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A History of American Paper Money
For more than 300 years, American paper currency has undergone many changes in design, size, denomination, security features, and more. This printed legacy is an important yet little known part of American history; let’s review the main events that have defined it.
The first paper currency is issued by the Massachusetts Bay colony to fund military expedition expenses. Other colonies soon followed in this practice.
1775-Continental Congress Currency
The Continental Congress currency finances the Revolutionary War with paper money, called Spanish milled dollars. However, since it was easy to counterfeit, the Continental currency lost value quickly giving rise to a popular term “not worth a Continental.”
1781-First National Bank
The Bank of North America, chartered by Congress, becomes the first national bank.
1785-The U.S. Dollar
The U.S. dollar becomes the monetary unit of the United States of America.
1791-First U.S. Central Bank
Congress charters the Bank of the United States for a period of 20 years to function as the fiscal agent of the U.S. Treasury department. This bank was the first to function as a central bank for the U.S. government.
1792-Federal Monetary System
The Coinage Act of 1792 creates the U.S. Mint that places coin values and denominations as a federal monetary system. The bimetallic standard is created by this act, which sets fixed exchange rates for gold and silver.
1816-Second U.S. Central Bank
The second U.S. Central bank is licensed by the Congress for twenty years, up to 1836.
1836-Free Banking Era
Without a formal U.S. Central bank, private banks make their own paper currency. Counterfeit bills or bank notes were easily made in this period.
1861-Civil War “Greenbacks”
U.S. Congress enables the U.S. Treasury to issue “Demand Notes,” as the paper currency to finance the Civil War. Demand Notes were also called “greenbacks.” All U.S. paper currency made since 1861 is valid with a redeemable full face value.
1862-First $2, $50, and $100 Bills made as Legal Tender Notes.
U.S Notes or Legal Tender Notes replaces Demand Notes with the first $2, $50, and $100 bills.
- $2 Note. The first ones were made on 1862 and had a portrait of Alexander Hamilton, the first Secretary of the Treasury. The $2 United States and Federal Reserve Notes have shown Thomas Jefferson’s portrait since 1869.
- $50 Note. $50 Notes portray Ulysses Grant and the Capitol on the back.
- $100 Note. The first $100 notes were made in 1862 with a portrait of an American eagle. Benjamin Franklin first appeared on a $100 note in 1914.
1865-Establishment of U.S. Secret Service
The U.S. Secret Service is established under the bureau of the Treasury to control counterfeiting practices, safeguarding the national currency.
1877-Bureau of Engraving and Printing
The BEP (Bureau of Engraving and Printing) starts printing all U.S. currency.
1878-First Silver Certificates
Silver certificates were made from 1878 to 1964 to replace silver dollars.
1882-First Gold Certificates
The first gold certificates were used in the 1882-1933 period, which gave holders a pre-set value of gold coins.
1913-Federal Reserve Act of 1913
The Federal Reserve Act of 1913 creates the Federal Reserve to work as the U.S’s central bank. It provides a better response to the ever changing financial needs of the country. The Federal Reserve Board makes a new currency called Federal Reserve Notes.
1914-Large Size Federal Reserve Notes
Larger than bills today, $5, $10, $20, $50, and $100 notes were issued.
1918-Large Size High Denominations Federal Reserve Notes
Big denomination bills are issued as $500, $1,000, $5,000, and $10,000 Federal Reserve Notes. These bills were withdrawn from the market in 1969 due to poor demand.
- $500 Notes. Two versions were made, in 1918 with blue seals and 1928 with green seals. The 1918 portrayed John Marshall with Desoto finding the Mississippi on its back. The 1928 version had William McKinley in its front.
- $1,000 Notes. There are two versions of $1,000 notes, which were made in 1918 with a blue seal and in 1928 with a green seal. The 1918 version has Alexander Hamilton’s portrait on the front with an eagle on its back. The 1928 version has the image of Grover Cleveland on its front with the words “The United States of America-One Thousand Dollars” on its back.
- $5,000 Note. Issue in 1928 with James Madison’s image on the front and a portrait of Washington Resigning his Commission on the back.
- $10,000 Notes. The 1918 Notes had Salmon P. Chase on its front with an image of the Embarkation of the Pilgrims on its back. On the other hand, series from 1928’s only difference was with the reverse image that displays “The United States of America-Ten Thousand Dollars.”
Bill sizes were reduced by 25% to reduce production costs, creating a standardized design for all denominations.
1934-$100,000 Gold Certificates
The $100,000 gold certificates were made in 1934 with Woodrow Wilson shown on the front and the words “The United States of America-100,000-One Hundred Thousand Dollars” on the back. This Gold Certificate was only used for transactions amongst Federal Reserve Banks. It was not put to public circulation.
1957-“In God We Trust”
The motto “In God We Trust” has been used in all U.S. paper currency since the first $1 silver certificates were issued in 1957.
1990-New Counterfeit Deterrent Methods
To fight against advanced printers and other counterfeiting techniques, micro printing and security threads are developed.
1996-2000-Redesign of Paper Money
U.S. paper currency is redesigned with advanced anti-counterfeiting techniques that were first introduced on the $100 bill.
2003-2006-Updated Security Features
Federal Reserve Notes are made with advanced security features and special colors, first implemented on the $20 bill.
2007-New $5 Bill with an All Digital Design
The all-digital design was first introduced on the $5 bill.
2010-New $100 Bill Design
With advanced anti-counterfeiting technology, the new $100 bill is unveiled with a traditional American money design.
The Federal Reserve Bank is in charge of the U.S. central banking system, which places all currency into the hands of consumers and businesses alike. As technology advances, the look of the American paper money will also change to meet new security standards, as experienced throughout its rich history.