A Brief History of American Money

A Brief History of American Money

by Brandon Chase | Mar 28, 2022

Since time immemorial, humans have used items of perceived value to exchange for goods and services. Shells, stones, gold, gems, paper, and even lines of code as a digital currency are used to establish a common medium of exchange that is predicated on trust — if everyone agrees that a $100 bill is worth $100 then the system works, otherwise it is useless.

Last fall during a trip to Virginia, we stopped into the American Civil War Museum in Richmond. Among the many well-crafted displays was an excellent exhibit on the history of American money and how the currency we know and use today began as a result of the war.

The American Civil War

The dollars we use in America today are a direct byproduct of the Civil War. To raise money for the campaign, the U.S. Government had limited options: borrowing from banks, taxing citizens, printing money, and confiscating property. They settled on a mixture of taxation (3% income tax on those earning more than $8,000 per year), borrowing ($150 million from Congress in 1861), and printing money.

The U.S. Treasury soon began to issue paper bills, known as “greenbacks”, that were claimed to have a certain value (as opposed to notes backed by gold or silver). Before the war, no such currency existed and instead hundreds of different banks printed their own money. With no regulation or central authority, “wild cat” bankers often defrauded the public by issuing notes that could not be redeemed for value as advertised. This led to widespread mistrust of the banking industry and a fierce debate about the safety and fairness of the financial system.

Bank note from Pennsylvania, c. 1859 – before the Treasury began issuing greenbacks.

To gain public trust in greenbacks, the U.S. Treasury incorporated several features into the notes to inspire faith and foil counterfeiters including:

A portrait of Secretary Salmon P. Chase (no relation)

Permeating the notes with chromium oxide, giving them their green color, to prevent counterfeiting by photography

Intricate engravings to make duplication more difficult

The phrase regarding the note’s status as “legal tender”, which relied on the U.S. Government’s promise of its value


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