This Day In Market History: US Treasury Stops Printing Civil War Greenbacks

Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.

What Happened? On this day in 1864, the U.S. Treasury stopped issuing “greenbacks.”

Where The Market Was: 1864 predates both the Dow and the S&P 500.

What Else Was Going On In The World? In 1864, Union General William Tecumseh Sherman captured Atlanta and conducted his famous March To The Sea, culminating in the capture of the port of Savannah. The phrase “In God We Trust” first appeared on a U.S. coin. A pound of cheese cost 13 cents.

Civil War Greenbacks: Greenbacks were paper fiat currency issued by the U.S. government during the Civil War. The currency got its name from the green ink used on the back of the bills.

Greenbacks were legal tender but were not backed by gold or silver. The U.S. used greenbacks to help finance the Civil War and represented the first non interest-bearing notes ever created by the government. In 1861, Congress authorized the creation of $150 million in greenbacks, but there were $431 million outstanding by mid-1864.

From July 1861 to June 1864, the U.S. Treasury money supply had increased by roughly 450 times.

The U.S. public was initially hesitant to trust a currency not backed by precious metals, but they eventually became receptive to the idea.

The value of greenbacks fluctuated significantly during the Civil War. In July 1864, it took $285 in greenbacks to buy $100 in gold-backed currency.

In 1875, Congress passed the Resumption Act, which called for the Treasury to redeem legal tender notes in specie, or coins. Once Americans realized paper notes were as “good as gold,” they continued as accepted currency.