The Greenback State: The Search for Order and Uniformity in American Political Economy

In 1862 when the U.S. Congress created the first federal fiat currency in American history, popularly called ‘greenbacks,' they seemed to have thought of everything – except the goats. Forty years later, the writer Mary Logan reported that goats, mice, and pigs regularly munched through millions of U.S. dollars. Their owners would send what was left to the government where teams of employees worked every day to sort and redeem the half-digested notes. The work of these Treasury employees signaled a larger transformation occurring in American government after the Civil War. Congress created the greenbacks as a temporary device to pay for the war. As greenbacks and national banks spread across the country, Americans supported greater government intervention in the economy to provide a safe and uniform currency to replace the dysfunctional systems of the antebellum era. Uniformity proved more elusive than simply printing and distributing millions of green notes. My paper will consider how public pressure and internal problems pushed federal policymakers to build a new bureaucracy to authenticate, police, and regulate greenbacks and national banks: the U.S. Secret Service, the Office of the Comptroller of the Currency, and the Bureau of Engraving and Printing. The goats who ate greenbacks represent a strange origin point for central state authority in the American economy. Our histories of the American state tend to focus on how the federal state increased its hold on the economy to fight monopoly or serve it. Histories of monetary policy usually consider debtors versus creditors and rural versus urban America as key dividing lines in politics. Offering a new approach, this paper argues that the Greenback state developed without a blueprint as American citizens and policymakers searched for order and uniformity in the market.