Posted 03/02/2020 6:01 pm
There are several issues to note here.
Firstly, the US Constitution says states cannot "coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts". State-backed banknotes were not, strictly, "legal tender"; they were intended and designed as a convenience, so you only had to carry around a piece of paper with you instead of lugging a bunch of heavy coins about the place. People had the right to refuse to accept such notes, under any circumstance. States were prohibited from declaring a piece of paper to be legal tender without that piece of paper having backing in gold or silver coin.
Secondly, just because a bank was named "State bank of {x}", does not necessarily mean that the government or treasury of State {x} was responsible for or controlled that bank. Banks were free to come up with whatever name they wished; if it had an official-sounding name that might encourage people to deposit money with them, all the better.
Thirdly, most of the notes that actually were issued by state-backed banks or by state Treasury departments and bear some clause regarding legal tender, were issued during the Civil War period by states that had already declared or were in the process of declaring secession from the Union, and thus felt no obligation to comply with the Constitution.
Firstly, the US Constitution says states cannot "coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts". State-backed banknotes were not, strictly, "legal tender"; they were intended and designed as a convenience, so you only had to carry around a piece of paper with you instead of lugging a bunch of heavy coins about the place. People had the right to refuse to accept such notes, under any circumstance. States were prohibited from declaring a piece of paper to be legal tender without that piece of paper having backing in gold or silver coin.
Secondly, just because a bank was named "State bank of {x}", does not necessarily mean that the government or treasury of State {x} was responsible for or controlled that bank. Banks were free to come up with whatever name they wished; if it had an official-sounding name that might encourage people to deposit money with them, all the better.
Thirdly, most of the notes that actually were issued by state-backed banks or by state Treasury departments and bear some clause regarding legal tender, were issued during the Civil War period by states that had already declared or were in the process of declaring secession from the Union, and thus felt no obligation to comply with the Constitution.
Don't say "infinitely" when you mean "very"; otherwise, you'll have no word left when you want to talk about something really infinite. - C. S. Lewis
