Chase, Salmon Portland

Letter signed ("S.P. Chase"), 6 pages (8 5/8 x 5 5/8 in.; 220 x 142 mm), Washington, 19 November 1867, to Horace Greeley, offering a summary of his work as Treasury Secretary; edges lightly soiled, formerly folded, fold tears repaired with cello tape.

J. Niven, ed. Salmon P. Chase Papers, vol. 5 (1998), pp. 177-180; see R.C. Williams, Horace Greeley: Champion of American Freedom (2006)

Letter signed ("S.P. Chase"), 6 pages (8 5/8 x 5 5/8 in.; 220 x 142 mm), Washington, 19 November 1867, to Horace Greeley, offering a summary of his work as Treasury Secretary; edges lightly soiled, formerly folded, fold tears repaired with cello tape.
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Chase on the establishment of a national banking system and the issue of federal paper currency—"greenbacks"—to fund the Civil War.

The Civil War created the need to raise money, and with customs revenue from the Southern cotton trade cut off, Chase, as Secretary of the Treasury, had to implement several financial innovations. The Bureau of Internal Revenue, later the Internal Revenue Service, was created in 1862 to collect stamp taxes and internal duties. The next year it administered the nation's first income tax. In order to further finance the war, the Bureau of Engraving and Printing was established in 1862 to print the government's first currency, known as greenbacks because of their color. These were legal tender notes not backed by specie. Chase disapproved in principle of the legal tender notes; with no requirement for specie backing as they could be printed in unlimited quantities and were therefore inflationary. He recognized their necessity in a time of emergency, but later, as Chief Justice of the Supreme Court, he would declare the notes unconstitutional. The National Banking System was created in 1863 to establish a uniform currency. The greenbacks, within a new network of national banks, directly involved the government in banking for the first time.

"If in 1864 I could make a good candidate," Horace Greeley wrote Chase, "you would be my first choice." (Williams,  p. 257). Chase and Greeley were long-time political allies, and Chase was at the time of the present letter serving as Chief Justice of the Supreme Court, tangling with President Andrew Johnson over whether Jefferson Davis was to be tried, and whether former Confederates could hold federal offices. He later supported Greeley in his presidential campaign against Grant and served as one of his pall-bearers on his death in 1873.

Chase takes advantage of his relationship with Greeley, publisher of the New York Tribune, to anonymously influence banking policy from the Supreme Court bench. He writes: "There are few who understand what my work was. It may be set under three heads: 1. To establish satisfactory relations between the public credit and the productive industry of the country — in other words, to obtain supplies. ... Then I resorted to Legal Tender Notes, made them a currency and borrowed them as cash ... 2. To provide against disastrous results on a return of peace. This could only be done by providing a national currency. There were about 1500 state banks in existence who wanted to make their own paper the currency of the country. This I resisted, and confined my loans to greenbacks ... 3. The third division of my labor was to provide a funding system. It was unavoidable during the rebellion that every means of credit should be used. I borrowed money every way I could at reasonable rates."

Not all financiers appreciated Chase's policies, as he notes that "Jay Cooke got nearly quite twice as large commissions under Fessenden and Mcculloch as I allowed him."

He goes on to explain the mechanics of "funding loans" and to critique a proposed new funding law. At the end he adds: "P.S. I wrote this letter so early that I have got [Jacob William] Shuckers to copy, fearing that otherwise it might never be read. To show how badly I can write I enclose the original. I doubt if you can crack[?] the hand."

On 26 November the Tribune printed this letter as a communication from "Our Special Correspondent," with new text at the beginning and end. This original letter was unknown to the editors of the Salmon P. Chase Papers, who had to rely on letterpress copies at the Library of Congress and the New York Public Library.