Monday, June 13, 2011

The Treasury Department: Funding the Union Armies One Greenback at a Time

The U.S. Treasury Department has been housed in the same impressive structure just east of the White House since 1839. After several earlier Treasury buildings had burned to the ground-- one courtesy of our British cousins-- Congress approved construction of a  "fireproof building of such dimensions as may be required for the present and future accommodations" of the Treasury Department.

Treasury Department activities during the Civil War were as critical to the North's victory as that of the War and Navy Departments.  Without the sale of bonds and increased revenues, the Union armies in the field could not be sustained. In the early days of the war when there was genuine fear that the Confederate Army might march on Washington after the Union rout at Bull Run, U.S. Army General-in-Chief Winfield Scott designated the solid Treasury building to be the fallback position of last resort for government leadership.  The building's new south wing, like other government buildings, was soon quartering troops.


Wartime photograph of the Treasury Department Building.  Clara Barton worked as a clerk here before the war led her to devote her life to relief efforts. (Library of Congress)

Discussing the Treasury Department is fitting as some key aspects of modern US governmental financing have their roots in actions taken byLincoln, Secretary of the Treasury Salmon P. Chase and Congress during the Civil War.  Unprecedented military expenditures required creative bookkeeping, an expansion of the money supply and new revenue measures to include the first federal income tax. The Treasury also first issued paper currency during the war after Congress passed the Legal Tender Act in 1862.  Secretary of the Treasury Salmon P. Chase's "greenbacks" were derided by many for being backed by neither silver nor gold. The expanding duties of the Treasury Department required a large civilian workforce  to include a growing number of female clerks, nearly 500 by war's end.

Chase, whom felt that he should have been the Republic nominee in 1860 and coveted the 1864 nomination, was an uneasy member of Lincoln's "Team of Rivals."  After numerous feuds between Chase and Secretary of the Treasury William Seward, Lincoln finally called Chase's bluff and accepted his previously tendered resignation.  Lincoln later appointed Chase the Chief Justice of the Supreme Court.



Although Lincoln and his Cabinet did not have to deal with hostile bloggers or cable show demagoguery, they did face  scathing political cartoons in Democratic-leaning newspapers.  This 1864 cartoon, captioned "Running the Machine," depicts "Chase's Patent Greenback Mill" being used to pump out worthless currency.  Meanwhile, Lincoln is depicted as a bumbling country fool telling crude jokes.
 So, the next time that it is 1 AM and you are fighting with the vending machine to get it to accept your wrinkled, torn $1 bill in order to satisfy your Snickers fix, remember that your tattered paper currency is one of the many legacies of the Civil War.  Otherwise you might be paying with money issued by anyone of hundreds of different state or private banks or schlepping around gold or silver coins.




Modern-day view of the U.S. Treasury Department, 1500 Pennsylvania Avenue, NW.  First occupied in 1839, it is the oldest departmental building in Washington, and the third oldest federally occupied building in Washington.  Tours are available by advanced reservation through your Congressional member's office.  The tour includes a visit to Salmon P. Chase's office, which has been restored to a 1860s period appearance. (Photo Courtesy U.S. Department of the Treasury)



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