Tracing the evolution of a nation’s currency provides a unique window into its history. Currency’s journey is rarely straightforward, filled with complex technicalities that can challenge even the most devoted economist. Here, we explore some of the most fascinating moments in the history of U.S. currency, simplifying the tale for those without an economics degree.
The First National Bills Were Called “Continentals”
The Continental Congress issued the first national paper currency for what would become the United States of America in 1775. Named Continental currency, it aimed to fund the Revolutionary War. Initially strong, its value quickly depreciated due to inadequate revenue sources and government mismanagement. Britain’s counterfeiting of the 1777 and 1778 issues exacerbated the problem, forcing Congress to recall these printings. By 1779, as the currency’s value plummeted, Congress halted new printings of Continentals. Although the bills continued to circulate, they were worth only 1% of their face value by 1781.
New Coins Were Minted Under Alexander Hamilton
By the late 18th century, the United States required a currency overhaul. In 1791, Alexander Hamilton, the first treasury secretary, established the Bank of the United States to create a stable credit system. The following year, Congress passed the Coinage Act of 1792, establishing a national mint in Philadelphia to produce coins from copper, silver, and gold. These included the denominations we use today, along with a broader range of values. Copper coins included the half cent and cent; silver coins featured the half dime, dime, quarter, half dollar, and dollar; and gold coins included the quarter eagle ($2.50), half eagle ($5), and eagle ($10).
The U.S. Dollar Was Based on the Spanish Peso
The U.S. dollar originated as a coin based on the Spanish milled dollar, known as the peso, replicating its weight and silver value. The origin of the dollar sign remains unclear. One theory suggests it evolved from superimposing the “S” and “P” from the old shorthand for peso (“ps”), later simplified into the dollar sign. Another theory proposes that it derived from a superimposed “U” and “S,” potentially representing “units of silver.” However, no substantive evidence supports these theories. Despite its iconic status, the exact origin of the dollar sign remains a mystery.
George Washington Wasn’t on the First Dollar Bill
The first U.S. $1 note, part of the legal tender known as “greenbacks” for their color, was printed in 1862. This initial dollar bill did not feature George Washington but instead displayed the likeness of then-Treasury Secretary Salmon P. Chase. Chase, in charge of creating the currency, placed his own image on it. During a speech, he recounted, “I went to work and made ‘greenbacks’ and a good many of them. I had some handsome pictures put on them; and as I like to be among the people… and as the engravers thought me rather good looking, I told them they might put me on the end of the one-dollar bills.”
Greenbacks included anti-counterfeiting measures such as the U.S. Treasury seal, engraved signatures, and complex geometric patterns. These early measures are the roots of techniques still in use today, augmented by additional identifying factors. George Washington replaced Chase on the dollar bill permanently in 1869, with Section 116 of the annual Financial Services and General Government Appropriations Act preventing any redesign of the $1 note.
There Used To Be a $10,000 Bill
While the $100 bill is currently the largest denomination of American currency, much larger notes were once printed. Until their discontinuation in 1969, notes in $500, $1,000, $5,000, and $10,000 denominations existed, though they were not widely circulated. The $500 note featured John Marshall on the blue seal version and President William McKinley on the green seal version. The blue seal $1,000 depicted Alexander Hamilton, while its green seal counterpart featured Grover Cleveland. James Madison appeared on the $5,000 note. The $10,000 note, the highest value of American currency ever circulated, featured Salmon P. Chase on both versions.
Only one piece of U.S. currency surpasses the $10,000 note: the $100,000 gold certificate, which was never circulated. Printed for just three weeks between 1934 and 1935, this gold certificate was intended exclusively for transactions between Federal Reserve Banks. Woodrow Wilson was portrayed on the front of the note. Possession of the $100,000 gold certificate by a civilian is illegal, making it one of the strangest possible financial crimes.
The history of U.S. currency is a fascinating journey through economic challenges, innovation, and the occasional act of vanity. From the initial Continental currency to the high-value notes of the 20th century, each development reflects the evolving needs and values of the nation. As we continue to use the dollar today, these historical moments remind us of the intricate and often surprising path that has shaped the currency we now take for granted.
