e industrial corporation, had been
created in legal-tender dollars of the value of the depreciated
greenbacks. Any appreciation which might come to the greenbacks must
increase the content-value of the debt. If "dollars," borrowed when they
were worth sixty cents in gold, were to be repaid in "dollars" worth
eighty or more cents in gold, the debtor was repaying one third more
than he had received, and no appeal to the importance of public credit
could make him forget his loss. He resented not only the decrease in the
actual amount of money, but the appreciated value of the remainder.

McCulloch, trained in finance, was ready to sacrifice the debtor for the
sake of national solvency,--and, indeed, one or the other had to yield.
But Congress felt the pressure, which was strong from all the West, and
most strong from the Northwest, between Pittsburg and Chicago, whose
industry had been reorganized during the years of war. In February,
1868, the retirement of more greenbacks was forbidden by law, the amount
then in circulation being $356,000,000. The inflation which war had
brought about was legalized in time of peace, and the Supreme Court
ultimately ruled[1] that the issue of legal tenders, in either war or
peace, is at the free discretion of Congress.

Like every other West, the West of 1868 was in debt; like every other
debtor community, it was liable to yield to theories of inflation, and
was prone to look to politics for redress of grievances. The farmers of
Massachusetts and Connecticut had followed Shays for this purpose in
1786; Ohio and Kentucky had attacked the second Bank of the United
States when it forced their banks to pay their debts; and now the
Northwest listened to politicians who told them that more greenbacks
would cure their ills.

The advocates of the Greenback movement urged that the legal tenders be
retained as the foundation of the currency, and that all bonds and
interest payable in "lawful money" be paid in paper. By thus increasing
the volume of greenbacks in circulation they hoped to avoid a fall in
prices or an increased pressure on the debtor. Wherever men were heavily
in debt, they accepted this doctrine. George H. Pendleton, of Ohio,
became its most prominent spokesman, though it received the support of
men as far apart as Thaddeus Stevens and B.F. Butler, and on it as an
issue Pendleton sought to obtain for himself the Democratic nomination
for the presidency in 1868.

[Footnote 1: In