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Paper money was first issued by the colonies in the late 1600's and was used to pay the cost of military attacks on Canadian colonists.
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The Massachusetts Bay Colony, one of the Thirteen Original Colonies, issues the first paper money to cover costs of military expeditions. The practice of issuing paper notes spread to the other Colonies
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Benjamin Franklin's printing firm in philadelphia printed colonial notes with nature prints--unigue raised impressions of patterns cast from actual leaves. This process added an innovative and effective counterfeit detterent to notes, not completely understood until centuries later.
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Following years of retrictions on colonial paper currency, Britain finally ordered a complete ban on the issuance of paper money by the Colonies.
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The Continental Congress issued paper currency to finance the Revolutionary War. Continental currency was denominated in Spanish milled dollars. Without solid backing and easily counterfeited, the notes quickly lost their value, giving rise to the phrase "not worth a Continental."
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Congress chartered the Bank of North America in Philadelphia as the first national bank, creating it to support the financial operations of the fledgling government.
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Congress adopted the dollar as the money unit of the United States.
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A law passed in 1793 made these foreign coins a legal part of the U.S. coinage system, but things were still very confusing.
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In 1861 the U.S.Treasury Department issued its first notes called greenbacks. These were issued to help pay the cost of the Civil War (1861-1865), but they could not be exchanged for gold or silver and they lost much of their value
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The first $10 notes were Demant Notes, issuedin 1861 by the Treasury Department. A portrait of President Abraham Lincoln appeared on the face of the notes.
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In l863 and l864 a system of national banks was set up by the National Banks Act.
