THIS DAY IN HISTORY – Legal Tender Act passed – 1862

Via History.com

On this day in 1862, the U.S. Congress passes the Legal Tender Act, authorizing the use of paper notes to pay the government’s bills. This ended the long-standing policy of using only gold or silver in transactions, and it allowed the government to finance the enormously costly Civil War long after its gold and silver reserves were depleted.

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Soon after the war began, the federal government began to run low on specie. Several proposals involving the use of bonds were suggested. Finally, Congress began printing money, which the Confederate government had been doing since the beginning of the war. The Legal Tender Act allowed the government to print $150 million in paper money that was not backed by a similar amount of gold and silver. Many bankers and financial experts predicted doom for the economy, as they believed there would be little confidence in the scheme. There were also misgivings in Congress, as many legislators worried about a complete collapse of the nation’s financial infrastructure.

The papernotes, called greenbacks, worked much better than expected. The government was able to pay its bills and, by increasing the money in circulation, the wheels of Northern commerce were greased. The greenbacks were legal tender, which meant that creditors had to accept them at face value. In 1862, Congress also passed an income tax and steep excise taxes, both of which cooled the inflationary pressures created by the greenbacks.

Another legal tender act passed in 1863, and by war’s end nearly a half-billion dollars in greenbacks had been issued. The Legal Tender Act laid the foundation for the creation of a permanent currency in the decades after the Civil War.

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Anonymous
Anonymous

This is how today’s debt can and maybe will end up being handled.

Congress can just take back the Fed and issue as much money -legal tender- as it wants to.

End the Fed.

MrLiberty
MrLiberty

Hyperinflation can still happen without a central bank. End the Fed, but allow the market to set interest rates and allow gold/silver/precious metals to be used as money – Gresham’s Law says that worthless paper creations will be driven out by good money.

CCRider
CCRider

Legal tender laws are among those we were never allowed to learn about. It’s a subject our betters will tolerate no discussion on. They are beyond ANY public scrutiny. That’s because it’s how THEY hold us by the neck while they steal us blind. We could wreck this scam by simply eliminating legal tender laws. Let the free market create it’s own currency to compete against THEM. Smart people would go to a currency backed with intrinsic value. Dumb people will get taken by hustlers. The entire economy would blossom. But it won’t happen. THEY won’t have it.

Vote, my ass.

Houston Davis
Houston Davis

Try to compete against the Fed?
Look what happened to Bernard von NotHaus and the private currency the Liberty Dollar. He was made an example of by the Secret Service.

MrLiberty
MrLiberty

He only got in trouble because of legal tender laws and the crony capitalism inherent in the government’s protection of the criminal Federal Reserve. If a law was passed that allowed LEGAL competition, the SS and others would have NO GROUNDS for coming after anyone. Why is that not clear in the proposal???

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