page_title: United States Note
section_title: Post Civil War
hierarchical_section_title: United States Note / History / Post Civil War
caption_attribution_description: English: United States $10 Banknote, Legal Tender, Series of 1901 (Fr. Ref#114), depicting Meriwether Lewis and William Clark of the Lewis &amp; Clark Expedition. The central portrait is a depiction of an American bison which may be modeled after Black Diamond, a bison once housed in the Central Park Zoo. Part of the National Numismatic Collection, NMAH, Smithsonian Institution.
context_page_description: A United States Note, also known as a Legal Tender Note, is a type of paper money that was issued from 1862 to 1971 in the U.S. Having been current for 109 years, they were issued for longer than any other form of U.S. paper money. They were known popularly as "greenbacks", a name inherited from the earlier greenbacks, the Demand Notes, that they replaced in 1862. Often termed Legal Tender Notes, they were named United States Notes by the First Legal Tender Act, which authorized them as a form of fiat currency. During the 1860s the so-called second obligation on the reverse of the notes stated:
  This Note is a Legal Tender for All Debts Public and Private Except Duties On Imports And Interest On The Public Debt; And Is Redeemable In Payment Of All Loans Made To The United States.
  They were originally issued directly into circulation by the U.S. Treasury to pay expenses incurred by the Union during the American Civil War. During the next century, the legislation governing these notes was modified many times and numerous versions were issued by the Treasury.
context_section_description: At the end of the Civil War, some economists, such as Henry Charles Carey, argued for building on the precedent of non-interest-based fiat money and making the greenback system permanent. However, Secretary of the Treasury McCulloch argued that the Legal Tender Acts had been war measures, and that the United States should soon reverse them and return to the gold standard. The House of Representatives voted overwhelmingly to endorse the Secretary's argument. With an eventual return to gold convertibility in mind, the Funding Act of April 12, 1866 was passed, authorizing McCulloch to retire $10 million of the Greenbacks within six months and up to $4 million per month thereafter. This he proceeded to do until only $356,000,000 were outstanding during February 1868. By this time, the wartime economic prosperity was ended, the crop harvest was poor, and a financial panic in Great Britain caused a recession and a sharp decrease of prices in the United States. The contraction of the money supply was blamed for the deflationary effects, and caused debtors to agitate successfully for a halt to the notes' retirement.
  During the early 1870s, Treasury Secretaries George S. Boutwell and William Adams Richardson maintained that, though Congress had mandated $356,000,000 as the minimum Greenback circulation, the old Civil War statutes still authorized a maximum of $400,000,000—and thus they had at their discretion a "reserve" of $44,000,000. While the Senate Finance Committee under John Sherman disagreed, being of the opinion that the $356,000,000 was a maximum as well as a minimum, no legislation was passed to assert the Committee's opinion. Starting in 1872, Boutwell and Richardson used the "reserve" to counteract seasonal demands for currency, and eventually expanded the circulation of the Greenbacks to $382,000,000 in response to the Panic of 1873.
  In June 1874, Congress established a maximum for Greenback circulation of $382,000,000, and in January 1875, approved the Specie Payment Resumption Act, which authorized a reduction of the circulation of Greenbacks towards a revised limit of $300,000,000, and required the government to redeem them for gold, on demand, after 1 January 1879. As a result, the currency strengthened and by April 1876, the notes were on par with silver coins which then began to re-emerge into circulation. On May 31, 1878, the contraction in the circulation was halted at $346,681,016—a level which would be maintained for almost 100 years afterwards. While $346,681,016 was a significant figure at the time, it is now a very small fraction of the total currency in circulation in the United States. The year 1879 found Sherman, now Secretary of the Treasury, in possession of sufficient specie to redeem notes as requested, but as this brought the value of the greenbacks into parity with gold for the first time since the Specie Suspension of December 1861, the public voluntarily accepted the greenbacks as part of the circulating medium.
  While the United States Notes had been used as a form of debt issuance during the Civil War, afterwards they were used as a way of moderately influencing the money supply by the federal government—such as through the actions of Boutwell and Richardson. During the Panic of 1907, President Theodore Roosevelt attempted to increase liquidity in the markets by authorizing the Treasury to issue more Greenbacks, but the Aldrich–Vreeland Act provided for the needed flexibility by the National Bank Note supply instead. Eventually, the perceived need for an elastic currency was addressed with the Federal Reserve Notes authorized by the Federal Reserve Act, and attempts to alter the circulating quantity of United States Notes ended.
caption: Series of 1901 $10 Legal Tender depicting military explorers Meriwether Lewis, William Clark, and an American bison.
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