Fire & Finance Blog

Fire & Finance Blog

The Tortured History of Paper Money

Believe it or not, it took more than a century before Americans could feel safe using paper money, according to a feature from the U.S. Census Bureau.

In the early days people used coins as their currency. But shortages of precious metals often led to shortages of coins.

Even before the U.S. was the U.S. there were attempts to deal with these shortages by issuing paper currency. Census said that the Massachusetts Bay Colony issued paper money as early as 1690.

Later on – and well into the 19th century – banks would often issue their own paper currency to customers, to be used instead of coins. The problem was, when these banks failed (as they often did), the paper would become worthless.

It wasn’t until the 1860s that, when the pressures of funding the Civil War, Congress finally took action to create a unified, national currency.

Congress passed the Legal Tender Act in 1862 as a means of paying the government's considerable Civil War bills with something other than gold or silver.

In time, greenbacks became a means of exchange for all private transactions.

Today, there is over $1.4 trillion in cash circulating the country and the world.

However, we may also approaching the day when currency will become a quaint relic of the past. Americans now conduct more than 80% of all transactions electronically, and cash-free. And that number keeps going up.


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