The US Continental Currency – 1776

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From the Archives : Originally published March 01st, 2009
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Category : History of Gold

The story of the continental currency was published by the New York Herald in 1863.  The unabridged newspaper article which describes it is posted in full at

The Greenback - 1860 to 1880 - The United States of America

In spite of a constitutional bar to un-backed paper money which existed at the time Abraham Lincoln was forced, in 1862,  to issue the first tranche of what was eventually $450,000,000 of "greenbacks" needed to finance the North's efforts during the civil war.

The greenback was a credit note.  Unlike America's extant currency it conferred no right of redemption into gold. What it did do was offer a promise that at some unspecified future date the issuer - Lincoln's government - would honour them with conversion back into a truly gold convertible currency.  Clearly this was an unfunded promise based on the outcome of the war, a fact which was not lost on the population.

When soldiers sent their greenbacks home they were inferior to the sounder notes backed by gold, and a price differential arose according to which type of money was being used.  As fears of a long and costly war peaked the credit of Lincoln's government diminished until the differential reached 3:1, and even that flattered the greenback because there were doubts about the gold backed currency itself, whose redemption rights had been suspended to prevent its owners bleeding the treasury dry as they hedged the military outcome with metal.

But - and here is a rarity - the greenback was redeemed, some fifteen years later.  This simple fact disproves the popular belief that 'all paper currency systems eventually end in disaster'.  On the contrary, this particular one was something of a success - especially for those who bought their government's integrity at a deep discount.

We could conclude that the greenback was a story to re-assert faith in paper money systems, but it would be simplistic.  A significant factor in the redemption was corruption.  At the time there was no such thing as insider dealing and for those who knew that a redemption of doubtful paper was likely the only respectable course of action was to buy some.  In fact one of the constitutional reasons for sound money in the first place was to prevent a conflict arising where those with privileged knowledge could benefit privately.  It is beyond doubt that by the time of redemption a substantial haul of deeply discounted paper had found its way to officials and their private and commercial associates.  Their money was made at the collective expense of others who had held the paper while it was sinking.

"The greenbacks ceased to be legal tender after a Supreme Court ruling struck them down as unconstitutional money. Who was the man who led the Supreme Court to strike down the very financing tool of the North's victory? It was the same man who ushered in its birth. For you see by 1870 the Chief Justice of the Supreme Court was none other than former Secretary of the Treasury, Salmon P. Chase."
Larry LaBorde proprietor

In the end the greenback's successful redemption was a mixed blessing.  This experience of state borrowing under duress was an important driver in encouraging the next political generation to embark, in the 1930s, on the deficit financing which is the cause of so much private prosperity and public debt today.  In that sense maybe the jury on the greenback case is still out.

Paul Sustain

Director and Founder

Also by Paul Tustain

Paul Tustain is director and founder of BullionVault - the world's fastest-growing gold ownership service, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

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Settlement-systems specialist Paul Tustain launched BullionVault in 2005 to make the security and cost-efficiencies of the professional wholesale gold market available to private investors. Designed specifically to meet his own gold ownership needs as a risk-averse investor, BullionVault now cares for over US$1bn of client gold property, all of it privately owned in the client's choice of low-cost, market-accredited facilities in London, New York or Zurich.
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Wow! Great article. That's the kind of history America's globalist controllers don't want us to know. You point out that the gold standard was designed to "prevent a conflict arising" so wars or any government expenditure would have difficulty finding funding.

The globalist have us worshiping Lincoln because of his freeing the slaves when it was merely a gimmick to inspire more soldier signups as he was facing draft riots in NYC. He was planning to deport the slaves after the war, so Lincoln wasn't the slave's hero the globalists portray.

Lincoln was a corporate lawyer representing Northern manufacturers and bankers who planned the civil war using the usual divide and conquer strategy. They imposed a tariff on finished goods giving their Northern industries an advantage that triggered a British retaliatory tariff on Southern cotton choking off their exports. Where have you heard anything about a Northern tariff causing the civil war?

This was the strategy to cause a war that would split up the union and conquer it piecemeal by foreign interests. Lincoln later opposed Southern occupation and the globalist plotters killed him for it.

History that makes sense, particularly including the conspiracies have been sorely lacking in our controlled education and presents a strong argument for a free-market educational system - freed from the government manipulation, deception and propaganda that has occurred ever since.

"Who controls the past controls the future: who controls the present controls the past.” George Orwell

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Wow! Great article. That's the kind of history America's globalist controllers don't want us to know. You point out that the gold standard was designed to "prevent a conflict arising" so wars or any government expenditure would have difficulty finding  Read more
sam_site - 7/26/2016 at 4:45 PM GMT
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