The first greenbacks were issued in mid 1861 by the Federal Government to pay for domestic war material. These were called Demand Notes and were only produced in $5, $10 & $20 denominations. They were hand signed & lacked the red Treasury Seal. As the demand for more currency mounted, the U.S. Treasury decided to break with tradition and used printed signatures on the new United States Notes. Local, State & Confederate governments continued to hand sign their notes (except for the CSA 50c note) believing this would deter counterfeiting.

Before and during the Civil War, all coins, except the copper-nickel Indian Head cent, were made of 90% silver: 3c, half-dime (the "nickel" was issued in 1866), 10c, 25c, 50c and rarely issued $1. An 1860 25c coin had 24c worth of silver or 4 quarters was worth 96c in gold coin before the War. When the greenback dropped in value below 96c (May 1862), this meant that the silver coins were worth more than the face value and thus were hoarded quickly. A modern comparison: 1964 or earlier US quarters (90% Silver) are worth today about 90c in silver and thus you don't find silver coins in circulation today... if you received one in change, you would "hoard it" ... just like in the Civil War.

In spring 1862, the lowest Federal note was still the $5 greenback, soldiers and civilians could not make change, so shinplasters (merchant/store scrip... script are for plays or movies) or cut up State Bank notes were used. As a result of this hoarding of coins, postage stamps ("gumbacks") became the standard medium for making change (1c, 2c (issued July 1st, 1863), 3c, 5c, 10c, 12c & 24c stamps). Most were placed in paper envelops marked "25 Cents Postage Stamps" or other values but the gum on stamps could become wet (and sticky), canceled stamps could be passed off as new ones or the amount in stamps might be less than the printed value. Bankers and merchants did not like accepting clumps of sticky stamps or cut up State Bank notes but there was little choice.

Due to public demand, the US Treasury reluctantly introduced small pieces of paper with images of postage stamps on them. They were called Postage Currency (1st Issue) and greatly improved commerce (the $1 & $2 greenbacks were also issued in late August, 1862). The first Postage Currency was issued August 1st, 1862 to Union Paymasters and then to the general public in late September, 1862. Postage Currency were issued until May, 1863 but were common after the War. The 2nd and other Issues are called Fractional Currency and were to replaced the easily counterfeited Postage Currency. The 2nd Issue has George Washington on the front with a large bronze "O" overprint and were issued from October, 1863 to late 1864. Fractional Currency was issued until 1878 when the coin supply was finally restored to pre-war levels (Morgan Silver Dollars and Silver Certificates were massed produced in 1878 onward to redeem the flood of greenback issued 17 years earlier!)

During 1863, the US greenback traded for 79c to 63c in coin, the CSA notes for 33c to 15c before July, 1863. After the defeats of Gettysburg and Vicksburg, the CSA dollar declined to 10c then 5c by December 1863. A common pre July, 1863 trade was $3 or $4 in CSA notes for a $1 Greenback ... 8:1 or more after. In 1864, the CSA currency lost value quickly but so did the Greenback. On July 11th, 1864, the Greenback was only worth 34c ($3 in paper for $1 in coin) before recovering to 71c in the middle of 1865.

Revised U.S. Army Regulations. Washington: Government Printing Office, 1863.

Grover C. Criswell Jr., Confederate & Southern States Currency, 4th Edition. Ohio: BNR Press, 1992.

William Donlon, United States Large Size Paper Money 1861 to 1923, 2nd Edition. New York: Krause Publications, 1970.

Chester L Krause & R. R. Lemke, United States Paper Money, 5th Edition. New York: Krause Publications, 1986.

Wesley Clair Mitchell, A History of the Greenback. University of Chicargo, 1904.

Haxby, Obsolete Bank Notes 1782-1866, BNR, 1986.

To View Images of the Paymaster's USA and CSA Currency:

• Visit Jim Janke's Money Section - or
• The 1995 Nashville Event Paymaster Page

Or

Send Email to: Major Arthur W. Henrick