I have read many times that Civil War tokens were made because of the shortage of coins, due to people hoarding them. This theory always sat wrong with me. Then, like now, most people aren't able to hoard cash, because of the need to eat, etc. My theory is that because we suddenly had many hundreds of thousands of men in uniform that needed a paycheck, many of whom, previously lived in agricultural/barter settings. The mint could not keep up and it had nothing to do with hoarding. I have checked the total mintage of all coins during the Civil War, and the amounts were not anywhere near enough to cover the armed forces payroll of the time. Some people I have mentioned my theory to, tell me that paper money was plentiful at the time, which I believe to a degree. My question is, pre-federal paper money was regional and discounted if you tried to use it "out of town", so how could soldiers on the move and the government function with local "obsolete" paper money? How did the government/army/navy decide which banks currency to use? (Cited from: https://www.cointalk.com/threads/civil-war-paper-currency-question-theory.266526/)
Various camps used Sutler who followed the troops where they went. They would use Sutler's compound to buy what they needed. The soldiers debt was then deducted from their pay before hand. Only the balance was paid in Sutler's tokens. A private would only earn $13.00 per month in the Union.
And I believe that Fractionals and CSA's were used in their areas widely. So that would be easy to use on the move.
I did the math and added up the total mintage of all federal coins and came up with about 8.5 million dollars for 1861. By the end of the year, we had 500,000 men in uniform. If we just use a privates pay of $13 /month, that's 6.5 million per month of payroll, not even counting officers and the rest of the economy.
But the soldiers spent that money putting it back into circulation. The hoarding was done by the locals. Not knowing at the start which side would win, southerners and bordering states kept stockpiling federal coins so they could function afterwards.
There were Sutler tokens and Sutler's Scott's Paper money. Plus encased postage stamps and tokens, tokens and more tokens.
Newspapers of the day in major cities often carried advertisements offering a premium for "coppers". The reason behind this is that cent coins were in very short supply. The merchants needed them or an equivalent to make change for customers. If there really was no shortage of coins why were merchants offering a premium? The Fuld CWT catalogs contain a very good history of the reasoning behind the manufacture of these tokens.
I'm not questioning the shortage, just the reason. My theory is that hoarding had little or nothing to do with the shortage. That army payroll was the real reason. I will have to make a point and read the Full catalog reasoning. Thanks
Was hoarding real? Yes it was. It started with the precious metals, gold and silver and spread to the lowly cent. There was a War, people didn't know who would win, but gold and silver would always have value. The local paper money was risky. Troops were paid with the first Federal notes. All part of Treasury Secretary Chase's plan to finance the war with unpacked paper money. With the War's conclusion coinage came out of hiding, if there was no hoarding where did those coins come from?
I thought we didn't have federal notes until 1863 but I just found this article: Demand Notes[edit] Main article: Demand Note Comparison of a $5 Demand Note (upper image) and an 1862 issue $5 United States Note (lower image). Note the removal of the words "On Demand" and of the phrase "Receivable in Payment of All Public Dues". Also note the Treasury Seal added to the United States Note. During 1861, the opening year of the American Civil War, the expenses incurred by the Union Government far outstripped its limited revenues from taxation, and borrowing was the main vehicle for financing the war. The Act of July 17, 1861[2] authorized United States Secretary of the Treasury Salmon P. Chase to raise money via the issuance of $50,000,000 in Treasury Notes payable on demand.[3] These Demand Notes were paid out to creditors directly and used to meet the payroll of soldiers in the field. While issued within the legal framework of Treasury Note Debt, the Demand Notes were intended to circulate as currency and were of the same size as banknotes and closely resembled them in appearance.[4] In December 1861, economic conditions deteriorated and a suspension of specie payment led the government to cease redeeming the Demand Notes in coin. I didn't know about these 1861 demand notes. I guess that answers my question. Thanks
