Monster. The Greenback and Greenbackers of then and now are evil to Liberty.
Rothbard's History of Banking and Money
The National Banking Acts of 1863–1864 had semi-cartelized the banking system. Only certain banks could issue money, but all other banks had to have accounts at these banks.
The most interventionary of the Civil War actions was in the vital field of money and banking. The approach toward hard money and free banking that had been achieved during the 1840s and 1850s was swept away by two pernicious inflationist measures of the wartime Republican administration. One was fiat money greenbacks, which depreciated by half by the middle of the Civil War, and were finally replaced by the gold standard after urgent pressure by hard-money Democrats, but not until 1879, some 14 full years after the end of the war. A second, and more lasting, intervention was the National Banking Acts of 1863, 1864,and 1865, which destroyed the issue of bank notes by state-chartered (or “state”) banks by a prohibitory tax, and then monopolized the issue of bank notes in the hands of a few large, federally chartered “national banks,” mainly centered on Wall Street.
In a typical cartelization, national banks were compelled by law to accept each other’s notes and demand deposits at par, negating the process by which the free market had previously been discounting
the notes and deposits of shaky and inflationary banks. In this way, the Wall Street–federal government establishment was able to control the banking system, and inflate the supply of notes and deposits in a coordinated manner.
But there were still problems. The national banking system provided only a halfway house between free banking and government central banking, and by the end of the nineteenth century,the Wall Street banks were becoming increasingly unhappy with the status quo. The centralization was only limited, and, above all, there was no governmental central bank to coordinate inflation, and to act as a lender of last resort, bailing out banks in trouble. No sooner had bank credit generated booms when they got into trouble and bank-created booms turned into recessions,with banks forced to contract their loans and assets and to deflate in order to save themselves. Not only that, but after the initial shock of the National Banking Acts, state banks had grown rapidly by pyramiding their loans and demand deposits on top of national bank notes.
The complaints of the big banks were summed up in one word: “inelasticity.” The national banking system, they charged, did not provide for the proper “elasticity” of the money supply; that is, the banks were not able to expand money and credit as much as they wished, particularly in times of recession. In short,the national banking system did not provide sufficient room for
inflationary expansions of credit by the nation’s banks.
This lead to the drive for a full cartel of the banking system, which became the Federal Reserve System.
"Before we can ever ask how things might go wrong; we must first explain how they could ever go right"
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