 During the Civil War , Congress had authorized " greenbacks , " a new form of fiat money that was redeemable not in gold but in government bonds . The greenbacks had helped to finance the war when the government 's gold supply did not keep pace with the expanding costs of maintaining the armies . When the crisis had passed , many in both parties , especially in the East , wanted to return the nation 's currency to a gold standard as soon as possible . The Specie Payment Resumption Act , passed in 1875 , ordered that greenbacks be gradually withdrawn and replaced with gold @-@ backed currency beginning in 1879 . At the same time , economic depression had made it more expensive for debtors to pay debts they had contracted when currency was less valuable . Farmers and laborers , especially , clamored for the return of coinage in both gold and silver , believing the increased money supply would restore wages and property values . With neither major party willing to endorse inflation , some partisans of loose money joined the new Greenback faction . 
