In the 1500s and 1600s, long before
our country was born, many European countries started colonies in North America.
What did the colonists use for money? They used the currencies from the
countries they came from: Spain's daaler, England's shillings, France's ecus,
Germany's thaler, Portugal's cruzados and Holland's ducatoons.
Early colonists also used American Indian wampum as money. Because there weren't enough coins in the British colonies, people started making their own money in the mid-1600s. The first British colony to do this was Massachusetts. The government of this colony minted threepence, sixpence and shilling coins. One of the best-known coins was the Pine Tree shilling. It was named after the design stamped on the head of the coin.
In 1637, Massachusetts also declared that white wampum was legal tender for sums up to one shilling. Later, in 1690, the same colony started a bank and issued paper money in several denominations, from two shillings to five pounds. These Bills of Credit were used to pay soldiers returning from an expedition to Quebec. The notes promised eventual redemption in gold or silver and could be used immediately to pay taxes and used as money.
Other colonies also started accepting substitute things as money. In fact, by 1775, in North Carolina alone, there were as many as 17 different forms of money that were declared legal. Traditional American Indian currency, including furs, was used. Also, tobacco, rice, indigo, wheat and corn were used. Another form of early money in America was the "tobacco note." These were certificates that said tobacco, stored in a warehouse for resale, was good as legal tender.
When the colonies declared their independence from England, a war called the American Revolution began. As you can imagine, paying soldiers and giving them clothing, food, shelter and guns cost a lot a lot more than the government had on hand. So it printed paper money, or notes called Continentals. When the government started running out of money, it printed more and more. When you print too much money its value goes down. By 1783 a whole barrel of Continentals couldn't buy a piece of cheese. After that, the government didn't issue paper money until a century later.
When the American Revolution ended there were 13 different state currencies as well as foreign money in the new nation. Congress decided that the states should all use the same currency.
One of the first U.S. coins was minted in Connecticut in 1787. It showed 13 linked circles with one circle in the center with the words "United States" and "We are One." Each circle represented one of the original colonies.
On April 2, 1792, Congress passed the Coinage Act, which authorized construction of a mint in what was then the nation's capitol, Philadelphia. This was the first federal building erected under the Constitution. The Secretary of the Treasury was Alexander Hamilton, and he personally prepared plans for it.
In 1793, newly minted cent and half-cent coins began rolling out of the Philadelphia Mint. Did you know that cent means 1/100th of a unit, the total unit?
Silver coins followed the next year and gold coins the year after. The gold coins, called Eagles, were produced until 1933. There were three different Eagle coins, the $10 Eagle, the $5 half Eagle, and the $2.50 quarter Eagle.
However, because of a shortage of both gold and silver, in 1797 the government extended legal tender status to Spanish dollars for an indefinite period. The discoveries in California, which sparked off the Gold Rush in 1848, lead to a massive increase in the production of gold coins by the mint and even the creation of new mints, still in operation today in San Francisco and Denver.