The Greenback Union: The Politics and Law of American Money in the Civil War Era

This dissertation explores the growth of federal monetary powers in the United States during the American Civil War and how it realigned American political economy in the nineteenth century. Contrary to works that highlight how class interests guided Republican economic policy, my dissertation shows how the new national currency of the 1860s grew out of the failure of financial markets and state governments to create and regulate paper money. This new centralized currency of greenbacks and national bank notes expanded federal authority, rearranged national politics, remade economic exchange, and promoted a new brand of political conflict in postwar America.

Part 1, “Problems and Traditions,” recounts both the immediate and deep origins of the Legal Tender Act of 1862 and the National Banking Acts of 1863-64, and their relationship to the war and the political economy of the nineteenth-century. Chapter one considers the financial crisis faced by the Union in 1861-1862 and roots those problems, and the solutions offered by Republicans, in in the practices and traditions of the prewar past. Chapter two provides a history of the constitutional law of money and legal tender and its relationship to Congress’s hesitation to pass the Legal Tender Act in early 1862. Chapter three argues for the significance of Union nationalism and the depth of the financial emergency in 1862 in pushing a reluctant Congress to create the first fiat currency in U.S. history. Chapter four lays out the problem of law and politics surrounding the issue of state banks in the prewar period and the resolution of the problem of state bank notes in the form of the National Banking Act.
The second section “Conflict and Consolidation” documents the various reactions of northerners for and against this intrusion into their economic affairs. Chapter five deals with the immediate reactions of the northern public to these policies in the Civil War years, arguing that the centrality of the greenbacks to the war and northern commerce stifled resistance to the act in places like New York, with the lone exception of California, where legislators and jurists found a way to secede from the new monetary union created by the war, while remaining in the political union of the United States. Chapter six traces efforts to do away with the greenbacks and national banks in Congress and before the U.S. Supreme Court during Reconstruction, and the ultimate failure of these efforts to destroy the new regime of national currency. Chapter seven explains how greenbacks and national banks altered the worlds of finance, statecraft, and politics for the rest of the century.