Saturday, February 25, 2012

Remembering: The Legal Tender Act

February 25, 1862. The United States government, faced with running out of gold and silver, with which to pay for the civil war, passes the Legal Tender Act. The Act allows the federal government to print paper money, that is not backed by an equal amount of specie.

Bankers, economists, and some congressmen predicted that doing so would destroy the economy. But the greenbacks, as they were called, did not end the world as it was then known, and were very successful. Because of them the North was able to pay it's bills and keep it's economy going strong throughout the war.

The Legal Tender Acts paved the way for the creation of a permanent currency. The same one which is still used today, though the looks have changed a bit.