150 years of "greenback" Birth of a world currency
02.14.2012 | 09:44 | By Peter Huber (DiePresse.com)
Until the introduction of a single currency in 1862, money was spent uncontrollably in America. How about the "greenback" was.
At the beginning of the 18th Century dared the Scot John Law ( "The inventor of paper money: murderers and financial genius" ), his famous paper money experiment that ultimately ended in disaster. The crucial chapter in the history of paper money but was written elsewhere: in the USA. Before it was so far, there grew tobacco for most money in the colonies and in Maryland even legal tender. Since 1792, there was then the American dollar. But only during the U.S. Civil War (1861-1865) was created 150 years ago with the "greenback", the bills of the Northern States, a single currency, which rose steadily to the world currency.
"Not worth a continental"
The British colonial rulers decreed by the tax burden rose in America of the 18th Century in any case constantly. "The more scarce precious metals - and money - in America, especially for military pay, the more urgent was the desire for independence from Great Britain At times even served cut in pieces, playing cards as a substitute for money." Writes Klaus W. Bender in his book "money-maker : The secret profession ". The American colonies called for more freedom in the printing of paper money, but Britain refused das. This led to the 1775 independence war.
Independence was won, by a stable value of money but it was as far away as before. In order to finance the Revolutionary Army, were large quantities of paper money of the "Continental", the new currency of the colonies issued. The British also brought lots of counterfeits in circulation, thus contributing to a phenomenon that also haunts today and over again by the media: hyperinflation. The phrase "Not worth a continental" for something of no value in the USA the way to this day.
The "wildcat banks"
For decades, monetary stability was a pipe dream. Thousands of banks, so-called "Wildcat Banks", gave an uncontrolled manner and without precious metal cover paper money, counterfeit money experienced a real boom time. These banks were literally located in places where there were more wild cats than people. Approximately 7,000 different bank notes have been issued. One outstanding sum of $ 648,000 was offset by only 86 silver dollars in coverage, it Eybl Erik writes in his book "From the Owl to the euro. Not only an Austrian monetary history."
At the beginning of the 19th Century, finally, a raging controversy over whether to centralize the government to issue paper money and a guarantee of its value should be. Only in 1862 was different with the "Legal Tender Act" everything. This law, which was approved in parliament by 93 votes to 59 decreed on 28 February 1862 to introduce uniform national banknotes. Issuing this could only see the "Department of the Treasury," the Treasury. The Government of the Northern States that funded their civil war (1861-1865) against the South.
"Greenback" as important as the end of slavery
It was also the birth of the "greenback" (tree frog) - also known as "United States Note" - the green to the color on the back of dollar bills has been named. The new notes were harder to counterfeit and bore the seal of the Treasury. They were not backed by gold and received the imprint: "This Note is a Legal Tender." This made them legal tender. The United States note was in circulation until 1971 before they finally settled by the Federal Reserve Notes was replaced.
The new currency was not without controversy, as even the legendary former Federal Reserve chairman Alan Greenspan in his memoirs, "My life for the economy," writes: "Paper money is printed due to state regulations, had a bad reputation." But the then finance minister in 1863, Salmon P. Chase was the occasion of the signing of the "National Banking Act" convinced that had succeeded with the creation of a single currency, an innovation "of perhaps the same value as the abolition of slavery."
"Greyback" the greater evil
The unification of the U.S. currency was consistently not as harmonious as it may sound. On the contrary: It was a chaotic time. And the "greenback" of the Northern States of the United States was at first no real success story - in comparison to the "Greyback" of the southern states but already: "At the end of war 'Greenback' dollars of the Union fifty cents in gold was worth, while the 'Greyback' dollars of the Confederacy, despite the attempt of a currency reform in 1864, was once just a penny, "the popular British historian Niall Ferguson writes in his book" The Ascent of Money ".
"Prices rose in the South during the Civil War to about 4000 percent. In the north it rose by only sixty percent," according to Ferguson continued. Even before the capitulation of the army, the economy along the southern states. His conclusion: "Hyperinflation proved to be a sign of defeat." We all wanted to end the civil war in the north no longer willingly accept "Greenbacks". A flight to tangible assets was the result.
The dollar is pegged to gold
Given the disastrous state of the "greenback", the government tried in 1865, the notes gradually again to pull off the road. This marked a shortage of money, one that hit hard, especially the farmers.
In 1868, the retraction of the "greenbacks" with its own law was again stopped, the money supply was fixed. This lack of flexibility, coupled with a weak economy caused by deflation, however, led to panic in 1873 and on 19 September at the New York Stock Exchange on "Black Friday". In 1879, the dollar was finally tied to gold before the gold binding was abolished in 1931 following the Great Depression. In 1944, the gold standard enjoyed by the Bretton Woods Agreement, nor even a resurrection before he finally fell in 1971.
02.14.2012 | 09:44 | By Peter Huber (DiePresse.com)
Until the introduction of a single currency in 1862, money was spent uncontrollably in America. How about the "greenback" was.
At the beginning of the 18th Century dared the Scot John Law ( "The inventor of paper money: murderers and financial genius" ), his famous paper money experiment that ultimately ended in disaster. The crucial chapter in the history of paper money but was written elsewhere: in the USA. Before it was so far, there grew tobacco for most money in the colonies and in Maryland even legal tender. Since 1792, there was then the American dollar. But only during the U.S. Civil War (1861-1865) was created 150 years ago with the "greenback", the bills of the Northern States, a single currency, which rose steadily to the world currency.
"Not worth a continental"
The British colonial rulers decreed by the tax burden rose in America of the 18th Century in any case constantly. "The more scarce precious metals - and money - in America, especially for military pay, the more urgent was the desire for independence from Great Britain At times even served cut in pieces, playing cards as a substitute for money." Writes Klaus W. Bender in his book "money-maker : The secret profession ". The American colonies called for more freedom in the printing of paper money, but Britain refused das. This led to the 1775 independence war.
Independence was won, by a stable value of money but it was as far away as before. In order to finance the Revolutionary Army, were large quantities of paper money of the "Continental", the new currency of the colonies issued. The British also brought lots of counterfeits in circulation, thus contributing to a phenomenon that also haunts today and over again by the media: hyperinflation. The phrase "Not worth a continental" for something of no value in the USA the way to this day.
The "wildcat banks"
For decades, monetary stability was a pipe dream. Thousands of banks, so-called "Wildcat Banks", gave an uncontrolled manner and without precious metal cover paper money, counterfeit money experienced a real boom time. These banks were literally located in places where there were more wild cats than people. Approximately 7,000 different bank notes have been issued. One outstanding sum of $ 648,000 was offset by only 86 silver dollars in coverage, it Eybl Erik writes in his book "From the Owl to the euro. Not only an Austrian monetary history."
At the beginning of the 19th Century, finally, a raging controversy over whether to centralize the government to issue paper money and a guarantee of its value should be. Only in 1862 was different with the "Legal Tender Act" everything. This law, which was approved in parliament by 93 votes to 59 decreed on 28 February 1862 to introduce uniform national banknotes. Issuing this could only see the "Department of the Treasury," the Treasury. The Government of the Northern States that funded their civil war (1861-1865) against the South.
"Greenback" as important as the end of slavery
It was also the birth of the "greenback" (tree frog) - also known as "United States Note" - the green to the color on the back of dollar bills has been named. The new notes were harder to counterfeit and bore the seal of the Treasury. They were not backed by gold and received the imprint: "This Note is a Legal Tender." This made them legal tender. The United States note was in circulation until 1971 before they finally settled by the Federal Reserve Notes was replaced.
The new currency was not without controversy, as even the legendary former Federal Reserve chairman Alan Greenspan in his memoirs, "My life for the economy," writes: "Paper money is printed due to state regulations, had a bad reputation." But the then finance minister in 1863, Salmon P. Chase was the occasion of the signing of the "National Banking Act" convinced that had succeeded with the creation of a single currency, an innovation "of perhaps the same value as the abolition of slavery."
"Greyback" the greater evil
The unification of the U.S. currency was consistently not as harmonious as it may sound. On the contrary: It was a chaotic time. And the "greenback" of the Northern States of the United States was at first no real success story - in comparison to the "Greyback" of the southern states but already: "At the end of war 'Greenback' dollars of the Union fifty cents in gold was worth, while the 'Greyback' dollars of the Confederacy, despite the attempt of a currency reform in 1864, was once just a penny, "the popular British historian Niall Ferguson writes in his book" The Ascent of Money ".
"Prices rose in the South during the Civil War to about 4000 percent. In the north it rose by only sixty percent," according to Ferguson continued. Even before the capitulation of the army, the economy along the southern states. His conclusion: "Hyperinflation proved to be a sign of defeat." We all wanted to end the civil war in the north no longer willingly accept "Greenbacks". A flight to tangible assets was the result.
The dollar is pegged to gold
Given the disastrous state of the "greenback", the government tried in 1865, the notes gradually again to pull off the road. This marked a shortage of money, one that hit hard, especially the farmers.
In 1868, the retraction of the "greenbacks" with its own law was again stopped, the money supply was fixed. This lack of flexibility, coupled with a weak economy caused by deflation, however, led to panic in 1873 and on 19 September at the New York Stock Exchange on "Black Friday". In 1879, the dollar was finally tied to gold before the gold binding was abolished in 1931 following the Great Depression. In 1944, the gold standard enjoyed by the Bretton Woods Agreement, nor even a resurrection before he finally fell in 1971.