A Monetary Innovation That Changed the Civil War’s Course
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Aug. 29 (Bloomberg) -- In the summer of 1861, shortly afterthe start of the Civil War, U.S. Treasury Secretary Salmon P.Chase negotiated a loan of gold from northeastern banks.
Until that gold arrived in Washington, the governmentplanned to issue $50 million in demand notes, a currency payableon demand in gold at any Treasury office, to fund the militaryeffort. Because the Treasury Department had no facility for theproduction of paper money, a private business in New York, theAmerican Bank Note Company, produced the notes in sheets offour. These sheets were then sent to the Treasury, where scoresof workers cut them and trimmed the almost 7 million notes withscissors.