sued their own notes to serve as
money. At best, and in theory, these were exchangeable for gold at par;
at worst, they were a total loss; yet as they were, variant and
depreciated since the panic of 1857, they were the money of the people
when the Civil War began. Before the end of 1861 the banks gave up the
pretense of redeeming their notes in coin. The United States Treasury
suspended the payment of specie early in 1862, and thereafter for
seventeen years the paper money in circulation depended for its value on
the hope that it would some day be redeemed.

The needs of the Treasury, in the crisis of suspension, induced Congress
to authorize the emission of $150,000,000 of legal-tender paper money.
These notes, soon known as the "greenbacks," became the measure of the
difference between standard money and coin. Issued at par, they sank in
value and fluctuated until in the darkest days of 1864 a dollar in gold
could be exchanged for $2.85 in greenbacks. Yet they were called
dollars, and the creditor was forced to accept them in payment of his
debts. They were themselves a forced loan, borrowed by compulsion from
the people, and constituting $433,000,000 in the total debts of the
United States in 1865.

The greenback element in the national debt threatened the integrity of
the whole. Should redemption take place at par, and at once, the credit
of the United States could not fail to be strengthened. But should the
greenbacks be allowed to remain below par, should more of them be
issued, or should the United States avail itself of its technical
privilege to pay off part of the bonded debt in "lawful money"
manufactured by the printing-press, the weakest item in the total might
easily depress the whole.

The future of American politics after 1865 was largely determined by the
methods through which the revenue had been increased and by the fate of
the greenbacks, but more important for the immediate future than either
of these was the great fact that in five years the United States had
been able to incur its net debt of $2,808,000,000, and had raised in
addition more than $700,000,000 through taxation. It was a prosperous
Union that emerged from the Civil War, and every region but the South
was strong in its conscious wealth.

The whole of the United States had shared in the unusual growth in the
period following the Mexican War, in which the new railroads were tying
the Mississippi Valley to the seaboard. The census of