GREENBACKS (as printed on the back in green ink), the current name, from the first of the legal-tender notes first issued by the government during the Civil War. (See DEW!, NATIONAL). The authorizing act was signed by Lincoln 25 Feb. 1862; it was the first ever passed by Congress making anything but coin legal tender, and nearly all the Democrats and many Republicans declared it unconstitutional. But war necessities were too exigent, and the bill authorized $150,000,000 of the notes, not receivable for import dues nor payable by the government as interest on its obligations. On 11 June 1862 and 3 March 1863 further issues were authorized ; and on 3 Jan. 1864 they reached their maximum amount of $449,338,902. The great inflation, the uncertain fortunes of the War, and the belief that even if victorious the United States neither could nor would pay its enormous debt at face value, but would re pudiate or scale it, combined to depreciate the value of the notes; throughout 1864 they were worth on an average only about 45 cents on the dollar, and on one day, 11 July, when Early was threatening Washington, they drop ped in panic to about 35 cents — or as currently expressed, the "premium on gold') was 285. The legal tender acts had always been under stood to he temporary war measures only, and a choice of evils; the secretary of the treasury (McCulloch) in his report for 1865, expressed the opinion that they ought not to be in force a day longer than was necessary to prepare for a return to the gold standard. The House
passed a resolution of cordial concurrence, 144 to 6; and on 12 March 1866 both houses agreed on a reducing act, by which on 31 Dec. 1867 the volume of greenbacks stood at $356,000,000. But the demoralization of economic sentiment and judgment wrought by them, which afterward issued in the Greenback party, was already at work; many attributed the prosperity of the time to the currency inflation and even in a majority had determined to make the paper currency a permanent feature of our finance. On 4 Feb. 1868 any further reduction was prohib ited and the volume stood at this mark till October 1872, when it began to increase, amount ing on 15 Jan. 1874 to $372,979,815. On 20 June 1874 the maximum was fixed at $382,000,000. Meantime a test case had been made up to try the question of their constitutionality (Hepburn Griswold) and in 1869 the Supreme Court, by five to three, heade(1 by Chief-Justice Chase, decided against them. The fiercest political op position was roused by this, however, and it became a party question. The Supreme Court, in May 1871, reversed its decision by one ma jority. This experience has led the Supreme Court to be excessively cautious about taking jurisdiction in any case where strong political feeling is involved. The question of legal tender has become unimportant in recent years.
See GOLD STANDARD BILL.