Greenback Movement

The Greenback Party was a movement in the United States during the post–Civil War years to inflate the money supply and give “ordinary” citizens the chance to pay their debts and participate more fully in the economic system. In order to provide funding for the Civil War, the Union government issued $450 million in greenbacks, paper money that was not backed by specie, meaning gold. This was viewed as beneficial by both farmers and urban debtors alike, as it increased the money supply, making it easier to pay debts, even if inflation was a result. The name greenback came from the fact that the money was printed on one of its sides with green ink. However, the value of the greenback dollar fluctuated anywhere from under 40 cents to 67 cents by the end of the Civil War.

In the political arena, the two main parties were divided on this issue. The Republicans tended to represent the creditors, and it was this group that preferred the greenbacks be removed and a return to currency backed by gold. They believed in halting the inflation that came with the issuance of greenbacks, and that all debts would be paid with specie, which was far more sound. The Democrats, on the other hand, believed it would be a good idea to redeem war bonds with greenbacks.

With the end of the Civil War also came an end to the economic boom that wars often produce. The farmers, and other debtors, did not want the notes to be retired. Eventually, it was agreed to retain $356 million worth of the notes in circulation. This was not acceptable to either side.

The issue took center stage once again with the Panic of 1873, which sparked the worst depression in American history up to that time. When the banking firm of Jay Cooke and Company closed its doors and declared bankruptcy, the effects reached across the country, where businesses, railroads, and other banking firms failed. President Ulysses S. Grant, while sympathetic at first to the plight of debtors, vetoed legislation that would have expanded the money supply. In 1875 came the Specie Resumption Act, which provided for the redemption of greenbacks at face value in 1879.

This would be the impetus to spur political action. In 1876 the National Greenback Party was formed, with fighting the Specie Resumption Act as their main goal. In 1876 the party nominated Peter Cooper as its presidential candidate, but the results were dismal.

In 1878, the group changed its name to the Greenback-Labor Party. With 1878 being a congressional election year, the party successfully sent 14 members to Congress. However, on the national level other political compromises were being worked out. The Resumption Act would not be repealed, a small amount of silver would be coined to help increase the money supply, and specie-backed currency would be increased to a small extent.

But with the presidential election of 1880, the movement was losing steam, and fast. The Greenback-Labor Party nominated James B. Weaver for president. The greenback issue was not as important to the voters this time, although the party also pressed for women's suffrage, a graduated income tax, and better congressional regulation of interstate commerce. Weaver garnered only 300,000 votes, indicating that the issue was no longer very important to the general public, because the depression was over. In 1884, the party made one last stand with its nomination of Benjamin F. Butler for president, with terrible results. The members of the Greenback-Labor party would split up and join other reform movements such as the Populist (People's) Party.

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