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American Currency

In: Other Topics

Submitted By filipe
Words 854
Pages 4
Filipe Correia
HIST: 2304:02
Professor Dineen

* History of American Currency * * When the early English settlers came to America they carried small amounts of capital to trade amongst themselves. There is an account of John Winthrop who was a leading figure in the founding of the Massachusetts Bay Colony, in 1630 writing to his son telling him to bring 150 or 200 pounds with him. Later early settlers brought money to exchange for seed, cattle, and any form of capital the original colonies had already accumulated. During this time a married clergyman was allowed 30 pounds per year. Josias Plainstowe, having stolen four baskets of corn from the Indians needed to repay eight and be fined five pounds. Carpenters, sawyers, jointers, and bricklayers (whose service were at a high demand and was at a monopoly price) were forbidden to take over 12d and afterwards 2s per day).
“In January 1631 the crops having failed in England, and no crop having been raised in Massachusetts Bay, grain was at famine prices. Including freight, wheat was 14s. per bushel, peas 10s. Indian corn from Virginia 10s. Many cattle died. A cow was worth 25 or 30 pounds.” * Before America’s independence the colonial economies struggled with the availability of money to go around. Colonial governments made attempts to solve the problem by using nails, tobacco, and animal pelts for currency, giving each a set amount of shillings or pennies so they could intermix with the pre existing system. “The most successful ad hoc currency was wampum, a particular kind of bead made from the shells of ocean critters. But eventually the value of this currency, like that of other alternative currencies of the day, was undermined by oversupply and counterfeiting.” They would produce counterfeit wampum by dyeing similar shaped shells with berry juice, mimicking the purple color of the original. * It was a group of puritans from Boston who first put their faith in paper. Initially the Massachusetts Bay colony tried to issue colonial coins, the pieces themselves were struck in 1652 and were made from a mix of poor quality silver and quickly became outlawed by the British. “Less than a decade later the colonists tried again. They were forced to, really, because they owed money to the crown to help fund Britain's war against France, yet lacked any currency with which to pay up. They called the paper bills of credit. The local government essentially said to the people: Here, just use this. It's real money. We'll sort out redeemability later.”
During 1861, the introductory year of the American Civil War, the expenses acquired by the Union Government far surpassed its limited revenues from taxation, and borrowing was the foremost vehicle for financing the war. The Act of July 17, 1861 authorized Secretary of the Treasury Salmon P. Chase to rear money via the issuance of $50,000,000 in Treasury Notes payable on demand. These Demand Notes were salaried out to creditors directly and used to meet the payroll of militaries in the field. While issued within the legal structure of Treasury Note Debt, the Demand Notes were intended to circulate as currency and were of the same scope as and the exterior closely resembled banknotes. In December 1861, economic conditions worsened and a suspension of specie payment led the government to terminate redeeming the Demand Notes in coin.
Congress passed the Legal Tender Act to finance the Civil War in 1862. It permitted the federal government for the first time to print paper money, called greenbacks, that was not backed by an equivalent quantity of Gold or Silver. “As the government’s hard currency reserves dwindled, the legislation created a new path for it to pay its bills. By obliging creditors to accept the greenbacks at face value, the legislation also energized the economy even as Congress kept inflationary pressures in check by enacting an income tax and steep excise taxes.” The act legitimized paper currency in “payment of all taxes, internal duties, excises, debts, and demands of every kind due to the United States, except duties on imports, and of all claims and demands … and [it] shall also be lawful money and legal tender in payment of all debts, public and private, within the United States.”
By the time the war came to an end in 1865, the government had printed nearly $500 million in greenbacks, the equivalent of more than $7 billion today.
On February 25, 1863 president Abraham Lincoln signed the National Banking Act (was originally known as the National Currency Act), which for the first time in American History established the federal dollar as the only currency of the United States of America.

*

--------------------------------------------
[ 1 ]. Sumner, William. A History of American Currency (Beard Books; Washington D.C.): 2000.
[ 2 ]. Wolman, David. The End of Money: Counterfeiters, Preachers, Techies, Dreamers--and the Coming Cashless Society (Da Capo Press; Massachusetts): 2012.
[ 3 ]. IBID.
[ 4 ]. Chittenden, L. Recollections of President Lincoln and His Administration (Harper and Brothers; New York): 1991.
[ 5 ]. Glass, Andrew. “Legal Tender Act passed Feb. 25, 1862” (Politico.com)
[ 6 ]. Klein, Christopher. “History Channel” (A&E Television Networks): 1996-2014.

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