American money: What Lincoln teaches us about personal finance


Paul Conley

Paul Conley

Blog author Paul Conley

Paul Conley is a writer, a Dad and a communications consultant living in New York City. You can learn more about him at

Published March 6, 2018 | 4 min read

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Abraham Lincoln may be the most revered of our presidents.

The Great Emancipator is credited with freeing the slaves, saving the Union and setting the stage for Reconstruction. But perhaps forgotten amid those major accomplishments is that Lincoln also left an indelible mark on American finance.

Our 16th president changed how the government and its people thought about and interacted with money. It was Lincoln who opened land ownership to the poor (the Homestead Act), facilitated interstate banking (the National Banking Act of 1863), and gave us the progressive income tax (the Revenue Act of 1862).

In fact, a careful look at the life of the Illinois rail splitter shows a lifelong interest in how to get and keep money.

Here are five surprising lessons in personal finance from Honest Abe.

1. Lend money to your peers …

Lincoln’s early life was one of considerable hardship. His mother died when he was only 9 years old. His family moved constantly — living in Kentucky, then Indiana and finally Illinois. As a young adult, Lincoln struggled to find a way to support himself. Over the years he worked as a soldier, a shopkeeper, a ferry operator and a boatbuilder. He even became an inventor of sorts, securing a patent for an inflatable device that could lift flatboats over shoals. (The device was never manufactured. But Lincoln is the only U.S. president to hold a patent.)

As most Americans know, Lincoln eventually became a lawyer.

But few know he enhanced his legal income by lending money. More than a century before the rise of P2P lending, Lincoln served as a money lender to other members of Illinois’ emerging middle class, earning reasonable returns.

2. … but be cautious about borrowing

In 1833 Lincoln and a friend from the state militia decided to buy a store. Lacking the funds to purchase the place outright, Lincoln signed a one-year note with the previous owner. But Lincoln’s fate was not in retail. The store closed soon after the purchase. And Lincoln was stuck with the debt. Complicating matters was that Lincoln’s partner in the store died. And Honest Abe wound up taking on his partner’s debt as well.

The exact amount of the debt, and how long it took Lincoln to pay it down, is lost to history. But it was burdensome enough that Lincoln would jokingly refer to it as his “national debt”.

3. Keep your eye on the family budget

Mary Todd Lincoln was a troubled woman. And her apparently unpleasant personality and harsh temper caused bad press for the president.

For more than a century, armchair psychiatrists have offered up a series of diagnoses to explain the behavior of a woman who held seances in the White House, dressed in widow’s clothing for years after the death of her husband, and who was put on trial and convicted of insanity upon the urgings of her own son.

Much about her remains a mystery. But there is one thing that is clear: she could spend money like nobody’s business. And it caused President Lincoln considerable discomfort.

4. Go to a state college

Lincoln, just like our first president, was a self-taught man with little formal education.

But what would a man who became a lawyer by reading Blackstone's Commentaries on the Laws of England and other law books have to say about today’s world of student-loan debt and rising tuition costs?

Perhaps it’s not too much of a stretch to assume Lincoln would advise students to shun the loans, avoid pricey colleges and head to their state universities instead.

After all, it was Lincoln who championed the the Morrill Land-Grant Act, which created the American system of land-grant colleges.

5. Invest in the dollar

In difficult financial times, investors around the world flock to the U.S. dollar. The almighty dollar is seen widely as the safest, liquid investment on earth.

No doubt Lincoln would get a kick out of that. Because until his presidency, there was no U.S. dollar.

Before the Civil War, the only money issued by the federal government consisted of gold and silver coins. Paper money was issued only by private banks.

To fund the growing war effort, Lincoln and his treasury secretary, Salmon P. Chase, needed to take dramatic steps. And on Feb. 25, 1862, Congress passed the first Legal Tender Act, authorizing the issuance of $150 million in unbacked paper currency called United States Notes.

That money, used to pay soldiers and related bills, were printed with a green ink on the back. The “greenbacks” caught on. The war was won. And the U.S. dollar became the world’s preferred currency.

This article is the third in a series on what America's founding fathers can teach us about managing money. You can find more American money ideas, courtesy of Ben Franklin, right here.

Image: LionelHKR