Numismatics of 1861 PART TWO
Editor’s Note: This is a three-part article, the second part of which appears in this issue. A future issue of Numismatic News will carry the last installment.
There is a belief among many collectors and historians that the United States did not issue paper money until the Civil War began in 1861. This same view ascribes the reluctance to issue paper to a public memory of the ill-fated Continental currency issued in large amounts during the Revolutionary War.
Actually, paper money had been issued not long after the new federal government began operations in 1789. Treasury Secretary Alexander Hamilton persuaded Congress to charter the Bank of the United States, which in practice was to become a semi-official central bank. This bank issued various denominations of paper currency, which were notes of the United States government in all but name.
The charter of this first Bank of the United States expired in 1811 and Congress refused to renew it, one of the greater mistakes of this era. War with England erupted in June 1812, and there was no unified banking system to coordinate the expenses entailed by the war.
Congress soon realized the magnitude of its blunder and authorized the use of Treasury Notes. Technically these were small loans to the government, as each note bore interest and the interest would be paid upon the redemption of the
