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Fiat money,

A colloquial term applied especially to paper money, issued by a government, marked as legal tender for a certain value, but without a guarantee that it will be redeemed by the government for metallic money or its equivalent. Irredeemable and inconvertible money are other terms applied to such issues. In a particular sense the phrase was applied to the “greenback” certificates authorized by the United States government in 1862. An aggregate of $450,000,000 of such money was put into circulation between 1862 and 1865, to which Congress gave the quality of legal tender for all debts. The first issue of such inconvertible paper money in this country was made by the colony of Massachusetts to pay soldiers in 1690. About twenty years later the other New England colonies and New York and New Jersey also made use of the expedient. Between 1775 and 1779 the Continental Congress authorized the issue of about $200,000,000 of such scrip, which the States individually made legal tender. After the Revolution many of the States issued paper money on their own account. See currency, Continental.

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