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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 ?
This could be seen as indirect evidence against the eventual convertibility explanation of Greenback fluctuations as well.
The Greenback Labor Party, the Knights of Labor, and the United Mine Workers of America, all sanctioned the development of racially segregated constituent bodies.
The greenback experiment was an important innovation in money, as greenbacks were the first notes backed only by themselves.
In terms of long-run price stability, for example, the greenback equilibrium might seem inferior to the gold equilibrium.
All well and good but sterling alone does not determine the value of the pound against the greenback.
With little reprieve seen for the dollar, investors have sought to protect themselves against the greenback s fall by buying hard assets such as oil and other commodities.
It was a similar story for the greenback against the pound with sterling moving close to an 11-year high of 1.
TRIVIA buffs will doubtless find one to match it, but it's highly unlikely that there have been many winning teams with a combined age as high as the one behind Greenback yesterday, writes Graham Cunningham.
The redesigned $100 bill was launched in 1996, the new $50 greenback in 1997.
has completed its purchase of the assets of Greenback Industries, Inc, a wholly owned subsidiary of Handy & Harman (NYSE: HNH) of Rye, New York.
Federal Reserve discussions of reduced monetary stimulus also boosted the greenback against Japan's currency.
0529 during the European session, with the Canadian dollar holding on as the best performing currency against the greenback on Wednesday, while the Swiss franc failed to hold ground and halted the three-day advance to trade within the range from the previous month.