Paper money has been part of United States currency since the Continental Congress authorized a two-dollar note in June 1776. But those notes were not the paper money we know today. They were bills of credit used to fund the defense of a new country's struggle for independence. When the Constitution was ratified in 1788, it prohibited states from issuing bills of credit or using anything other than gold and silver as legal tender.
When Fort Sumter was attacked on April 12, 1861, the scale of the coming crisis became immediately obvious. The Army and Navy needed men, supplies, and guns. The government was desperate for funds, and gold and silver would not be enough. Later that year, Congress authorized the printing of paper money. The bills became known as greenbacks because of the green ink. They were not backed by gold or silver. Instead, the government simply declared them to be legal tender.
As people began moving into Dakota Territory, payment for goods and services came in many different forms, including bartering — a way for people to trade what they had for what they needed. Gold and silver coins were familiar, and they seemed solid and reliable. People were skeptical of the new greenbacks.
An 1886 article in the Wahpeton newspaper expressed some of those concerns. It asserted that the early greenbacks were not printed on fiber paper and "were most dangerously counterfeited." In 1896, the Jamestown Weekly Alert said the greenback should be retired "as soon as possible." J. D. Doane, president of the Merchants' Loan and Trust Company, agreed. He said, "There can be no doubt to the wisdom of the government retiring the greenbacks."
Needless to say, the greenback was not retired and went on to become a reliable form of currency. However, the internet age may do what newspapers and businessmen could not by putting an end to the greenback — not officially, perhaps, but on a practical level. The use of cash has declined with the advent of internet banking. Recent statistics show that approximately 70 percent of purchases are made with credit or bank cards. Cash is used primarily for small purchases, with more than half of purchases under ten dollars still being made in cash.
Dakota Datebook written by Dr. Carole Butcher
Sources:
- Jamestown Weekly Alert. “Retire the Greenbacks.” Jamestown ND. 11/12/1896. Page 1.
- Wahpeton Times. “How to Tell Counterfeits.” Wahpeton ND. 7/8/1866. Page 6.
- Congressional Research Service. “Design of United States Paper Currency.” https://www.congress.gov/crs_external_products/IF/PDF/IF11414/IF11414.1.pdfAccessed 7/2/2026.
- Today’s Flashback. “Congress authorizes first US government issued paper currency.” https://www.todaysflashback.com/congress-authorizes-first-us-government-issued-paper-money-50-million-worth-known-as-demand-notes-and-greenbacks/Accessed 7/2/2026.
- Civics for Life. “From Coins to Greenbacks.” https://civicsforlife.org/from-coins-to-greenbacks/ Accessed 7/2/2026.
- Vermillion Enterprises. “Coins and Currency of the Wild West.” https://civicsforlife.org/from-coins-to-greenbacks/Accessed 7/2/2026.
