Legal Tender Act
Quick Summary
The Legal Tender Act of 1862 was a pivotal piece of legislation passed by the United States Congress during the Civil War. Facing a shortage of coins, the act authorized the U.S. Treasury to issue the first paper currency, known as "greenbacks." These bills were not backed by gold or silver, marking a significant shift towards a national currency and fiat money.12
The constitutionality of this act was debated, with the Supreme Court initially ruling against it in Hepburn v. Griswold (1870). However, this decision was overturned in 1871 by the Legal Tender Cases (Knox v. Lee and Parker v. Davis), which upheld Congress's power to issue fiat currency, especially during times of national emergency. The introduction of greenbacks helped finance the war effort, though it also led to debates about inflation and the government's monetary policies.12
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- Legal Tender Cases
ā¦government in 1862 passed the Legal Tender Act, authorizing the creation of paper money not redeemable in gold or silver. About $430 million worth of āgreenbacksā were put in circulation, and this money by law had to be accepted for all taxes, debts, and other obligationsāeven those contracted prior toā¦
Read Moreā¦government in 1862 passed the Legal Tender Act, authorizing the creation of paper money not redeemable in gold or silver. About $430 million worth of āgreenbacksā were put in circulation, and this money by law had to be accepted for all taxes, debts, and other obligationsāeven those contracted prior toā¦
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William Strongā¦involved the constitutionality of the Legal Tender Act of 1862. The court, in a 5ā3 vote (including a vote for the majority by the ailing Grier), struck down the Legal Tender Act, thus denying Congress the power to issue paper currency as legal tender.
Read Moreā¦involved the constitutionality of the Legal Tender Act of 1862. The court, in a 5ā3 vote (including a vote for the majority by the ailing Grier), struck down the Legal Tender Act, thus denying Congress the power to issue paper currency as legal tender.
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