by
conflicting currents, but at least making progress.

CHAPTER VI. THE GREENBACK INTERLUDE

Whatever may have been the causes of the collapse of the Granger
movement in 1875 and 1876, returning prosperity for the Western farmer
was certainly not one of them, for the general agricultural depression
showed no signs of lifting until nearly the end of the decade. During
the Granger period the farmer attempted to increase his narrow margin
of profit or to turn a deficit into a profit by decreasing the cost of
transportation and eliminating the middleman. Failing in this attempt,
he decided that the remedy for the situation was to be found in
increasing the prices for his products and checking the appreciation of
his debts by increasing the amount of money in circulation.

This demand for currency inflation was by no means new when it was taken
up by the Western farmers. It had played a prominent part in American
history from colonial days, especially in periods of depression and in
the less prosperous sections of the ever advancing frontier. During the
Civil War, inflation was actually accomplished through the issue of over
$400,000,000 in legal-tender notes known as "greenbacks." No definite
time for the redemption of these notes was specified, and they quickly
declined in value as compared with gold. At the close of the war a paper
dollar was worth only about half its face value in gold. An attempt was
made to raise the relative value of the greenbacks and to prepare for
the resumption of specie payments by retiring the paper money from
circulation as rapidly as possible. This policy meant, of course,
a contraction of the volume of currency and consequently met with
immediate opposition. In February, 1868, Congress prohibited the further
retirement of greenbacks and left to the discretion of the Secretary of
the Treasury the reissue of the $44,000,000 which had been retired. Only
small amounts were reissued, however, until after the panic of 1873; and
when Congress attempted, in April, 1874, to force a permanent increase
of the currency to $400,000,000, President Grant vetoed the bill.

Closely related to the currency problem was that of the medium to be
used in the payment of the principal of bonds issued during the Civil
War. When the bonds were sold, it was generally understood that they
would be redeemed in gold or its equivalent. Some of the issues,
however, were covered by no specific declaration to that effe