The general and rapid rise in prices in 1862 due to the first issue of greenbacks during the Civil War was perhaps the most acute example of government-inspired paper money inflation and suspension [in the pre-Fed U.S.]. Commodity values of most metallic coins rose sharply above their monetary values, and coins then went out of circulation, leaving the North’s economy with almost no currency denominations below $5. . . . After 1865, private coinage as well as issues of state bank notes were effectively prohibited. But government coinage of fractional currency was still inadequate until after 1880.
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