The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-05-14
U. S. CIVIL WAR
INITIATION COST
S6OO,OOO,OOO
GreenbackS Sent All Prices
Soaring While Wages
Jagged Badly.
BY RUTH FINNEY
Times special Writer

WASHINGTON. Ma = The
United States last attack Of paper
money fever cost y 100000 0O0-in
day when that sum looked much
larger than IL does now.
That vas during The Civil War.
In 1861. var financing began
with a $4,000 900 loan from the
banks 70 the government When the
Government Hcxt needed money, IN
1852 IL found it could not sell JUS
s per cent bonds az par Instead Of
marketing them for what they
would bring. Congress decided 10
issue notes amounting 70 Sl50000.-
900 II made them legal tender Tor
az debts except customs duties and
interest on the national debt
RciCre the war vss over. $3.50
200 COO Ia irredcemable notes were
circulating. 1Lev deprecated more
than 50 per cent
Creenbacks Bought Gold Bonds
Or. Richard T. Eiy explained
what happened IN his outlines Of
Economic
The Government was forced 70
sell bonds for deprecated green
backs ne says, but in order 70
maintain IT'S credit IL had 70 pay The
interest and ultimately the prInCi-
pal Of these bonds IN gold
Supplies for the army were paid
FOR in deprecated greenbacks Il
has been estimated that the use Of
the greenbacks increased the ex-
pense OF the Civil War by nearly
$500 900 0OO This estimate ap-
plies only 10 the increased expense
10 The Government. and consequent
~ TO its taxpayers. BOIdhOlders
gained a large part Of what tax
payers lost
Wages g. Per Cent Behind
In 1865. families we're paying SIS
cents a pound for butter that had
cost IT cents in 1860 A barrel Of
flour had risen from S8.25 to sl6.25.
Wages we're 81 per cent behind
prices. Every dollar the worker re-
ceived was worth 1855. but every
one he paid out was worth S2l9.
Families whose savings were in
vested in mortgages or other loans
found that instead of a $4,000 re-
serve they had only $4,000
On the other hand the very
wealthy. who could afford to buy
mp greenbacks as a speculation and
pull wires to bring about redemp-
ton. accumulated great fortunes
when gold payments we're finally
resumed.
An attempt was started in 1886
TO retire the Civil War greenbacks
gradually. But this necessary and
wholesome policy of contraction
was opposed by all who had invested
while prices we're still rising and
desired an opportunity to unload
their investments upon other
people" says DR.. Charles J. Bullock
in his Monetary History Of the
United States" Congress halted the
retirement OF notes
Still in Circulation
II wasn't until after Jay Gould's
attempt TO corner the gold market
and the collapse which followed,
and the panic attendant upon the
failure Of jay Cooke and all the
banks and business men connected
with him. that gold payments were
finally resumed in 1879. The Civil
War greenbackS are still in circula-
ton. to the amount Of S346.000 600.
where they stood in 1867 when Con-
greSs halted retirement
During the long controversy
over retirement defenders Of green
backs argued. as they had in earlier
periods. that the depreciation had
done no harm but had acted as a
gradual and invisible tax on the
community
Or. Bullock sums up the answer
this way. Such a tax was the
most unjust and harmful method
ever devised for meeting public eX-
penditureS Il taxed only those who
were so situated that they could not
avoid il. and benefited SharperS
spectators and dishonest debtors
II devoured the estates of widows
and orphans. paralyzed legitimate
business undertakings and wrought
untold Injury TO public and private
morals"