Paper vs. specie during the Civil War

[shirohniichan]

Carothers' famous tome Fractional Money deserves a spot on every coin collectors shelf for addressing how coins were used as a medium of exchange in American life until the early 20th century.

 

Here is an article by Fred L. Reed III that may interest students of money usage during the Civil War.

 

Until I read the article I did not know Postal Currency was legal tender for payment of all debts (including customs duties) in amounts up to $5.00. This made them on par with Demand Notes and specie in amounts up to $5.00 in the eyes of customs collectors, and it made them worth far more than greenbacks (ironically called Legal Tender Notes) as the war dragged on.

 

Does anyone know of other articles or monographs that deal with the discrepancy in values between specie, Postal Currency, and other forms of money that were limited in use as legal tender for all purposes (i.e. including payment of customs duties)?

 

I thought Unger's The Greenback Era: A Social and Political History of American Finance 1865-1879 worth more than I paid for it.

[DWLange]

I have a few good books in my library that address these topics:

 

History of Coinage and Currency in the United States by A. Barton Hepburn

 

The Money Question During Reconstruction by Walter T. K. Nugent

 

Financial History of the United States by Davis R. Dewey

 

It always surprises me how unaware numismatists are of published economic histories. These offer great perspective on how coins and notes were really used, which I see as essential to getting the most from one's collection.

 

The Carothers book is a great start, and it's also the most easily read of these works. It focuses mostly on the coins and notes, while the more purely economics books delve a lot into bonds and Treasury loans, which can make for rather dry reading.

[RWB]

Few collectors seem to be able to place their coins into the appropriate historical context, and almost none seem aware of the most basic economic principles. These are the basis for understanding the "why" of the "what" (coins).

 

Curiously, the most ardent "gold bugs" and self-styled economic "conservatives" appear to have the shallowest understanding.

 

[shirohniichan]

I have a few good books in my library that address these topics:

 

History of Coinage and Currency in the United States by A. Barton Hepburn

 

The Money Question During Reconstruction by Walter T. K. Nugent

 

Financial History of the United States by Davis R. Dewey

 

Nugent's is one of my favorites because of its conciseness.

 

I also read A Monetary History of the United States, 1867-1960 by Milton Friedman and Anna Jacobson Schwartz, but Nugent's book was the most germane to what I wanted to learn.

 

Another good way to learn about the use of money is to scan through old newspapers. The digital age has given us an easily accessible cornucopia of information almost unimagineable 20 years ago. When one reads that Californians were called "unpatriotic" during the Civil War for refusing to circulate greenbacks, it raises questions on why paper didn't circulate on the Pacific Coast (and why paper currency supporters wanted it to). That makes one wonder where paper did circulate, where specie circulated, where both circulated (and at what exchange rate), etc. Contemporary accounts don't make much sense unless you understand the context.

 

I'll have to check into Hepburn's and Dewey's works.

[DaveG]

This isn't really my area, but I haven't seen these mentioned:

 

 

A History of the Greenbacks by Wesley Clair Mitchell

 

and

 

Banks and Politics in America from the Revolution to the Civil War

 

and

 

Sovereignty and an Empty Purse: Banks and Politics in the Civil War

 

both by Bray Hammond

 

If you liked Fractional Money, then I'm pretty sure you'll like Banks and Politics. I haven't read the second Hammond book.

 

[BillJones]

I have a few good books in my library that address these topics:

 

History of Coinage and Currency in the United States by A. Barton Hepburn

 

The Money Question During Reconstruction by Walter T. K. Nugent

 

Financial History of the United States by Davis R. Dewey

 

Nugent's is one of my favorites because of its conciseness.

 

I also read A Monetary History of the United States, 1867-1960 by Milton Friedman and Anna Jacobson Schwartz, but Nugent's book was the most germane to what I wanted to learn.

 

Another good way to learn about the use of money is to scan through old newspapers. The digital age has given us an easily accessible cornucopia of information almost unimagineable 20 years ago. When one reads that Californians were called "unpatriotic" during the Civil War for refusing to circulate greenbacks, it raises questions on why paper didn't circulate on the Pacific Coast (and why paper currency supporters wanted it to). That makes one wonder where paper did circulate, where specie circulated, where both circulated (and at what exchange rate), etc. Contemporary accounts don't make much sense unless you understand the context.

 

I'll have to check into Hepburn's and Dewey's works.

 

Paper did not circulate well on the Pacific Coast because the California gold fields were still producing lots of gold, and the value of greenbacks was dependent upon how the war was going for the North. When North lost a big battle greenbacks could worth as little as 40% of their face value. When the North did well the value of the paper money increased. The two did not become interchangeable until the mid 1870s.