Lincoln's Greenbacks Were Fiat Money with Just a Promise of Redemption.

This article was edited on 10/22/2014:

Abraham Lincoln issued the Greenbacks. They helped pay for the Civil War.

Gary North has argued that the Greenback was not pure fiat money and was backed by gold, and Ellen Brown says the opposite.  Turns out there were two banking acts that are confused. The National Banking Act of 1863-64 used bonds as collateral for the dollars issued. The Greenbacks, however, were issued by the Legal Tender Act of 1862 with just a promise to redeem and no collateral offered.Wikipedia reports:

One of the first attempts of the nation to issue a national currency came in the early days of the Civil War when Congress approved the Legal Tender Act of 1862, allowing the issue of $150 million in national notes known as greenbacks and mandating that paper money be issued and accepted in lieu of gold and silver coins. The bills were backed only by the national government's promise to redeem them and their value was dependent on public confidence in the government as well as the ability of the government to give out specie in exchange for the bills in the future. Many thought this promise backing the bills was about as good as the green ink printed on one side, hence the name "greenbacks." [1]

I wrote this to Gary North:

We don't have a complete fiat system do we? After all, the government is constrained by borrowing to pay it's bills. Bonds are the new gold, being used as pristine collateral in clearinghouses. Of course, the scam is, that swaps are forced upon businesses who borrow, and the borrowers have to take the high, fixed side of the swap, and the banks take the low, floating side of the swap. That means, the banks need to Fed to keep interest rates low to continue the scam.

Where that didn't happen in 2008, we almost had a meltdown.

So, bonds are the new gold but the scam is the swap market. The banks always win as governments and companies try to protect against inflation and rising interest rates that never come.

So, really, Ellen Brown wants to break that prison we are in as a nation. I don't know if she has thought of it in these terms but we are bound by low interest rates and swaps and treasuries control the world.

And that is good? I am interested in your comments,

Gary Anderson
As you can see, my concern is that there is no escape from this low interest rate environment and scam without some sort of really fiaty fiat money or at least money backed by US treasuries. Now with the derivatives, treasuries are in shortage and it may be necessary to issue a Greenback type currency! ( I made that word "fiaty" up since fiat money tends to have backing of something, including our current system where treasury bonds are the new gold.)  Low interest rates have actually destroyed the middle class in America.

See also:


  1. the greenbacks were promises to pay (as stated on the front of them); and they did pay: following the organization of the federal reserve system, new members (formerly national currency banks) presented $150million greenbacks to the Treasury and received $150million in gold

    the pure fiat notes were the 1953, 1963, 1966 United States notes which promised nothing and were legal tender for all debts

    Ellen Brown never studied or read the history of greenbacks, and knows nothing of the subject; she never even read the text of the act of february 25, 1962.

    1. So, there is not enough gold to back all the money that is in existence today. And bonds are the new gold. You have to prove they are not. You can always turn in your dollars and get treasuries.

  2. >>>bonds are the new gold
    that was acknowledged (and enacted into law) long ago; in the 1863 national currency bank act,
    and in the 1913 federal reserve act

    The title of your article is still in-correct,
    Ellen Brown is still a trojan infiltrator

    1. I don't know about Ellen being a trojan infiltrator, however, I do support the concept of your article and appreciate your understanding that bonds work as collateral. The article has been corrected.

  3. NatCurBankAct 1863:--

    Sec. 15. And be it further enacted, That every association, after having complied with the provisions of this act preliminary to the commencement of banking business under its provisions, shall transfer and deliver to the Treasurer of the United States any United States bonds bearing interest to an amount not less than one third of the capital stock paid in; which bonds shall be deposited with the Treasurer of the United States, and by him safely kept in his office until the same shall be otherwise disposed of, in pursuance of the provisions of this act.

    Section 16. And be it further enacted, That upon the making of any such transfer and delivery, the association making the same shall be entitled to receive from the Comptroller of the Currency circulating notes of different denominations, in blank, registered and countersigned as hereinafter provided, equal in amount to ninety per centum of the current market value of the United States bonds so transferred and delivered, but not exceeding the par value thereof, if bearing interest at the rate of six per centum, or of equivalent United States bonds bearing a less rate of interest; and at no time shall the total amount of such notes, issued to any such association, exceed the amount at such time actually paid in of its capital stock.

    Sec. 18. And be it further enacted, That, in order to furnish suitable notes for circulation, the comptroller of the currency is hereby authorized and required, under the direction of the Secretary of the Treasury, to cause plates to be engraved in the best manner to guard against counterfeiting and fraudulent alterations, and to have printed therefrom, and numbered, such quantity of circulating notes, in blank, of the denominations of five dollars, ten dollars, twenty dollars, fifty dollars, one hundred dollars, five hundred dollars, and one thousand dollars, as may be required to supply, under this act, the associations entitled to receive the same; which notes shall express upon their face that they are secured by United States bonds, deposited with the treasurer of the United States, and issued under the provisions of this act, which statement shall be attested by the written or engraved signatures of the treasurer and register, and by the imprint of the seal of the treasury; and shall also express upon their face the promise of the association receiving the same, to pay on demand, attested by the signatures of the president, or vice-president, and cashier; and the said notes shall bear such devices and such other statements, and shall be in such form, as the Secretary of the Treasury shall, by regulation, direct.

    FedResAct of 1913:---
    section 4,
    (sub-section) Eighth. Upon deposit with the Treasurer of the United States of any bonds of the United States in the manner provided by existing law relating to national banks, to receive from the Comptroller of the Currency circulating notes in blank, registered and countersigned as provided by law, equal amount to the par value of the bonds so deposited, such notes to be issued under the same conditions and provisions of law as relate to the issue of circulating notes of national banks secured by bonds of the United States bearing the circulating privilege, except that the issue of such notes shall not be limited to the capital stock of such Federal reserve bank.

    The legislative history of greenbacks

  4. You are confusing the fiat money of the Legal Tender Act of 1862, which were the Greenbacks, with the National Bank Act of 1863-64 which established bonds as collateral. Ellen Brown is spot on with regard to the Greenbacks, and you are incorrect.

  5. So, I would say that the full faith and credit of the USA stands behind the dollar. Unfortunately, the dollar is used to further international trade, which has become very important. It means the dollar can lose value and I understand your concern about this, Name 789. But bonds are gold, for derivatives, but I would rather have them being the new gold for currency. But with floating currencies that won't happen. Such is life.

  6. you are the one who is confusing;
    I merely posted the relevant sections to support the observation that "bonds are the new gold" for 150 years now

    Greenback act February 25, 1862:

    Be it enacted by the Senate and House of Representatives of the United States in Congress assembled, That the Secretary of the Treasury is hereby authorized to issue on the credit of the United States one hundred and fifty millions of dollars of United States notes, not bearing interest, payable to bearer, at the Treasury of the United States, and of such denominations as he may deem expedient, not less than five dollars each.

    section 2. And be it further enacted, That to enable the Secretary of the Treasury to fund the Treasury notes and floating debt of the United States, he is hereby authorized to issue on the credit of the United States coupon bonds or registered bonds, to an amount not exceeding five hundred million dollars, and redeemable at the pleasure of the United States after five years, and payable twenty years from date, and bearing interest at the rate of six per centum per annum, payable semi-annually;

    and the $5.00 US note issued based on the Feb 25, 1862 act states on its front:
    "The United States promise to pay to the bearer five dollars"

    that is exactly what bank notes promised to do

    "payable to bearer" means what ?
    and they were paid to bearer at the pleasure of the government; more correctly, at the pleasure of the bankers, who presented them to the Treasury and received $170million in 1917

    as I stated the real fiat notes are the 1953, 1963, 1966 United States notes

    >>>>>>>full faith and credit of the USA
    more like the high moral character of the government :-)

  7. If greenbacks were fiat, so were the national bank notes, and so are the federal reserve notes

    [greenbacks] "are made the basis of the entire system of national banks, whose notes are payable in United States notes." ---senator John Sherman, one of the fathers of greenbacks, in 1873

    Sec. 41. And be it further enacted, That every such association shall at all times have on hand, in lawful money of the United States, an amount equal to at least twenty-five per centum of the aggregate amount of its outstanding notes of circulation and its deposits; and whenever the amount of its outstanding notes of circulation and its deposits shall exceed the above-named proportion for the space of twelve days, or whenever such lawful money of the United States shall at any time fall below the amount of twenty-five per centum of its circulation and deposits, such association shall not increase its liabilities by making any new loans or discounts otherwise than by discounting or purchasing bills of exchange, payable at sight, nor make any dividend of its profits, until the required proportion between the aggregate amount of its outstanding notes of circulation and its deposits and lawful money of the United States shall be restored

    (how did that funky anchor at the end of the link to my site ended up there ? :-)

  8. So, the only difference I see between the Greenbacks and the fiat notes of 53,63, and 66 is that they could become like confederate money, ie. become worthless. I believe that is very unlikely. But it could happen.

    1. The difference is, US notes are limited by law to $300 some millions (from the original $450millions), and are not even issued into circulation.....
      Please see the law as it stands, and as it evolved:--


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