b) Paper currency

The 1862 Legal Tender Act was crucial for introducing paper currency in the United States. To finance the Civil War, the federal government issued paper money, known as “greenbacks,” which was declared legal tender for all debts. This act marked the first time the U.S. government issued paper currency not backed by gold or silver. The introduction of greenbacks helped resolve the Union’s financial crisis but also led to significant inflation. The Legal Tender Act represented a major shift in the nation’s monetary policy and the beginning of a modern paper currency system.