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in U.S. history, legal tender notes unsecured by specie (coin). In 1862, under the exigencies of the Civil War, the U.S. government first issued legal tender notes (popularly called greenbacks) that were placed on a par with notes backed by specie. By the end of the war such notes were outstanding to the amount of more than $450 million. They had been issued as temporary, and in accordance with the Funding Act of 1866 Secretary of State Hugh McCullochMcCulloch, Hugh
, 1808–95, American financier and public official, b. Kennebunk, Maine. Educated at Bowdoin College, he studied law in Boston and practiced two years at Fort Wayne, Ind.
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 began retiring them. The hard times of 1867 caused many, especially among Western debtor farmers, to demand that the currency be inflated rather than contracted, and Congress suspended the retirement. George H. PendletonPendleton, George Hunt,
1825–89, American political leader, b. Cincinnati. He was admitted to the Ohio bar in 1847 and served (1854–56) in the state senate. He was an antiwar Democrat in the House of Representatives (1857–65) and vice presidential candidate on
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 advanced the so-called Ohio Idea, recommending that all government bonds not specifying payment in specie should be paid in greenbacks. John ShermanSherman, John,
1823–1900, American statesman, b. Lancaster, Ohio; brother of William Tecumseh Sherman. He studied law, was admitted (1844) to the bar, and practiced law several years in Mansfield, Ohio, before he moved (1853) to Cleveland.
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, more conservative, was nevertheless willing to let the greenbacks stay in circulation on a redemption basis. The question was warmly debated in 1869 and was ended by a compromise, which left greenbacks to the amount of $356 million in circulation. The law creating them was declared constitutional in the later Legal Tender casesLegal Tender cases,
lawsuits brought to the U.S. Supreme Court involving the constitutionality of the Legal Tender Act of 1862, which was passed to meet currency needs during the Civil War.
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, and the matter rested until the Panic of 1873. The hard-hit agrarians then wanted to inflate the currency with more greenbacks. An inflation bill passed Congress in 1874, but so intense was conservative opposition that President Grant reversed his former position and vetoed the bill. Although the Greenback party worked hard to oppose them, the conservatives triumphed in Jan., 1875, with the Resumption Act, which fixed Jan. 1, 1879, as the date for redeeming the greenbacks in specie. The Secretary of the Treasury accumulated a gold reserve of $100 million, and confidence in the government was so great that few greenbacks were presented for surrender in 1879. Congress provided in 1878 that the greenbacks then outstanding ($346,681,000) remain a permanent part of the nation's currency.


See W. C. Mitchell, A History of the Greenbacks (1903, repr. 1960); D. C. Barrett, The Greenbacks and the Resumption of Specie Payments, 1862–1879 (1931, repr. 1965); I. Unger, Greenback Era (1964).

References in periodicals archive ?
Moreover, during the period the gold premium on the 1861 Notes reached a peak (August to September 1862 as shown in Figure 1) indicating, according to Calomiris, that the public strongly anticipated revocation, the Treasury was actively withdrawing them from circulation in accordance with the Greenback legislation.
Kuwait -- which dropped its dollar peg in 2007 in favor of a currency basket which includes the greenback -- said that Gulf countries will discuss pegging their planned single currency to a basket instead of the US dollar.
I'm saving to buy an apartment because here prices are set in dollars and it's going to be like that for a long time," said Soledad Orozco, a 35-year-old telecommunications manager in Buenos Aires who holds her savings in greenbacks.
The tremendous moves of the greenback may not last very long.
This was part of a prolific winning season for Greenback, who posted eight wins and four seconds from 15 attempts.
However, currency analysts we contacted suggested that the outlook for the dollar/yen exchange rate looks set to favor a continued slide in the greenback.
Native greenback cutthroats are on the rise in this small-stream fly fisher's paradise.
In relatively rapid succession, coal miners rallied around the Greenback Labor Party (LP), the Knights of Labor (K of L), and finally the United Mine Workers of America (UMWA).
A second episode in our history when two currencies were traded side by side at changing prices was the Greenback Era of 1862-1879.
In the East, the yellow-back dollar, a new, gold-denominated and fractional-reserve currency, challenged the greenback dollar, the entrenched fiat currency.
KARACHI -- State Bank of Pakistan on Tuesday verbally took back a notification which restricted import of dollars up to 35 percent and permitted currency exchange dealers to import 100 percent of the greenback.