greenbacks were legal tender printed by the union during the civil war that was not backed by gold or silver.
greenbacks were legal tender printed by the union during the civil war that was not backed by gold or silver.
legal tender printed by the union during the civil war that was not backed by gold or silver?
greenbacks
when congress returned to washington in december 1861, sherman and the finance committee continued their attempts to fix the deepening financial crisis caused by the war. the financial situation had continued to worsen, resulting that month in banks suspending specie payments—that is, they refused to redeem their banknotes for gold. gold began to disappear from circulation. with the 500,000 soldiers in the field, the government was spending the then-unheard-of sum of $2 million per day. sherman understood that "a radical change in existing laws relating to our currency must be made, or ... the destruction of the union would be unavoidable ..." secretary chase agreed and proposed that the treasury department issue united states notes that were redeemable not in specie but in 6% government bonds. the bills would be "lawful money and a legal tender in the payment of all debts". nothing but gold and silver coin had ever been legal tender in the united states, but congress yielded to the wartime necessities, and the resulting first legal tender act passed both the house and the senate. the act limited the notes (later known as "greenbacks") to $150 million, but two subsequent legal tender acts that year expanded the limit to $450 million. the idea of making paper money legal tender was controversial, and william pitt fessenden of maine, chairman of the senate finance committee, was among many who opposed the proposal. sherman disagreed and spoke in favor of the idea. he defended his position as necessary in his memoirs, saying "from the passage of the legal tender act, by which means were provided for utilizing the wealth of the country in the suppression of the rebellion, the tide of war turned in our favor".
john sherman
an early case involving interpretation of the fifth amendment was the "legal tender cases", 79 u.s. 457 (1870) during the american civil war, the legal tender acts of 1862 and 1863 made paper money a legal substitute for gold and silver, including for the payment of preexisting debts. in "hepburn v. griswold", the supreme court had found the legal tender laws inconsistent with the spirit of the constitution, which prohibited the states from passing "any ... law impairing the obligation of contracts." moreover, the court had held that an act compelling holders of contracts that called for payment in gold or silver to accept as legal tender "mere promises to pay dollars" was unconstitutional because it deprived "such persons of property without due process of law" under the fifth amendment. the court until this time had rarely found an act of congress unconstitutional. in 1871, the court, with two new justices on the bench, reversed itself in the legal tender cases, "knox v. lee" and "parker v. davis", and declared the legal tender acts constitutional the fifth amendment does not apply to injuries which flow from the exercise of lawful power, the court held, but only to direct appropriation of property.
regulatory taking