Civil War Currency Facts

1. The Federal income tax on personal income began during the Civil War in 1861 during Abraham Lincoln's administration. It violated the Constitution and was struck down at war's end.

2. The Confederate states made up 87% of the tax revenue of the Federal treasury in 1860.

3. Before the War broke out Federal taxes were mostly in the form of excise taxes and tariffs (import taxes). Tariffs provided most of the Federal revenue in the form of taxes.

4. Northern states used import taxes as a way to protect their own manufacturers against Great Britain and other overseas competition. Northern imports brought in very little taxes for the government.

5. Unlike the North, the Southern states' primary staple was King Cotton. The South depended heavily upon exporting cotton to overseas markets. Unlike the North, the South was an export-oriented economy. Thus import taxes on Southern cotton contributed greatly to the Federal tax revenue.

6. The North resorted to taxing it's citizenry on such items as tobacco, alcohol, clothing, food stuffs, stamps, tools and even entertainment. The newly created Department of Internal Revenue collected the taxes. Personal evasion of taxes was a common problem for the DIR.

"Only a strong central government - a government that was a major player in the national economy, a government that dominated the states and localities, a government that was capable of reaching into every city and town and compelling individual citizens to do its bidding - could marshal and wield those resources." Stevens.

7. Taxes were paid for roughly one-fifth of the North's daily war efforts.

8. 80% of the money for the North came from such forms as the creation of paper money, bonds and borrowing, This led to rampant inflation for the Northern economy due to an excessive proliferation of money.

9. During the Civil War (1861-1865) the cost of goods and services increased by 80% for the Northern states.

10. During the Civil War (1861-1865) the cost of goods and services increased by 60-70 times for the Southern states.

11. About $1.75 million dollars was needed every day by the North to conduct its affairs on the military front, according to Anderson. Stevens says it was costing the North $2.5 million a day by the spring of 1863.

12. There were many different forms of money in circulation prior to 1863, including private bank notes, government-minted gold and silver coins, Spanish dollars, and even private coins. There were as many as 1,500 different institutions issuing private bank notes. Private notes undermined the value of the Federal currency. They were printed in a variety of sizes, styles and denominations, thus making even simple transaction difficult to execute.

13. The Legal Tender Act of 1862 effectively outlawed privately minted gold and silver coins, and authorized the Federal Government to issue paper currency. It was printed with green ink on the back and thus became known as greenbacks. They were un-backed by gold and silver.

The government issued $500 million worth of bank notes during the war. By the end of the war, inflation having taken its toll, these same bank notes decreased in value by 61%.

Senate Finance Committee chairman John Sherman said, The policy of this country ought to be to make everything national as far as possible; to nationalize our country so that we shall love our country. If we are dependent on the United States for currency and a medium of exchange, we shall have a broader and more generous nationality. Stevens.

14. The National Banking Act (passed February 25, 1863) had two primary objectives; (1) raise money to pay for the War, (2) revamp the nation's convoluted currency system. A uniform national currency and a dependable market for government bonds were sorely needed. The Banking Act provided for them. - Stevens, p. 106.

The National Banking Act made it possible for five or more persons to form a bank as long as they had a minimum of $50,000 dollars in capital, though it was $100,000 in some large cities. A Federal charter was granted if the institution purchased U.S. bonds equaling one-third of the amount of capital laid down to establish the bank. In return the Treasury would engrave the money for them, called National Bank Certificates. These National Bank Certificates were equal to 90% of the market value of their bonds. The banks would then use this money to transact their business (i.e., making loans). Banks would profit off these commercial loans and the owners would pocket the profits.

Banks also received interest payments in the form of gold from bonds they bought from the government. This was an enticement to state-chartered banks to file for a Federal charter and to stop using private currency.

15. At the beginning of 1863 the government relied heavily upon the sale of "five twenties" (six percent bonds, callable in five years and maturing in twenty). However, the demand for war bonds was unpredictable. They would rise and fall based on the military successes of failures of the North. The government issued five kinds of paper currency during the war.

16. The Union 2-Cent pieces were the first U.S. coins minted with the motto, In God we Trust. These coins were bronze and were available from 1864-1865 during the war and actually up to 1873 after the war. They depict images of a shield, and eagle and a laurel sprig.

17. Due to short supply of coins in the North, the government issued un-gummed stamps that could also be used as coinage.

18. Facing a probable long war, the North decided to stop issuing coins and turned too printing paper money (i.e., greenbacks). As a result, many northerners panicked and started hoarding coins. Before long, most coins were no longer in circulation.

19. In response to the crisis, the Federal government issued fractional paper currency in denominations of 3, 5, 10, 15, 25, and 50 cents. These became known as shinplasters. People did eventually accept them as substitutes for metal coinage. The government stopped issuing fraction currency in 1876. By then $368 million worth of it made it into the private sector.

20. In contrast with the North, the South primarily depended on paper currency to finance the war. As a result, inflation impacted the South even more since this currency was not backed by silver or gold. Currency was printed from 1861-1864. In 1861, when Confederate currency was first printed, it was worth 95 cents on the U.S. dollar. By 1863 they were trading at just 33 cents on the dollar. By April 9, 1965, at the war's end, a Confederate dollar traded at just 1.6 cents on the dollar. On May 1, 1865 Confederate dollar bills were sold in bales of 1,200 notes for just $1 U.S. dollar.

21. More than $1 billion was in circulation during the Civil War. Unfortunately, as much as $1.5 billion was printed in counterfeit Confederate currency. The North encouraged and promoted the counterfeiting of Confederate currency since it devalued the value of it.

22. Confederate banknotes were printed in blue-gray color and became known as bluebacks. They were available in the following denominations: 5 cent note, 10 cent note, 15 cent note, 25 cent note, 50 cent note, $1 note, $1.75 note, $2 note, $3 note, $5 note, $10 note, $20 note, $50 note and $100 notes. $10 notes were the most widely printed note.

23. Coins were minted by the Confederacy but they were very rare, Experimental pennies (copper or silver, 1861) and half-dollars (silver, 1861) were minted by the South. Examples: .1 cent coin, .50 cent coin, $5 dollar coin.

24. Some examples of paper denomination amounts that were printed by the Federal Government are; 3 cent note, 5 cent note, 10 cent note, 25 cent note, $1 dollar note, $2 dollar note, $5 dollar note, $10 dollar note, $50 dollar note

25. Among the myriad of scenes depicting slave labor from the South on their currency we find the following categories of images: Individuals With Cotton, Individuals With Assorted Tasks, Field Scenes, Stylistic Scenes, Post Civil War Scenes, Sugar Plantations and Transportation.