Table of contents
Currency became widespread in America during the colonial period. The colonists found that they needed a paper currency to help them manage the bustling trade economy that was going on in the New World. Through the course of history, economies have rested on the currencies that support them. Even in today’s global economy, simple issues like credit card processing require a strong currency to support consumers’ spending habits.
Colonial and Continental Currency
Colonial currency dates back to the late 1600s, when people in the Massachusetts Bay Colony created paper currency to simplify their active trade economy. Other colonies followed this lead, and soon many colonies were using paper money to fund transactions. This currency was to be backed by silver or gold. However, colonists soon found that they could not redeem the currency for these precious metals when they tried, so currency values quickly fell.
In 1775, the Continental Congress issued the continental as the new country’s first paper currency. The purpose of this currency was to pay for expenses associated with the Revolutionary War. Unfortunately, the value of this currency was questionable because it rested on anticipated future tax revenues, which the country hoped to collect after winning the war. The combination of a lack of backing and increasing inflation took its toll on continentals. This currency lost its value, and colonists lost their faith in currency. Two successive privately owned banks served essentially as central banks for the new country between 1791 and 1836. After Andrew Jackson opted to discontinue the second bank’s charter, the United States entered into a free banking era for the next quarter-century
With the Civil War looming, the United States needed a way to fund the war. To generate money, Congress authorized new demand notes. These demand notes were the first paper currency issued by the United States government since the demise of the continentals. Demand notes ended in 1862, replaced by legal tender notes, or United States notes. All currency issued since then in the United States continues to be valid and redeemable for face value.
National Banking System
In 1863, Congress passed legislation that established the national banking system. This legislation also established a uniform national currency for the United States. The new law required the national bank to purchase United States government securities, which served as backing for national bank notes. As a part of the new national banking system, Congress established the U.S. Department of the Treasury to manage and oversee the bank notes. In 1869, the Bureau of Engraving and Printing was given the responsibility of engraving and printing faces and seals on the banknotes.
The Federal Reserve
The Federal Reserve Act established the Federal Reserve system as America’s central bank in 1913. President Woodrow Wilson was in office at this time. Federal Reserve notes went into circulation in 1914, taking the place of the now-defunct national bank notes. By 1918, denominations of these new notes spanned from $1 to $10,000. National banks had the authority to issue national currency, which was secured by the purchase of U.S. bonds.
The year 1929 was an important year in the history of U.S. currency. The federal government instituted redesigns that involved making the notes smaller and standardizing designs for each bill denomination. The purpose of these changes was to reduce expenses. In 1957, the words “In God We Trust” first appeared on currency, thanks to a law passed amid Cold War fears. By 1969, the larger denominations, $500 and up, were discontinued.
Newer technology made counterfeiting more difficult thanks to features such as microprinting and a security thread running through bills. Another currency redesign occurred in 1996: New background colors added extra security against counterfeiting. Watermarks on the bills also appear when they are held up to a light. The absence of watermarks would indicate a counterfeit bill. In 2013, the $100 bill received an additional redesign to enhance security. A security ribbon now crosses the bill to the right of Benjamin Franklin’s picture.
- History of the BEP and U.S. Currency
- The office largely in charge of printing money, the Bureau of Engraving and Printing (or BEP) of the U.S. Department of the Treasury, delves into its history.
- A Brief History of U.S. Government Currency, 1861-Present: Part 1
- Here, you can view some beautiful, vintage notes from 1861 and onward.
- History of United States Currency
- This is a brief and helpful summary of the overall history of U.S. currency.
- Which Denominations of Currency Does the Federal Reserve Issue?
- Did you know that the Federal Reserve still prints $2 notes? The proof is here! However, $500, $1,000, $5,000, and $10,000 notes are no longer in print.
- The Comparative Value of Money Between Britain and the Colonies
- Find out more about the delicate politics and economics between British and American currencies.
- The Civil War (1861-65)
- This time in American history was very difficult in terms of money creation.
- The Cash Life Cycle
- Have you ever wondered what happens to bills when they are old and overused?
- A Short History of Currency
- Find more about the money system from the time of the Civil War to now.
- The 1955 Legislation Placing “In God We Trust” on National Currency
- Many people have the misconception that the motto “In God We Trust” has always been on currency. In fact, it was added in 1955.
- Catching Counterfeiters
- Money has evolved and changed over the years often to deter the efforts of skilled counterfeiters.
- Celebrating American Currency and its History
- This article delves into the nature of modern currency systems and how they came to be.
- Historical Timeline
- Money changed a great deal during the Great Depression and the following years. Franklin D. Roosevelt and his administration took great pains to get a grip on inflation and interest rates. Gold became devalued.
- The United States Secret Service
- The Secret Service, now famous for protecting presidents in public settings, began as a group to prevent counterfeiting which was rampant during the 1800s.
- The History of Money
- The history of our currency falls into a much larger worldwide history of money. Before the colonists arrived, Native peoples used intricately designed wampum to exchange goods.
- Coins, Currency, and Medals
- Here, you can view a vast collection of very interesting coins, paper bills, and unique currencies.
- Colonial U.S. Currency
- See some of the earliest paper bills used in the colonies.
- Central Banking in the United States
- Central banking in the U.S. was developed early in the new country’s history, and met with controversy.
- A Quick History of Paper Money
- The history of paper currency, especially in English colonies, is interesting and fraught with politics