Greenback
Candlefocus EditorAt the start of the Civil War, bills issued by private banks were legally tendered across the nation, however many banks began to suspend payment of their notes due to the chaotic and disorganized times. In an effort to finance the war effort, the Union government issued a series of ‘Demand Notes’ in 1862. These notes were printed in green on the back and declared to be ‘legal tender’ – meaning they could be used to pay all debts, public or private.
The amount of greenbacks in circulation increased quickly. This, combined with the Union government’s lack of gold reserves to back the value, meant that the greenbacks began to devalue significantly and the rise of inflation was felt across the North. To combat this problem, the Legal Tender Act of 1862 was introduced, which allowed for the redemption of greenbacks at the government’s discretion, however it also authorized the issue of paper currency. These notes, called United States Notes or ‘Silver Certificates’, eventually became the official currency of the United States.
The creation of greenbacks during this time was significant and could be argued to have helped the Union win the war. Thus, it is remembered by the popular name ‘greenbacks’ and remains an important part of American history.