Aveneu Park, Starling, Australia

In dollar was used as a value

In 1775, Congress needed to fund the Revolutionary War and establish credit, however other countries did not believe that the US was a good investment. As a result, Congress printed currency, known as the Continental Dollar, and used it as their primary funding method during the war. They printed large quantities of this paper currency, but were not able to give it real value. Congress did not have the power to tax its citizens therefore had no savings saved up in the Treasury. Regardless of their inability to value to currency, it was reported that the printing presses “worked nonstop” between 1775 to 1781. Since the Continental Congress did not have precious metals in their possession, the Continental Dollar was printed on paper notes. On May 10, 1775, the currency was officially circulated. It was printed by Hall & Sellers in Philadelphia. The issuers were extremely wary of counterfers, so the design included many intricate patterns to discourage any copies from being made. Patriotic mottos in Latin were inscribed on the back with sayings such as “Mind Your Business,” “Death to Counterfeiters,” and “A Lesson to arbitrary Kings, and wicked Ministers.” The printers used a special paper which featured a picture of a leaf from a local tree on one side. Featuring the tree was a method of preventing counterfeiting as well, because the printers believed that nobody could “duplicate the pattern of God’s handiwork.” Each bill was also personally signed and numbered by an official to discourage counterfeiting and to make them look more valuable. Despite the issuers’ many efforts, counterfeiting became a huge problem, and was used by the British to sabotage the currency. Interestingly enough, some citizens were able to tell a fake bill from a real one because it looked  “too good.”The holder of the bill was theoretically entitled to a certain amount of Spanish milled dollars or gold/silver. The reason that the Spanish milled dollar was used as a value reference was because it was the most common currency in circulation in the colonies at that time. However, it was never specified how to redeem the value of the Continental Dollars in hard currency, and overtime, people began losing faith in its value. The Continental Congress ended up printing too much paper currency and its value began dropping year after year. Congress also had no control over the bills once they were in circulation. It is believed that in 1775, there was only $12 million in total specie in the colonies, none of it belonging to Congress, therefore none of it backing up the Continental Dollar. Congress however, printed $12 million in Continental Dollars, even though they had nothing backing it up. The printing did not slow down, and it is estimated that by the end of the Revolutionary War, Congress printed around $242 million in Continental Currency. For this reason, it was inevitable that the Continental Dollars would lose their value eventually. By 1777, The Continental Dollar had lost two-thirds of its value. In 1779 $100 worth of real gold or silver would buy $2,600 worth of Continental currency, but by 1781 $100 of gold or silver coins would buy $16,800 in Continental bills. Despite this huge drop in value, Congress still wasn’t able to tax or take any measures to prevent the rapid devaluation of its currency, so they kept on printing more and more dollars to continue buying needed goods and services. Prices kept going up as the country faced hyperinflation, turning into a full fledged crisis. Citizens were panicking because soldiers and merchants who invested in war efforts were being paid with almost worthless money.This crisis wasn’t stopped until eight years after the war ended. The Constitution partly solved the problem by unifying the country and outlawing individual states from issuing their own currency. It also gave Congress the power to tax its citizens to ensure that the US’s paper currency would be backed up by assets in the treasury.

x

Hi!
I'm Simon!

Would you like to get a custom essay? How about receiving a customized one?

Check it out