The Civil War had been financed primarily by issuing short-term and long-term bonds and loans, plus inflation caused by printing paper money, plus new taxes. Wholesale prices had more than doubled, and reduction of inflation was a priority for Secretary McCulloch. A high priority, and by far the most controversial, was the currency question. The old paper currency issued by state banks had been withdrawn, and Confederate currency was worthless. The national banks had issued $207 million in currency, which was backed by gold and silver. The federal treasury had issued $428 million in greenbacks, which was legal tender but not backed by gold or silver. In addition about $275 million of coin was in circulation. The new administration policy announced in October would be to make all the paper convertible into specie, if Congress so voted. The House of Representatives passed the Alley Resolution on December 18, 1865 by vote of 144 to 6. In the Senate it was a different matter, for the key player was Senator John Sherman
John Sherman (May 10, 1823October 22, 1900) was an American politician from Ohio throughout the Civil War and into the late nineteenth century. A member of the Republican Party, he served in both houses of the U.S. Congress. He also served as ...
, who said that inflation contraction was not nearly as important as refunding the short-term and long-term national debt. the war had been largely financed by national debt, in addition to taxation and inflation. The national debt stood at $2.8 billion. By October 1865, most of it in short term and temporary loans. Wall Street bankers typified by Jay Cooke
Jay Cooke (August 10, 1821 – February 16, 1905) was an American financier who helped finance the Union war effort during the American Civil War and the postwar development of railroads in the northwestern United States. He is generally acknowle ...
believe that the economy was about to grow rapidly, thanks to the development of agriculture through the Homestead Act, the expansion of railroads, especially rebuilding the devastated Southern railroads and n opening the transcontinental line to the West Coast, and especially the flourishing of manufacturing during the war. The goal premium over greenbacks was hundred and $145 in greenbacks to $100 in gold, and the optimists thought that they heavy demand for currency in an era of prosperity would return the ratio to 100. A compromise was reached in April 1866, that limited the treasury to a currency contraction of only $10 million over six months. Meanwhile the Senate refunded the entire national debt, but the House failed to act. By early 1867, postwar prosperity was a reality, and the optimists wanted an end to contraction, which Congress ordered in January 1868. Meanwhile, the Treasury issued new bonds at a lower interest rate to refinance the redemption of short-term debt. while the old state bank notes were disappearing from circulation, new national bank notes, backed by species, were expanding. By 1868 inflation was minimal.
Personal
McCulloch's first marriage, to Eunice Hardy, ended when she died young. His second marriage was to Susan Man, a schoolteacher, whom he met in Fort Wayne in 1836 when he was a young widower. They had six children. One of his daughter, Marie Louise, married to John Brooks Yale, son of Linus Yale Jr.
Linus Yale Jr. (April 4, 1821 – December 25, 1868) was an American mechanical engineer, manufacturer, and co-founder with Henry R. Towne of the Yale Lock Manufacturing Company, which became the premier manufacturer of locks in the Unite ...
, member of the Yale family
Yale University is a Private university, private research university in New Haven, Connecticut. Established in 1701 as the Collegiate School, it is the List of Colonial Colleges, third-oldest institution of higher education in the United Sta ...
. He died at his home, Holly Hill in Prince George's County, Maryland
)
, demonym = Prince Georgian
, ZIP codes = 20607–20774
, area codes = 240, 301
, founded date = April 23
, founded year = 1696
, named for = Prince George of Denmark
, leader_title = Executive
, leader_name = Angela D. Alsobroo ...
, near Washington, D.C., in 1895 and is buried in Rock Creek Cemetery in D.C.[
]
Legacy
According to economic historian Allan Peskin, McCulloch's career exemplifies the Western pioneer as banker, and also the banker as a Christian moralist. He was well-educated but had no business or banking experience. His honesty proved an essential asset in the age of rascality and dubious paper money. His greatest challenges came in building the brand-new national banking system during the war, and afterwards refinancing the enormous Union debt. The Confederate debt was repudiated and never repaid. The biggest puzzle was dealing with $428 million in greenbacks, in an age where McCulloch like all orthodox economists, rejected paper money. His remedy was a rapid return to specie payment using gold and silver and retiring the greenbacks. This contraction policy removed money from circulation, lowered prices, wages and profits, and put heavy pressures on debtors. The Republican Party, however, backed McCulloch's program, and his years at Treasury were highly prosperous. He left the government in 1869 to become a very rich international financier. [Allan Peskin, "McCulloch, Hugh" in John A. Garraty, ed., ''Encyclopedia of American Biography'' (1974) pp 710–711.]
McCulloch Hall, a residence hall at Harvard Business School
Harvard Business School (HBS) is the graduate business school of Harvard University, a private research university in Boston, Massachusetts. It is consistently ranked among the top business schools in the world and offers a large full-time MBA p ...
, was named in his honor.
The U.S. Revenue Cutter Service
)
, colors=
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, mascot=
, equipment=
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, anniversaries=4 August
, decorations=
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, disbanded=28 January 1915
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and its successor, the U.S. Coast Guard
The United States Coast Guard (USCG) is the maritime security, search and rescue, and law enforcement service branch of the United States Armed Forces and one of the country's eight uniformed services. The service is a maritime, military, mul ...
, each named cutters after McCulloch. The Revenue Cutter USS ''McCulloch
McCulloch is a Scottish surname. It's a variation of the Northern Irish surname McCullough. It's commonly found in Galloway.
Notable people with the surname include:
*Alan McCulloch (politician), New Zealand politician
*Alan McLeod McCulloch ( ...
'' served under George Dewey
George Dewey (December 26, 1837January 16, 1917) was Admiral of the Navy, the only person in United States history to have attained that rank. He is best known for his victory at the Battle of Manila Bay during the Spanish–American War, with ...
in the Battle of Manila during the Spanish–American War
, partof = the Philippine Revolution, the decolonization of the Americas, and the Cuban War of Independence
, image = Collage infobox for Spanish-American War.jpg
, image_size = 300px
, caption = (clock ...
, and Coast Guard Cutter ''McCulloch'' served in World War II
World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposin ...
and the Vietnam War
The Vietnam War (also known by #Names, other names) was a conflict in Vietnam, Laos, and Cambodia from 1 November 1955 to the fall of Saigon on 30 April 1975. It was the second of the Indochina Wars and was officially fought between North Vie ...
.
The chief authority for the life of McCulloch is his own book, ''Men and Measures of Half a Century'' (New York, 1888). McCulloch was the last surviving member of the Lincoln Cabinet.
His house at Fort Wayne, the Hugh McCulloch House
Hugh McCulloch House is a historic home located at Fort Wayne, Indiana. It was built in 1843, and is a two-story, three bay by four bay, Greek Revival style painted brick building. It features a projecting front portico supported by four Doric or ...
, was listed on the National Register of Historic Places
The National Register of Historic Places (NRHP) is the United States federal government's official list of districts, sites, buildings, structures and objects deemed worthy of preservation for their historical significance or "great artistic v ...
in 1980.
References
Further reading
*
* Grable, Theodore Eli. ''Financial Policy of Hugh McCulloch'' (Indiana University, 1910
online
* Reece, Raymond J. "Hugh McCulloch Moves West" ''Indiana Magazine of History,'' 32#2 (1936), pp. 95–10
online
* Schell, Herbert S. "Hugh McCulloch and the Treasury Department, 1865–1869" ''Mississippi Valley Historical Review'' (1930) 17#3: 404–421 DOI: 10.2307/189307
online
External links
Hugh McCulloch Biography
The McCulloch mss
{{DEFAULTSORT:McCulloch, Hugh
1808 births
1895 deaths
19th-century American politicians
Allen County, Indiana
United States Comptrollers of the Currency
United States Secretaries of the Treasury
People of Indiana in the American Civil War
Bowdoin College alumni
Union (American Civil War) political leaders
People from Kennebunk, Maine
Indiana Republicans
Comptrollers in the United States
Lincoln administration cabinet members
Andrew Johnson administration cabinet members
Arthur administration cabinet members
Maryland Republicans
Lincoln administration personnel