Treasury Notes

 A Brief History of U.S. Government Currency, 1861-Present: Part 1

By: Dr. Franklin Noll

This September marks the 225th anniversary of both the congressional authorization for the Department of the Treasury and the swearing in of its first Secretary, Alexander Hamilton. Throughout the department’s long and storied history, it has played an increasingly integral role in the issuance of national currency. This two-part series will provide a brief account of the evolution of our nation’s federally-issued currency, birthed during one of our nation’s most trying times – the Civil War.

The Civil War Era

The federal government began issuing its own currencies during the Civil War as it tried to meet funding and money circulation emergencies. In 1861, Secretary of the Treasury Salmon P. Chase directed the Treasury to issue Demand Notes to pay expenses. As the first national currency, Demand Notes earned their name from the fact that they were redeemable on demand for gold coin at the Treasury. 

The government also created the United States Note, another currency designed as a temporary financing measure, with the passage of the Legal Tender Act of February 25, 1862. Almost bankrupt, the United States needed money to pay suppliers and troops during the Civil War. The plan was to print a limited supply of U.S. Notes to meet the crisis. However, U.S. Notes became popular and were issued for decades, coming to be known as Greenbacks.


The Civil War also brought about a shortage of coins. In response to this problem, Treasury issued currency notes in denominations of less than one dollar, ranging from three cents to fifty cents, in 1863. These small value notes are known as fractional currency. They were the first notes printed by the Bureau of Engraving and Printing, and were issued until 1876. 

In an effort to get control over the chaos of the monetary system, Secretary Chase advocated the creation of a system of National Banks in 1863 that would issue a uniform, national currency. The National Bank Act of June 3, 1864, created National Bank Notes that were redeemable at any National Bank of the Treasury. The notes proved a success, and were issued well into the 20th century.

In the same year it authorized National Bank Notes, Congress also created another new form of currency, Gold Certificates. One could deposit gold at the Treasury and receive Gold Certificates in exchange. The first Gold Certificates were issued in November 1865, with a maximum denomination of $10,000.

The Late 19th Century

By 1878, U.S. Notes, National Bank Notes, and Gold Certificates co-circulated. That same year, Congress introduced the Silver Certificate. The act authorizing these notes allowed people to deposit silver coins in the Treasury in exchange for certificates, giving people an alternative to carrying numerous silver dollars. Silver Certificates became very popular and were a major form of currency for many years. 

Twelve years later, the growth of silver mining in the United States led to another form of currency known as Treasury Coin Notes, which the Treasury Note Act of 1890 authorized. Until 1893, the law required the Treasury to purchase silver bullion and to pay for it with the new notes. 


The close of the 19th century saw various forms of currency co-circulating in the nation’s economy, but money-related economic and banking crises continued.  A central problem revolved around the inability of the supply of these currencies to expand or contract to meet economic conditions. Part two of this series, to be posted later this week, will explore the solution to this problem.​


Dr. Franklin Noll is the Historian at the United States Department of the Treasury’s Bureau of Engraving and Printing, and President of the Treasury Historical Association.
Posted in:  Bureau of Engraving and Printing
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