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Early American currency
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Early American currency
Early American currency went through several stages of development during the colonial and post-Revolutionary history of the United States. John Hull was authorized by the Massachusetts legislature to make the earliest coinage of the colony (the willow, the oak, and the pine tree shilling) in 1652.
Because few coins were minted in the Thirteen Colonies, which later became the United Colonies and then the United States, foreign coins like the Spanish dollar were widely circulated. Colonial governments, at times, issued paper money to facilitate economic activities. The Parliament of Great Britain passed currency acts in 1751, 1764, and 1773 to regulate colonial paper money.
During the American Revolutionary War, the colonies became independent states. No longer subject to monetary regulations of the British Parliament, the states began to issue paper money to pay for military expenses. The Continental Congress also issued paper money during the revolution—known as continental currency—to fund the war effort. The unchecked printing of fiat money by state and continental governments, driven by the demands of war, led to rampant inflation and the phrase "not worth a continental," as the currency rapidly lost value. By the end of the war, these paper notes became effectively worthless. Additionally, British counterfeiting teams contributed further to the decreased value. By its conclusion, only a few counterfeiters had been caught and preemptively hanged, for the crime. The failure of the continental currency underscored the risks of fiat money, prompting the United States to adopt a bimetallic standard of gold and silver under the Coinage Act of 1792 to ensure a stable and trusted monetary system.
There were three general types of money in the colonies of British America: the specie (coins), printed paper money and trade-based commodity money. Commodity money was used when cash (coins and paper money) were scarce. Commodities such as tobacco, beaver skins, and wampum, served as money at various times in many locations.
Cash in the colonies was denominated in pounds, shillings, and pence. The value of each denomination varied from colony to colony; a Massachusetts pound, for example, was not equivalent to a Pennsylvania pound. All colonial pounds were of less value than the British pound sterling. The coins in circulation during the colonial era were, most often, of Spanish and Portuguese origin. For most of the 17th and 18th centuries, the Spanish dollar was one of the few widely accepted denominations by the people, which resulted in it serving as the colonists' interim currency.[citation needed] The prevalence of the Spanish dollar throughout the colonies led to the money of the United States being denominated in dollars, rather than pounds.
One by one, colonies began to issue their own paper money to serve as a convenient medium of exchange. On December 10, 1690, the Province of Massachusetts Bay created "the first authorized paper money issued by any government in the Western World". This paper money was issued to pay for a military expedition during King William's War. Other colonies followed the example of Massachusetts Bay by issuing their own paper currency in subsequent military conflicts.
The oldest surviving bill bears the date "February 3, 1690" and was for 20 Massachusetts shillings, equivalent to one pound.
However, as the colonies began printing their own money, location-based socio-economic issues soon followed. Most of these concerns were rooted in each colony having different values of the dollar, confusing any inter-colony transactions. By the time Parliament decided to prohibit the printing of paper money in the colonies, their hired counterfeiters were able to take advantage of the common people, widening the gaps between socioeconomic classes.[citation needed]
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Early American currency
Early American currency went through several stages of development during the colonial and post-Revolutionary history of the United States. John Hull was authorized by the Massachusetts legislature to make the earliest coinage of the colony (the willow, the oak, and the pine tree shilling) in 1652.
Because few coins were minted in the Thirteen Colonies, which later became the United Colonies and then the United States, foreign coins like the Spanish dollar were widely circulated. Colonial governments, at times, issued paper money to facilitate economic activities. The Parliament of Great Britain passed currency acts in 1751, 1764, and 1773 to regulate colonial paper money.
During the American Revolutionary War, the colonies became independent states. No longer subject to monetary regulations of the British Parliament, the states began to issue paper money to pay for military expenses. The Continental Congress also issued paper money during the revolution—known as continental currency—to fund the war effort. The unchecked printing of fiat money by state and continental governments, driven by the demands of war, led to rampant inflation and the phrase "not worth a continental," as the currency rapidly lost value. By the end of the war, these paper notes became effectively worthless. Additionally, British counterfeiting teams contributed further to the decreased value. By its conclusion, only a few counterfeiters had been caught and preemptively hanged, for the crime. The failure of the continental currency underscored the risks of fiat money, prompting the United States to adopt a bimetallic standard of gold and silver under the Coinage Act of 1792 to ensure a stable and trusted monetary system.
There were three general types of money in the colonies of British America: the specie (coins), printed paper money and trade-based commodity money. Commodity money was used when cash (coins and paper money) were scarce. Commodities such as tobacco, beaver skins, and wampum, served as money at various times in many locations.
Cash in the colonies was denominated in pounds, shillings, and pence. The value of each denomination varied from colony to colony; a Massachusetts pound, for example, was not equivalent to a Pennsylvania pound. All colonial pounds were of less value than the British pound sterling. The coins in circulation during the colonial era were, most often, of Spanish and Portuguese origin. For most of the 17th and 18th centuries, the Spanish dollar was one of the few widely accepted denominations by the people, which resulted in it serving as the colonists' interim currency.[citation needed] The prevalence of the Spanish dollar throughout the colonies led to the money of the United States being denominated in dollars, rather than pounds.
One by one, colonies began to issue their own paper money to serve as a convenient medium of exchange. On December 10, 1690, the Province of Massachusetts Bay created "the first authorized paper money issued by any government in the Western World". This paper money was issued to pay for a military expedition during King William's War. Other colonies followed the example of Massachusetts Bay by issuing their own paper currency in subsequent military conflicts.
The oldest surviving bill bears the date "February 3, 1690" and was for 20 Massachusetts shillings, equivalent to one pound.
However, as the colonies began printing their own money, location-based socio-economic issues soon followed. Most of these concerns were rooted in each colony having different values of the dollar, confusing any inter-colony transactions. By the time Parliament decided to prohibit the printing of paper money in the colonies, their hired counterfeiters were able to take advantage of the common people, widening the gaps between socioeconomic classes.[citation needed]
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