The Greenback Party was founded in 1874 in Indianapolis, Indiana. Following the panic of 1873, an economic downturn hit the nation's agricultural sector: farm prices dropped but growers' costs (including rail freight rates) remained stationary or rose. The amount of money in circulation decreased and interest rates increased. Farm families were caught in the middle— those unable to pay their mortgages faced bank fore-closure. Rural America was in crisis. The greenback forces, mostly western and southern farmers, reasoned that putting more money into circulation would have an inflationary effect: Farm prices would rise thereby putting more cash in farmers' pockets and allowing them to pay off their debts.
Originally called the Independent National Party, the Greenbackers advocated the government issue of more greenbacks (the paper currency printed to fund the American Civil War 1861–65). When the party assembled its first convention in 1876, it nominated American inventor and industrialist Peter Cooper (1791–1883) as its presidential candidate. Receiving only 81,837 votes, Cooper's run for office was a failure. But in the midterm elections of 1878 the party united with workers to form the Greenback-Labor Party. Capturing more than 1 million votes, the independent political party placed 14 members in Congress. For the presidential election of 1880, the party nominated Congressional leader James B. Weaver (1833–1912) in order to broaden their political platform to support women's suffrage, a graduated income tax, and the eight-hour work day (then a popular initiative among the nation's laborers). The Greenbackers received few votes and lost seats in Congress, in part because the economy had rebounded.
The Greenback-Labor Party dissolved following the 1884 election. Some of its members joined the People's (Populist) Party. But the nation's monetary crisis was far from over. The greenback forces, which consisted largely of debtors, were later replaced by the Free Silver supporters who advocated government coinage of silver to expand the nation's money supply and produce inflationary effects. Until the mid-1890s the Free Silverites struggled against gold standard forces, (mostly New England creditors who favored a limited money supply).
See also: Bland-Allison Act, Free Silver, Gold Resumption Act, Gold Standard Act, Greenbacks
Greenback party, in U.S. history, political organization formed in the years 1874–76 to promote currency expansion. The members were principally farmers of the West and the South; stricken by the Panic of 1873, they saw salvation in an inflated currency that would wipe out the farm debts contracted in times of high prices. They were opposed by the conservatives, who managed to get the Resumption Act of 1875 passed. The Greenbackers had in 1874 hoped to capture the Democratic party, but the nomination of Samuel J. Tilden killed that hope, and the Greenback party nominated Peter Cooper as its own candidate for President in 1876. The Greenbackers got only 81,737 votes. In 1878, however, certain labor organizations, embittered by the labor troubles in 1877, united with the advocates of cheap money in the Greenback-Labor party, and the combination party polled over 1 million votes and elected 14 Representatives to Congress that year. The Greenbackers' hopes for 1880 were high, and bidding for wider support they broadened their program by endorsement of woman suffrage, federal regulation of interstate commerce, and a graduated income tax. For the presidency in 1880 the party nominated its most notable figure, Gen. James B. Weaver, but the return of prosperity, the passage of the Bland-Allison Act (1878), and the success of the Resumption Act had allayed the discontent on which the party had grown, and the Greenback-Labor vote declined in 1880 to just a little over 300,000. When the candidate in 1884, Gen. Benjamin Franklin Butler (1818–93), did very badly, the party dissolved. Some members joined the Union Labor party in 1888, but more of them went back to the old parties. Later many Greenbackers, among them Weaver and Ignatius Donnelly, became leading figures in the Populist party.
greenback, in U.S. history, legal tender notes unsecured by specie (coin). In 1862, under the exigencies of the Civil War, the U.S. government first issued legal tender notes (popularly called greenbacks) that were placed on a par with notes backed by specie. By the end of the war such notes were outstanding to the amount of more than $450 million. They had been issued as temporary, and in accordance with the Funding Act of 1866 Secretary of State Hugh McCulloch began retiring them. The hard times of 1867 caused many, especially among Western debtor farmers, to demand that the currency be inflated rather than contracted, and Congress suspended the retirement. George H. Pendleton advanced the so-called Ohio Idea, recommending that all government bonds not specifying payment in specie should be paid in greenbacks. John Sherman, more conservative, was nevertheless willing to let the greenbacks stay in circulation on a redemption basis. The question was warmly debated in 1869 and was ended by a compromise, which left greenbacks to the amount of $356 million in circulation. The law creating them was declared constitutional in the later Legal Tender cases, and the matter rested until the Panic of 1873. The hard-hit agrarians then wanted to inflate the currency with more greenbacks. An inflation bill passed Congress in 1874, but so intense was conservative opposition that President Grant reversed his former position and vetoed the bill. Although the Greenback party worked hard to oppose them, the conservatives triumphed in Jan., 1875, with the Resumption Act, which fixed Jan. 1, 1879, as the date for redeeming the greenbacks in specie. The Secretary of the Treasury accumulated a gold reserve of $100 million, and confidence in the government was so great that few greenbacks were presented for surrender in 1879. Congress provided in 1878 that the greenbacks then outstanding ($346,681,000) remain a permanent part of the nation's currency.
See W. C. Mitchell, A History of the Greenbacks (1903, repr. 1960); D. C. Barrett, The Greenbacks and the Resumption of Specie Payments, 1862–1879 (1931, repr. 1965); I. Unger, Greenback Era (1964).
green·back / ˈgrēnˌbak/ • n. 1. inf. a dollar bill; a dollar: the pot she purchased with our last greenback. 2. inf. an animal with a green back, esp. a race of the cutthroat trout found only in Colorado.