Hard Money

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HARD MONEY is specie, that is, gold and silver coin. During much of the eighteenth century, the Revolution, and the Confederation, many Americans suffered from the inflation of paper money. The Constitution says that "No State shall … make any Thing but gold and silver Coin a Tender in Payment of Debts" (Article I, Section 10), which put the United States on a hard money basis. Since then, debtor classes and some business groups have repeatedly tried, often with success, to modify the intent of these words.

Those who favored hard money have at different times fought different opponents. In the 1830s the fight was against banks, particularly the second Bank of the United States, which President Andrew Jackson and Senator Thomas Hart Benton of Missouri alleged defrauded the people and mixed in politics. Jackson's followers, including President Martin Van Buren, set up the Independent Treasury System in 1840–1841, but the Whigs abolished it. President James K. Polk founded a more enduring system in 1846. Van Buren's and Polk's systems put the treasury on a hard money basis, although some modifications soon had to be made.

For Secretary of the Treasury Salmon P. Chase (1861–1864), also a hard money proponent, it was a bitter pill to have to ask Congress for three issues of legal tender notes (greenbacks) to carry on the Civil War. Later, as chief justice, Chase said that making paper money legal tender was unconstitutional (Hepburn v. Griswold [1870]).

In the later 1860s and 1870s hard money advocates demanded a return to the gold standard, which was finally achieved on 2 January 1879; an 1873 law had already eliminated silver as part of the monetary base. The hard money advocates opposed any expansion of government paper money, in contrast with the views of the Greenback Party. But they did not oppose national bank notes if these were redeemable in specie.

When the United States abandoned the gold standard in the spring of 1933, American citizens lost the right to demand redemption of paper money or bank deposits in gold coin, and they did not regain it with the limited return to a gold standard in January 1934. The era of hard money had ended. On 15 August 1971, the United States took the final step in establishing an irredeemable paper money standard.


Friedman, Milton, and Anna Jacobson Schwartz. A Monetary History of the United States, 1867–1960. Princeton, N.J.: Princeton University Press, 1963.

McFaul, John M. The Politics of Jacksonian Finance. Ithaca, N.Y.: Cornell University Press, 1972.

Timberlake, Richard H. Monetary Policy in the United States: An Intellectual and Institutional History. Chicago: University of Chicago Press, 1993.

Donald L.Kemmerer/a. r.

See alsoCurrency and Coinage ; Inflation ; Mint, Federal ; Specie Circular ; Specie Payments, Suspension and Resumption of ; Treasury, Department of the .