The gold standard and the tariff tax on imports divided the major parties. The monetary debate was over the basis for the value of the United States dollar. Nothing but gold and silver coin had ever been legal tender in the United States until the Civil War, when the mounting costs of the war forced the United States Congress to issue "greenbacks" (dollar bills backed by government bonds). Greenbacks helped pay for the war, but resulted in severe inflation . After the war, bondholders and other creditors (based in the North) wanted to return to a gold standard. At the same time, debtors (especially in the South and West) benefited from the way inflation reduced the real value of their debts, and workers and some businessmen liked the way inflation made for easy credit. The issue cut across parties, producing dissension among Republicans and Democrats alike and spawning a third party, the Greenback Party, in 1876, when both major parties nominated "hard money" candidates (i.e., candidates who favored the gold-backed currency instead of "soft money" greenbacks that generated inflation). Monetary debate intensified as Congress effectively demonetized silver in 1873 and began redeeming greenbacks in gold by 1879, while limiting their circulation. As the 1880 election season began, the nation's money was backed by gold alone, but the issue was far from settled.
