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Posted - 02 Nov 2001 : 17:07:46
 The History of the Greenback
Money is not what you believe; although whatever one may think, the stuff we use works so well that life is miserable without it. Today's money is not money at all. It is a payments transfer system, known as checking. The presumption is that money is in the bank and is transferred to someone by means of writing a check.
That is where the greenback comes in, for it is presumed to be the money one is transferring. The greenback today is the Federal Reserve Note, the paper we carry in a wallet and call "cash". Our story deals with the two kinds of money, the check that is not money and the greenback that is money. The Greenback got its name in President Lincoln's administration. It is a pejorative term in that it was scorned by banks, which paid only part value for it when presented by clients. History had been unkind to the paper money put out by the Continental Congress during the Revolution against England.
To downgrade something, one might say, "not worth a Continental." The Continental Congress had no taxing authority; so, any paper money it issued could not command payment of a commodity without risk. History texts do not say that the true greenback was as good as gold, until banks persuaded the U.S. Senate to strip it of its legal tender feature. The Treasury authorized issue of $150 million of legal-tender notes on February 28, 1862 for payment of all debts public and private. The vote in Congress was 93 to 59. [Gertrude Coogan, "Money Creators", 1934] These greenbacks never lost their value against gold coin.
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