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Greenback dollar History


Greenback dollar

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.

United States Gold Reserves

united states gold reserve

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.

Start of Depression 1800´s

united states depression

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.

America Civil War Finance

Greenback dollar note

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…

Definition Dollar Greenback

Its all about the Ink!

Greenback dollar

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.