Paper money has a long, rich history rife with controversy, conflict, and creativity. Last time, Coins Plus in Cincinnati, OH recounted the origins of our currency, starting with pre-Revolutionary War America. While bleak, these early years played a crucial role in the country’s new post-war financial system.

A Need for Change

The Revolutionary War left many Americans feeling bitter towards paper money. Namely, it was seen as fraudulent thanks to the lack of bullion backing and Great Britain’s malicious counterfeits. However, the country still had wartime expenses and other government expenditures to contend with. Thus, in addition to drafting the U.S. Constitution, the Founding Fathers enacted a variety of measures to establish a stronger, more stable economy.  

A New World of Finance

To stabilize government expenditures, the country needed some form of credit. Thus, the First Bank of the United States was born in 1791. This bank, along with other pioneering financial institutions throughout the states, was created to raise money for the new government. It was also responsible for issuing private currencies that were then used for borrowing and lending.

A year later, George Washington’s administration established the United States Mint in Philadelphia. However, coinage proved inadequate for financing growth. Instead, the country needed paper money. Many private firms began issuing their own currency. But when people failed to pay their loans, and the banks went under, these banknotes became worthless. Hence, coin dealers refer to them as “broken banknotes,” many of which are valuable collectibles today.

The United States economy saw change again at the start of the Civil War. Both the North and South governments began printing their own paper currency to fund their war efforts. But, thanks to the duration of the conflict, the country soon found itself in a desperate financial situation. To remedy the issue, the government enacted the first income tax. Additionally, they passed the National Banking Act of 1863, an act that established our national currency.

With this legislation in place, the United States laid the foundation for our current financial system. However, there were still several issues that needed to be resolved before the country could experience significant economic growth.   

Want to learn more about paper money in early America? Then call Coins Plus at (513) 621-1996 to speak with one of our experienced coin dealers. For more on our numismatic services including expert, honest coin appraisals, visit us online.