What did the United States Treasury create when the Legal Tender Act was passed in 1862?
It led to the creation of the greenback money system.
The greenback were the bank notes created by Lincoln's government to manage the North's economy.
This act authorized issuance of paper money, United States Notes, to finance the war without raising taxes. The paper money depreciated in terms of gold and became the subject of controversy, particularly because debts contracted earlier could be paid in this cheaper currency.
Sources: Newcomer, Philip. The Illegality of Legal Tender, The Freeman: Ideas on Liberty, December 1986, Vol. 36 No. 12.
Legal Tender cases, The Columbia Encyclopedia, Sixth Edition. 2001-05.