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=Economic Life in Carlisle, Pennsylvania in 1876= | =Economic Life in Carlisle, Pennsylvania in 1876= | ||
'''The Greenback Era 1867-1879''' | |||
Needs for financing the Civil War established an increase on rates on protective tariffs, a new banking system and new currency, the greenback. The US issued this inconvertible currency in 1862 and placed it on a par with notes backed by specie. The paper money was a fiduciary standard, unsupported by gold and freely floating against gold and other currencies. It therefore depended entirely on the credit of the US government. The era from 1867-1879 was known as the Greenback era. | |||
After the Civil War there was a rapid economic expansion which led to the inflation of the issuance of greenbacks. By 1867 about 75% of the total money stock was “new” money, national bank notes and US greenback notes and other US currency. National bank notes grew to $340 million by 1874 and were backed by 111% security in government bonds. Security by the federal government allowed for the control of the issuance of bonds, therefore the control of the maximum amount of national bank notes in circulation. In 1876, US bank notes estimated 331,447 (in thousands) and greenbacks exceeded $350 million in circulation. | |||
The | The rise of greenbacks in circulation from 1870-1874 and then its decline through 1878 reinforced money stock movements. After 1873, the stock of money rose then fell creating a fall in wage rates. This was connected with a severe contraction beginning in 1873. From 1873-1897 became known as the long wave depression caused by monetary disturbances and resumption. | ||
To meet the expenses of the government, the Treasury reissued about $26 million of greenbacks that had been retired under the contraction policy of 1865-1868. In 1874, Congress raised the amount to $382 million. In 1875 Congress passed the Resumption Act and by 1877 it was in effect. This act was put in place to reduce the volume of US notes to $300 million thus redeeming the greenbacks in specie. For the success of resumption, deflation was the key factor. A period of deflation of 50 percent in greenbacks occurred from the rapid expansion of the economy after the Civil War. It created a fall in real wages and decreased prices, profits and employment. (gbera) The decline in price was around 3.5% per year. By 1879, the Secretary of the Treasury accumulated a gold reserve of $100 million for the redemption of the greenbacks. In 1878, Congress provided that the greenbacks then outstanding ($346,681,000) would remain a permanent part of the nation's currency. | |||
[[Scott Carpenter]] | [[Scott Carpenter]] | ||
[[Dianna Coscette]] | [[Dianna Coscette]] | ||
Revision as of 22:44, 13 April 2008
History 204 Sp 08 | Political Life | Cultural Life | Economic Life
Economic Life in Carlisle, Pennsylvania in 1876
The Greenback Era 1867-1879 Needs for financing the Civil War established an increase on rates on protective tariffs, a new banking system and new currency, the greenback. The US issued this inconvertible currency in 1862 and placed it on a par with notes backed by specie. The paper money was a fiduciary standard, unsupported by gold and freely floating against gold and other currencies. It therefore depended entirely on the credit of the US government. The era from 1867-1879 was known as the Greenback era.
After the Civil War there was a rapid economic expansion which led to the inflation of the issuance of greenbacks. By 1867 about 75% of the total money stock was “new” money, national bank notes and US greenback notes and other US currency. National bank notes grew to $340 million by 1874 and were backed by 111% security in government bonds. Security by the federal government allowed for the control of the issuance of bonds, therefore the control of the maximum amount of national bank notes in circulation. In 1876, US bank notes estimated 331,447 (in thousands) and greenbacks exceeded $350 million in circulation.
The rise of greenbacks in circulation from 1870-1874 and then its decline through 1878 reinforced money stock movements. After 1873, the stock of money rose then fell creating a fall in wage rates. This was connected with a severe contraction beginning in 1873. From 1873-1897 became known as the long wave depression caused by monetary disturbances and resumption.
To meet the expenses of the government, the Treasury reissued about $26 million of greenbacks that had been retired under the contraction policy of 1865-1868. In 1874, Congress raised the amount to $382 million. In 1875 Congress passed the Resumption Act and by 1877 it was in effect. This act was put in place to reduce the volume of US notes to $300 million thus redeeming the greenbacks in specie. For the success of resumption, deflation was the key factor. A period of deflation of 50 percent in greenbacks occurred from the rapid expansion of the economy after the Civil War. It created a fall in real wages and decreased prices, profits and employment. (gbera) The decline in price was around 3.5% per year. By 1879, the Secretary of the Treasury accumulated a gold reserve of $100 million for the redemption of the greenbacks. In 1878, Congress provided that the greenbacks then outstanding ($346,681,000) would remain a permanent part of the nation's currency.
