Paper currency may seem tied to the modern era, but its use as a means of exchange in the United States began before the Constitution was signed. Like many important efforts in the New World, Benjamin Franklin played a central part in the development of American paper money.
Franklin’s Role in Early Money
In 1690, Massachusetts Bay Colony began issuing paper notes to pay military expenses, and other colonies soon did likewise. Franklin first worked with paper money in 1739, using his printing business to create colonial notes with distinctive nature prints that counterfeiters could not easily copy. His method used real leaves and lead casts reproducing their vein patterns. On certain bills, he intentionally misspelled Pennsylvania. Franklin also advocated early for paper money, maintaining that the colonies could not survive on gold coins and silver coins alone.
The Introduction of Demand Notes
Despite Franklin’s work, Continental Congress paper money, introduced in 1775 to finance the Revolutionary War, declined in value amid growing counterfeiting and a lack of dependable backing. Only nine days after the Constitution was signed in 1776, $2 “bills of credit” appeared. In 1861, Civil War-era greenbacks followed: non-interest-bearing Demand Notes that, when this article was originally published, remained redeemable at face value. Later that year, the first $10 note was introduced as a Demand Note. United States notes followed the next year. Identified by red seals and serial numbers, they stayed in circulation until 1971.
The Formation of A Government Agency for PrintingAt the time of original publication, the article described the following:
Before 1869, private companies printed Demand Notes and other paper currency. Beginning that year, paper-money production was consolidated within the Bureau of Engraving and Printing. The next major financial-system development was creation of the Federal Reserve in 1913. In 1929, U.S. currency changed to its current dimensions. Larger notes issued earlier are commonly called “blanket notes.”
Early settlers exchanged shells, stones, coins, and other tangible items, but paper currency became a foundation of colonial America.
