* History of American Currency
* When the early English settlers came to America they carried small amounts of capital to trade amongst themselves. There is an account of John Winthrop who was a leading figure in the founding of the Massachusetts Bay Colony, in 1630 writing to his son telling him to bring 150 or 200 pounds with him. Later early settlers brought money to exchange for seed, cattle, and any form of capital the original colonies had already accumulated. During this time a married clergyman was allowed 30 pounds per year. Josias Plainstowe, having stolen four baskets of corn from the Indians needed to repay eight ...view middle of the document...
Initially the Massachusetts Bay colony tried to issue colonial coins, the pieces themselves were struck in 1652 and were made from a mix of poor quality silver and quickly became outlawed by the British. “Less than a decade later the colonists tried again. They were forced to, really, because they owed money to the crown to help fund Britain's war against France, yet lacked any currency with which to pay up. They called the paper bills of credit. The local government essentially said to the people: Here, just use this. It's real money. We'll sort out redeemability later.”
During 1861, the introductory year of the American Civil War, the expenses acquired by the Union Government far surpassed its limited revenues from taxation, and borrowing was the foremost vehicle for financing the war. The Act of July 17, 1861 authorized Secretary of the Treasury Salmon P. Chase to rear money via the issuance of $50,000,000 in Treasury Notes payable on demand. These Demand Notes were salaried out to creditors directly and used to meet the payroll of militaries in the field. While issued within the legal structure of Treasury Note Debt, the Demand Notes were intended to circulate as currency and were of the same scope as and the exterior closely resembled banknotes. In December 1861, economic conditions worsened and a suspension of specie payment led the government to terminate redeeming the Demand Notes in coin.
Congress passed the Legal Tender Act to finance the Civil War in 1862. It permitted the federal government for the first time to print paper money, called greenbacks, that was not backed by an equivalent quantity of Gold or Silver. “As the...