Faced with the dilemma of having to raise sufficient capital to finance a pending war with Great Britain and maintain stability domestically, the federal government was forced in 1810 into borrowing for the short term.
The First Bank of the United States wasn’t an option, since its charter expired in 1811, and no immediate political support arose to advocate immediate renewal. The charter for the Second Bank of the United States wouldn’t be issued until 1816.
The U.S. Treasury Department needed a solution in the interim to execute business that normally would have been conducted through the Bank of the United States.
The answer for Albert Gallatin — who served as Treasury secretary during President Thomas Jefferson’s two four-year terms in office and most of James Madison’s presidency — was the issuance of privately printed Treasury notes.
Connect with Coin World:
Issued between 1812 and 1815, these notes became widely known as War of 1812 notes, since it was this conflict for which the federal government needed significant financial support.
According to Gene Hessler and Carlson Chambliss in their reference The Comprehensive Catalog of U.S. Paper Money, two distinct series of Treasury notes are classified under War of 1812 issues.
The first series — notes produced and issued from 1812 through 1814 inclusive — received authorization under four different legislative acts.
The second series, Treasury notes issued under 1815 congressional action, are considered by many numismatists and researchers to be the first U.S. paper money to officially circulate since the June 21, 1788, ratification of the U.S. Constitution.
According to Donald H. Kagin in the September/October 2005 issue of Paper Money (the journal of the Society of Paper Money Collectors), the 1812 to 1814 notes proved to be extremely useful as they were transferable by delivery and receivable for duties, taxes and public use at par plus accrued interest.