The Civil War was probably the greatest disaster to ever hit these shores. 610,000 people killed in that war started by Abe Lincoln. The Civil War was unpopular in the North. So unpopular, that Lincoln had to institute a draft to gain soldiers. For some strange reason, a man who didn’t want to go could pay $300, and be exempt. The North was so lacking in support for Lincoln’s war, that he denied habeas corpus to many who were arrested for protesting the war in the North. At any rate, both the North and South were unable to pay the bills that war was costing, so both resorted to the printing press, just like FDR did in WW II. WW II, in less than four years, the dollar’s purchasing power was reduced by 50%, and it never did recover. The North’s un-backed currency was officially called a Federal Reserve note, but it went by two other nick names, and they were “Greenbacks,” and “Rag Babies.”
On February 25, 1862, Congress authorized a $150 million issue of legal tender U.S. notes, which was against the wishes of Lincoln’s Secretary of the Treasury, Salmon Chase, and Senator John Sherman. They not only objected, but Lincoln insisted that no taxes be raised to pay for the issue, which has been common throughout history as governments run out of money, due naturally, by politicians having no concept of economics, and authorizing endless spending. That may not have been the case during the Civil War, at least on the South’s side, as they certainly didn’t want a war, but had no choice after the North shelled the South’s Ft. Sumpter. When you are attacked as America was on December 7, 1041, we had no choice but to fight.
Although Chase was personally against paper issues, he was converted, if not by banking interests (who always love paper money), but by the fact that the Treasury was empty. Chase wrote, “I have felt a great aversion to making anything but coin a legal tender in payment of debt. It is, however, at present impossible, in consequence of the large expenditure entailed by the war. It has therefore, become indispensably necessary that we should resort to the issue of United States Notes.” Senator Sherman advocated and moved the greenback bill through Congress, saying, “It could not be harmful; it was a mere temporary expedient: It was absolutely necessary.” (Politicians always say that what they do will not harm anyone). The act passed the House by 93 to 59, and the Senate 37 to 7.
Like all politicians, Lincoln decided that he had nothing to do with the creation of the greenback, which quickly became known as the rag baby. Lincoln decided that the greenback was the creation of Colonel “Dick” Taylor. A partial quote from a letter written by Lincoln said, “My dear Colonel Dick: I have long determined to make public the origin of the greenback and tell the world that it is Dick Taylor’s creation.” As in all worthless paper money creations, there is always a “Legal Tender” law, which makes it illegal to buy or pay with anything but that currency. There’s always a legal tender law, just like today. As is always the case, the $150 million didn’t last very long. On June 12, 1862, less than four months after the initial release, another issue took place, and on December 8th, another $200 million was issued. Six days later, another $100 million, and on it went. Like Germany after WW I, a cartoon at the end showed a boy in a drug store needing three cents worth of paregoric. The druggist asks, “Where is your money?” The boy points to a wheelbarrow full of rag babies.
Those who saved their surplus assets in greenbacks or rag babies, lost all of their wealth. The same thing with the South, or Zimbabwe ( I have a $20 trillion dollar Zimbabwe note). The North’s and South’s using the printing press to fight a war, was actually the second time in the U.S that it had happened. Less than a hundred years old, The United States once again resorted to the printing press to fight a war. The Revolutionary War under General George Washington, had the same problem, and the infant nation printed the “Continental” dollar, which also became worthless, so many had been printed. The old expression, “Not worth a continental,” refers to the continental dollar becoming worthless at the end of the Revolutionary War. We fought that war to gain independence, and I have no problems with that war, but had I been living at that time, as in the time of the Civil War, I would have saved surplus assets in real money in the form of gold and silver, whose prices escalated in direct proportion to the decline of the rag baby, continental, or dollar. Remember, the dollar was $20.67 per ounce for almost a hundred years. By all means, we have to use dollars to buy food, gasoline, pay taxes, and live from day to day, but there is no law which says you have to save in dollars. Only to use them to purchase things, and this includes purchasing real money with fake money! Don Stott 1-888-786-8822