Money Supply Crisis-ME-Mishael Theis

During the Civil War, the United States printed off millions of dollars. They called this money greenbacks, and it could not be exchanged for gold or silver coins. This caused a severe inflation, which is decline in the money's value. The less value money has, the higher the prices get so that businesses can make the same amount of money. In 1865, there was enough money for $30 per person, in 1895 the amount had dropped to $23.

To combat this, Congress decided to reduce the money supply which caused deflation. This was a huge blow to the farmers, because the money value increased so prices of goods were free falling. While they could buy goods at a cheap amount, their goods hardly sold for any money. Since there wasn't a large money supply, farmers were forced to borrow money, this made interest rates rise.

 Five dollar greenback

 Front and back of a U.S. 3 cent silver coin 

created in 1868