fidence had increased, loans had been made more
freely, and capital had taken up again its search for profitable
investment. In the newer regions, where permanent improvements were
least numerous, the field for exploitation had been great. The climax of
exploitation was reached throughout the West.

As had been true at all the stages of the westward movement, the West
was heavily in debt, and upon a forced balance would generally have
shown an excess of liabilities over assets. Borrowed money paid much of
the cost of emigration. During the first year the pioneer often raised
no crops and lived upon his savings or his borrowings. He and his local
merchant and his bank and his new railroad had borrowed all they could,
while the creditor, living necessarily in the older communities where
saving had created a surplus for investment, lived in the East, or even
in Europe. The necessary conditions of settlement and development had
prepared the way for a new sectional alignment of business interests,
those of the Far West and the Northwest taking their tone from the
interests of a debtor class, while those of the East represented those
of the creditor. The possible cleavage was revealed as real when the
United States Treasury Department, in its work toward financial
reconstruction, approached the subject of the greenbacks.

The legal-tender greenbacks, which were in circulation to the extent of
$433,000,000 in 1865, constituted not only a part of the debt of the
war, but the foundation of the currency in circulation. Throughout most
of the war they were supplemented by the notes of state banks, local
token-money, and fractional currency, or "shinplasters," of the United
States. Coin ceased to circulate in 1862 and was used only by those
whose contracts obliged them to pay in gold or silver. In 1863 Secretary
Chase inaugurated a system of national banks, to circulate a uniform
currency, secured by United States bonds, but these did not become a
factor in business until the state bank notes had been taxed out of
existence in 1865. After this time national banks were formed in large
numbers, replacing the uncertain notes of the state banks with their own
notes, which were quite as good as greenbacks. But all paper money was
below par in 1865, and gold remained out of circulation, at a premium,
until the end of 1878.

The depreciation of the greenbacks reflected a popular doubt as to the
outcome of the Civil War. They entailed ha