I wonder how the rich Americans dealt with money in and around the mid 19th century. Specifically when they travelled, or spent long whiles
away from home and/or in other countries. If anyone knows, or knows of a resource that would be great.
Although the answers are specific to the situation of mid-19th century America, the generalities apply universally.
One of the best resource genres would be the travel diary. Very often, writers of these works will mention their various issues with money. Obviously,
money is a thing that travellers have always required in some abundance. Especially since travel in those times meant several months to several years away
from home rather than a few days.
More specific to the question: wealthy people travelled, like they do now, with sums of cash. Tips, fares, local chachkies all need paying. There were no credit
or debit cards to whip out when checking in to the local hotel. In the US, in the 1860s, this would consist of coins of gold, silver and copper. Copper coins at
this era consisted of one and two cent pieces, as well as a copper-nickel three cent piece. Silver coins were 5c, 10c, 20c, 25c, 50c and $1.00.
Gold coins were $1, $2.50, $3, $5, $10, $20. Twenty dollars was a fabulous sum at that time --- almost a month wages for a laborer. Coins were always more
common in the East and North, so, basically the "Union" states.
The primary Mint was at Philadelphia. Up until 1857, foreign coins circulated freely in the US, in particular the various Latin American pesos, and most
especially the Mexican peso and its subdivisions into eight reales, which came to be called "bits" in the US. (The peso was divided into 8 reales and
it is from these smaller coins that we derive the old sayings two bits, four bits, six bits a dollar and also shave and a haircut - two bits, two bits being
the same as two reales, or a quarter dollar. Interestingly enough, this is also the reason why stock prices used to be quoted in eighths of a dollar --- from
the times when the US dollar was itself patterned on the Mexican.)
Keep in mind that during the War, coins would be hoarded on account of their precious metal content. This necessitated various substitutes. Tokens of metal and
paper were made privately and used widely. Postage stamps were also used as coins and were regularly encased in brass tokens.
Civil War era tokens
Encased Postage Stamp
At this time, there was Federal paper money, though it was actually pretty new and not necessarily well established. Prior to this time, the US had
experimented a couple times with central banks and those failed; then came a time of free banking where banks issued their own currency. As you might
imagine, this led to loads of paper money that could not be trusted. The farther away from home you tried to spend your "Bank of Upper Lower Poocahashie"
three dollar bill, the less likely you were to get three dollars for it. In 1863, President Lincoln established the Federal dollar as the sole currency of the US. The
now familiar dollar bills date to this period in history. Paper money in this period also came in a dizzying array of denominations from three cents up to a
thousand dollars. And of course, also at this time, the CSA was also furiously printing its own money and in similar range of denominations.
We might also note that at this time in history, US money was BIG --- about 50% larger than what we're used to today! Also, it was much more richly
decorated and much more highly symbolic.
And even wallets at this time were different. A gentleman might have carried a secretary wallet in the inner breast pocket of his coat, rather than a tiny bifold.
Beyond carrying a wad of cash and coin, the next important documents to have on hand were two very important letters. One was the letter of
recommendation which would serve as an introduction of the traveller to some local authority in the destination locality. This would establish a person's
repute and social standing if otherwise unknown locally and would most likely be written by a respected person of the traveller's home town, a minister or high
government official. The next is the letter of credit. This is what allowed the traveller to secure more money at the destination. A letter of credit would
be issued by a banker in your home town and accepted by a banker at your destination. You'd be able to withdraw from the destination bank money up to the
amount agreed to in the letter. In combination with your letter of recommendation, you as the stylish nineteenth century traveller could be assured of a steady
stream of local cash to pay for your accommodations, excursions and meals.
A quick search at Google for "US paper money 1860s" and "US coins 1860s" will give a good idea what money looked like back then. Also, see this article
for some background as well. It's focus is Australia, but the problems and solutions were widespread!
A Letter of Credit
I've never completely understood letters of credit. Is it basically like a primitive form of a check, where you can cash it at one bank and they'll get the
money from whatever bank it was issued from? I recently read The Count of Monte Cristo and letters of credit played a big factor in a lot of the story, and I
didn't completely understand all of it.
As I understand it, what it really is is a contract or arrangement between two banks or commercial houses in two different places with you as the traveller
If you want to leave home for a while, you'll go down to the Bank of Upper Lower Saxonia (conveniently located in your home city of Snodding Cranberry) and
reserve some portion of your money on deposit for use on your travels.
If you want to spend some time in Outer Langobardia, passing through the Vales of Vuonh first, you'd need letters for both places. Happily the Bank of Upper
Lower Saxonia has relations with banks in both those countries.
Since you're passing through the Vales, you might get a letter for twenty pounds and twelve shillings; and since you'll be a couple months in Outer Longobardia,
you'll get a letter for a hundred twenty pounds and twelve shillings.
Such a letter, when presented to the Bank of the Vales, allows you to withdraw up to your £20/12 limit, less applicable conversion fees. Now, since you'll be
passing through the Vales both ways, you might want to limit your withdrawals, lest you run out of money and have nothing for your return trip!
Once in Outer Langobardia, you'd go through the same process of going to the bank to withdraw some money. Just as if you were a local account holder. As
your holidays wind down, you see that you've only withdrawn £90/-- of your allotment. So you head back to the Vales. That remaining £30/12 in your
Langobardic letter of credit is no good to you in the Vales, so you have to rely on your good planning in leaving yourself enough money for this return leg of
Perhaps you decide to splurge a little here and withdraw to the limit.
When you get back to Snodding Cranberry, you'll head on back to the bank there to settle your accounts. Nothing remains in your letter of credit to the Vales,
so that's done. You still have £30/12 in your other letter, and that will be redeposited into your own account.
What happens after is the money placed on deposit in Saxonia now has to be divided to settle the accounts between the three banks, since Outer Langobardia
is out ninety pounds and the Vales of Vuonh is out twenty pounds and twelve shillings. So, equivalent sums of cash will have to be transferred back to those
other places, taken from the money that originally came out of your own account.
I think these letters are a kind of early travellers cheque. With the exception that travellers cheques can be spent like cash at shops and restaurants, or they
can be exchanged for cash at a bank.
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