Page "United States Note" Paragraph 9

The beginning of 1862 found the Union's expenses mounting, and the government was having trouble funding the escalating war.

U. S. Demand Notes — which were used, among other things, to pay Union soldiers — were unredeemable, and the value of the notes began to deteriorate.

On January 16, 1862, in a private meeting with President Lincoln, Edmund Dick Taylor advised him to issue greenbacks as legal tender.

Congressman and Buffalo banker Elbridge G. Spaulding prepared a bill, based on the Free Banking Law of New York, that eventually became the National Banking Act of 1863.