Week 2 — Day 5
The Continental Dollar: America’s First Paper Money
The story of the Continental Dollar is a fascinating chapter in American history. It was the first paper money ever used in the United States, created during the Revolutionary War. Even though it eventually failed, it taught important lessons about money and how a country's finances should be managed.
What Was Used Before the Continental Dollar?
Before the Revolutionary War, the American colonies didn’t have their own money. Instead, people used a mix of different currencies. The British pound was the most common, but there were also Spanish dollars (often called "pieces of eight") and Dutch guilders. Sometimes, people even traded goods like tobacco, furs, or livestock as a form of barter. Each colony also issued its own paper money, but this wasn’t always trusted or accepted everywhere.
The Birth of the Continental Dollar
When the Revolutionary War started in 1775, the American colonies needed money to pay for soldiers, weapons, and supplies. Since the colonies didn’t have enough gold or silver, the Continental Congress decided to create paper money called the Continental Dollar. The idea was that this money would be backed by the promise that it could be exchanged for real money (gold or silver) after the war.
At first, people were hopeful that the Continental Dollar would work. The colonies were united in their fight against Britain, and this new money was a symbol of that unity. However, the Continental Congress ended up printing way too much of it.
DISCLOSURE: This video is for educational and informational purposes only. Both SteveSuravage.com and Steve Suravage neither endorse or deny the claims made in this video. This video was produced by 'The Story of Liberty'.
Why Did the Continental Dollar Fail?
Several reasons led to the failure of the Continental Dollar:
- Too Much Money Printed: The Continental Congress kept printing more and more Continental Dollars to pay for the war. With so much money in circulation, the value of each dollar started to drop.
- People Lost Faith: As the value of the Continental Dollar decreased, people started to lose trust in it. They didn’t believe it would be worth anything after the war, so they stopped using it.
- Counterfeiting: The British made things worse by printing fake Continental Dollars and spreading them around. This caused even more people to distrust the currency.
- No Central Control: There was no strong government or central bank to manage the money and keep it stable. Each colony had its own way of doing things, which made the situation even more confusing.
By 1781, the Continental Dollar was practically worthless. The saying “Not worth a Continental” became a popular way to describe something that had no value.
What Came After the Continental Dollar?
After the collapse of the Continental Dollar, the United States didn’t have a single, reliable currency for a long time. Instead, people went back to using a mix of different forms of money. Spanish dollars, British pounds, and even the paper money from individual states were commonly used. Gold and silver coins, especially those from Spain, were also in circulation. This period of time was very chaotic in terms of money, and it made trading and business difficult.
In 1792, the U.S. Mint was established, and the country began to produce its own coins, such as the dollar, half-dollar, and quarter. But even then, foreign coins were still widely used.
It wasn’t until 1863, during the Civil War, that the U.S. government started issuing the first national paper money, known as “greenbacks.” But even with these, it wasn’t until the creation of the Federal Reserve in 1913 that the U.S. finally had a stable, national currency system controlled by a central bank.
Interesting Facts About the Continental Dollar
- Designed by Benjamin Franklin: Benjamin Franklin, one of the Founding Fathers, helped design the Continental Dollar. He tried to make it difficult to counterfeit by adding unique designs and watermarks, but the British still managed to produce fake ones.
- A Symbol of Independence: Even though the Continental Dollar failed, it was a powerful symbol of America’s fight for independence. It showed that the colonies were willing to do whatever it took to win their freedom, even if it meant taking financial risks.
- Now a Collector’s Item: Today, surviving Continental Dollars are rare and valuable. Collectors are willing to pay a lot of money for them, even though they were once considered worthless.
The story of the Continental Dollar is more than just a tale of financial failure. It’s a reminder of the challenges the United States faced in its early days and the lessons learned about the importance of having a stable, trusted currency.
Full Documentary
How the American Revolution Was Financed with Paper Money
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Until my next post,
Steve