2010 at 3:08 pm What is the evidence that taxes payable in fiat currency are necessary for the public's acceptance of the same fiat currency for all other purposes? During the Civil War, The Legal Tender Act of 1862 "authorized the issue of $150 million in Treasury notes, known as Greenbacks. In contrast to Confederate paper, however, Congress required citizens, banks, and governments to accept Greenbacks as legal tender for public and private debts, except for interest on federal bonds and customs duties". http://www.taxanalysts.com/museum/1861-1\\... The obligation for citizens to pay State taxes in US Notes and the obligation for the States to accept those notes for tax payments anchored US Notes as legal tender. However, Tsy would have had a better handle on inflation, and kept US Notes at par with gold dollars, if it could have drained US Notes out of the economy by accepting them for payment customs duties (a large fraction of federal revenue). As is typical in wartime, inflation was high, but not disastrously so because Tsy was able to reduce inflationary pressure with a number of new taxes, including the US's first income tax. As it happens, both Congress and Tsy preferred a federal real estate tax but constitutional issues lead them to follow the example of Britain's income tax system. Lincoln's government did about as competent a job managing public finance as anyone in that era could have. Davis's Confederate Government could not have done a worse job. The CSA didn't require citizens or