A Brief History of US Paper Money (Currency) by Date

© 2003 2016 Sam Watson

1690 Massachusetts Bay Colony:

Massachusetts Bay Colony issued the first paper money in what is now the United States. This was the first paper currency backed by any form of government. Soon many of the colonies were issuing currency in many forms. The lack of gold and silver coinage lead to the necessity of paper money being printed. Previously there had been paper money or notes issued but backing was by individuals or businesses. Some colonies backed there issues with gold and silver while others had no backing at all. In general Colonial currency was not well accepted and depreciated rapidly.

1775 Continental Currency:

Continental Congress authorized the issuance of paper currency to finance the Revolutionary War. These issues were called Continentals and were backed by the anticipation of future tax revenues. Paul Revere engraved some of the plates used to print the money and Ben Franklin did some of the printing of the new currency. Because Continentals did not have backing of gold or silver they again depreciated rapidly leading to the fraise not worth a Continual. George Washington once stated, A wagonload of currency will hardly purchase a wagonload of provisions.

1777 United States:

After the signing of the Declaration of Independence the first notes baring the words The United States were issued. Well-known figures from the revolution often signed the notes to add to their acceptance.

1791 Free Banking Era (Broken Bank Notes):

The First Bank of the United States received it charter to operate expiring in 1811. The Second Bank of the United States received it charter to operate expiring in 1836. The US Congress chartered both of these banks but both were privately owned and unregulated. These banks were allowed to print notes and act as an agent for the US government. President Andrew Jackson revoked the Second Bank of the United States charter in 1832. This began an era where states and individuals could open a bank with very little regulation. There was no uniformity in the backing needed, the size or denominations of paper currency that could be issued. Banks began to spring up everywhere. Most currency stated that it was backed (could be exchanged for) gold or silver but the only location were the currency could be exchanged would be at the issuing bank. Thus banks not only sprang up in villages, towns and cities but were found in many out of the way places were the access was poor. These out of the way banks were called wildcats because it was said that the banks were more accessible to wildcats than to people. Misleading titles were common such as the The Workers Bank of New York could be located in a wooded area in Indiana. Though some banks Were good and had good backing (coinage in gold or silver)to back there currency others had very little to back there currency. Banks that had little backing would be found in out of the way places and would issue large amounts of paper currency with the expectation that little if any would ever find its way back to the back for redemption in gold or silver. This led the public to a distrust of paper currency unless the bank was personally known. The broken bank note took its name form the frequency that some of these banks went broke (failed).

1861 The influence of the Civil War:

Needing money to finance the Civil War Congress authorized the issuance of Demand notes in $5, $10 and $20 denominations. These notes were redeemable in coin on demand. Because of the green ink used to print these notes they became known as Green Backs.

1862 Hoarding of coins and Legal Tender

As the Civil War dragged on people not trusting demand notes or Confederate currency began to hoard coinage because of the silver or gold content. This created a increasing demand for coins. Shoppers were sometimes forced to take goods that they didnt want or need because no one could make change for a dollar. The government needed metal that could have been used for coins for war materials. Though illegal some businesses started printing their own currency to fill the need for small change. Eventually some shops started using postage stamps to make change for their customers. Following this idea the US Government issued the first Postage currency in 5, 10, 25 and 50 cents denominations. The second issue was started in 1863 and was called Fractional currency. Fractional currency was printed until 1874 in 3, 5, 10, 15, 25 and 50 cents denominations. At the same time Congress discontinued issuing Demand notes and started issuing Legal Tender Notes (Also known as United States Notes). Legal Tender Notes were the first notes that by law were good for all debts public and private. They were redeemable for silver but redemption was stopped soon after they were first issued (because of the need for the metal to make war materials) but it was resumed in 1879.

1863 National Bank Note Act:

President Abraham Lincoln Convinced Congress to pass the National Banking Act. This Act created a system by which banks became National Banks with a uniform currency backed by government securities. The same act levied a tax on notes issued by State Banks notes. Because the 10% tax on State Bank notes was higher than the profit a bank could make the Act had the effect of taxing all State Banks out of existence. Private printers, between 1863 and 1877, followed very strict guidelines set by the US government in the printing of National Bank notes. In 1877 the Bureau of Engraving and Printing was formed and took over the printing of all government notes. The notes were issued to the National Banks as long as the banks held the government securities.

1863 Gold and Silver Certificates:

In a move to increase its reserve of precious metals in 1863 the government offered Gold Certificates. However, Gold certificates were not placed into general circulation until 1865. Gold Certificates were printed with both green and yellow ink so they could easily be identified. In 1934 all Gold Certificates were called in from the Federal Reserve Banks. New certificates were printed in 1935 but never placed into circulation. Between 1934 and 1974 it was illegal for US Citizens to hold gold bullion or certificates.
Silver Certificates were first issued in 1878. They were redeemable for silver dollars. Silver Certificates were the major form of US currency until they were eliminated in 1963.

1914 Federal Reserve Notes:

99% of the US currency in use today consist of Federal Reserve Notes.

Timeline

1690 1798:

Colonial Currency issued by states.
Denominations were varied. Common denominations were British (pounds),s (shillings) and d (pence) or in Spanish $ (milled dollars) and bits (1/8 of a dollar).

1775 1779:

Continental Currency issued by United Colonies (United States)

1791 - 1863

Free Banking Era (Broken Bank Notes)
Under state charters anyone could open a bank and print money. Denominations varied from cent to $20,000.

1861

Demand Notes issued by US Government.
Considered to be the first paper currency Issued by the United States. Denominations were $5, $10 and $20.

1862 1876

Postage and Fractional Currency.
Denominations 3, 5, 10, 15, 25 and 50 cents.

1862 1966

Legal Tender Issues.
Denominations $1, $2, $5, $10, $20, $50, $100, $1,000, $5,000 and $10,000.

1863 1864

Compound Interest Treasury Notes.
Though these notes were not legal tender they often circulated as money. Compound Interest Notes bore 6% interest for 3 years. Denominations were $10, $20, $50, $100,$500 and $1,000.

1863 -1929

National Bank Note
Notes were distributed by US Government to charter banks. Denominations of $1, $2, $5, $10, $20, $50, $100, $500 and $1,000.

1865 - 1934

Gold Certificates:
Denominations of $1, $2, $5, $10, $20, $50, $100, $500, $1,000, $5,000, $10,000 and $100,000.

1878 - 1957

Silver Certificates.
Redeemable in silver coin. Denominations of $1, $2, $5, $10, $20, $50, $100, $500, $1,000, $5,000 and $10,000.

1864

Interest Bearing Notes.
Interest Bearing Notes did not circulate and came in three types (1, 2 and 3 year. Denominations were $10, $20, $50, $100, $500, $1,000 and $5,000.

1879

Refunding Certificates.
Bearer payable certificates, which had a 4%, interest indefinitely. However an Act of Congress stopped interest as of July 1, 1907. $10 denominations only.

1890 1891

Treasury or Coin Notes.
Issued in payment for silver bullion. Redeemable in coin.

1910

Bureau of Engraving and Printing assumed the production of all US currency.

1914 - Present

Federal Reserve Notes:
Denominations of $1, $2, $5, $10, $20, $50, $100, $500, $1,000, $5,000 and $10,000

1929

The size of US currency was reduced from 7.42 x 3.13 to the present size of 6.14 x 2.61

1957

In God We Trust was added to the first currency

1966

The Latin wording around the Treasury seal was replaced with English wording.

1990

Redesign of $5, $10, $50 and $100 Federal Reserve note. Security threads and micro-printing were incorporated in the currency

2003

Redesign of $5, $10, $50 and $100 Federal Reserve note.