Letter from Salmon P. Chase to Representative Thaddeus Stevens, January 29, 1862
In this letter to Thaddeus Stevens, Chairman of the House Committee on Ways and Means, Secretary of the Treasury Salmon P. Chase revealed his ambivalence about making paper notes legal tender as the House of Representatives debated the Legal Tender Act. Chase abhorred making paper notes legal tender, but recognized the need for urgent action.
Records of the U.S. House of Representatives, National Archives and Records Administration
The condition of the Treasury certainly renders immediate action on the subject of affording provision for the expenditures of the Government both expedient and necessary.
From Gold to Greenbacks
The 37th Congress (1861–1863) faced a financial crisis in 1862, as spiraling costs of war rapidly depleted the Union’s reserves of gold and silver coin, the only legal tender of the United States. After intense debate, Congress authorized the issuance of paper U.S. Notes (popularly called “greenbacks”), declaring them lawful money for all payments except interest on public debt and import duties. The Legal Tender Act, intended as an emergency measure, dramatically extended federal power and changed the nation’s monetary standard.