Chapter 20 9. Lincoln's New Currency Deal

You can't fight a war without money, and borrowing money from international bankers is putting a noose around your own neck.Lincoln brooded over solutions.At this time, his old friend Dick in Chicago.Taylor gave Lincoln an idea that the government issue its own currency! Get Congress to pass a bill authorizing the Treasury Department to print legally binding currency, pay soldiers, and go win your wars.Lincoln asked the American people whether they would accept the new currency, and Dick said that all the people would have no choice on the matter, as long as you make the new currency fully legal, and the government gives them full backing, they will and Real money is as versatile as the Constitution gives Congress the power to issue and dictate the value of money.

Lincoln was overjoyed at this suggestion, and immediately asked Dick to plan the matter.This earth-shattering approach broke the practice that the government had to borrow money from private banks and pay high interest.This new currency uses a green pattern to distinguish it from other bank currencies, and is known as the green coin in history.The unique novelty of this new currency was that it was completely uncollateralized by monetary metals such as gold and silver, and offered five percent interest over twenty years.During the Civil War, due to the issuance of this currency, it overcame the government's serious lack of currency at the beginning of the war, greatly and efficiently mobilized various resources in the North of the United States, and laid a solid economic foundation for the final victory over the South.At the same time, since this low-cost currency became the reserve currency of the Bank of the North according to law, bank credit in the North was greatly expanded, and military industry, railway construction, agricultural production, and commercial trade all received unprecedented financial support.

The discovery of gold since 1848 has gradually freed American finance from the extremely unfavorable situation of being completely controlled by European bankers. It is precisely because of the large amount of high-quality currency as the foundation of confidence that Lincoln's new currency can be widely used. Accepted by the people, it laid a solid financial foundation for winning the Civil War.What is even more surprising is that the new coins issued by Lincoln did not cause severe inflation similar to that during the Revolutionary War. From the outbreak of the Civil War in 1861 to the end of 1865, the price index of the entire North only moderately increased from 1 to 1. One hundred grew to two hundred and sixteen.Considering the scale and devastation of the war, and compared with other wars of the same scale in the world, it cannot but be called a financial miracle.On the contrary, the south also adopted paper currency circulation, but the effect was really different. The price index in the south soared from one hundred to two thousand seven hundred and seventy-six in the same period.

Throughout the Civil War, the Lincoln administration issued $450 million in new currency.This new monetary mechanism worked so well that President Lincoln considered perpetuating and legalizing the issuance of this debt-free currency very seriously.And this has deeply hurt the fundamental interests of the international financial oligarchy.If all governments don't need to borrow money from banks and issue their own currency brazenly, then the monopoly of bankers on currency issuance will no longer exist. Wouldn't the banks have to drink the northwest wind? No wonder the Times of London, which represents British bankers, immediately issued a statement on hearing the news that if this disgusting new fiscal policy originating in the United States were to be made permanent, then the government could issue its own currency at no cost.It will be able to pay off all its debts and be debt free, it will have all the money necessary to develop its commerce, it will become a more prosperous country than the world has ever known, and the best minds and all the wealth of the world will flow to North America.This country must be destroyed or it will destroy every monarchy in the world.

The British government and the New York Bankers Association expressed anger that they would retaliate.On December 28, 1861, they announced the cessation of metal currency payments to the Lincoln government.Some banks in New York also stopped gold depositors from withdrawing gold and announced the withdrawal of their commitment to buy government bonds with gold.Banks all over the United States responded one after another. They went to Washington to propose a workaround to President Lincoln. They still adopted the past practice of selling high-interest bonds to European bankers; depositing the gold of the US government in private banks as a reserve for credit issuance, Bankers are getting rich; the U.S. government is taxing industry and the people to support the war.

As a matter of course, President Lincoln resolutely rejected this completely unreasonable request of the bankers.His policies were so popular that the American people bought up all the bonds and used them as cash by law. Seeing that one plan failed, the bankers made another plan.They found that the act of Congress issuing the new Lincoln dollar did not mention whether the interest payments on the national debt should be paid in gold.The bankers and members of Congress then reached a compromise that would allow the Lincoln dollar to buy Treasury bonds, but the interest would be paid in gold coins.This is the first step in a complete plan to link the value of the Lincoln New Dollar in the United States to gold, and the European bankers, who were the world's reserve currency at the time, had far more gold currencies than the United States in the pound sterling system.The compromise between American bankers and Congress enabled international financial forces to use their control over the total amount of U.S. gold imports and exports to indirectly achieve the effect of manipulating the value of the U.S. currency.