Ivory marked by the Royal African Company. International Slavery Museum, Liverpool. Wikimedia Commons.
Congress created national banks whose paper would rest on United States bonds, so the country could leave behind a jumble of state notes.
A poor household that had been paid in a shaky local note gained a more uniform currency and still had no say in who got a charter.
A small merchant could take a national banknote with less fear that it was good only in the next county.
Bankers who joined the new system bought federal bonds to back their notes, which also helped finance the war.
The National Banking Act of 1863, rewritten in 1864, set up the Comptroller of the Currency and let national banks issue notes backed by United States bonds deposited in Washington.
In 1865 Congress put a tax of 10 percent on state bank notes to drive them out of circulation.
The result was a more uniform paper money tied to the government’s debt.
National Bank Act, 12 Stat. 665 (1863); Act of June 3, 1864, 13 Stat. 99; Act of March 3, 1865; Bray Hammond, Sovereignty and an Empty Purse (1970)