 The outbreak of the Civil War shook public confidence in the Union , and citizens began hoarding specie , gold and silver coins . In late December 1861 , banks and then the federal Treasury stopped paying out gold at face value . By mid @-@ 1862 , all federal coins , even the base metal cent , had vanished from commerce in much of the country . The exception was the Far West , where for the most part , only gold and silver were acceptable currencies , and paper money traded at a discount . In the rest of the nation , gold and silver coins could be purchased from banks , exchange agents , and from the Treasury for a premium in the new <unk> the government began to issue to fill the gap in commerce and finance the war . 
