United States Notes

Greenbacks: The 1861-62 Demand and Legal Tender Notes That Created Modern US Currency

In the summer of 1861 the Treasury had a war to pay for and no federal paper money to pay for it with. What it printed instead ran for more than a century, survived a Supreme Court fight over whether it was constitutional at all, and gave the dollar a nickname that has outlived the notes themselves by more than fifty years.

First federal paper, 1861 Legal Tender Act, 25 February 1862 $60,030,000 in Demand Notes Last delivery 1971

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Last updated: September 2026

What is a greenback?

A greenback is a United States Note, also called a Legal Tender Note, the class of federal paper money Congress created in 1862. The Bureau of Engraving and Printing calls United States Notes the first widely circulated US paper currency, whose outstanding notes, in denominations from $1 to $1,000, remain redeemable at face value by the Treasury.

The nickname is older than the notes it ended up attached to. The Demand Notes of 1861 were the first to carry green backs and the first to be called greenbacks, but the name transferred, and the Bureau of Engraving and Printing is direct about why: "Though Demand Notes were technically the first Greenbacks, the nickname stuck to United States Notes because they were much better known" (BEP History Fact Sheet: United States Notes). The Library of Congress records the word in wide use by 1863, complete with musical compositions celebrating the currency (Library of Congress).

The other name, Legal Tender Note, comes from the sentence printed on the back of the early issues: "This note is legal tender for all debts, public and private." That line is the whole point of the class. Before it, federal paper had been a promise to pay in coin. After it, the note itself was the payment.

What were the 1861 Demand Notes?

Demand Notes were the first paper currency issued by the United States government, authorized by the acts of 17 July and 5 August 1861 and payable "on demand" in gold coin at certain Treasury facilities. They came in $5, $10 and $20, carried no Treasury seal, and have no series designations at all.

The circumstances were grim and the Bureau of Engraving and Printing records them plainly. About a month after the Union defeat at Bull Run in August 1861, Treasury Secretary Salmon P. Chase negotiated a loan from the big northeastern banks for $150 million in gold. Demand Notes were the stopgap issued while the first $50 million installment made its way into the Treasury (BEP History Fact Sheet: Demand Notes). Chase's own summary, which the BEP quotes on that sheet, is worth reading twice: "I was compelled to use some expedients for payment of the Army & Navy, or see the defeat of all our efforts to save the integrity of the Republic."

Everything about the production was improvised. The American Bank Note Company of New York printed the notes and shipped them to the Treasury in sheets of four, where dozens of clerks separated and trimmed them by hand. The notes were supposed to be signed personally by the Register and the Treasurer, which was impossible when four to five million notes had to go out in a matter of months, so Treasury clerks signed their own names and wrote "for the" beside the engraved titles. Later printings had "for the" engraved to save time. That single detail is now the main variety collectors chase in the series.

Demand Notes were issued through the Treasury in Washington and the sub-treasuries in Boston, New York, Philadelphia, Cincinnati and St. Louis, and the city name is printed on the note. Issuance in fiscal year 1862 came to $21,800,000 in $5s, $20,030,000 in $10s and $18,200,000 in $20s, for a total of $60,030,000, a figure the BEP takes from the 1876 Annual Report of the Secretary of the Treasury. They were not legal tender when they appeared. They were "receivable in payment for all public dues", which meant taxes and customs duties. The act of 17 March 1862 made them legal tender, three weeks after the Legal Tender Act had already created their replacement.

Why were the backs of the notes printed green?

Green ink was an anti-counterfeiting measure, not a decorating choice. Photography of the period produced black and white images, so a note printed in green could not be copied by camera. The green on the back of the Demand Notes is what gave American paper money its nickname.

The mechanics matter. Counterfeiters had learned to lift colored inks off a note without disturbing the black printing, then photograph what remained to make a plate. A patented green ink that resisted erasure without disturbing the black ink closed that route, and the notes tinted with it were produced under contract by the company that held the patent rights (Coin World). The Federal Reserve Bank of San Francisco's currency exhibit states the consequence flatly: the term greenback for United States paper money originated with the Demand Notes of 1861, and those notes are the first and earliest issue of United States currency as we know it (FRBSF).

Our page on why money is green follows the color forward from there into the modern Federal Reserve Note, and how to spot counterfeit banknotes covers what replaced anti-photographic ink once photography stopped being the threat.

What did the Legal Tender Act of 1862 do?

The First Legal Tender Act, passed on 25 February 1862 and signed by Lincoln the next day, authorized $150 million in United States Notes and declared them a valid form of payment for debts. It created a class of federal money whose value rested on law rather than on a metal reserve.

The act is recorded at 12 Stat. 345, and a second act followed on 11 July 1862 at 12 Stat. 532, authorizing a further $150 million and establishing the Bureau of Engraving and Printing along the way (Library of Congress). The July act added the $1 and $2 denominations, capped at $35 million of the total. A third authorization of $150 million arrived with the act of 3 March 1863. Those three acts plus a joint resolution of 17 January 1863 are still the statutory ancestry named in 31 U.S. Code 5119, which directs the Secretary to redeem United States currency notes from the general fund on presentment and to cancel and destroy them afterwards.

Two pieces of back text distinguish the early notes for collectors. The first authorization carried what collectors call the First Obligation, promising the note was legal tender for all debts public and private except duties on imports and interest on the public debt, and exchangeable for United States six per cent twenty year bonds. The July 1862 authorization changed it to the Second Obligation, which dropped the bond exchange and made the note receivable in payment for all loans made to the United States. 1862 is also the year the Treasury seal first appeared on American currency (US Currency Education Program).

Were greenbacks challenged in the Supreme Court?

Yes, and the Court changed its mind. Many Americans believed a fiat currency was unconstitutional because the Constitution recognized only gold and silver as tender. Salmon P. Chase, who had issued the notes as Treasury Secretary, later sat as Chief Justice in the 1870 decision that first struck down part of the act.

The sequence, as the Library of Congress sets it out, runs from Chase's 1870 opinion holding portions of the act unconstitutional, to Knox v. Lee and Parker v. Davis in 1871, to Juilliard v. Greenman in 1884, which together affirmed the constitutionality of federal paper currency. The Bureau of Engraving and Printing puts it in one sentence: the matter was settled in 1871 in Knox v. Lee, where the Court declared that making United States Notes legal tender was constitutional.

The argument did not end in the courtroom. When the post-war boom collapsed into the panic and depression of 1873, farmers and debtors blamed the Treasury's policy of contracting the currency by withdrawing United States Notes in order to return to the gold standard. The call to expand greenback circulation joined an existing politics opposed to big business and banking interests, and the Greenback party was born out of it. The opposing side, sometimes called the Goldbugs, won: in 1878 the total circulation of United States Notes was fixed at a little over $346 million and the notes became redeemable in gold, a provision that lasted until 1933.

Which series of United States Notes were issued?

United States Notes ran from 1862 to Series 1966, across denominations from $1 to $10,000. The table below tracks the class by authorizing act and series, with the seal and the design points that let a collector place a note in the sequence from across a room.

One caution on the seal column. Between 1862 and 1929 the color and style of the Treasury seal varied greatly from issue to issue, and a single issue was not restricted to a single seal type. The BEP's own reference notes that the $5 Silver Certificate of Series 1886 appeared with small plain red seals, small red seals with a scalloped edge, large red seals and large brown seals, and that no documentation has been found explaining why particular seals went on particular notes.

Acts, authorized amounts, obligation texts and series milestones from the BEP History Fact Sheet: United States Notes. $2 series list, portraits and engravers from BEP Historical Highlights: $2 Note. Seal colors, the 1928 standardization and note dimensions from the BEP booklet Currency Notes. The 1901 $10 device from the Federal Reserve Bank of San Francisco. Final small-size series by denomination from the USPaperMoney.Info chronology of small-size notes.

One footnote on that last row is a genuine first. Treasury Secretary Henry H. Fowler approved a redesigned Treasury seal on 29 January 1968, replacing the Latin inscription with the words THE DEPARTMENT OF THE TREASURY and the date 1789. It appeared first on the $100 United States Note of Series 1966, and only afterwards on Federal Reserve Notes of Series 1969. The last class of note the Treasury was retiring introduced the seal every note has carried since.

When did United States Notes stop being issued?

The Treasury began removing United States Notes from circulation in 1966, reducing the class to the $100 note alone, and the Bureau of Engraving and Printing made its last delivery in 1971. Outstanding United States Notes were never demonetized and remain redeemable at face value by the Treasury.

By the twentieth century the class had become a formality. Congress supported keeping United States Notes in circulation, so the Treasury kept a fixed amount outstanding, but few of the Series 1966 $100 notes circulated beyond the Treasury's own walls. The US Currency Education Program dates the last issuance to 1971 and lists the Series 1966 $100 as retired, noting it as the only small-size $100 US note (US Currency Education Program). The Riegle Community Development and Regulatory Improvement Act of 1994 ended the issuance of United States Notes outright.

That run, 1862 to 1971, is the longest of any class of American federal paper money that has since been retired, with production totals the BEP records at $8,998,950,000 in $5 notes, $2,181,370,000 in $10s, $1,827,182,128 in $2s and $1,230,494,960 in $1s, among others. The American Numismatic Association notes that both Demand Notes and Legal Tender Notes remain redeemable at face value today, and that the Treasury began redeeming Legal Tender Notes for coin in 1879 (ANA Money Museum).

What are greenbacks worth today?

Value tracks scarcity and grade, not denomination or age. Small-size red seal $2 and $5 notes from the 1928 to 1963 series are common and affordable. Large-size Civil War era notes are a different market, and Demand Notes are among the scarcest federal paper an American collector can pursue.

Documented reference points, each tied to a named seller and a date:

Read that table as a shape rather than a price list. The Demand Note results sit at the top because fewer than 200 have ever been certified by PMG, not because $5 and $10 were large sums. At the other end of the class, the small-size red seal notes of Series 1928 through 1963 were printed in the hundreds of millions and remain one of the easiest ways into genuine nineteenth-century American currency design. Our ranking of the most valuable US banknotes shows where greenbacks sit against the American record book, and what determines banknote value explains the mechanics underneath every figure above.

How do you start collecting greenbacks?

Start with a small-size red seal. A Series 1928 through 1963 $2 or $5 United States Note is inexpensive, genuinely historic and instantly recognizable, and it teaches you to read a seal color and a series date before you spend real money on a large-size note.

From there the class opens in three directions. A denomination set of the small-size notes is short and closed: the $1 exists in Series 1928 only, the $5 ends at Series 1963, the $2 ends at Series 1963A and the $100 exists only as Series 1966 and 1966A. A type set of the large-size issues is the serious collector's route, one note per major series from 1862 forward, and it is where the 1901 bison and the 1869 designs live. A Demand Note is a lifetime purchase and should only be bought certified.

Two practical rules. Buy certified for anything large-size or scarce, because restoration and repair are common on Civil War era paper; our comparison of graded versus raw banknotes and the banknote grading guide explain what a holder does and does not guarantee. And learn the Friedberg numbers before you buy, because a Friedberg 126b is a different note from a Friedberg 126a even though both are 1863 $20 Legal Tender Notes.

Browse the current United States banknotes selection to see what is on the shelf. From here, three good next steps: read the history of US paper money for the full sequence from 1690 forward, go back to Continental Currency for the federal paper money that came and went eighty years earlier, and read up on National Bank Notes, the class Congress created in 1863 to sit alongside the greenback. Collectors drawn to Civil War paper usually find their way to Confederate currency next, and the wartime coin shortage that produced Fractional Currency is the other half of the same story.

Planet Banknote is a family-owned dealership in Sarasota, Florida, founded in 2021. Every note is sourced direct from mints, central banks, and authorized distributors, inspected through our Planet Banknote Verified process, and ships with a free Certificate of Authenticity. US orders ship free via USPS Priority, and every order includes a free bonus gift.