Greenbacks

paper money, promises to pay issued by the United States government during the Civil War. The notes were so called from the color of the ink with which their backs were printed. Through political agitation the term is identified more or less closely with paper money in general. The national Constitution denies the states authority to emit bills. It does not expressly authorize Congress to issue notes, but Congress has assumed authority on several occasions.

During the war of 1812 treasury notes to the amount of $36,680,794 were issued. They were chiefly $100 notes bearing 5 2/5 per cent interest, receivable for taxes or dues to the government and legal tender in discharge of all private debts. The latest of these issues consisted of small bills bearing no interest. During the financial panic of 1837, and closing with 1844, various acts were passed, under which notes to the amount of $47,002,900 were issued. They were for the most part bills for $50 or $100, running for one year and bearing interest at a rate varying from six per cent downward to practically nothing, one thousandth of one per cent.

Again during the Mexican War, the government felt obliged to resort to paper money. Notes to the value of about $90,000,000 were issued in large denominations, bearing from three to six per cent interest. During the Civil War the government had to put forth every effort to obtain the means of paying costs that rose to the enormous figure of $30,000,000 per day. August 31, 1865, the amount of paper money afloat, including notes, greenbacks, and fractional currency, was $1,732,725,414.67. The notes bore interest ranging as high as 7 3/10 per cent, and were in large denominations. The greenbacks, like currency of the present day, were issued in various denominations and bore no interest. January 3, 1864, the circulation of greenbacks amounted to $449,338,902. Fear lest the war might prove a failure or that the government could not redeem so large an amount of paper reduced its value. At one time, when the Confederate general Early was near the gates of Washington, it required $285 in greenbacks to buy $100 in gold. As specie had retired from circulation fractional currency was issued. These "shinplasters," as they were derisively called, were in denominations of three, five, ten, twenty-five, and fifty cents, corresponding in value to the coins they replaced. In 1865 fractional currency to the amount of $26,344,742.51 was outstanding. Many bills and notes were burned, lost, or kept as souvenirs and never presented for payment. This proved especially true of fractional currency; but, to the credit of a democratic form of government, it may be said that the United States has paid every dollar of its war obligations without loss to the holder.

The abundance of money and apparent prosperity during the war when greenbacks were in circulation led many to believe that the government has it in its power to make business active and money easy at any time by the issue of paper money. During the panic years of 1874-8, numerous political conventions bid for the labor vote by adopting resolutions calling for the issuing of paper money. In 1876 the Independent party nominated Peter Cooper of New York for the presidency on a fiat money platform. This party, known popularly as the Greenback party, polled 81,737 votes. In 1878 1,000,000 votes were cast for Greenback candidates, and fourteen congressmen were elected on Greenback platforms.

Two kinds of paper money are now in circulation. In exchange for United States bonds deposited with the United States treasury for security, the government authorizes national banks to issue paper money and guarantees its value. The government issues also a limited amount of paper money. The government notes now in circulation are gold certificates, authorized March 3, 1863; silver certificates, authorized by the Bland Act of February 28, 1878; treasury notes, authorized by the Sherman Act of July 14, 1890; and United States notes or "greenbacks" of 1862 and 1863.

The Bureau of Printing and Engraving at Washington prints paper money as fast as the banks call for it. Bills are printed in sheets of four bills each. The paper is counted out to the printers and is counted in again. If a sheet be lost the printers have it to pay for as though it were so much money. A press runs off 176,000 sheets daily. At times $2,000,000 worth of new bills are printed daily.

See Money; Counterfeiting