The Heated Debate Over 'Shaving' Greenbacks
Washington Territorial legislators clashed over a bill aimed at criminalizing the devaluation of federal currency, pitting economic protectionism against constitutional theory.
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In the House, an act was introduced to prevent the depreciation of United States Legal Tender Notes. The bill provides that anyone who 'shaves' greenbacks—buying or selling them at less than face value—shall be guilty of a misdemeanor, punishable by a fine of up to $200 and imprisonment for up to six months. During debate, Mr. Frost argued that because greenbacks were arriving in packages as large as a mule could carry to pay federal officers, it was the legislature's duty to protect the laborer and mechanic from depreciation. Mr. Griswold countered that the matter was a question of constitutional law for Congress alone to decide. After spirited discussion, the bill passed with 17 ayes and 11 nays.
“It belongs to the Legislature to protect the rights and interests of the poor man.”
This debate highlights the early struggle to establish federal fiat currency as the sole medium of exchange in the West. Much like modern debates over the regulation of decentralized digital assets or stablecoins, the legislature was grappling with how to force public and private adherence to a government-backed financial standard.
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