Greenback-Labor Party

THE GREENBACK-LABOR, NATIONAL Independent, or as it was most commonly known, the Greenback Party, formally began in 1874 when a group of farmers and reformers gathered at a meeting sponsored by the Indiana Grange for the purpose of forming a new political organization committed to currency reform. By 1878, the party had won 14 seats in the House of Representatives, and in the presidential election of 1880, the Greenback candidate received 3.3 percent of the popular vote. But by 1884, the Greenback Party had lost its importance as a third party.

The movement had its informal beginnings as early as 1866, when debt-ridden farmers demanded that greenbacks, the green-and-black inked Demand Notes that were first printed in 1862, remain in circulation as legal tender and that new notes should also be issued. Because the notes were originally issued for the purpose of funding the north in the Civil War, they were not backed by specie (gold or silver), which allowed for inflation, and gave hope to debtors that they might able to pay off their loans for significantly less than they were actually worth. Wealthy conservatives opposed any plan [Page 288]to print more money and thereby contribute to inflation; they wanted all paper currency to be backed by gold. But the political viability of a return to the gold standard was unlikely because of the post-war economic downturn that was having an especially strong impact on the farming community.

The emergence of the railroad had a profound impact on social and economic life in America. Railroads brought new dimensions of speed, scope, and scale, to commerce. But railroads expanded the boundaries of the market economy faster than the financial infrastructure could handle. A shortage of legal tender and a collapse of several major banking institutions led to the Panic of 1873 when the New York Stock Exchange closed for 10 days; but the fallout from the panic lasted for several years.

As a result, credit dried up, banks failed, as did most of the major railroads, and factories closed. A total of 18,000 businesses failed between 1873 and 1875. Unemployment reached 14 percent by 1876, during a time that became known as the Long Depression. Politically, a considerable segment of the voting public became dissatisfied with both the Republican and the Democratic parties.

In 1874, the self-proclaimed Independents issued a call for all those in support of clean government and a single national currency to gather in Indianapolis in November. In January 1875, Congress passed the Resumption Act, which mandated the U.S. Treasury to resume the redemption of legal tender notes in specie as of 1879. The Greenbacks focused their attention on the reversal of this act by framing the money debate in terms of the government's obligation to monopolize the structure of monetary exchange within its sovereign boundaries. The Greenbacks maintained that money should be issued and its volume controlled by the government, and not by banking corporations. Greenbacks fervently believed that the U.S. government had the right and responsibility as a sovereign nation to have a monopoly over the printing and distribution of all currency within its boundaries.

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