The Civil War Gold Premium: How Greenbacks Made Every Farmer a Coin Trader

When Paper Stopped Being a Ticket to Gold

Any man who has watched a thin thread of spirit fall from his worm knows that a thing may look one way and prove to be another. Money in the war years was like that. From '62 to '64 every farmer, widow and drunkard in the Suncook Valley turned coin trader overnight. They bit coins, weighed pennies, and squinted at paper as though it owed them rent. I was among the worst of them, here at Fort Wilkins on the Suncook Valley Turnpike in Pittsfield, and I set down what I saw.

The close of 1861 found the war going badly. Bull Run had sent our boys back to Washington with their pride emptied. Then came the Trent business. Our navy took two Confederate gentlemen off a British mail packet, and for some weeks it seemed we should be fighting England as well as Richmond. Every banker in New York puckered up tight, and on the thirtieth of December, 1861, the New York banks stopped paying out gold for their notes. The Treasury soon did the same. The learned name for this is suspension of specie payments. In plain Suncook talk it means your paper was no longer a ticket to gold. It was only paper.

On the twenty-fifth of February, 1862, Congress passed the Legal Tender Act, and Mr. Salmon P. Chase at the Treasury began printing United States Notes. They had green ink on the back, and so we called them greenbacks. There was no gold behind them, only the government's word and a pretty engraving. Mr. Chase printed money the way a drunk deacon tells the truth: generously, at night, and with nothing to back it.

The Gold Room and the Boy on the Mule

The law said a greenback dollar was a dollar, and a creditor had to take it. Gold did not care what Congress said. The old alchemists gave gold to Sol, the king of metals, and a king takes no orders from a Treasury clerk. So paper and gold parted ways like an unhappy couple at a church social, and the gap between them was called the gold premium.

The premium was quoted in New York in a place called the Gold Room, a pit of screaming men in silk hats who traded gold like hogs at the Brighton cattle market. The quote went out by telegraph and was in the Concord papers by morning. By noon some boy on a mule had carried it up Route 28 to Pittsfield. The figure told you how many greenback dollars it took to buy one hundred dollars in gold. At 150, your paper dollar was worth sixty-six and two-thirds cents in coin. At 200 it was worth half.

War news moved that figure the way the moon moves the tide. When we lost a battle, gold went up, and when we won one, it came down. After Gettysburg and Vicksburg in July of '63 it sank to near 125, and men in this valley cheered twice, once for the Union and once for their pocketbooks. In the summer of '64, though, Grant was bleeding men before Petersburg and Jubal Early's rebels were raiding up to the edge of Washington. On the eleventh of July gold climbed to 285, and a greenback was worth about thirty-five cents. In those days the most patriotic man in Pittsfield was the one praying his own investment would go broke.

Bad Money Drives Out Good

The English call it Gresham's Law: bad money drives out good. When two coins have the same face value but one holds more metal, folks spend the poor one and hide the good one. By the summer of '62 the silver had vanished. Half dimes, dimes and quarters went into socks, sugar bowls and hollow fence posts. Some went down an old miser's privy shaft, wrapped in oilcloth.

Then the cents went too. These were the little copper-nickel cents, the eagle ones and the Indian-head ones, eighty-eight parts copper to twelve of nickel and seventy-two grains apiece. People hoarded them by the jar, and Boston brokers sold a hundred cents for more than a paper dollar. Merchants who were desperate for small change struck their own copper tokens the size of a cent. They bore the merchant's name and some patriotic line such as 'The Union Must and Shall Be Preserved,' and millions of them went into trade until Congress outlawed private cents and two-cent pieces in '64.

In the spring of '64, Mrs. Hutchins kept a slate behind her counter at Hutchins' store by the Suncook mills. One column said Currency and the other said Specie, and she changed it every time the mail stage came in. Once she bit one of my cents so hard she left a dent. I charged her a quarter for the dental consultation, and she paid me in a greenback, which I took to be her revenge.

That August a gold speculator came up from Boston in a checked waistcoat. He was buying hoarded coin from country folk at half its worth, and he offered me greenbacks for my strongbox at a robber's rate. When I refused him, he went round back to inspect my still-house and stepped right over the chain of Barnaby, my black bear, who was asleep in the dirt. Barnaby swallowed the man's greenback and took off his coat-tail and a fist-sized piece of his hindquarter. I put eleven stitches in him on my dental chair and charged him in gold at the day's premium.

A Banker Without a License

I stamp my name on coins: G. G. WILKINS, PITTSFIELD N.H. When nobody trusted paper, people trusted a name they could walk to. A man holding one of my stamped cents knew I would take it back at my counter for a cent's worth of anything I sold. Those cents passed hand to hand from Barnstead to Epsom. A counterfeiter makes false money, and I only make true money louder. In '63 a Merrimack deputy threatened to seize my cents as evidence. Then he admitted he had been spending them at Hutchins' on chewing tobacco for a month.

The old large cents, which stopped being minted in '57, weigh near one hundred sixty-eight grains, about a fortieth of a pound. During the war copper grew so dear that the metal in a large cent came near its face value. I bought copper sheet for my stills by the pound, and some days I was paying for copper with copper, weighing cents against sheet like an apothecary at his scales.

What the Revenue Man Saw

Captain Donald Vance spent twenty-eight years in the Federal Revenue and is now retired to Manchester. He followed copper through the hills, and he says the gold premium made every distiller an economist. A man making whiskey up a hollow wants no paper that loses a third of its value between Monday's run and Saturday's sale, so the distillers priced their liquor in gold, in grain, or in anything that held still. Near Bethel, in the Green Mountains, one man ran a clean copper still in his sugarhouse and weighed every coin on a jeweler's balance. When the Captain walked in, the man asked to see his badge, set it in the brass pan, and frowned. "German silver. Not worth much," he said. He was working out whether a bribe was worth offering.

In the Androscoggin country the Captain seized a peddler's wagon and found a nail keg in the back, full of cents of every kind. After two hours of counting by lantern he weighed a counted hundred on a hay scale and reckoned the rest by the pound. It came to near six thousand cents, or sixty dollars. His report read: "Approximately sixty dollars, one shirt button, and a tooth." I have it on record that the tooth was not one of mine.

Near Plymouth, on the Pemigewasset, a moonshiner chalked his price on a slate. After the Wilderness, and again after Cold Harbor, he added fifteen cents a jar. When Atlanta fell in September of '64 he rubbed the price down, grumbling. Not every tale was comic. Near Conway a young fellow who could not afford copper patched his kettle seams with melted pewter spoons and lead solder. Two men who drank his spirit got the colic, the shakes, and the gray gums that lead gives a man. One of them never worked a full day again. The Captain made the boy take the still apart himself, seam by seam. You do not save money with poison.

Copper, Rye and Honest Cuts

The alchemists gave copper to Venus. Beneath the poetry is honest chemistry. Bright copper binds the sulfur compounds that rise with the vapour, the rotten-egg and burnt-match stink, and holds them on its own skin. The more bright copper the vapour touches, the sweeter the spirit runs. Iron will not do this, and lead is a slow grave.

In '64 the Barnstead farmers would not take paper, so I paid old Mr. Tasker a pulled tooth and a jar of my best for two bushels of rye. I ground eight pounds of rye coarse and stirred it slowly into about five gallons of water near the boil. I held it hot and kept stirring for an hour so it would not set up like mortar. When it had cooled to bath-warm, I stirred in two pounds of malted barley, whose diastase turns starch to sugar. When it cooled to room warmth I pitched brewer's yeast, covered it with a cloth, and kept the room aired. In four to seven days the cap sank and I had my wash.

Fill the still no more than three-quarters full and never seal it, for a closed kettle on a fire is a bomb. Run a low fire, keep your jars away from flame, and never leave a running still. Catch the run in small numbered jars. Throw out the foreshots, and be generous about it. Set aside the heads and the tails, and keep the hearts. When the still is cool, scrub her with sour cider vinegar and salt, then rinse and dry her. The law forbids making spirits for drinking without a federal permit, and I offer all this as history.

Hickory Ash, Red Oak and the Blue Flame

Cletus 'Rabbit' Miller of Wilkesboro, North Carolina, asks whether hickory ashes or red oak shavings in the thump keg will clean out bad heads. Hardwood ash in water makes lye, and that is soapmaking, not distilling. Heads are spirits that boil off early, and they cannot be scrubbed out of a run. You catch them and pour them away. Oak gives colour, a little tannin and a woody vanilla taste, but it removes neither the heads nor the wood spirit. As for the tavern trick of judging liquor by its flame: good grain spirit burns pale blue, and so does the methanol that blinds a man. A red flame may come from a dirty dish or salt. The only real protection is a still with no lead in it, clean copper, and cuts made by a sober man.

For three years nobody in this country knew what a dollar was. Every storekeeper kept two prices, and every moonshiner learned to price his work in something that would still be worth the same come Saturday. Keep your copper clean, your cuts honest, and your fire low.