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The Other Coin: Paper Money
Paper money or banknotes is a collecting area of increasing popularity as the
vividness of designs and variety of topics has grown. After all you can put anything on
a piece of paper. Paper money has been reluctantly accepted as the money has no
intrinsic value and is often considered fiat money, contributing to inflation. Germany ,
Russian, Turkey, Yugoslavia and recently Zimbabwe and several other African nations
have had to issue notes in the hundreds of billions or trillions as inflation ravished their
countries (see below).
The first paper banknotes appeared in China about 806 AD for letters of credit
transferred over large distances. The first real use of a paper money system was for
about 300 years of a 400 year period between 1050 and 1450. Marco Polo noted its
use. The Bank of England began issuing notes in 1694, following the practice of
goldsmiths and local banks. Paper currency was adopted throughout Europe and the
US in the 17th century.
In desperation and needing to fund the new war with the French Colonies in Canada ,
an impoverished England first authorized the Massachusetts Bay Colony to print Bills
of Credit in 1690. Thus, gradually in pre-Revolutionary America , each colony began
to print its own form of currency. The first was issued by Rhode Island in 1710 with
the other Colonies following suit up to the Revolutionary war.
To finance the American Revolution, and because the Colonies were powerless to
tax, the Continental Congress authorized the first actual American Currency on May
10, 1775. Not having bullion backing and easily counterfeited, continental notes were
worth only 2 1/2 cents to the dollar in 1780. Thus began the phrase, not worth a
Continental (see left). By 1836, banks in the United States had swollen to over 1,600 in
number. With scant regulation, these state- charted, private banks ran wild issuing
over 10,000 Variety Notes of various design, color and size.
During the Civil War, both the North as well as the South developed their own
currency. Ripped apart by war and teetering on bankruptcy, Congress ordered the
printing of a number of notes. These Large Size Notes were commonly called horse
blankets because of their dimensions. In 1863 there still was a problem in stabilizing
the value of our currency. Since over 75 percent of all bank deposits were held by
nationally charted banks, national Bank Notes backed by U.S. goverment securities
came into being. This lasted until 1928. To create greater confidence in our currency,
Gold Certificates were issued against U.S. gold holdings by the Department of the
Treasury from 1865 until 1922. Beginning in 1878 and continuing through seven
series, Large Size Silver Certificates stayed in circulation until 1923 with the smaller
size remaining until this day. The Government stopped redeeming them for silver
bullion on June 24, 1968. Starting with the reduction in currency size in 1929, the
United States Government has minted over 1,200 issues of currency - Legal Tender
Notes; Silver Certificates; National Bank Notes; Federal Reserve Notes; World War II
Emergency Notes; Gold Certificates; and Military Payment Certificates. Many of these
varieties are being printed yet today. In 1990 a new series of notes was introduced to
improve security and stay ahead of counterfeiters and advances in technology which
make it easier to reproduce currency. These notes include microprinting and an
embedded security strip.
There’s a nice collection of US currency on the web by the Federal Reserve in San
Francisco at http://www.frbsf.org/currency/index.html
Numismatically yours, David Elliott
Paper money or banknotes is a collecting area of increasing popularity as the
vividness of designs and variety of topics has grown. After all you can put anything on
a piece of paper. Paper money has been reluctantly accepted as the money has no
intrinsic value and is often considered fiat money, contributing to inflation. Germany ,
Russian, Turkey, Yugoslavia and recently Zimbabwe and several other African nations
have had to issue notes in the hundreds of billions or trillions as inflation ravished their
countries (see below).
The first paper banknotes appeared in China about 806 AD for letters of credit
transferred over large distances. The first real use of a paper money system was for
about 300 years of a 400 year period between 1050 and 1450. Marco Polo noted its
use. The Bank of England began issuing notes in 1694, following the practice of
goldsmiths and local banks. Paper currency was adopted throughout Europe and the
US in the 17th century.
In desperation and needing to fund the new war with the French Colonies in Canada ,
an impoverished England first authorized the Massachusetts Bay Colony to print Bills
of Credit in 1690. Thus, gradually in pre-Revolutionary America , each colony began
to print its own form of currency. The first was issued by Rhode Island in 1710 with
the other Colonies following suit up to the Revolutionary war.
To finance the American Revolution, and because the Colonies were powerless to
tax, the Continental Congress authorized the first actual American Currency on May
10, 1775. Not having bullion backing and easily counterfeited, continental notes were
worth only 2 1/2 cents to the dollar in 1780. Thus began the phrase, not worth a
Continental (see left). By 1836, banks in the United States had swollen to over 1,600 in
number. With scant regulation, these state- charted, private banks ran wild issuing
over 10,000 Variety Notes of various design, color and size.
During the Civil War, both the North as well as the South developed their own
currency. Ripped apart by war and teetering on bankruptcy, Congress ordered the
printing of a number of notes. These Large Size Notes were commonly called horse
blankets because of their dimensions. In 1863 there still was a problem in stabilizing
the value of our currency. Since over 75 percent of all bank deposits were held by
nationally charted banks, national Bank Notes backed by U.S. goverment securities
came into being. This lasted until 1928. To create greater confidence in our currency,
Gold Certificates were issued against U.S. gold holdings by the Department of the
Treasury from 1865 until 1922. Beginning in 1878 and continuing through seven
series, Large Size Silver Certificates stayed in circulation until 1923 with the smaller
size remaining until this day. The Government stopped redeeming them for silver
bullion on June 24, 1968. Starting with the reduction in currency size in 1929, the
United States Government has minted over 1,200 issues of currency - Legal Tender
Notes; Silver Certificates; National Bank Notes; Federal Reserve Notes; World War II
Emergency Notes; Gold Certificates; and Military Payment Certificates. Many of these
varieties are being printed yet today. In 1990 a new series of notes was introduced to
improve security and stay ahead of counterfeiters and advances in technology which
make it easier to reproduce currency. These notes include microprinting and an
embedded security strip.
There’s a nice collection of US currency on the web by the Federal Reserve in San
Francisco at http://www.frbsf.org/currency/index.html
Numismatically yours, David Elliott
