Treasury Secretary Salmon P. Chase suggested to Congress in 1862 that the government issue its own paper currency. On February 25, 1862, Congress passed the Legal Tender Act. In response to the act, $150 million in Treasury notes were printed. Green ink was used on one side of the notes and the popular nickname "Greenbacks" began.
The Bureau of Engraving and Printing states that green ink was originally used because unlike other colors, the protective green ink could not be removed from authentic notes. The measure foiled counterfeiters who used black and white photography to produce counterfeit currency.
<< For more information, click here.