The Civil War fiscal crisis began before 12 April 1861. The United States Treasury tottered in a state of ‘utmost confusion’ months before Edmund Ruffin shot at the troops holed up in Fort Sumter. The Treasury had been the country's traditional ‘dynamic center’ of government, yet now it faced bankruptcy. Congress was notified on 11 February 1861 that ‘little more’ than $500,000 remained in the central depository in Washington. Demands for $2 million in ‘unanswered’ requisitions had accumulated in the department, with $6 million more due to public creditors in early March. Staff in most executive departments could not draw their salary that January. Members of Congress had gone unpaid since the start of the session the previous December. Worse yet for a nation stumbling into battle, ‘The War and Navy departments’, reported the Treasury department's secretary, John A. Dix, ‘have calls for large requisitions [that] have been delayed on account of the exhausted condition of the Treasury’.

‘To understand the measures submitted to Congress’, John Sherman wrote in reference to the fiscal legislation introduced in the Thirty-seventh Congress, ‘it is necessary to have a clear conception of the condition of the Treasury at that time, and of the established financial policy of the government immediately before the war’. Yet historians rarely include the state of the pre-war Treasury in their review of the Civil War legislation. Studies of finances during the war usually offer only a brief mention of the ‘unsatisfactory condition of the Treasury in 1860’, then move on to the wartime policy.

Analyses of the economic impact of the Civil War era often begin with a litany of Union strengths: in manpower, industrial output, capital resources, railroad miles and the value of real property. These factors gave the Union ‘an overwhelming preponderance in most sources of economic power’, according to Richard N. Current. However, in April 1861, the economic power of the Union seemed more tenuous. Merchants and planters in the future Confederate states owed northern businesses approximately $200 million in unpaid receipts at the start of 1861; as more southern states seceded, repayment seemed unlikely.