Tag Archives: Salmon P. Chase

Foner’s Misstep on Civil War Fiat Currency

(January 1, 2017) When history professor Eric Foner applauds the North in this lecture for making Civil War paper money legal tender (which the South did not) he overlooks exceptions, including a rebellion in otherwise Union-loyal states that was never punished. The excerpt below summarizes his remarks:

The paper money issued in the North was declared…legal tender. That is to say, “You’ve got to accept this money [even] if you don’t think it is worth anything.” [If I] borrow [money from you] before the war, it’s gold. Now I can pay you back with [paper money]. But creditors don’t want to be paid in money that is worthless. But [the Legal Tender Act] makes paper money acceptable everywhere.

The South did not make their money legal tender. Therefore you could accept it or not, as you saw fit, which meant that it’s value fell far faster.

To be sure, the professor correctly notes that the value of paper money fell much faster in the South than in the North. He fails to mention, however, that the authority forcing everyone to accept Northern paper money (Greenbacks) in trade for debts originally incurred in gold—The Legal Tender Act—had limits. For example, Greenbacks could not be used to pay tariff duties, which remained a major source of federal tax revenue. As Foner acknowledges in a later lecture, they also could not be used to pay interest on federal bonds, but that was a limitation on the government, not the people. Most significantly, however, the Pacific Coast states simply rebelled against Greenbacks.

Although California and Oregon never seceded, they defied the February 1862 Act by refusing to accept Greenbacks as legal tender. They would not honor the notes at face value.

Since gold was more common on the Pacific Coast, the two states were particularly contemptuous of Greenbacks. In November ‘62 San Francisco merchants refused to accept the notes at anything above the discounted rates at which they were exchanged for gold. As the accompanying chart indicates, those rates fluctuated. (The chart shows the value of a gold dollar in relation to a Greenback dollar. In July 1864 after Grant had lost 50,000 men during the overland campaign and was stalled before Petersburg, for example, one gold dollar was worth about 2.7 Greenbacks.) The following April California’s legislature adopted a Specific Contracts Act, clarifying that contracts entered on the basis of gold were enforceable in gold. Finally, the California state government refused to accept Greenbacks in payment of taxes.


Oregon quickly followed California. For years gold had been the state’s exclusive currency. Shortly after the San Francisco merchants’ agreement, those in Salem and Portland followed suit. Portland merchants also circulated a black list of residents and businesses that tried to settle bills with Greenbacks. Finally, the state’s Supreme Court ruled that it was unconstitutional to accept Greenbacks for tax payments.

Neither California nor Oregon was punished for their defiance. Instead, the federal government eventually conformed to the Pacific Coast monetary principles. First, when Grant became President in 1869 his first step was to sign the Public Credit Act, which required that all federal bonds be repaid in gold even though most had been purchased during the war with Greenbacks for as little as thirty-seven cents on the dollar. It was a huge windfall to the bondholders, among whom there were almost no Southerners, if any. Second, all Greenbacks became redeemable at par in gold in 1879, but few were presented for redemption.

Treasury Secretary Salmon P. Chase proposed to make Greenbacks superficially more palatable by adding the “In God We Trust” motto that he had earlier put on coins but Lincoln suggested wryly, “If you are going to put a legend on the Greenbacks, I would suggest that of Peter and John, ‘Silver and gold I have none, but such as I have I give to thee.’”

Instead, Chase put his portrait on the face of the one-dollar denomination. He reasoned that the circulating notes might help him win the Presidency in the 1864 election. Instead, his self-promotion led Congress to eventually stipulate that no image of a living person could be placed on US currency or postage stamps.

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Sample Chapter: Trading With the Enemy

Provided below is a free copy of the Introduction for my book, Trading With the Enemywhich is about intersectional commerce between the North and South during the Civil War.    Abundant footnotes are provided in the book, but not in this free sample.

The ways of the dollar are always devious. — Walter Tevis, The Hustler


On June 7, 1863, the Confederate commerce raider Clarence forced the US flagged Alfred H. Partridge to stop off the North Carolina coast. The raider anticipated the Partridge would be the second of an eventual string of twenty-one prizes. Normally, seized merchant ships were burned or used to transport previously captured crews to a safe harbor. But upon boarding the schooner, the Rebels discovered it was bound for Matamoras, Mexico, out of New York with a cargo of arms and clothing for Texas Confederates. Consequently, the Partridge was set free.

Since Matamoras was a neutral Mexican port, federal warships could not blockade it. Before the Civil War, only about one ship annually cleared New York for the Mexican town. However, a year after the war’s first important battle at Bull Run, the average was about one per week. Ships to Matamoras were also cleared from Boston, Philadelphia, and other Northern harbors. Cargoes included a multitude of Northern-made items that would have been considered contraband if shipped directly into the Confederacy. They encompassed weapons, munitions, and military uniforms, among other articles. For Northerners willing to help arm the Confederacy for a profit, Matamoras was little more than a legal fig leaf to cover dubious, if not treasonable, conduct.

In exchange, Southern planters provided cotton from fields as far away as Arkansas, Louisiana, and east Texas. They typically loaded wagons with twenty cotton bales and set out in caravans over crude trails ending in Brownsville, Texas, across the shallow Rio Grande River from Matamoras. En route teamsters were vulnerable to unpredictable water shortages and attack from hostile Native Americans, and outlaws of all types. Next to specie (gold and silver coins), cotton was the most acceptable international exchange medium available to North Americans, whether in the Union or Confederacy. Adroit, clever, and sometimes ruthless contraband-for-cotton traders accumulated fortunes in Matamoras and Brownsville.

One example was Connecticut-born Charles Stillman, who sold Rebel cotton out of Matamoras to buyers in Northern states, including the US government. His chief cotton supplier was a putative Confederate-loyal Texan who changed sides after federal troops temporarily occupied Brownsville in November 1863. In order to prevent interference from the newly arrived Yankee soldiers, he swore an oath of loyalty to the Union.

After the war, Stillman was one of the wealthiest Americans and a major shareholder in New York’s National City Bank. His son, a grandson, and a great-grandson each served as National City’s board chairman, the great-grandson as late as 1967. Presently, the bank is known as Citicorp. Two of Charles Stillman’s granddaughters married into the Rockefeller family.

Despite its legal circumvention advantage, Matamoras was a comparatively minor part of Civil War interbelligerent trade. More often, the exchange was directly across enemy lines. The practice became important about a year after the opening shots at Fort Sumter, in spring 1862, as the cotton-trading centers at New Orleans and Memphis were captured.

When Union Major General Benjamin Butler arrived in New Orleans with fifteen thousand occupation soldiers in May 1862, his net worth was about $150,000, but six years later it was $3 million. Although the lawyer-general was too shrewd to incriminate himself, there is little doubt the gain was primary achieved by trade with the enemy.

By summer 1862, Union Major General William T. Sherman at Memphis complained that Northern traders were buying Southern cotton for gold, which he believed the Rebels next used to buy weapons at Nassau in the Bahamas and even in Cincinnati. In an August 1862 letter to his brother US Senator John Sherman of Ohio, General Sherman wrote, “Cincinnati furnishes more contraband goods than [leading blockade-running port] Charleston, and has done more to prolong the war than the state of South Carolina.” A few months later, Major General Ulysses Grant captured Confederate cavalry in northern Mississippi armed with modern carbines evidently purchased at occupied Memphis.

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Ladies were not excluded from such trade and were sometimes especially effective. They were generally held less accountable for violations, and soldiers were hesitant to physically search them. For example, while Union Captain Julius Ochs was assigned to a unit guarding the St. Louis-to-Cincinnati railroad, his wife was caught trying to smuggle quinine in a baby carriage across an Ohio River bridge to Rebels in Kentucky. Somehow Captain Ochs got the charges dropped, but his wife’s dedication to the South persisted. After the war, she joined the United Daughters of the Confederacy while her husband became a member of the Grand Army of the Republic, a Union veterans organization. Their eldest son, Adolph, became a Chattanooga, Tennessee, newspaperman. Shortly before the turn of the nineteenth to the twentieth century, Adolph bought a failing New York newspaper, added the words “All the News That’s Fit to Print” to its masthead, and launched the New York Times toward national prominence. Continue reading

Speaking at Huntsville Civil War Roundtable

Provided below are the specifics of my forthcoming talk to the Tennessee Valley Civil War Roundtable

Topic: Trading with the Enemy
Date: Thursday, July 14, 2016
Time: 5:30 PM Dinner, 6:30 PM Presentation

Location: Elks Lodge
725 Franklin Street
Huntsville, Alabama 35801

Additional Information: Contact Kent Wright

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Book Review: Lee’s Lost Dispatch

Earlier this week Civil War author and book reviewer, Fred Ray, wrote the review of my Lee’s Lost Dispatch and Other Civil War Controversies provided below:

Lee’s Lost Dispatch and Other Civil War Controversies

By Philip Leigh
Illustrated, photos, maps, notes, bibliography, index, 224 pp. softcover $18.95
Westholme Publishing 2015

Philip Leigh, whose last book, Trading With the Enemy, I reviewed a while back, has produced another volume for the Civil War reader. This one is a series of essays on various controversies, mysteries, and other aspects of the war. Briefly, they are:


• The Biggest Confederate Error. Leigh sees this as Jefferson Davis’ decision to hold Southern cotton off the market to put pressure on England and France to intervene. In retrospect, however, Davis missed a golden opportunity to supplement his meagre war chest while he still could. Had the cotton been sold and the money put into European banks, the Confederacy would have had more money than the United States to buy badly needed war materiel. Once the blockade became effective, it was too late.

To read the rest of the review, please go to the TOCWOC Blog where Ray posts his reviews. 

My Civil War Books

Lee’s Lost Dispatch and Other Civil War Controversies
Trading With the Enemy
Co. Aytch: Illustrated and Annotated

To Speak at Charleston Civil War Roundtable: Trading With the Enemy

On Tuesday, September 8, 2015 I will be making a presentation on my Civil War Book, Trading With the Enemy to the Charleston, South Carolina Civil War Roundtable.

When:   Tuesday, September 8, 2015

Where: Ryan’s Steakhouse
829 St. Andrews Boulevard
Charleston, South Carolina 29407

Time:    Dinner: 6:00 p. m.     Speech: 7:00 p. m.

Topic:    Trading With the Enemy

Trading With the Enemy concerns inter-belligerent commerce between the North and South during the Civil War, excluding the minor trade among fraternizing enemy soldiers.

Such commerce was large and scandalous. About twice as much cotton went to Northern states as was shipped through the blockade to Europe. Aside from gold, cotton was the best international exchange medium available in America. Although Civil War shipment tonnage dropped sharply, cotton prices soared over ten-fold thereby sustaining a robust dollar volume.

When Northern traders purchased cotton with specie, the gold invariably found its way into markets where it bought weapons for the Confederacy. Contrary to popular belief such markets were not necessarily international. Major General William T. Sherman complained that Rebels purchased weapons in Cincinnati from the cotton they sold for gold to Memphis traders.

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Evidence suggests a number of notable Civil War personalities were involved in dubious – perhaps treasonous – conduct. Examples include Treasury Secretary Salmon P. Chase, Major General Benjamin Butler and Rhode Island Senator William Sprague. One cotton trader became the largest shareholder of New York’s National City Bank. At different times, his son, grandson, and great-grandson all served as the bank’s Board Chairman, the last as late as 1967.

Perhaps because the story provides no heroes, little has been written about inter-belligerent trade. Nonetheless, an 1865 joint Senate-House investigation led by Illinois Congressman Elihu Washburne concluded: “[The trade] is believed to have led to a prolongation of the war, and to have cost the country thousands of lives and millions upon millions of treasure.”


Amazon links to my three Civil War Books:

Lee’s Lost Dispatch and Other Civil War Controversies
Trading With the Enemy
Co. Aytch: Illustrated and Annotated


Book Review: Lee’s Lost Dispatch


Provided below is a book review from Civil War News of my latest book: Lee’s Lost Dispatch and Other Civil War Controversies.

Lee’s Lost Dispatch and Other Civil War Controversies. By Phillip Leigh. Illustrated, photos, maps, notes, bibliography, index, 224 pp., 2015, Westholme, http://www.westholmepublishing.com, $18.95 softcover.


Phillip Leigh has produced a thoughtful, thought-provoking and enjoyable book addressing some of the Civil War’s puzzles, scandals, mysteries and “what-if” subjects. It is a delightful “must-read” book.

Leigh makes the following assertions and discusses them in brief and interesting detail:

• The Confederates’ biggest mistake was misplaying its King Cotton advantage.

• The Union’s greatest error was its failure to promptly and massively manufacture breech-loading single-shot and repeating rifles – a failure attributable to Abraham Lincoln, Simon Cameron, Edwin Stanton, Ulysses S. Grant and the Joint Congressional Committee on the Conduct of the War.

• Opportunities were missed to possibly prevent the war – one of them being Union failure to more effectively reinforce Fort Sumter in January 1860.

• Union Secretary of the Treasury Salmon P. Chase creatively financed the war by explosively increasing revenues and deficit spending – and perhaps personally benefitted from his financial maneuverings.

• Chase’s daughter Kate and millionaire Rhode Island senator William Sprague became the Camelot couple of their day, but their marriage crashed as a result of Salmon Chase’s presidential ambitions, William Sprague’s trading with the enemy, and Kate’s infidelities.

• William T. Sherman, in November 1864, was responsible for the unnecessary destruction of most private dwellings in Atlanta, Cassville, Rome, Big Shanty, Marietta and other Georgia towns.

• George “Rock of Chickamauga” Thomas would have been a better choice than Sherman to lead the Union armies in the 1864 Atlanta Campaign, but Grant selected Sherman for several erroneous reasons.

• Union spies may have been responsible for the Spring Hill, Tenn., fiasco, in which John Bell Hood’s army allowed John Schofield’s trapped 23,000-man command to march unmolested past them on the night preceding the Battle of Franklin.

• The loss of a copy of Robert E. Lee’s famous Special Order 191 during the Maryland (Antietam) campaign remains a mystery, but there are several possible explanations.

• After Vicksburg’s fall, Florida became important to the Confederacy because of its cattle industry, but states’ rights, a railroad owner’s financial interests, and the cattlemen’s desire to resume profitable sales to Cuba combined to impede the movement of beef to hungry Confederate soldiers and civilians.

Many will question some of these contentions, but Leigh’s success is in making readers think about, or rethink, these issues. I highly recommend this book for Civil War buffs with inquiring minds.

Edward Bonekemper

If you enjoyed the book review above, consider buying one of my books:

Lee’s Lost Dispatch and Other Civil War Controversies
Trading With the Enemy
Co. Aytch: Illustrated and Annotated