TeachMeFinance.com - explain United States note
United States note -- A particular form of paper money issued
by the United States and based simply on the credit of
the country (not issued against gold or silver on deposit) ;
often called greenback (because the back is printed in green)
and also legal tender or legal tender note.
United States notes were authorized by various acts of
Congress passed at the time of the Civil War and were virtually
a forced loan. Some of the earlier issues were convertible
into bonds , but this provision was abrogated on July
1, 1863. The highest amount at any time outstanding was
$449,338,902 on January 3, 1864. The original intention was
to redeem the notes and cancel them and by December
31, 1867, the amount outstanding had been reduced to $356,000,000, but Congress on February 4, 1868, passed a law,
without the President's approval, suspending further retirement.
On March 18, 1869, Congress solemnly pledged the
faith of the United States to the payment of these notes in
coin or its equivalent and to make provision at the earliest
practical moment for their redemption. During the panic of
1873 the issue was increased to $382,979,815, but under authority
of the resumption act, January 14, 1875, retirement of
the notes was again undertaken and by May 31, 1878, the
amount outstanding had been reduced to $346,681,016, where
it has remained ever since, as on that date Congress passed an
act forbidding further cancellation and directing the reissue
of such as might be redeemed.
The resumption act went into effect January 1, 1879. On
December 17, 1878, for the first time since 1861, the notes
reached parity with gold, where they have remained ever
since. Their lowest status had been reached in 1864, when
they were worth less than fifty cents on the dollar.
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