This demand for currericy inflation was by no
means new when it was taken up by the West-
ern farmers. It had played a prominent part in


American history from colonial days, especially in
77


78 THE AGRARIAN CRUSADE


periods of depression and in the less prosperous
sections of the ever advancing frontier. During
the Civil War, inflation was actually accomplished
through the issue of over $400,000,000 in legal-ten-
der notes known as “‘greenbacks.”’ No definite
time for the redemption of these notes was speci-
fied, and they quickly declined in value as com-
pared with gold. At the close of the war a paper
dollar was worth only about half its face value in
gold. An attempt was made to raise the relative
value of the greenbacks and to prepare for the re-
sumption of specie payments by retiring the paper
money from circulation as rapidly as_ possible.
This policy meant, of course, a contraction of the
volume of currency and consequently met with
immediate opposition. In February, 1868, Con-
gress prohibited the further retirement of green-
backs and left to the discretion of the Secretary of
the Treasury the reissue of the $44,000,000 which
had been retired. Only small amounts were reis-
sued, however, until after the panic of 1873; and
when Congress attempted, in April, 1874, to force a
permanent increase of the currency to $400,000,000,
President Grant vetoed the bill.
Closely related to the currency problem was that
of the medium to be used in the payment of the


THE GREENBACK INTERLUDE 79


principal of bonds issued during the Civil War.
