Continental currency was a paper currency issued by the Continental Congress, after the Revolutionary War began in 1775. Eric P. Newman, a leading authority on the early paper money of America, distinguishes between Continental Currency, issued by the authority of the Continental Congress, Colonial currency, issued by the colonies before the revolution, and state currency, issued after the Declaration (though many collectors lump together state and colonial issues and refer to both as Colonial Currency). Continental currency was denominated in dollars from 1/6 of a dollar to $80, including many odd denominations in between, while Colonial currency was denominated in pounds, shillings, and pence, as well as in dollars. When war with England broke out the British began a large scale counterfeiting operation against the Continental as an act of war to destabilize the economy of the colonies. Benjamin Franklin is recorded as having said, "The artists they employed performed so well that immense quantities of these counterfeits which issued from the British government in New York, were circulated among the inhabitants of all the states, before the fraud was detected. This operated significantly in depreciating the whole mass.". By the end of 1778 the Continentals retained from 1/5 to 1/7 of their value against coinage. At the end of 1779, they retained only 1/25 of their value against coinage, giving rise to the phrase "not worth a continental"

The painful experience of the runaway inflation and collapse of the Continental dollar prompted the delegates to the Constitutional Convention to include the gold and silver clause into the United States Constitution so that the individual states could not issue bills of credit.

Second Continental Congress

The second Congress met in Philadelphia on May 10, 1775, and on that day, in secret session, the measure was agreed upon, but the resolution was not formed and adopted until June 22, the day on which news of the battle on Breed's Hill was received by the Congress. Then it was resolved

and that

Each colony was required to pay its proportion, in four annual payments, the first by the last of November, 1779, and the last by the end of November, 1782. A committee appointed for the occasion reported the following day the annexed resolution:

Printing the bills

A committee was appointed to procure the plates and superintend the printing of the bills. The plates were engraved by Paul Revere, of Boston. The paper was so thick that the British called it "the pasteboard currency of the rebels." The size of the bills averaged about 3½ by 2¾ inches, having a border composed partly of repetitions of the words "Continental Currency." On the face of each bill was a device (a separate one for each denomination) significant in design and legend; for example, within a circle a design representing a hand planting a tree, and the legend "Posteritat" — for posterity. Twenty-eight gentlemen were appointed to sign these bills.

The two million was issued by July of the same year, and Congress quickly concluded that more was needed. By the end of 1775, a total of $6,000,000 in Continentals had been issued. Since the total money supply in the Colonies has been estimated at $12 million before the revolution, this reflects a 100% increase in the supply of money within a single year.

New issues were made at various times until the close of 1779, when the aggregate amount was $242,000,000. Then the bills had so much depreciated that $100 in specie would purchase $2,600 in paper currency. By the end of 1781, $100 in specie would purchase $16,800 in paper. Laws, penalties, entreaties, could not sustain its credit. It had performed a great work in enabling the colonists, with no tax revenue during the first three years of the war, to fight and battle one of the most powerful nations in Europe. The total loss to the people, by depreciation and failure of redemption, of $200,000,000, operated as a tax, for that depreciation was gradual. Continental bills of credit are now very rare—only in the collections of antiquaries.
Counterfeits of the bills were sent out of New York by the British by the cart-load, and put into circulation. The following appeared in Rivington's Gazette:

South Carolina Currency

An ill-advised expedition against the Spaniards at St. Augustine, Florida, by land and sea, undertaken by Governor Moore, of South Carolina, in September, 1702, was unsuccessful, and involved the colony in a debt of more than $26,000, for the payment of which bills of credit were issued, the first emission of paper money in that colony.

Pennsylvania Currency

In 1723 Pennsylvania made its first issue of paper currency. This, however, was called Colonial Scrip, not the same as Continental currency, and it deceased in 1775, giving way to the heavily depreciating Continental currency.

In March 1723 Pennsylvania issued paper bills of credit to the value of $60,000, and made them legal tender in all payments on pain of confiscation of the debt or forfeiture of the commodity. It imposed penalties on all who presumed to make any bargain or sale on cheaper terms paid in gold or silver, and provided for the gradual reduction of the bills by enacting that one-eighth of the principal sum, and all of the interest, should be paid annually. It made loans only on land security and plate deposited in the loan office, and obliged borrowers to pay 5% interest. The scheme worked so well that, in the last part of the year, the government wrote bills worth $150,000 on the same terms. In 1729 there was a new scrip of $150,000, to be reduced one-sixteenth a year.

Pennsylvania was one of the last – if not the very last – provinces that issued its own paper currency.

French Currency

During the French and Indian War, the French officers in Canada, civil and military, had made immense speculations. At the close of hostilities there was outstanding, in unpaid bills on France and in card or paper money, more than $20,000,000, a large portion of which (the French government declared) had been fraudulently issued. Those holding this currency, exchange for which had been suspended immediately after the fall of Quebec (1759), received only a small indemnity for it.

Massachusetts Currency

Very little money had been in circulation in Massachusetts during its early years. What coin the settlers brought with them soon went back to England to pay for imports. Taxes were paid in grain and cattle, at rates fixed by the General Court. Each new arrival of emigrants brought some money, and the newcomers' lively demand for corn and cattle raised the prices high.

But when political changes in England stopped emigration, prices fell, and some in Massachusettes found it hard to pay their debts. In 1640, the legislature of Massachusettes enacted that grain, at different prices for different sorts, should be a legal tender for the payment of all debts.

Corn, cattle, and other personal goods would be taken in payment of debt. As a last resort, the home and lands of the debtor were to be delivered to the creditor "in full satisfaction", at such value as they might be appraised at by "three intelligent and indifferent men" — one to be chosen by the creditor, another by the debtor, and a third by the marshal.
Beaver skins were also paid and received as money, and held a place next to coin in the public estimation. At one time musket-balls, at one farthing each, were made legal tender. A more available currency was found in Wampum, the money of the Native Americans.

Virginia Currency

In 1645 the legislature of Virginia prohibited dealing by barter, and abolished tobacco as currency. They established the Spanish dollar, or "piece of eight", at six shillings, as the standard of currency for that colony. In 1655 the "piece of eight" was changed from six shillings to five shillings sterling as the standard of currency.

See also

• United States dollar

• Federal Reserve Note

• Colonial Scrip

• Connecticut pound

• Delaware pound

• Georgia pound

• Maryland pound

• New Hampshire pound

• New Jersey pound

• New York pound

• North Carolina pound

• Rhode Island pound