Civil War Currency

The American Civil War changed almost every aspect of life for both soldiers and civilians. Both Union and Confederate states experienced inflation and shortages of goods. The way that people paid for items changed, as well.

One of the first effects of the war that civilians both North and South felt was the absence of coinage. U.S. coins, made from precious metals such as gold, silver, and copper, became scarce as fear of a long, expensive war set in. Hoarding coins became common; everyone from farmers to gamblers and speculators began squirreling away coins in anticipation of hard times ahead.

For an economy that relied almost exclusively on coinage, the disappearance of coins meant that commerce nearly ground to a halt, as merchants found themselves unable to keep enough coins on hand to make change.

Although the United States attempted to boost consumer confidence by issuing paper currency in denominations as small as a few cents, the fact that these “greenbacks” were not backed by gold or silver made both consumers and merchants nervous, and entrepreneurial Americans came up with several replacements for small-denomination coins.

One option was the use of postage stamps for currency. In an era when telephones were several years in the future and telegrams were not widely used, mail – and thus postage – was a necessity, and using a universal medium such as stamps made a good, if not lasting, substitute for coins.

Another option was the creation of tokens, or scrip. Merchants who needed to make small change contracted with diemakers to create coin-sized scrip, redeemable for goods or services. Around 8,500 different specie of these tokens have been identified, made from everything from hard rubber to bronze.

By 1864, the war seemed to be close to ending, and the Indian Head Cent back in circulation, Congress made the issuing of many by private individuals and businesses illegal, and the production of scrip ended.

In the new Confederacy, coinage was a non-issue – literally. With precious metals being used to purchase goods from Europe, the Confederate government declined to mint coins; however, in an attempt to establish themselves as a legitimate government, the Confederate government began to produce its own currency. Paper banknotes were issued in denominations of $1/10, $½, $1, $2, $5, $10, $20, $50, $100, $500, and $1,000. These notes featured various designs, issuers and redeemable obligations. In total, the Confederate Congress issued $1.7 billion in currency from 1861-1865.

At the outset of the war, many Southern sympathizers exchanged their U.S. currency for Confederate currency. However, as the war continued and international confidence in the Confederate States of America waned, so did the value of this currency, and many who held Confederate currency found themselves with money worth less than the paper it was printed on.

Currency from the Civil War era is highly collectible today. Currency issued by both the U.S. and the Confederate governments is prized, but so too is the scrip minted by merchants to substitute for coinage. In fact, this scrip is often as valuable on the numismatic market as U.S. coins from the same era.