Collecting Paper Money - Littleton Coin Company

the history of u.s. paper money
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striking U.S. coins dated 1861, though now under Confederate supervision.
Once the Confederate government was fully established, it resolved to
solve its financial woes by issuing its own paper currency. Southerners were
asked to accept it on a par with regular money or bank notes – enabling it to
perform the functions of legal tender. Eventually, as the war dragged on and
continued to drain the South’s finances, it was patriotism alone that gave the
Confederate currency any value.
The South battles inflation
The expenses of
the Confederate
States of America
continued to
increase, and as
the war went on,
Southern currency
continued to
depreciate in
value. Confederate
president Jefferson
Davis’s wife kept
a diary of those
trying days in the
South. Paper
money in denominations of $5 and under was useless. The Confederate
money supply was so inflated it could buy little. Mrs. Davis recalled that
turkeys sold for $60 each, tea was $22 a pound, and milk was $4 a quart. One
bar of soap could sell for as high as $50, and an ordinary suit of clothes cost
$2,700! In spite of the inflation, the Confederate Congress continued to issue
millions of dollars worth of notes.
At the time of the war’s conclusion, the currency authorized by the
Confederate Congress consisted of hundreds of varieties. Several states of
the Confederacy (Georgia and North Carolina, in particular) issued their own
money, too. As true mementos of the Civil War, genuine Confederate currency
is hard to beat!
The North’s war chest runs low
While the Civil War was in progress, Lincoln’s administration needed
increasing sums of money to wage the war. The nation lacked a central
banking authority, and was relying largely on private banks – banks whose
finances were not always sound.
In 1863, the National Banking Act passed. This act created more money
with which to fight the war. It also attempted to regulate the country’s chaotic
currency system. The new act encouraged private banks to apply for federal
charters, thereby making them “national banks.”
National Banks to the rescue – 1863
Newly chartered “national banks” used their funds to buy Union bonds (thus
raising money for the war). They deposited the bonds with the Treasury in
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As the Civil War progressed, inflation in the South
reached such a high level that it took as many as
five of these $10 notes to buy one bar of soap!
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