ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Out of desperation, Congress passed the Legal Tender Act of 1862, authorizing Treasury Secretary Salmon P. Chase to print $150 million of United States Notes, later dubbed “greenbacks.” That amount eventually increased to $450 million, ultimately funding 15% of the Union’s war costs.

Detailed explanation-2: -Greenbacks, such as this $5 bill issued in March 1863, were a form of legal tender paper money created by the Union government to help finance the Civil War.

Detailed explanation-3: -Greenbacks-named for their distinctive color-were the first national currency of the United States. The notes, though not redeemable for gold or silver, were lawful money backed by the credit of the federal government.

Detailed explanation-4: -During the Civil War, the federal government issued “greenback” paper money to keep a sufficient amount of currency in circulation. Because this type of money was not backed by gold or silver, inflation resulted and the greenbacks declined in value.

Detailed explanation-5: -Greenback is a slang term for U.S. dollars. The first greenbacks were printed to finance the civil war and were called as such because their backs were printed in green. Because they were not fully backed by gold, greenbacks lost value and caused inflation in the northern economy.