The legal-tender greenbacks, which were in circulation to the extent of $433,000,000 in 1865, constituted not only a part of the debt of the war, but the foundation of the currency in circulation. Throughout most of the war they were supplemented by the notes of state banks, local token-money, and fractional currency, or "shinplasters," of the United States. Coin ceased to circulate in 1862 and was used only by those whose contracts obliged them to pay in gold or silver. In 1863 Secretary Chase inaugurated a system of national banks, to circulate a uniform currency, secured by United States bonds, but these did not become a factor in business until the state bank notes had been taxed out of existence in 1865. After this time national banks were formed in large numbers, replacing the uncertain notes of the state banks with their own notes, which were quite as good as greenbacks. But all paper money was below par in 1865, and gold remained out of circulation, at a premium, until the end of 1878. The depreciation of the greenbacks reflected a popular doubt as to the outcome of the Civil War. They entailed hardship upon all who received them as dollars, since their purchasing value was below the standard of one hundred cents in gold. When the Government, desperate in war time, forced its creditors to accept them at par, it did an injustice which it regarded as real, though necessary. The speedy restoration of the greenbacks to par received the immediate attention of the Treasury upon the return of peace. Hugh McCulloch, of Indiana, who became Secretary of the Treasury in 1865, was a banker of long experience and success. He proposed, if allowed, to reduce the whole war debt, including the greenbacks, to long-term bonds bearing a low rate of interest, and to create a sinking fund which should redeem them as they fell due. This involved the withdrawal from circulation of the greenbacks, and the destruction of that amount of the money used in business. Congress authorized it, however, and McCulloch canceled greenbacks from month to month until he had reduced the total to $356,000,000 in February, 1868.