Legal Tender Act

The Legal Tender Act, passed by the U.S. Congress in 1862, authorized the federal government to issue paper money, known as greenbacks, that was legally recognized for all debts and transactions. This law was crucial during the Civil War to fund the Union's efforts, providing a uniform national currency instead of relying on private banks’ notes or gold and silver coins. It established the government's authority to declare its currency as valid payment for debts, helping stabilize the economy and support wartime financing.