Greenback got its name from a slang term for U.S. paper dollars due to their color, however, in the mid-1800s, “greenback” was a negative term. During this time, the Continental Congress did not have taxing authority. As a result, the greenback did not have a secure financial backing and banks were reluctant to give customers the full value of the dollar.
Half a century later all the foreign coins and competing state currencies were finally out of circulation, but by the early 1800s, the U.S. was ready to try the paper money experiment again. Bank notes had been in circulation for a while, but because banks issued more notes than they had coin to cover, these notes often traded at less than face value.
During the 1860s, the U.S. created over $400 million in legal tender to finance its war against itself. These were called greenbacks simply because the backs were printed in green. The government backed this currency and stated that it could be used to pay back public and private debts. The value fluctuated according to the North’s success or failure at certain stages in the war. Confederate dollars, also issued during the 1800s, followed the fate of the confederacy and were worthless by the end of the war and only the greenback prevailed.
During the 1800´s the United States gold reserve was dramatically increased by the government. It increased its gold reserves in the event of a mass run on the banks to redeem the greenbacks. However, January 1, 1879, came and went. The public had gained full confidence in the currency. The greenback issue was dead, but attention turned toward another economic panacea the free and unlimited coinage of silver.
The gold standard also spurred massive exploration. Which is why Spain and other European countries discovered the New World in the 1500s to prospect more gold and increase the country’s prosperity. It also inspired the Gold Rush in California and Alaska during the 1800s which indirectly affected the United States gold reserve.
During the 1800s, even commercial banks in Canada and the United States issued their own banknotes, backed by their promises to pay in gold. The U.S claimed it building United States gold reserve as a backer of its currency. Since they could lend more than they had to hold in reserves to meet their depositors demands, they actually could create money. This inevitably led to “runs” on banks when they could not meet their depositors demands and were bankrupt. The same happened to smaller countries. Even the United States Treasury had to be rescued by JP Morgan several times during this period. In the late 1800s and early 1900s, countries legislated their exclusive monopoly to issue currency and banknotes. This was in response to “financial panics” and bank insolvencies. This meant that all currency was issued and controlled by the national governments, although they still maintained United States gold reserve to support their currencies. Commercial banks still could create money by lending more than their depositors had placed with the bank, but they no longer had the right to issue banknotes.
United States gold reserve subsequenatly increased over the period based upon the above factors.
Farmers and debtors, feeling a the economic downturn of the united states depression and began requesting the halt of the greenback notes. Around 1867, the wartime economic boom had ended and it was in their interest to create inflation, which would make it easier for them to pay off large debts.
A compromise was reached in which $356 million worth of greenbacks would remain in circulation. Neither side was fully in agreement with this result.
The financial uprising of 1873 started in the fall and was followed by the worst united states depression in history up to that time, climaxing in 1893. The monetary issue was revived and was argued heatedly by both sides. During the united states depression, president Grant was originally sympathetic to the farmers’ plight, but he eventually caved in to the wishes of his wealthy friends and vetoed a measure that would have expanded the greenback currency.
The conservaties won an important victory in the passage of the famous Resumption Act of 1875. This law provided that on January 1, 1879, all greenbacks would be redeemable at full face value. Debtor groups immediately began working for the law’s repeal, a movement that developed into the National Greenback Party. However, due to the united states depression, the general population, was well as the Congress, was nearly equally divided on monetary issues. Therefore, in 1878 a compromise was worked out which provided that:
The Resumption Act would was not repealed as many farmers and the general public wished
The currency supply would be slightly increased through the printing of more greenbacks of additional gold & silver backed currency A limited coinage of silver dollars would be allowed through the Bland-Allison Act (1878), a small inflationary gesture to the debtor interests. The united states depression lasted a long time but the economy improved.
The monetary value of the greenback, which was printed using green ink on one side, fluctuated as the war progressed. At the start of 1864, when Union prospects were slim, the greenback dollar held a value of below 40 cents; by the end of the war in 1865, it was around 67 cents. The original intention was for the greenbacks to hold the same value as regular gold-backed notes, but that result never occurred.
Financing the cost of fighting the Civil War had a financial burden; so the federal (Union) government in 1862 began printing legal tender notes. This currency was not backed by specie (gold or silver) and exerted an inflationary impact on the Northern economy. By end of the war about $450 million was in circulation.
Pressure from business interests and creditors in the postwar period led to an effort to retire the greenbacks. These forces did not want to receive payments in cheap money and opposed any government policy that would lead to inflation. However the greenback prevailed…
Its all about the Ink!
The ink on the reverse side of the Greenback Federal Reserve Notes being green is what led to the nick name “greenback”. To a lesser extent, Silver Certificates and United States Notes also had a greenback, but the seal and serial numbers on the front were printed in blue and not green ink. The last issuance of the Greenback was in 1957 and 1966, respectively. The Greenback is a weel known form of United States currency, specifically a Federal Reserve Note, which is the paper currency presently used by the United States. Your parents will remember the Greenback !
‘Greenbacks’ have been printed since before the turn of the 20th century, when the size of the paper currency was printed on was about 1/3 wider and 1/3 longer than its present size. Many older Greenback notes are now extremely valuable.
Congressional Record states that American Bankers Association was printed in these records on the of April 29, 1913. The continued gold standard made this possible. William Jennings Bryan was the Democratic candidate for president in 1896, campaigning to bring silver back as a money standard. (Silver standard) “We will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.”
William Jennings Bryan Of course the money changers supported his opposition on the Republican side so long as he wanted the gold standard maintained. The factory bosses were somehow convinced to tell their work force that business would close down if Bryan was elected, and everyone would lose their jobs.
The silver “fleecing of the flock” is a term money changers use for the process of booms and depressions which make it possible for them to repossess property at a fraction of its worth. In 1891 a major fleece was being planned. “On Sept 1st, 1894, we will not renew our loans under any consideration. On Sept 1st we will demand our money. We will foreclose and become mortgagees in possession. We can take two-thirds of the farms west of the Mississippi and thousands of them east of the Mississippi as well, at our own price… Then the farmers will become tenants as in England…”
The Republicans won by a small margin. Bryan tried again in 1900 and in 1908 but lost both times. He became secretary of state under Wilson in 1912 but became disenchanted and resigned in 1915 under suspicious circumstances connected with the sinking of the Lusitania which drove America into the First World War and its first conflict overseas.
W.Cleon Skousen. Even after his death, the idea that America might print its own debt free money set off warning bells throughout the entire European banking community. On April 12th in 1866, the American congress passed the Contraction Act, allowing the treasury to call in and retire some of Lincoln’s greenbacks, With only the banks standing to gain from this, it’s not hard to work out the source of this action. To give the American public the false impression that they would be better off under the gold standard, the money changers used the control they had to cause economic instability and panic the people. This was fairly easy to do by calling in existing loans and refusing to issue new ones, a tried and proven method of causing depression. They would then spread the word through the media they largely controlled that the lack of a single gold standard was the cause of the hardship which ensued, while all this time using the Contraction Act to lower the amount of money in circulation.
“Right after the Civil War there was considerable talk about reviving Lincoln’s brief experiment with the Constitutional monetary system. Had not the European money-trust intervened, it would have no doubt become an established institution.”
It went from $1.8 billion in circulation in 1866 allowing $50.46 per person, to $1.3 billion in 1867 allowing $44.00 per person, to $0.6 billion in 1876 making only $14.60 per person and down to $0.4 billion only ten years later leaving only $6.67 per person and a continually growing population.
Most people believe the economists when they tell us that recessions and depressions are part of the natural flow, but in truth the money supply is controlled by a small minority who have always done so and will continue to do so if we let them. By 1872 the American public was beginning to feel the squeeze, so the Bank of England, scheming in the back rooms, sent Ernest Seyd, with lots of money to bribe congress into demonetizing silver. Ernest drafted the legislation himself, which came into law with the passing of the Coinage Act, effectively stopping the minting of silver that year. Here’s what he said about his trip, obviously pleased with himself. “I went to America in the winter of 1872-73, authorized to secure, if I could, the passage of the bill demonetizing silver. It was in the interest of those I represented – the governors of the Bank of England – to have it done. By 1873, gold coins were the only form of coin money.”
Ernest Seyd Or as explained by Senator Daniel of Virginia “In 1872 silver being demonetized in Germany, England, and Holland, a capital of 100,000 pounds ($500,000.00) was raised, Ernest Seyd was sent to this country with this fund as agent for foreign bond holders to effect the same object (demonetization of silver)”. 1
Within three years, with 30% of the work force unemployed, the American people began to hark back to the days of silver backed money and the greenbacks. The US Silver Commission was set up to study the problem and responded with telling history: “The disaster of the Dark Ages was caused by decreasing money and falling prices… Without money, civilization could not have had a beginning, and with a diminishing supply, it must languish and unless relieved, finally perish. At the Christian era the metallic money of the Roman Empire amounted to $1, 800, million. By the end of the fifteenth century it had shrunk to less than $200, million. History records no other such disastrous transition as that from the Roman Empire to the Dark Ages…”
United States Silver Commission While they obviously could see the problems being caused by the restricted money supply, this declaration did little to help the problem, and in 1877 riots broke out all over the country. The bank’s response was to do nothing except to campaign against the idea that greenbacks should be reissued. The American Bankers Association secretary James Buel expressed the bankers attitude well in a letter to fellow members of the association.
He wrote: “It is advisable to do all in your power to sustain such prominent daily and weekly newspapers, especially the Agricultural and Religious Press, as will oppose the greenback issue of paper money and that you will also withhold patronage from all applicants who are not willing to oppose the government issue of money. To repeal the Act creating bank notes, or to restore to circulation the government issue of money will be to provide the people with money and will therefore seriously affect our individual profits as bankers and lenders. See your congressman at once and engage him to support our interest that we may control legislation.”
American Bankers Association, James Buel said what this statement exposes is the difference in mentality between your average person and a banker. With a banker ‘less really is more’ and every need an opportunity to exploit. James Garfield became President in 1881 with a firm grasp of where the problem lay. “Whosoever controls the volume of money in any country is absolute master of all industry and commerce… And when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate.”
James Garfield 1881 Within weeks of releasing this statement President Garfield was assassinated.
During the American Civil war, Colonel Dick Taylor When Lincoln asked if the people of America would accept the notes Taylor said. “The people or anyone else will not have any choice in the matter, if you make them full legal tender. They will have the full sanction of the government and be just as good as any money; as Congress is given that express right by the Constitution.”
Dick Taylor the major protagonist of the American Civil war said Lincoln agreed to try this solution and printed 450 million dollars worth of the new bills using green ink on the back to distinguish them from other notes. “The government should create, issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers….. The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government’s greatest creative opportunity. By the adoption of these principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts and exchanges. The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power.”
From this we see that the solution to cover the American Civil war financially worked so well Lincoln was seriously considering adopting this emergency measure as a permanent policy. This would have been great for everyone except the money changers who quickly realised how dangerous this policy would be for them. They wasted no time in expressing their view in the London Times. Oddly enough, while the article seems to have been designed to discourage this creative financial policy, in its put down we’re clearly able to see the policies goodness. “If this mischievous financial policy, which has its origin in North America, shall become undurated down to a fixture, then that Government will furnish its own money without cost. It will pay off debts and be without debt. It will have all the money necessary to carry on its commerce. It will become prosperous without precedent in the history of the world. The brains, and wealth of all countries will go to North America. That country must be destroyed or it will destroy every monarchy on the globe.”
Hazard Circular – London Times 1865 From this extract its plan to see that it is the advantage provided by the adopting of this policy which poses a threat to those not using it. 1863, nearly there, Lincoln needed just a bit more money to win the war, and seeing him in this vulnerable state, and knowing that the president could not get the congressional authority to issue more greenbacks, the money changers proposed the passing of the National Bank Act. The act went through. From this point on the entire US money supply would be created out of debt by bankers buying US government bonds and issuing them from reserves for bank notes. The greenbacks continued to be in circulation until 1994, their numbers were not increased but in fact decreased. “In numerous years following the American Civil war, the Federal Government ran a heavy surplus. It could not (however) pay off its debt, retire its securities, because to do so meant there would be no bonds to back the national bank notes. To pay off the debt was to destroy the money supply.”
John Kenneth Galbrath The American economy has been based on government debt since 1864 and it is locked into this system. Talk of paying off the debt without first reforming the banking system is just talk and a complete impossibility. That same year Lincoln had a pleasant surprise. Turns out the Tsar of Russia, Alexander II, was well aware of the money changers scam. The Tsar was refusing to allow them to set up a central bank in Russia. If Lincoln could limit the power of the money changers and win the war, the bankers would not be able to split America and hand it back to Britain and France as planned. The Tsar knew that this handing back would come at a cost which would eventually need to be paid back by attacking Russia, it being clearly in the money changers sights. The Tsar declared that if France or Britain gave help to the South, Russia would consider this an act of war. Britain and France would instead wait in vain to have the wealth of the colonies returned to them, and while they waited Lincoln won the civil war. With an election coming up the next year, Lincoln himself would wait for renewed public support before reversing the National Bank Act he had been pressured into approving during the war. Lincoln’s opposition to the central banks financial control and a proposed return to the gold standard is well documented. He would certainly have killed off the national banks monopoly had he not been killed himself only 41 days after being re-elected. The money changers were pressing for a gold standard because gold was scarce and easier to have a monopoly over. Financing the American Civil war had thus been acheived largely due to the Greenback.
With Abraham Lincoln as president and the Central Bank resolutely dead, fractional reserve banking moved like the plague through numerous state chartered banks instead causing the instability this form of economics thrives on. When people lose their homes someone else wins them for a fraction of their worth. Abraham Lincoln said, “Depression is good news to the lender” but war causes even more debt and dependency than anything else, so if the money changers couldn’t have their Central Bank with a license to print money, a war it would have to be. Also Abraham Lincoln regarding this war time quote as vaulable. We can see from from the quote of the then chancellor of Germany that slavery was not the only cause for the American Civil War. “The division of the United States into federations of equal force was decided long before the Civil War by the high financial powers of Europe. These bankers were afraid that the US, if they remained as one block, and as one nation, would attain economic and financial independence, which would upset their financial domination over the world.”
Otto von Bismark chancellor of Germany 1876 On the 12th of April 1861 this economic war began. Predictably Abraham Lincoln, needing money to finance his war effort, went with his secretary of the treasury to New York to apply for the necessary loans. The money changers wishing the Union to fail offered loans at 24% to 36%. Lincoln declined the offer. A colleague of Lincoln’s, Colonel Dick Taylor of Chicago was put in charge of solving the problem of how to finance the war. Abraham Lincoln´s solution is recorded as this. “Just get Congress to pass a bill authorizing the printing of full legal tender treasury notes… and pay your soldiers with them and go ahead and win the war with them also.” Quite a message from Abraham Lincoln!
The American congress voted to renew the charter of The Second Bank of The United States, Andrew Jackson replied by using his veto to prevent the renewal bill from passing. Andrew Jackson´s response gives us an interesting insight. “It is not our own citizens only who are to receive the bounty of our government. More than eight millions of the stock of this bank are held by foreigners… is there no danger to our liberty and independence in a bank that in its nature has so little to bind it to our country?
Andrew Jackson said that, controlling our currency, receiving our public moneys, and holding thousands of our citizens in dependence… would be more formidable and dangerous than a military power of the enemy. If government would confine itself to equal protection, and, as Heaven does its rains, shower its favor alike on the high and the low, the rich and the poor, it would be an unqualified blessing. In the act before me there seems to be a wide and unnecessary departure from these just principles.”
In 1832 Andrew Jackson ordered the withdrawal of government deposits from the Second bank and instead had them put into safe banks. The Second Banks head, Nicholas Biddle was quite candid about the power and intention of the bank when he openly threatened to cause a depression if the bank was not re-chartered, we quote. “Nothing but widespread suffering will produce any effect on Congress… Our only safety is in pursuing a steady course of firm restriction and I have no doubt that such a course will ultimately lead to restoration of the currency and the re-charter of the bank.”
Nicholas Biddle 1836 By calling in existing loans and refusing to issue new loans he did cause a massive depression, but in 1836 when the charter ran out, the Second Bank ceased to function. It was then he made these two famous statements: “The Bank is trying to kill me – but I will kill it!” and later “If the American people only understood the rank injustice of our money and banking system – there would be a revolution before morning…”
When asked what he felt was the greatest achievement of his career Andrew Jackson replied without hesitation “I killed the bank!”