Currency and the Press

It starts with a fake article in a minor newspaper. The dollar drops, gold surges, and the administration panics. In the shadows someone who’s bought gold makes a bundle. Perhaps you’re thinking of a story earlier this week, when an article by Middle Eastern correspondent Robert Fisk in the British newspaper The Independent sent the financial world into a tizzy.

Arab oil sheiks are conspiring with the Russians and Chinese to quit using the dollar to set the value of oil trades — a direct threat to the global supremacy of the greenback.

Of course the article was vaguely sourced and Fisk himself isn’t renowned for accuracy, so although gold spiked at a record high Thursday things have calmed down a bit.

It wasn’t the first time. In the spring of 1864 an editor of the Brooklyn Daily Eagle, a Democratic newspaper, decided to make a little money on the gold market. In the days before polls, gold prices were widely seen as a barometer of public opinion and confidence in the government and hence the war. So on May 18, with battles raging in Virginia, Louisiana (the Red River campaign) and Charleston, the Eagle and the hyper-partisan New York World published an article saying that Lincoln was issuing a draft call for an additional 400,000 troops, which if true was a tacit admission of defeat. The prestigious Journal of Commerce, the Wall Street Journal of its day, also took the bait.

Excitement in the [Wall] Street mounted. A crowd of traders and brokers assembled at the office of the Journal of Commerce, Wall and Water Streets, and called on the newspaper to affirm or deny the proclamation.

The fraud was quickly uncovered, but the Lincoln Administration overreacted in a big way. Secretary of War Edwin Stanton summarily ordered the arrest of the editors of the three papers and that they be immediately shut down. The arrests were rescinded on the advice of General John A. Dix, commanding in New York, who had figured out the situation. The editor who’d faked the dispatch, Joseph Howard, and one of his reporters, Francis Mallison (who ironically enough was on his way to report for the draft) were arrested on May 20 and confined in Fort Lafayette. The suppression order remained in force, however, and even though the newspapers were guilty of nothing more than being hoaxed the military occupied their offices for three days. That two of the three newspapers were opposition organs led the president to suspect the worst, and he issued the following proclamation:

Whereas, there has been wickedly and traitorously printed and published this morning, in the “New York World” and New York “Journal of Commerce” newspapers printed and published in the city of New York,—a false and spurious proclamation, purporting to be signed by the President, and to be countersigned by the Secretary of State, which publication is of a treasonable nature, designed to give aid and comfort to the enemies of the United States, and to the rebels now at war against the Government, and their aiders and abettors: you are therefore hereby commanded forthwith to arrest and imprison in any fort or military prison in your command, the editors, proprietors and published of the aforesaid newspapers, and all such persons as, after public notice has been given of the falsehood of said publication, print and publish the same, with intent to give aid and comfort to the enemy;—and you will hold the persons so arrested, in close custody, until they can be brought to trial before a military commission, for their offense. You will also take possession by military force, of the printing establishments of the “New York World” and “Journal of Commerce,” and hold the same until further order, and prevent any further publication therefrom.

Dix, the military man, comes off as the most reasonable of the bunch as well as someone who appreciated the value of a light touch. He’d quickly divined that this was a hoax and not a Copperhead conspiracy, publicly debunked it, and arrested the guilty parties. The newspapers cooperated by destroying uncirculated copies and printing retractions. Finally his bosses relented a bit. Stanton telegraphed:

Your telegram respecting the arrest of Howard has been received and submitted to the President. He directs me to say that while, in his opinion, the editors, proprietors, and publishers of the World and the Journal of Commerce are responsible for whatever appears in their papers injurious to the public service, and have no right to shield themselves behind a pleas of ignorance or want of criminal intent; he is not disposed to visit them with vindictive punishment; and, hoping they will exercise more caution and regard for the public welfare in the future, he authorizes you to restore to them their respective establishments.

This is still pretty strong stuff and an indication of how far Lincoln thought his war powers extended. In effect it says “okay, we’ll let you go this time, but we may not in the future. Innocence, ignorance, carelessness or lack of intent is not a defense if you print something we don’t like.”

What the Great Emancipator had not anticipated, however, was that journalists tend to stick together, even across party lines. An attack on one is seen as an attack on all, and the whole matter promptly blew up in his face. The World and the Eagle immediately cast themselves as journalistic martyrs for civil liberties, and even pro-administration newspapers joined in criticizing Lincoln’s heavy-handed actions. It was one thing to do this sort of thing in Secessia, but not in New York! The affair also gave Democrats and Copperheads plenty of grounds in an election year to tar Lincoln as a tyrant, and they even began to spread rumors that the whole thing was a Republican plot (sound familiar?) to shut down the opposition press. As soon as he resumed publication the World’s editor, Manton Marble, wrote:

Not until today has The World been free to speak. But to those who have ears to hear, its absence has been more eloquent than its columns could ever be….Had the Tribune and the Times published the forgery…would you, Sir, have suppressed the Tribune and the Times as you suppressed the World and the Journal of Commerce? You know you would not. If not, why not? If there a different law for your opponents and for your supporters? Can you, whose eyes discern equality under every complexion, be blinded by the hue of partisanship?

Restored to its former glory the World continued to slander Lincoln and support his opponent that year, George McClellan. When all was said and done Lincoln ended up the loser, giving considerable ammunition to his enemies. He’d have been much better off letting General Dix handle it, in which case it would have been swiftly forgotten. Nevertheless, even today it remains an interesting window into the Lincoln’s view of his war powers.

I drew much of the information for this post from an excellent article on The Lincoln Institute’s web site.


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