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Greenbacks were emergency paper currency issued by the United States during the American Civil War that were printed in green on the back. [1] They were in two forms: Demand Notes , issued in 1861–1862, [ 1 ] and United States Notes , issued in 1862–1865. [ 2 ]
Late in 1861, seeking to raise revenue for the American Civil War effort without exhausting its reserves of gold and silver, the United States federal government suspended specie payments, or the payments made in gold and silver in redemption of currency notes. Early in 1862, the United States issued legal-tender notes, called greenbacks.
Top row: The distinctive green ink used on the backs of Demand Notes gave rise to the term "greenbacks" Bottom row: Prominent design elements used on the front of $5 and $20 Demand Notes (located respectively under their denomination); pictured in the middle is the front of a $10 Demand Note with prominent design elements listed
During the early 1870s, Treasury Secretaries George S. Boutwell and William Adams Richardson maintained that, though Congress had mandated $356,000,000 as the minimum Greenback circulation, the old Civil War statutes still authorized a maximum of $400,000,000 [nb 1] —and thus they had at their discretion a "reserve" of $44,000,000.
On February 25, 1862, the U.S. passed the First Legal Tender Act to help finance the Civil War. The act changed the economy to a fiduciary standard based on a fiat currency called United States Notes, or more popularly, greenbacks. Unlike bank notes, greenbacks were not backed by any metallic standard and functioned as a "loan without interest."
A $5 United States Note of the series of 1862 popularly known as a "greenback" from the color of ink used on the reverse. The American Civil War of 1861 to 1865 greatly affected the financial system of the United States of America, creating vast new war-related expenditures while disrupting the flow of tax revenue from the Southern United States, organized as the Confederate States of America.
The act maintained greenbacks issued during the Civil War at their existing level, about $356 million, neither contracting them nor issuing more. It replaced $45 million in "temporary loan certificates," paper bearing 3% interest but which circulated as currency, with the same amount of national bank notes issued by newly chartered banks.
A "greenback" note issued during the Civil War One of the first attempts to issue a national currency came in the early days of the Civil War when Congress approved the Legal Tender Act of 1862 , allowing the issue of $150 million in national notes known as greenbacks and mandating that paper money be issued and accepted in lieu of gold and ...