Paper money’s value and management have been debated for centuries. Even today, questions persist about its true worth, economic impact, and proper control. Delving into the origins of paper money in America, particularly through the lens of Benjamin Franklin, offers valuable insights into these enduring questions. Franklin’s experiences and writings shed light on the early adoption and societal role of paper currency in the nascent United States.
In early America, paper money emerged in two significant phases. The initial period, beginning in 1690 and lasting until the U.S. Constitution’s ratification in 1789, saw individual colonies and states issuing their own paper currencies. These weren’t federal notes, but rather “bills of credit” authorized by local legislatures. Governments used these bills to cover public expenses and provide mortgage loans to citizens, who secured these loans with land.
This system created a localized form of currency. Crucially, these bills could be used to pay taxes and mortgage obligations to the issuing government. This acceptance for governmental payments provided the paper money with its local “currency” and facilitated trade within each colony or state. Consequently, the number of distinct paper currencies in circulation mirrored the number of colonies and states, creating a complex monetary landscape in early America that Benjamin Franklin navigated and understood deeply.
