This Week in the Civil War - 514
On February 25, 1863, the nation saw a major reorganization of its financial system, when Congress passed and President Lincoln signed the National Currency Act. At this time, the nation had no uniform currency.
The act established federal banks that issued legal tender backed by the US Treasury. The act also authorized the federal government to tax notes issued by state banks, which had the effect of driving them out of circulation.
Finance had been a major problem for both sides fighting the most expensive war yet in the nation’s history. For its part, the Union had previously attempted to pay for the war by issuing paper “greenbacks,” which were guaranteed only by a government promise. Until the passage of the National Currency Act, however, few took the nation’s money seriously.