History of United States Currency

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US Currency History

The US currency has evolved over the years while becoming one of the most popular currencies in the world.

In this article, we’ll be discussing the history of the US currency, how it started, and where it is today.

The Timeline

The history of the US currency goes a long way back. We’ll be taking you through all of its development cycles below.

1690: The First Paper Money

The Massachusetts Bay Colony issued the first paper money, and it was the first authorized one by any government in the western world.

Before that, Americans used Spanish, English, and French currencies, which were known as Colonial Notes.

1755: The Revolutionary War

Later, American colonists issued paper currency for the Continental Congress to finance the Revolutionary war. The forecast of tax revenues supported this currency.

But because they weren’t well supported, these notes were easily forged and depreciated right away. The famous phrase “not worth a Continental” was introduced then.

1776: 2 Dollar Notes

The Continental Congress allowed the issuing of 2 Dollar notes.

1781: The First “Real” Bank

The Bank of North America in Philadelphia was the first recognized “real” bank by the Continental Congress to provide more support financially to the Revolutionary War.

1785: The National Currency Unit

Privately owned banknote companies printed several different notes, while the Continental Congress acquired the dollar as the national currency unit.

The Congress authorized the First Bank of the United States to issue banknotes after the adoption of the Congress. The reason behind that was to make the trading process more straightforward and to avoid confusion.

The bank worked as the US Treasury’s revenue agent and performed the functions of the first central bank.

1792: The Federal Monetary System

By that date, the US Mint in Philadelphia was created as well as The Federal Monetary System, and the first American coins were introduced in 1793.

1816: The Second Bank of the US

As of this date, The Second Bank of the US was authorized for 20 years.

Twenty years later, in 1836, a scary number of 1,600 private banks that were authorized by the state supplied paper money, with very few regulations.

Needless to say, banknotes of different colors and designs were widely spread.

This variety resulted in the collapse of many banks and increased confusion between the Americans.

1861: Demand Notes

The Congress was on the verge of bankruptcy, and was under the pressure of financing the Civil War, so, it approved the US Department of Treasury to issue Demand Notes.

A year later, Demand Notes were no longer present, as the United States Notes were introduced to replace them.

The United States Notes were often called “greenbacks” because of their green color, which was used to reduce fake replacements.

Congress authorized the Secretary of the Treasury Department to order private bank note companies to issue printed and engraved notes. Those notes then had to be signed and sealed by the US Treasury Department.

1863: National Banknotes

In 1863, Congress established a national banking system, and the US Treasury Department was given the authority to supervise the issuing of National Banknotes.

1865: The United States Secret Service

The Treasury Department introduced the United States Secret Service to prevent the wide-spreading money copying phenomenon.

One year later, National Banknotes, which were supported by the US government securities, have become the primarily circulated banknotes. This naturally resulted in a stable value for the currency for a while.

1869: The Bureau of Engraving and Printing

The Bureau of Engraving and Printing began printing and engraving the seals and faces on the US Banknotes. By 1877, they began printing all the US currency.

The Bureau’s mission is to produce and develop US currency notes and is trusted internationally. It prints enormous amounts of Federal Reserve Notes, currently known as dollars.

1913: The Federal Reserve System

The Federal Reserve Act created this system and was performing as the central bank of the nation. Its role was to contribute to the economic stability and growth as well as stabilize the money flow.

At that time, Federal Reserve Notes were the only US currency issued.

In 1929 the size of the currency was reduced size to its current 6.14 inches by 2.61 inches.  Additionally, the general appearance of the money was noticeably different. The design had been standardized to make it easier to recognize the difference between a fake and a real note.

1957: “In God We Trust”

This famous proverb was introduced and printed on all the series of currencies later on in 1963.

1990: Microprinting Technology

Advanced printers and copiers that have microprinting technologies were introduced for higher security levels and better detection of fake money printing attempts.

The technology used was first reflected in the series of 1990 $100 notes, then by 1993 series, they appeared on all categories except for $1 and $2 bills.

1994: Re-designing

The Secretary of the Treasury announced introducing another design for the currency. The new $100 notes were first published in 1996, followed by the $50 in 1997, and finally the $20 in 1998.

The newly redesigned $50 had a freshly introduced low-vision feature that involved a prominent dark figure on a light background on the back of the note. The purpose behind that feature was to assist people with sight problems to recognize the denomination.

1998: The 50 State Quarters Act

The program of this act was to run from 1999 to 2008, releasing five new quarters per year, for a sequence of 10 years. The new quarters were planned to feature every state’s tradition and history.

Yet another redesigning process had been applied to $100 notes in 1996. In 1997 the $50 bills had also been re-designed, the $20 notes in 1998.

Finally, by the year 2000, the $5 and $10 bills were the last to be modernized.

To prevent them from being copied, banknotes had Abraham Lincoln, and Alexander Hamilton printed on them as well as watermarks as a higher level of security measure.

The redesigning of the US currency continued until the year 2013, every year using more advanced security measures in continuous attempts to stop fake money from spreading.

The current US currency now involves a 3-D Security Ribbon and color-changing Bell in the Inkwell, as well as a visible portrait of Benjamin Franklin as a watermark on the note’s front and back.

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GP

Hi, I'm GP. A personal finance expert with a mission to help Entirely Money readers break free of money worries. Combining a finance-focused education background (B.S. in Finance and MBA with Finance focus) with over 15 years of personal and corporate finance experience to help you achieve your financial best life!