Greenbacks were a form of paper money issued by the United States government during the American Civil War. They were printed in green ink on the back, which is how they got their name. Greenbacks were used to help finance the war when Congress had limited taxing authority. The first greenbacks were called demand notes and were used to pay for salaries and government expenses. The Legal Tender Act of 1862 authorized the paper notes that eventually became the official currency.
Key Facts
- Greenbacks were issued by the United States during the American Civil War.
- They were printed in green ink on the back, which is how they got their name.
- Greenbacks came in two forms: Demand Notes, issued in 1861-1862, and United States Notes, issued in 1862-1865.
- The purpose of issuing greenbacks was to help finance the Civil War when Congress had limited taxing authority.
- The first greenbacks were called demand notes and were used to pay for salaries and government expenses.
- The Legal Tender Act of 1862 authorized the paper notes that eventually became the official currency.
- Greenbacks were not fully backed by gold or silver, which caused them to lose value and led to inflation in the northern economy.
- Greenbacks funded about 15% of the war effort but also raised inflation rates to 14% in 1862 and 25% in 1863 and 1864.
- The value of greenbacks fluctuated during the war, reaching its lowest point of 258 greenbacks to 100 gold in 1864.
- Greenbacks were not legal tender, meaning private parties could refuse them as payment.
History of Greenbacks
Greenbacks came in two forms: Demand Notes, issued in 1861-1862, and United States Notes, issued in 1862-1865. Demand notes were not legal tender, meaning private parties could refuse them as payment. United States Notes were legal tender for all debts, public and private, except for customs duties and interest on the public debt.
Value and Impact of Greenbacks
Greenbacks were not fully backed by gold or silver, which caused them to lose value and led to inflation in the northern economy. Greenbacks funded about 15% of the war effort but also raised inflation rates to 14% in 1862 and 25% in 1863 and 1864. The value of greenbacks fluctuated during the war, reaching its lowest point of 258 greenbacks to 100 gold in 1864.
Conclusion
Greenbacks were a necessary measure to help finance the Civil War, but they also had negative consequences, such as inflation. After the war, the government gradually withdrew greenbacks from circulation and returned to a specie-based currency.
FAQs
What were greenbacks?
Greenbacks were a form of paper money issued by the United States government during the American Civil War. They were printed in green ink on the back, which is how they got their name.
Who used greenbacks?
Greenbacks were used by the Union government to help finance the Civil War. They were used to pay for salaries, government expenses, and to purchase supplies.
Why were greenbacks not fully backed by gold or silver?
The Union government did not have enough gold or silver to fully back greenbacks. This caused greenbacks to lose value and led to inflation in the northern economy.
What was the impact of greenbacks on the economy?
Greenbacks caused inflation in the northern economy. This made it more difficult for people to buy goods and services. Greenbacks also fluctuated in value during the war, which made it difficult for businesses to plan for the future.
What happened to greenbacks after the Civil War?
After the Civil War, the government gradually withdrew greenbacks from circulation and returned to a specie-based currency.
Were greenbacks legal tender?
United States Notes were legal tender for all debts, public and private, except for customs duties and interest on the public debt. Demand notes were not legal tender, meaning private parties could refuse them as payment.
How much of the war effort was funded by greenbacks?
Greenbacks funded about 15% of the war effort.
What was the lowest point that the value of greenbacks reached during the war?
The value of greenbacks reached its lowest point of 258 greenbacks to 100 gold in 1864.