This video provides a general overview of pre-Civil War paper currency commonly referred to today as Obsolete Banknotes. The time period is from 1776-1860 and why paper currency wasn’t liked but definitely needed for commerce and economic reasons. Also covered is the beautiful and elegant artwork and elaborate vignettes that make up obsolete banknotes.
But before we begin we have to rewind the clock four score and seven years - one year before the Thirteen colonies united together and declared independence in 1776. According to my currency books non-federal, pre-Civil War U.S. currency, is basically divided into two groups. Colonial banknotes leading up to roughly 1810 and Obsolete currency issued between the War of 1812 and the U.S. Civil War. Sure, there are sub-categories such as Confederate notes and the Republic of Texas - but those locations weren’t part of the United States.
Since the colonization, of what is now the United States, there has always been a shortage of coin or hard money. The second that Europeans set foot in British America there wasn’t enough gold and silver currency; and that would continue through to the 1870s. So, when there was a shortage of coin - which was basically ALL the time - paper currency stepped in and served a purpose. In the pre-industrial revolution era from 1800-1850, with the population and the economy growing at a rapid rate, the lack of circulating currency became acute. There was never enough precious metals to meet demand. And capacity always seemed to be limited even when the U.S. Mint added three branches in 1838 - two of which only minted gold coins. Good, bad, or ugly (pause) paper currency served a need - an ever growing need that coinage simply could not meet.
According to the Harvard Library the first of what could be considered, Federal issuance of paper currency was approved by the Second Continental Congress in 1775 as a way of funding the Revolutionary War. Although this wasn’t the first issue of paper notes in the colonies. The Massachusetts Bay colony had issued its own banknotes in 1690.
Over the course of the Revolutionary War more currency was needed and combined with additional issues of bills of credit being led to widespread inflation. Basically, the right hand didn’t know what the left hand was doing. Remember there was no Department of the Treasury and the U.S. Mint wouldn’t begin operations until 1792. By the war’s conclusion in 1781, the exchange value of the Continental dollar would eventually fall 1000 percent. This gave rise to the phrase ‘not worth a Continental’. Which provides a little foreshadowing.
The front of my 1775 Continental note has the top and bottom borders state The United Colonies with Continental Currency printed on left and right. The center contains the redemption statement entitling the bearer to two Spanish Milled Dollars or the value of gold or silver. The right center depicts grain being threshed by a flail with the Latin saying “Tribe-u-lay-shio Dye-dat” which translates to "Affliction Enriches."
The reverse has various leaf imprints which weren’t just a design element, they were an anti-counterfeiting tactic invented by Benjamin Franklin who was an early supporter of paper currency. The Continental note was printed by Hall & Sellers of Philadelphia, which Franklin was the original owner of the printing company but sold to David Hall in 1766.
Certainly, and rightfully, the framers of the U.S. Constitution were very leery of paper currency because of the failure of the Continental Dollar. The Constitution prohibits states from issuing currency, but it didn’t prohibit States from chartering banks to do so. State-charted banks began springing up across the country in the early 1800s, each issuing their own bank notes. In theory, these notes were redeemable at the issuing bank for their equivalent in gold or silver coins.
However, the reliability of banks varied greatly. The further away the notes were from the issuing bank the less value they carried. And if the bank went under - so did your banknote. Many banks went out of business as a result of three major panics in the first half of the 1800s which greatly diminished people’s trust in paper currency. Panic was the term used then. Today we call it a recession.
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