The U.S. Congress Passed the "Legal Tender Act" on February 25, 1862, authorizing $150 million in federal paper money to help fund the Civil War without relying solely on gold/silver reserves. It mandated that the notes were deemed lawful money for all debts, public and private, except for customs duties and interest on public debt.
The act was initially challenged, the Supreme Court later ruled the act a legitimate exercise of congressional power during wartime. The Act was the first of three, which all together increased the total authorized circulation to $450 million. The Legal Tender Act, intended as an emergency measure, dramatically extended federal power and changed the nation’s monetary standard. The U.S. notes, which were printed with green ink on one side. were nicknamed by the public as "Greenbacks". Salmon P. Chase, Lincoln's Treasury Secretary's likeness was used on the first one dollar bill printed in 1862.
