Civil War Finance and the American State
Civil War Finance and the American State
This chapter examines the influence of Civil War finance policy on American state formation. More specifically, it considers the two financial instruments used by the Treasury Department to fund the Northern war effort: the “greenback” paper currency and the national banking system. It first discusses Eastern financiers' preferences, particularly those of New York banks associated with the New York Clearing House Association, regarding the federal government's funding strategies. It then explores how voter ignorance influenced the Democrats' shift to supporting inflationary currency policy in the elections following the Civil War. It also shows how greenbacks and the national banking system unintentionally helped establish federal control over the money supply, giving rise to a regulatory state that is bureaucratic in nature.
Keywords: finance policy, state formation, Treasury Department, banks, voter ignorance, elections, Civil War, greenbacks, national banking system, regulatory state
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