Money likes attention and what better way to give it attention then to learn the origin, the history of money in America.
The paper money issued by the Massachusetts Bay Colony in 1690 was the first authorized by any government in the Western world. False notes as well as genuine notes altered by criminals followed promptly.
From colonial notes to the much-maligned Continental Currency to the “broken-bank” notes prior to the Civil War, paper money was widely distrusted in early America. Only with increasing Federal government control of paper money during and after the Civil War did paper currency gradually come to predominate.
Paper Money in Early America
When paper money was issued in America, it became the first authorized by any government in the Western world. The Massachusetts Bay Colony financed a military expedition to Canada in 1690 by issuing bills of credit. Subsequent military campaigns and other expenses by other Colonies were funded in a similar way. By the time of the Revolutionary War, each of the thirteen colonies’ governments had emitted their own currency issues although Great Britain opposed and tried to suppress them. In all cases, they were a financial expedient adopted to cover a lack of funds by promising to “pay later.”
The Continental Congress, the union of former colonies in rebellion against the British monarchy, introduced the first American national paper money in 1775, trying to meet military expenditures. Bullion backing for the issues never appeared, however, and this Continental Currency was rapidly devalued. The Congress asked the states to redeem it, but they were floundering financially themselves. In fact, the individual states issued their own paper money to cover their governmental and military costs. Such notes frequently carried propaganda messages: images of the King trampling on the Magna Carta and setting fire to an American city, American Liberty trampling on slavery while backed by an army, patriotic “Minute Men” brandishing their weapons, or allusions to the Union’s strength (or fragility). All became devalued by war’s end.
The British prohibited circulation of rebel money in areas they occupied and tried to undermine the American economy and public confidence by emitting counterfeits. By 1780, economic circumstances combined to cause the reduction of Continental Currency notes to one-fortieth of their original face values, and the Congress ceased printing them.
The first colonial paper currency, to cover Massachusetts’ expenses for an abortive attack on Canada at the beginning of the so-called French and Indian Wars, was followed within a few years by notes from the other colonies, emitted for similar reasons. Such notes were later properly redeemed and destroyed, so that survivors today are usually only false notes or ones that happened to have been altered by criminals, and hence could not be converted to specie.
Ingenious Benjamin Franklin, an accomplished printer, introduced plate blocks molded from actual leaves in the effort to combat early counterfeiters. With his partner David Hall, he prospered providing currency for his own province as well as for colonial New Jersey and Delaware. Counterfeiting was very widespread during the colonial era.
Paper money issued by the Congress became proverbially worthless by war’s end, when the phrase “not worth a Continental” was commonplace. Most were printed by the successor to Franklin’s firm. In 1776, the “one dollar denomination” was left out in anticipation of minting an actual coin intended to be worth a Spanish 8-reales piece, the “dollar” of the day.
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