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April 29th, 1999

A History of Money

Economics

Way Before the Benjamins…

Money is a fact of life, it always has been. So as long as there has been an America, there have been many different kinds of currency.

Wampum

So you think carrying change in your pocket could be a pain? How about lugging around strings of beads made from the clam shells?

That is precisely what Native American tribes had to do. These beaded shells, called wampum, were the most common form of money in North America. By 1637, the Massachusetts Bay Colony declared wampum legal tender (OK to use as money).

Continentals

We’re not talking about your grandparents car, here. What we are talking are America’s original ‘bucks.’ To finance the American Revolutionary, Congress authorized the first printing of currency by the new republic. But without the strong financial backing of gold or silver, the Continentals quickly devalued and were soon worthless – thus the expression, “not worth a continental.”

Wildcat and Broken Notes

Although these notes were actually issued by banks, they were as worthless as Monopoly money – maybe even less than that. With Monopoly money, you could at least put up a hotel on Park Place.

But back in the day when individual banks were allowed to print their own money, the so-called Free Banking Era, America was flooded with various currency notes – many of which were redeemable in gold or silver, but some were worthless. Some banks would set up shop in remote mountainous regions, prompting people to comment that it was easier for a wildcat to redeem these notes than people – thus the name.

As for “broken” notes, the name refers to the frequency in which the banks that issued them went bust. Without the confidence that these notes could be redeemed, they were virtually worthless. By 1860, an estimated 8,000 different state banks were issuing “wildcat” or “broken” bank notes.

Greenbacks – United States Notes

Pressed to finance the Civil War, the U.S. government resumed printing paper currency for the first time since it issued Continentals. The name itself, a reference to its color, has become as much a part of Americana as apple pie In addition to its new color, “greenbacks” incorporated a more complex design, including a Treasury Seal, fine-line engraving and various security measures.

Federal Reserve Notes

Open up your wallet – if you’re carrying some cash on you, chances are it is a Federal Reserve Note. Following the Federal Reserve Act of 1913, these notes became the dominant form of paper currency in America. Over the years, these notes have changed very little – they have been reduced in size in 1929 and the words “In God We Trust” were added in 1955.

Currently, the $100 bill is the largest currency note in circulation. The largest bill ever circulated in the United States is the $10,000 bill, which features the face of Salmon P. Chase, who was Abe Lincoln’s Secretary of the Treasury. If you have one, you can spend it, but most of them are in museums these days.