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Thread: Money in the Old West

  1. #1
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    Default Money in the Old West

    I'm in the process of writing a book on the 20 cent piece because I couldn't find an acceptable answer on why it was created.

    Boy, did that lead to some interesting tangents! By reading books and contemporary newspapers (e.g. the Daily Alta California) I found out there were 2 separate economies at work in the US until 1879. The one in the East from 1861 to 1879 was based on a fiduciary standard (i.e. paper currency backed by the government's promise of its worth), and the one in the West was on a specie (i.e. gold and silver) standard.

    In reading about the journeys of immigrants and travelers in the Old West (before 1880), I've seen how much trouble they had. Prices were far higher in the West than in the East, specie cost more than paper currency (so they had to exchange their money in the East before they left), and they couldn't always get exact change.

    In Roughing It, Mark Twain related how he felt generous giving a boot-black a half dime for his troubles. He thought the young man was admiring the coin as a great tip, but the man handed it back to him and "told me I ought to keep my money in my pocket-book [sic] instead of in my soul, and then it wouldn't get so cramped and shriveled up so!" Apparently the smallest coin circulating in Salt Lake City in the 1860s was a quarter.

    If you see western movies set in the 1860s and '70s and a character pays in paper money, you'll know it ain't accurate!

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    What did the military use for payment to the soldiers? I would think that would have an effect on the circulation of money?

    NJ
    "I got four things to live by: Don't say nothing that will hurt anybody. Don't give advice--nobody will take it anyway. Don't complain. Don't explain." Death Valley Scotty Walter Scott 1872-1954

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    Quote Originally Posted by Norman Johnson View Post
    What did the military use for payment to the soldiers? I would think that would have an effect on the circulation of money?

    NJ
    It was insignificant as far as the larger economy because the army was so small and scattered. It could make a difference at a town or business adjacent to a post of course. Soldiers received a scrip or check which they could cash at a bank, or in many other cases, received government paper money once a month. There is a story related to the Little Big Horn battle in which the 7th Cavalry troopers, just having been paid but with no place to spend it (except a local sutler that accompanied the main column) took their personal cash with them. Later, soldiers exploring the site of the LBH Indian encampment found toy 'ponies' made by the children from river bank mud, some using folded paper money for a 'saddle' no doubt obtained from the dead soldiers effects post-battle.

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    Quote Originally Posted by Norman Johnson View Post
    What did the military use for payment to the soldiers? I would think that would have an effect on the circulation of money?

    NJ
    The payment of Federal employees was a huge problem. In July 1864 the paper dollar fell to 35 cents in gold. Federal employees received the same pay as their counterparts in the East, so in reality the high cost of living coupled with the diminished purchasing power of their paper money forced many to quit. They simply couldn't afford to work for the government any more.

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    Many frontier outposts didn't require much actual currency. At a remote mine the company store would be the only place to get any goods. The employer would issue scrip on paper or coin tokens to exchange there. Even unprocessed gold & silver, (dust, nuggets) was accepted in the far frontier.

    <
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