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37-744: Late in 1861, seeking to raise revenue for the American Civil War effort without exhausting its reserves of gold and silver, the United States federal government suspended specie payments, or the payments made in gold and silver in redemption of currency notes. Early in 1862, the United States issued legal-tender notes, called greenbacks . By war's end, a total of $ 431   million in greenbacks had been issued, and authorization had been given for another $ 50   million in small denominations, known as fractional currency or "shin plasters." The issuance of greenbacks caused inflation during

74-592: A 29% premium. By spring of 1863, the greenback declined further, to 152 against 100 dollars in gold. However, after the Union victory at Gettysburg , the greenback recovered to 131 dollars to 100 in gold. In 1864, it declined again, as Grant was making little progress against Lee, who held strong in Richmond throughout most of the war. The greenback's low point came in July that year, with 258 greenbacks equal to 100 gold. When

111-608: A federal paper currency were politically contentious and recalled the experience of the Continental dollars issued during the American Revolution . These were nominally payable in silver, but rapidly depreciated due to British counterfeiting and the Continental Congress 's difficulty in collecting money from the states. The Buchanan administration had run chronic deficits as the country weathered

148-913: A member of the National Security Council . Under the Appointments Clause of the United States Constitution , the officeholder is nominated by the president of the United States, and, following a confirmation hearing before the Senate Committee on Finance , is confirmed by the United States Senate .     Federalist (4)     Democratic-Republican (4)     Democratic (30)     Whig (5)     Republican (34)     Independent (1) Status The secretary of

185-481: A proportion of 80% of new national bank note issue, which in theory aimed to contract the money supply and hence encourage dollar appreciation such that gold and currency might equate. However, in practice the effect was mild: the total quantity of greenbacks in circulation fell from $ 382   million at the end of 1874 to $ 300   million following the passage of the Resumption Act. The Resumption Act

222-577: Is the head of the United States Department of the Treasury , and is the chief financial officer of the federal government of the United States . The secretary of the treasury serves as the principal advisor to the president of the United States on all matters pertaining to economic and fiscal policy. The secretary is, by custom, a member of the president's cabinet and, by law, a member of the National Security Council , and fifth in

259-477: The Panic of 1857 . The southern secession movement worsened the situation, as the government lost substantial tax revenue. It continued to operate during the presidential transition on private bank loans at rates up to 12 percent, with some banks asking as much as 36. Salmon P. Chase , as the Treasury secretary of the incoming Lincoln administration, found the banks more receptive but struggled to keep enough coins in

296-557: The Secretary of the Treasury to redeem greenbacks in specie on demand on or after 1 January 1879. The Act, however, did not provide for a specific mechanism for redemption. The Act, though, did allow the Secretary of Treasury to acquire gold reserves either via any federal surpluses or the issuance of government bonds . An established gold reserve allowed for daily variations in specie flows and facilitated resumption. The act abolished

333-410: The U.S. presidential line of succession . Under the Appointments Clause of the United States Constitution , the officeholder is nominated by the president of the United States, and, following a confirmation hearing before the Senate Committee on Finance , will take the office if confirmed by the majority of the full United States Senate . The secretary of state , the secretary of the treasury,

370-535: The United States during the American Civil War that were printed in green on the back . They were in two forms: Demand Notes , issued in 1861–1862, and United States Notes , issued in 1862–1865. A form of fiat money , the notes were legal tender for most purposes and carried varying promises of eventual payment in coin but were not backed by existing gold or silver reserves. Before

407-432: The price level although successful resumption at par value required that the premium on gold to fall to zero, which in turn required a fall in the price level as the world price of gold was exogenous. In fact, the final date for Resumption was decided only after the premium on gold had fallen to a tenth of its peak level. The decline in the premium cannot entirely be attributed to the Resumption Act, as downward pressure on

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444-540: The real interest rate that they received. Supporters of the Resumption Act argued that the Panic of 1873 might not have occurred had there been sufficient reserves of gold in the United States Treasury as would have been the case if specie payments were resumed. Opposed to resumption, a new coalition of agrarian and labor interests found common cause during Reconstruction in advocating for "soft money" or

481-437: The secretary of defense , and the attorney general are generally regarded as the four most important Cabinet officials, due to the size and importance of their respective departments. The current secretary of the treasury is Janet Yellen , who is the first woman to hold the office. The Secretary is responsible for formulating and recommending domestic and international financial, economic, and tax policy, participating in

518-450: The seigniorage fee on coining gold and substituted silver for any still existing fractional currency. The Resumption Act set no limit on the quantity of national bank notes that could be issued; this idea became known as "free banking." This provision led many conservatives to believe that the Act was inflationary in nature. However, the Resumption Act also required that greenbacks be retired in

555-577: The treasurer of the United States must sign Federal Reserve notes before they can become legal tender . The secretary also manages the United States Emergency Economic Stabilization fund . The secretary of the treasury is a Level I position in the Executive Schedule , thus earning the salary prescribed for that level ( US$ 246,400, as of January 2024). The United States secretary of

592-535: The Civil War, the United States used gold and silver coins as its official currency. Paper currency in the form of banknotes was issued by privately owned banks, the notes being redeemable for specie at the bank's office. Such notes had value only if the bank could be counted on to redeem them; if a bank failed, its notes became worthless. The federal government sometimes issued Treasury Notes to borrow money during periods of economic distress, but proposals for

629-532: The Panic of 1873 between creditors and debtors revived the specie payment resumption debate. Two views dominated this debate. Conservatives and the creditor class favored " hard money ", they favored resumption as a method for making up losses incurred due to dollar depreciation during the past decade. The resumption of specie payments was perceived as a method to curb the rise in the price level and eventually equate currency with gold. For creditors, that had issued debts in inflated greenbacks, resumption would increase

666-956: The President's Economic Policy Council, Chairman of the Boards and Managing Trustee of the Social Security and Medicare Trust Funds, and as U.S. Governor of the International Monetary Fund , the International Bank for Reconstruction and Development , the Inter-American Development Bank , the Asian Development Bank , and the European Bank for Reconstruction and Development . The secretary along with

703-506: The Resumption Act also argued that many debt obligations were made in an environment in which there existed a premium on gold, that is that inflation in the currency in the previous decade made gold relatively more valuable than currency. Resumption therefore entailed up to a 50% increase in debt obligation if gold and currency equalized. For manufacturers, the rising price of gold made domestic prices cheaper relative to import prices since many European currencies including sterling were fixed to

740-579: The Resumption Act had mixed effects on actual resumption of specie payments, saying that primary economic product of the Act was that it instilled confidence in the business community on the maintenance of specie payments. According to Jennifer 8 Lee , backing American currency with gold helped curb inflation and stabilize the dollar. The Act served as a signal to businesses of an approaching exchange rate between gold and currency. Preparations among businesses for this exchange rate actually encourage parity between gold and currency. The Act did not directly address

777-607: The Treasury to meet expenditures. The first measure to finance the war occurred in July 1861, when Congress authorized $ 50,000,000 (~$ 1.33 billion in 2023) in Demand Notes . They bore no interest but could be redeemed for specie "on demand." Unlike state and some private banknotes, Demand Notes were printed on both sides. The reverse side was printed in green ink, so Demand Notes were dubbed "greenbacks." Initially, they were discounted relative to gold, but being fully redeemable in gold, they were soon at par. In December 1861,

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814-654: The U.S. Notes as well. Lincoln, however, humorously remarked, "If you are going to put a legend on the greenbacks, I would suggest that of Peter and Paul , 'Silver and gold I have none, but such as I have I give to thee. ' " California and Oregon defied the Legal Tender Act. Gold was more available on the West Coast, and merchants in those states did not want to accept U.S. Notes at face value. They blacklisted people who tried to use them at face value. California banks would not accept greenbacks for deposit, and

851-712: The United States to Europe and weakened demand for dollars leading to the Panic of 1873 . Increased Treasury cash balances, continued issuance of national bank notes, and capital outflows together depreciated the currency. These factors further caused a reduction in reserves held by monetary institutions because higher prices increased domestic demand for currency. Reserves held by banks were insufficient to be able to meet seasonal demands in autumn of 1873 as greenback reserves declined from $ 34   million in September 1873 to $ 5   million in October 1873. Tensions surrounding

888-579: The formulation of broad fiscal policies that have general significance for the economy, and managing the public debt. The Secretary oversees the activities of the Department in carrying out its major law enforcement responsibilities; in serving as the financial agent for the United States Government ; and in manufacturing coins and currency . The Chief Financial Officer of the government, the Secretary serves as Chairman Pro Tempore of

925-525: The government had to suspend redemption, and the Demand Notes declined. The later United States Notes could not be used to pay customs duties or interest on the public debt, which could be paid only by gold and Demand Notes. Importers, therefore, continued to use Demand Notes in place of gold. In March 1862, Demand Notes were made legal tender. As Demand Notes were used to pay duties, they were taken out of circulation. The number of Demand Notes issued

962-528: The overall price level also resulted from increased production in the South especially during 1877. The first four months of that year sold as much beef to England as had been sold all of the preceding year. The act has also been criticized for both failing to remove all greenbacks from circulation and failing to dictate what might be done with the greenbacks remaining in circulation. Greenback (money) Greenbacks were emergency paper currency issued by

999-664: The period. Immediately after the Civil War during Reconstruction, there were large capital inflows into the United States and a general improvement in the export-to-import ratio since the export-dominant South was reintegrated with the North. The United States Treasury , however, had increased its cash balance through the summer of 1873 by selling gold for $ 14   million. National banks also increased issuance of national bank notes by $ 44   million. The failure of several railroad companies including Jay Cooke & Company on their bond obligations encouraged capital outflows from

1036-434: The price of gold. Hence continued inflationary measures such as further issuance of greenbacks artificially supported domestic industries. Hard and soft money interests often did cross party lines, although a larger portion of Democrats were hard money advocates. Following a Democratic congressional victory in the elections of 1874 , a lame-duck Republican congress passed The Resumption Act of January 14, 1875. It required

1073-646: The promotion of inflationary monetary policies . These groups viewed the Panic of 1873 as the result of insufficient currency that should have been used to fuel the growth in production that occurred in the South and the West. These regions relied on cheap money – that is low interest rates – to be able to continue to grow. Other soft money advocates included gold speculators and the railroad industry. Collis P. Huntington and other railroad leaders called for further greenback issuance in light of harsh business conditions that made honoring debt obligations difficult. Opponents of

1110-423: The reverse of the notes was printed with green ink, they were called "greenbacks" by the public and considered to be equivalent to the Demand Notes, which were already known as such. The United States Notes were issued by the United States to pay for labor and goods. Earlier, Secretary Chase had the slogan " In God We Trust " engraved on U.S. coins. During a cabinet meeting, there was some discussion of adding it to

1147-470: The sale of bonds to Europe and Treasury surplus. However, when people found greenbacks to be on par with gold, they lost their desire for redemption. Reactions as to the effects of the Resumption Act are mixed. Contemporaries did not consider it an outright victory for hard money. The legislation stood as a compromise engineered by Senators John Sherman and George Edmunds between hard and soft money advocates. Milton Friedman and Anna J. Schwartz argue that

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1184-408: The state would not accept them for payment of taxes. Both states ruled that greenbacks were a violation of their state constitutions. As the government issued hundreds of millions in greenbacks, their value against gold declined. The decline was substantial, but was nothing like the collapse of the continental dollar. In 1862, the greenback declined against gold until by December, gold had become at

1221-400: The treasury is the head of the United States Department of the Treasury , and is the chief financial officer of the federal government of the United States . The secretary of the treasury serves as the principal advisor to the president of the United States on all matters pertaining to economic and fiscal policy. The secretary is, by custom, a member of the president's cabinet and, by law,

1258-531: The treasury is fifth in the presidential line of succession , following the secretary of state and preceding the secretary of defense . On August 16, 2016, President Barack Obama signed Executive Order 13735, which changed the order of succession for filling the Treasury Secretary's role when necessary. At any time when the secretary and the deputy secretary of the treasury have both died, resigned, or cannot serve as secretary for other reasons,

1295-537: The war ended in April 1865 the greenback made another recovery to 150. The recovery began when Congress limited the total issue of greenback dollars to $ 450 million. The greenbacks rose in value until December 1878, when they became on par with gold. Greenbacks then became freely convertible into gold. United States Secretary of the Treasury The United States secretary of the treasury

1332-604: Was far insufficient to meet the war expenses of the government but even so was not supportable. The solution came from Colonel Edmund Dick Taylor , an Illinois businessman who was serving as a volunteer officer. Taylor met with Lincoln in January 1862 and suggested issuing unbacked paper money. On February 25, 1862, Congress passed the first Legal Tender Act , which authorized the issuance of $ 150 million (~$ 3.57 billion in 2023) in United States Notes . Since

1369-551: Was hotly debated during the 1880 presidential election, with most western politicians opposed to it. Specie payments finally resumed during the presidency of Rutherford B. Hayes . Aided by the return of prosperity in 1877, Secretary of the Treasury John Sherman accumulated a gold reserve to be redeemed for existing greenbacks mostly from transactions with Europe. Sherman earmarked a redemption fund by January 1, 1879, that amounted to $ 133   million acquired from

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