Treasury Secretary Credited for Greenbacks He Spurned|
August 12, 2013
Civil War Treasury Secretary Salmon P. Chase’s image appears on the first $1 notes, the so-called Second Issue Series 1862 greenbacks with plate date of Aug. 1, 1862.
These notes were authorized by the Second Legal Tender Act of July 11, 1862, which provided for an additional $150 million in greenbacks, and altered the legal tender provision of this class of notes. Notes were no longer exchangeable for U.S. bonds, but were “receivable in payment of all loans made to the United States.”
The new legislation also provided for small denomination notes because of the scarcity of small bills in the marketplace. As can be seen on the note’s face $1, $2, and $3 bills were anticipated. The counter at the center of the bill would highlight the note’s denomination.
However, only $1 and $2 notes were issued.
Legal Tender Notes were part of the federal government’s arsenal of financial tools used to finance the Civil War. These paper notes were fiat promises to pay, creations of the Washington, D.C. legislators and printing presses of American Bank Note Co. and National Bank Note Co.
National Bank Note Co. prepared the plates for the $1 bill, both face and back, but printing was shared between the two firms. This is usually explained as providing a security for the notes’ issue, but was really just a way of rushing more notes into circulation in a given amount of time.
According to author Gene Hessler, the Chase portrait was engraved by Joseph P. Ourdan based on a painting by Henry Ulke.
The Friedberg reference lists nine varieties depending the company imprints, presence and location of the ABNCo monogram, absence or presence of the green tint protector patent date, and series details. Other catalogs enumerate the varieties slightly differently.
All varieties bear the printed facsimile signatures of Treasurer Francis E. Spinner and Register Lucius E. Chittenden. All have a red Treasury seal. Notes were issued in series of 100,000 notes, with Series 1-284 known. Chambliss thus estimates total issue of approximately 23,351,000 notes.
It’s somewhat ironic that Chase should appear on the greenback, since this former bank attorney had grave reservations regarding their issue when Congress was debating the legislation authorizing them. Chase expressed his ambivalence on the pending bill to Thaddeus Stevens, chairman of the House Ways and Means Committee, and his abhorrence to making paper notes a legal tender.
“I now feel a great aversion to making anything but coin a legal tender in payment of debts,” he wrote. “It has been my anxious wish to avoid the necessity of such legislation. It is, however, at present impossible, in consequence of the large expenditures entailed by the war, and the suspension of the banks, to procure sufficient coin for disbursements; and it has, therefore, become indispensably necessary that we should resort to the issue of United States notes.
“The making of them a legal tender might, however, still be avoided if the willingness manifested by the people generally, by railroad companies, and by many of the banking institutions, to receive and pay them as money in all transactions were absolutely or practically universal…” But this common consent could not be achieved, Chase felt, making this undesirable legislation imperative.
Chase left Lincoln’s cabinet at the end of the fiscal year June 30, 1864, and was appointed Chief Justice of the U.S. by Lincoln several months later after his reelection. The president was relieved to have the thorn removed from his side, and cognizant that he would need Chase on the Supreme Court to ratify the government’s more dicey measures ventured by the chief executive under the cloak of “military necessity.” Lincoln desired Chase’s acquiescence.
Sure enough the question of the legality of the legal tender legislation came up before the court. On Feb. 7, 1870, the Supreme Court with Chase writing the majority opinion ruled 4-3 in Hepburn v. Griswold that the legal tender acts were unconstitutional. A year later though, after Grant and the Senate had packed the court, the Supremes reversed themselves on May 1, 1871, upholding the acts 5-4, although Chase once again voted against them as part of the minority opinion.
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