The History of Paper Currency in America
While under English dominion, early American colonists utilized English, Spanish, and French money. When the Revolutionary War became inevitable in 1775, however, the Continental Congress authorized the issue of currency to fund the war. The initial plates for this "Continental Currency" were manufactured by Paul Revere. Those bills could be exchanged for Spanish Milled Dollars. The expression "not worth a Continental'' came from the depreciation of this currency. One dollar Martha Washington certificate from 1886. Following the ratification of the United States Constitution, Congress passed the "Mint Act" of April 2, 1792, which created the United States coinage system and the dollar as the primary unit of currency. Following the ratification of the United States Constitution, Congress passed the "Mint Act" of April 2, 1792, which created the United States coinage system and the dollar as the primary unit of currency. The United States became the first country in the world to adopt the decimal system of currency as a result of this Act. In 1793, the Philadelphia Mint created the first US coins, which were given to Martha Washington. Paper money was not issued by the government until 1861. During instances of the financial crisis, such as the War of 1812, the Mexican War of 1846, and the Panic of 1857, the government did issue "Treasury notes' ' on a limited basis.
Approximately 1,600 private banks were allowed to create and circulate their own paper currency under state charters during the same time period (1793-1861). Eventually, 7,000 different designs of these "state bank notes" were issued, each with its own unique design! With the start of the Civil War, the government issued the Act of July 17, 1861, allowing the Treasury Department to produce and circulate paper money in order to fund the war. "Demand notes," often known as "greenbacks," were the first paper money produced by the government. Congress phased out demand notes in 1862 and replaced them with United States notes, often known as legal tender notes.
Five separate sets of "silver certificates" were issued between 1878 and 1886, with denominations ranging from $1 to $1,000. Because silver coins were unpopular due to their size and weight, the Treasury swapped silver certificates for silver dollars. In 1923, the final set of silver certificates was released. The 1957B/1935H $1 notes, series 1953C $5 notes, and 1953B $10 notes were the last series of contemporary silver certificates manufactured. Under the National Banks Acts of 1863 and 1864, the government once again allowed thousands of banks to issue their own notes from 1863 through 1929. These were known as "national banknotes," and unlike earlier "state banknotes," they were printed on US government-approved paper and had the same fundamental design. The Federal Reserve Act of 1913 established the Federal Reserve System in the United States. The Federal Reserve Banks were given the authority to issue Federal Reserve Bank notes under this Act. The Federal Reserve Banks began issuing Federal Reserve notes in 1914, and they are the only currency currently produced by the Bureau of Engraving and Printing today.
The federal government was given sole authority under Article One of the Constitution to "coin money" and "control the value thereof." However, it made no mention of paper money. This was largely due to the founding fathers' experience with the Continental Congress's bills, known as "continentals," which had become nearly worthless by the end of the war. The implosion of the continental weakened trust in paper money to the point where the delegates to the Constitutional Convention agreed to remain mute on the subject.
Private enterprises, not the federal government, issued paper money for the first 70 years of America. The most popular kind of paper currency in circulation was notes created by state-chartered banks that could be exchanged for gold and silver. Approximately 8,000 distinct entities issued currency between the formation of the United States and the passing of the National Banking Act, resulting in an unmanageable money supply and facilitating rampant counterfeiting. The National Banking Act, by establishing a single national currency, abolished the vast diversity of paper money circulating across the country and established a system of federally chartered banks rather than state-chartered institutions.
Prior to the discovery of gold and silver in the West in the mid-1800s, the United States lacked sufficient precious metals to mint coins. As a result, a statute passed in 1793 allowed Spanish dollars and other foreign currencies to be accepted into the American monetary system. Foreign coins as legal tender were not outlawed until 1857. The $100,000 gold certificate was the largest bill. President Woodrow Wilson's face appeared on the front of the currency notes, which were printed between December 18, 1934, and January 9, 1935. However, don't ask for a $100,000 bill from your bank teller. The notes were never distributed to the general public and were only used to conduct business between Federal Reserve institutions.