This research paper discusses the origins, fate and significance in American history of the Greenback Party in the 1870s and 1880s. The Greenback Party, sometimes called the Independent or the Greenback-Labor Party, was a third political party. It peaked in political influence in the late 1870s and later merged into the populist movement. It represented a constellation of forces called 'greenbackism,' which was primarily composed of intellectuals, labor and agrarian interests, and which advocated soft money policies during the difficult economic period which accompanied the rapid industrialization of the United States after the end of the Civil War. As a political movement, it failed because of internal divisions, lack of funding and the unwillingness of the American electorate to support it.
The conflict over hard vs. soft money was a perennial feature of American politics in the 18th and 19th centuries. The American Revolution was financed by worthless paper money. Conflicts between Eastern moneyed and banking interests and those who needed easy credit to finance the expansion of the nation in the West had led to a major controversy over the National Bank during the Jacksonian era. Galbraith says that after the Panic of 1837, "the money of the United States was precious metal . . . gold." To finance the costs of the Civil War, the federal government ran up a huge deficit, which reached $2.8 billion by 1865, and which it largely financed by issuing $450 million of legal tender treasury notes, which were not backed by specie (gold). Goodwyn says that "because of the color of their ink, the notes quickly became known to the public as 'greenbacks.'" The war fueled prosperity in the North, but was accompanied by high inflation. After the war, business interests in the East called for the retirement of the greenbacks and a return to a hard currency redeemable in gold. In 1866, Congress authorized a gradual reduction of the greenba...