Populace makes do with money shortages during Civil War

Coin Lore: Substitutes come in many forms
By , Special to Coin World
Published : 09/30/16
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Coin Lore column from Oct. 17, 2016, Weekly issue of Coin World:

As Union forces closed in on New Orleans in April 1862, the city carried on as best it could, though cotton, “the wealth of the South,” was burned by the bale on the levies to prevent it from falling into Union hands, and precious metals were removed from the city. 

The Confederacy suspended specie payments Oct. 16, 1861, to, in the words of Louisiana Gov. Thomas O. Moore, force ac­ceptance of Confederate Treasury notes as “a currency of real value.” Commerce was conducted in Confederate bills, privately issued bank notes and much cursed shinplasters. Shinplasters, notes denominated below $1, replaced coins during the war.

Coffeehouse owner George W. Holt, a prolific issuer of shinplasters, advertised a few weeks before the Union takeover that his bills were good.

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The week before the Union takeover, the presidents of the city’s 13 banks met to discuss how to settle accounts before the city fell. All but one or two decided to liquidate. 

New Orleans’ The Daily True Delta reported, “Some redeemed their outstanding circulation and deposits in either gold or silver, as suited the views of the claimants, while others offered to redeem their bills only in specie: and a third class restricted its movements to the redemption of their bills at 50 percent in specie and the balance in Confederate treasury notes.”

At the time, Confederate currency had depreciated to the point that it took nearly $2 in Rebel paper money to buy a gold dollar.

On Friday, April 25, Union warships easily subdued the forts defending New Orleans, sailed to the city’s riverfront and demanded surrender. 

The Daily True Delta reported the next day: “The war movements during the past week have almost entirely absorbed the public mind, to the exclusion of financial and other operations of ordinary interest. The banks, or a majority of them, redeemed their circulation in specie up to Wednesday [April 23] when an official notice to discontinue was received from the government at Richmond. ... The enemy’s approach, however, would have in any event caused a suspension of operations, and the removal of the precious metals to points of safety has claimed no inconsiderable portion of the time of our most active financiers.”

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