Greenback

GREENBACK is about how paper money was born. There was always paper money in the young United States of America, but it was issued by local banks and was based on gold or silver deposits. The paper money circulated in the marketplace, but it was valued because one could always redeem the paper dollar at the named bank for a dollar's worth of gold or silver.

But there wasn't enough gold or silver in the United States to pay for the Civil War. That's when Salmon P. Chase, Secretary of the U.S. Treasury at that time, issued "greenback" currency that was not backed by gold or silver -- it worked only because Congress passed a law that said that it was "legal tender for all debts, public and private." Greenbacks were accepted by the public as payment for goods and services only because a law said they were acceptable, not because they were backed by a valuable metal.

Today, all paper dollars in the United States are fiat currency -- valued only because the law says they are. This is the story of how Salmon Chase made this come about, and also how he almost took it all away.