the federal government issued some $450 million in fiat money, known as greenbacks for the distinctive green ink on the reverse side and it designated greenbacks and treasury notes as legal tender. now, fiat money means currency backed only by the full faith and credit of the government issuing it. so using greenbacks as legal tender meant that the u.s. had decided to go off the bimetallic standard. but lincoln never intended a permanent departure. greenbacks koucounted as part o the federal debt. and like other government borrowing, applied a future foundation. and we did, in fact, return to a gold standard in 1873 which later gave rise to william jennings brian's famous cross of gold speech. but that's history for another day. so government borrowing practices during the civil war had a far more substantial effect on public finance. and both of the time, and consequently, the tax policy. the revenue effect was large. jay cook's efforts pioneered the way for direct sale of treasury bonds in notes to the public rather than using commercial banks. deficit financie ining became t norm during wartime. and we got our first real try at fiat money. now, when chase was diterring about whether fiat money was constitutional or not, abraham lincoln said i have that sacred instrument here at the white house. and i am guarding it with great care. so chase enthusiastically embraced the issuance of green backs, with his face on them, of course. he flip-flopped writing for chase decided the griswald that congress lacked the power to make paper money legal tender. despite the fact that he, himself had authorized the issuance of greenbacks as legal tender. despite salmon's flip-flopping, national bank notes survived and that experiment with fiat money later gave rise to departure from gold standard permanently in this country. and the creation of federal currency went hand in hand with the establishment of federally approved rather than state-chartered banks. national banks were capitalized with treasury bonds. they could issue national currency if it was backed by treasury securities. and so the federal government issued debt and then that debt was monetized. late in the war to reinforce the power of the federal currency, the federal government actually taxed state bank notes out of existence. so we don't have those anymore. so the u.s. emerged from the war with a far different financial system when the conflict began. perhaps most important by defining the banks via mandatory capitalization with treasury obligations, it bound the bankers to the fortunes of the union. but it also tied the federal government to the fortunes of the financial sector, which is, you know, today, can have significant economy-wide effects. this shows the dominance of the banks by wars and they became, basically, the only game in town. now, i want to talk just a little more about the experiment with fiat money. one potential cost of issuing money that's not backed by anything is inflation. and this slide shows what can happen when you add more pieces of paper to the economy and people use those pieces of paper to bid up prices. and what happened after the war is if mirror image in getting back to the gold standard at the rate that we had before the war, we experienced substantial deflation. so first inflation and then deflation. and here's another way during the war showing how much a greenback could buy. this is an annual exchange rate. in 1862, it took just over one greenback to buy one unit -- $1 worth of gold. by 1864, it took two. now, the next two slides are the ones which my friend in the audience may find a little scary and others of you as well, but i like them. so i'm going to show them to you anyway. and what they do is they link the forchoouns tunes to the bat. and this shows both greenbacks, which the union had and greybacks, which is what confederate currency was sometimes cold. and there was a third type of currency called yellowbacks which never went off the gold standard, as you might understand why. so we have a couple of slides here. i'll show them to you and talk about what we're looking at. what i tried to do here is identify important points along the way. what you can see is both greenbacks and greybacks bought progressively less gold as the war went on. as the graph rises, that means that their value is depreeciatig more and more. and it's interesting to see what happened at gettysburg and again at cold harbor and peetersburg if you look at the bouncing around. and the one i show you next is one of miy favorites. so this is the swings in value. so what it is is essentially the last slide but how things change from period to period. and this one, i think, shows really how the values went up and down around the full-time of m major values. so everything that's above zero means that the currency is depreciating against gold and everything below zero means that the currency itself is appreciating against gold. so if you look at this, i know there's a lot to absorb here. but for the union, not to surprising. things wr pretty bad for their currency after fredericksburg. they were pretty good after gettysburg. and they were pretty good after petersburg. and so monetary markets, i think, really clearly reflect what was going on on the battlefield, as well. in fact, i'm going back to this one here. what happened with confederate currency looks a lot like german currency after world war ii -- i'm sorry, for world war i. hyperinflation, in part, due to an inability to convince people that either the government or the government finance was stable. the probability that the federal government could actually redeem its currency shrank more and more. now, let me leave you with what may be one ovt most enduring legacy of changes brought by the financing of the union army and the civil war. and it's actual lly something tt doesn't happen. if you look at any bill in your wallet, do you ever see a living person on the bill? why not? who was on the green back? salmon p. chase who wanted to be the president so badly but who never was. and i'll say nothing about the bottom half of the slide. >> your words about the specie, as i understand it, evolved to the paperback or paper money. and the greyback and the grey ba greyback and all like that, how difficult was it to get these things all properly aligned so there could be good exchange? >> you mean -- okay. >> how did these things evolve so that we could go from one -- >> oh, there was actually a gold window in new york vmt and that was the main -- but there were exchanges, you know, in every major city where you could actually go in and you could take your money. so you couldn't take the greenback in and officially get one dollar for one dollar of greenback. but there was a market for each of these. so the value of this fluctuated. it was just what people were willing to give you for what they thought this would buy in real things. and same thing for the confederate money. i could come up to you and i could say look, i have a greenback. do you have any gold? and you and i could just agree to do that. so there was, in new york was where the official sort of green -- the greenback gold exchange rate was kept track of, just like a lot of financial stuff is now. there wasn't anything official. it was just what people were willing to exchange it for. great question. thank you. >> was there an actual exchange, a new york stock exchange, where people could buy and sell greenbacks for gold? >> there was what was called the gold room in new york. and that was -- actually, lincoln closed it down a few times because he didn't want people to be speculating against the union. >> what was the impact on the states on how they financed their operations and what role were they playing if you're going after a property tax and an income tax, what was left to the states? and, also, what did the states pay for? as far as their militias? >> yeah, they did. and i'm not an expert on how much was shared. but when you look at thestatist federal government paid some. the states paid some. and through the end of the civil war, states were still trying to issue their own currency. it wasn't until the end when they pretty much went out of business. the states were trying to do the same thing as the feds, which was trying to get people to accept pieces of paper rather than current points to pay for their goods. >> did the system improve purchasing power for corporations like railroads, as well? >> well, that's a really interesting question. and i guess i would say there was a lot going on with railroads both before and during the civil war in terms of financing and selling bonds and stocks. i mean, they were really the movers and shakers behind wall street and how things sort of started getting a lot more frantic around wall street. so the fact that railroads were commonly debtors meant that inflation wasn't such a bad thing to them. >> so i have a question about the taxes. did congress pass legislation authorizing the prop rty tax and the income tax? and how, especially as the property tax administered and who did the evaluation to see what the property was valued at? and how is it assessed and so forth? >> i'm not an expert on that. they were mainly responsible on the income taxation. property taxation wasn't a big part of it. and whatever system we ha before -- >> the big part in the south was assessing value of slaves. but in the north and the sout as well, equipment and that sort of thing. but that didn't -- that wasn't nearly as big a part of things as the income tax. and before that, of course, tariffs and import duties, as well. >> the supreme court decision under chase, as chief justice, what was the date of that decision? and did that instantly lead the federal government to cease collecting taxes? >> are you referring to the one that made paper money? whether it was unconstitutional? >> was that the decision rather than the income tax? >> yeah, yeah. the decision where chase essentially went back on what he had done as treasury secretary was in 1870. there was actually concurrence by a fifth judge. so, therefore, yes, they didn't say this isn't legal tender. so congress had to do something right away to bring that back. but they were already moving off of the fiat money by 1873 and had gone back to a gold standard anyway. so it was a bit of a moot point. >> the decision was then reversed the following year. they're known as the legal tender cases. the first and the second legal tender cases. >> my question is about trade flows. obviously, the southern ports were shut down. so there probably wasn't much happening there. but what, if anything, was the impact on u.s. currency of u.s. purchases abroad? federal government purchases, if any, on the monetary flow and the expansion of those greenbacks. >> i don't know the answer to that. it's a good question. i don't know that there was a lot of federal purchasing of goods abroad. that's tended to with more in the private sector. the federal government just wasn't a big player at all. but you're right in raising the question about were there international repercussions? yeah. >> maybe between 5 and 10%. >> it was small. >> you might be right. thank you. >> thank you. >> thank you all very much. [ applause ] >> before jenny goes, she will not be able to be here for the round table. so if anybody's holding back a question -- see, there's one more. >> where is your edith article? >> it's in the edith wharton review. [ laughter ] >> thank you. >> we're back to the house of merth. which, i guess, is the place to end with tax policy. we have on the program a break until 10:45. we're actually starting our break a couple minutes early. so we will convene back here at precisely 10:45 and move forward. thank you very much. we'll see you in a few minutes. >> the civil war airs here every saturday at 6:00 and 10:00 p.m. and sundays at 11:00 p.m. eastern time. to watch more civil war programming any time, visit our web site, c-span.org/history. to send us your questions and comments, join us online. follow us on twitter at c-span history. or like us on facebook at facebook.com/cspanhistory. you're watching american history tv all weekend, every weekend on c-span 3. >> the life of a sailor includes scrubbing the deck in the morning, working on the sails, climbing aloft, whatever the duties assigned, gun drill practice. but by the end of the day, you're ready fr some rest. you don't get a full a eight hours of sleep. >> this weekend on american history tv, the life an of an enlisted man during the war of 1812. >> the sailor lived in fear of the possibility of being whipped by a cat of nine tails. it was always carried by a petty officer in a bag. and the thing an officer never wanted to see is a petty officer getting ready for a flogging. it's a phrase we still used to. don't let the cat out of the bag. >> also this weekend, more from the contenders. our series on key political figures who ran for president and lost but changed political history. >> all weekend, american history tv is featuring jefferson city, missouri. well, i'd like to welcome all of you today and thank you for coming to the missouri governor's mansion. on behalf of jeremiah j. nixon, firsthand, their two sons and their dog, daniel boon. we welcome you to the home. this building was built in 1871, complete in january of 1872 making it 140 years old. this mansion also has the distinction of being one of the oldest official governor's residence in continuous use dating back to 1872. there were a lot of people in st. louis missouri who had just completed the civil war and there were still a little bit of tensions at the time. appropriations were given to build this building, hour, however, they waited a couple years after that. this is actually the third building on this side for the governor's mansion. the first building was a wi building for the legislatures with rooms set aside for the governor and his family. after the family out grew the space of two small rooms and the capital was built, another smaller building was built for the governor and his family. however, the materials were not sufficient and it became very dilapidated. there was a party in which many people were invited to and there was refuse to come because there was concerns if too many people got on the second floor, its would not hold all of them. the embarrassment caused by all of that forced the legislature to appropriate more money. the first family that moved into this current mansion moved in in january of 1872. brown had a quary made and delivered to the home providing and starting a tradition of each first family giving a gift of some sort and leaving it to our mansion. however, when the columns were delivered, they discovered that they were 9 impks too short. if you look carefully, we have double bases ats the bottom. we always try to tell the school kids measure twice and cut once and think of b.gratz brown when you do this. he wanted all of the windows lined up perfectly. he had, however, would have to put windows where this beautiful staircase is. it bothered him so much that they ended up incorporating dummy windows on the outside with the shudders closed. when you look from the outside, it appears as if they're real windows. however, they do not penetrate. this staircase is so beautiful and i think one of the most remarkable things about it is the fact that it is hand carved, free-standing wall nut staircase we have in front of us. people forget that in those days, they did not have the electricity and the tools that they have available today. so to stop and look at all of the beautiful woodwork and the carvings makes you appreciate the skill and the workmanship of those workers in those days. the state penitentiary, of k, is located just a couple blocks east. a lot of the labor that was used in build gd this home was labor. it took about eight months to build this home at the cost of ab75,000 which you could understand now why the cost might have been as low as it was with the use of prison labor. barnett, the man who designed this home, loved large spaces. you can tell that from this room that we're in right now. there's a lot of large rooms throughout to be able to handle all of the large amounts. not only for tours, but all the special events that they host here. i'd like to point out to you the shape of this table as well as it's carried over into some ovt floor covering that we have. it is the natural footprint of the design of this home. it's two half circles on either end. if you were above the mansion looking stragt down from a helicopter, that would be the shape that you would see and the design of this house. i would like to share with you this portrait at the majs. mansion. mrs. hadley was one of the first young ladies. however, she chose to wait and have her portrait painted years later. the story is ha her son, john hadley did come in and see mansion years later and remarked that mother wishes she had not waited. and he had also wished that she had chosen a dress that did not look like a nightgown. lightning struck the old capital building and she and her children were upstairs swadled in blankets as the fire burned down the capital building. this is a portrait of mrs. ca l carolyn bahn. in 1973, she opened this mansion to public tours trying to make the mansion available to all of the peecople and the children missouri. the dosens wear these costumes to try to share with those individuals that come into the home what it might be like if they had visited the home in the 1870s. this is one of my favorite items here. this is from the u.s.s. missouri. on the backside, we have the missouri state seal and all the little things that are on here are the things that are indigenous to us high in missouri. this was on board the u.s.s. missouri when the treaty was signed. it was located in the pacific ocean. we're presently standing in the formal dining room of the dpov nor mansion. it was originally two rooms and the door curtain was taken down providing extra space and making it a very large room to use. we're also in front of the side board here that was built in the 1818 e 20s and given to the governor's mansion when he left ufrs. one of the fun stories we always like to share with the children that they seem to enjoy, there was a governor steward that rode his horse up to the front steps and proceeded to feed his horse oats out of this plate warmer as part of the side board. now, the comment was that he probably should not be feeding his horse in the governor's mansion. and his comment to them was i have had to feed more people in this home with probably less manners than my horse has. the lovely portrait up here is mrs. critendid kwho lived here at the mansion during the times of jesse james and frank james, the lauslessness that we were worried about the safety of people with train robberies and bank robberies. despite all of their concerns, their daughter carry died of diphtheria at age 9 here at the mansion. she has been the only child who died while living at the mansion. she represents all the health of the missouri children. governor nixon and first lady nixon are kurntdly the 34th governor and his family to live in the governor's mansion where we are today. here we have a photograph of b.gratz brown, his wife and his child. what is interesting is the fact that his granddaughter, margaret weis brown wroet the book "good night move" which is a favorite of the school children all over the united states. the fact that we dwget to enjoy and be a part of this mansion makes it all very special here. i had a comment from somebody not long ago that told me that the dosens bring to life the max. without us here to tell the stories and share the history, it would simp lif be a home that had pictures, furniture and carp et.