Onnthis date in 1862, the United States issued its first paper money innbills worth $5, $10, $20, $50, $100, $500, and $1,000.
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nArenyou surprised that there was no paper money in the U.S. until 1862? Insure was!
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nItnturns out, of course, not to be so simple. There was paper currencyn(money) in America since at least 1690, when the Massachusetts BaynColony issued some and then other colonies followed suit. Coins andnbarter—such as trading a chicken for a basket of vegetables—hadnbeen common up to that point, but there was a lot of trade within andnbetween colonies, and coins were scarce—so the colonial governmentsnprinted notes that were supposed to be redeemable for silver or gold.
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| Bartering used to be very common. |
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nSometimes,nwhen somebody went to the bank to trade their paper money for silver or gold,nthe notes were redeemed, and the customer got the precious metals, and everyone was happy. But whennbankers couldn’t redeem paper money by paying out silver and gold,npeople lost faith in paper money.
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nDuringnthe Revolutionary War, the need for money was great, and thenContinental Congress decided to issue federal paper currency. Thesendollars were called Continentals, and they were backed withn“anticipation” of future tax dollars. In other words, this papernmoney wasn’t backed up at all! n
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nAndnso people didn’t trust the paper money very much.
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nWhennpeople don’t trust paper money, it really does lose its value. Afternall…if people won’t give you food or clothes or services when younhand them paper money…then the paper money isn’t really money. It’snjust paper!
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nAllnof this mistrust of paper money before the United States was quitenborn is the reason that it took our federal government so long tonissue paper money!
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nHerenis a picture of the first $5 bills, issued on this date in 1862.
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nAccordingnto Ron’s Currency, $1 bills were issued in August of the samenyear.
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nThenCentral Bank of Brazilnoffers a lesson on the evolution of money.
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nLearnnmore about the history of money here.
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nAlsonon this date:
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Daylight Savings Time beginsn
Daylight Savings Time beginsnn
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nGenealogy Day
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nHarrietnTubman Day
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nNaturalistnGeorg Steller’s birthday