#AskACWM Greenback America History is Present Mission in Action

Emergencies and the Economy

With our doors closed to the public, we love hearing from our visitors. Here are a couple of questions that were sent in earlier this week.

Rob from reached out and asked:

What are National Emergencies? (They are not in the Constitution). Moreover, did Lincoln ever declare a National Emergency?

Chris Graham, our Curator of Exhibits wrote back:

You are correct… “national emergencies” are not in the Constitution. National Emergencies are situations in which the government (particularly the executive branch) is empowered to perform actions not ordinarily permitted. In short, National Emergencies give presidents and congress new powers to tackle challenges to American safety at home and abroad when normal channels would be inadequate.                                           

The first instance of a President proclaiming a National Emergency was in 1917, when Woodrow Wilson asserted a power to assist U.S. maritime transportation during the Great War. Presidents since Wilson have routinely declared National Emergencies to deal with military, economic, and natural disaster challenges. The National Emergencies Act of 1976 codified what we currently know as National Emergencies. 

Because National Emergencies are a 20th Century innovation, Abraham Lincoln did not have those tools to use. His April 1861 proclamation that mobilized state militias and called Congress to an “extraordinary” session are often termed a National Emergency declaration, but they were nothing more than a proclamation and an extraordinary session, to use the language of the times.

During tough times money is on everyone’s mind. Tom Nanzig from Ann Arbor, Michigan asked:

Some years ago I taught a weeklong Elderhostel class at Longwood University on “The Last Days of the Civil War.” One evening I showed a film about the post-war South (“Sommersby” 1993, Richard Gere, Jodie Foster) and the question was asked by one of my students: “How did Federal currency in the form of greenback dollars and gold/silver coinage get circulated throughout the Deep South where Confederate money had recently been used? And how long did it take for Southern banks to open using Federal paper money and coins?”

Chris, who co-curated Greenback America, definitely had an answer for this question:

The starting point for this are the Legal Tender Act of 1862 and the National Bank Act of 1863. The former created the Treasury Notes popularly known as “Greenbacks.” Prior to the American Civil War, there had been no federal currency and no federal regulation of banks. Therefore, currencies (paper money and coin) had been issued by private banks, and by states that had controlling interests in public/private banks. The system was a mess. Some banks were sound, but some banks, because of spotty state regulations, were not. 

The Legal Tender Act created a federal paper currency and empowered Congress to determine how much was issued, and to regulate it. The National Bank Act created a “distributed” central banking system–in short, it didn’t create a central national bank that handled all of the nation’s monetary policy (like the Bank of England) but instead chartered private banks with the power not only to handle Treasury Notes/Greenbacks, but also to issue National Bank Notes… federal currency created and issued by the chartered banks. The key to all this was that in return for a federal charter, banks had to agree to purchase a certain amount of United States bonds, and to allow Treasury Department auditors to routinely inspect the banks’ books to ensure sound business practices. 

Greenbacks, being issued directly by the Treasury Department, found their way into circulation during the war through federal payments to contractors, and to soldiers. To that end, many Greenbacks actually found their way into the Confederacy before 1865 because soldiers had the money near porous front lines and many Confederates saw it as better money than Confederate notes. 

Anyhow, it wasn’t long after the surrender of Confederate armies that banks in recently-Confederate cities began to petition Congress for charters, and to receive them. In fact, the First National Bank of Richmond received its federal charter just eight or nine days after Appomattox. With a charter, the banks could immediately issue National Bank Notes, and of course, Greenbacks. With dozens of chartered national banks in the south by the fall of 1865, it wasn’t hard to get the Treasury and National Bank Notes.

The reach of chartered national banks in the former Confederacy was always limited, however. All of the charters went to banks in urban areas, and it was a very long time before any were present in the south’s rural districts. However, since rural hinterlands economically served cities, and because wealthier people in rural areas usually had economic ties to commercial interests beyond the farms, there were networks by which  Greenbacks found their way into the countryside.

Thanks for reaching out! If you have a question that you would like #AskACWM to answer, we’d love to hear from you!


Visitor questions for the Museum