The Early Paper Money Of Colonial America


This article takes a look at the often under-appreciated paper money of England’s American colonies and the issues of the Continental Congress in the years up to Independence. There was a wide range of issues by all thirteen of the founding colonies of the United States and their story is closely tied to the wider history of North America. The first paper money issue by any of the colonies was in Massachusetts in the year 1690, making that colony the first English paper money issuer in the world, four years ahead of the Bank of England.


Historical background 

The story of English settlement in America starts in 1607 in Jamestown in what became the Colony of Virginia. The first settlers were ill-prepared and barely survived the winter of 1609 when 450 out of 500 of them died, either from sickness or starvation. New settlers nevertheless joined them and eventually the colony thrived, becoming a Crown Colony in 1624.

Meanwhile, much further north, the Pilgrim Fathers arrived in 1620 in the Mayflower to establish their own settlement in Plymouth. They named the region New England while the first settlement became the Colony of Massachusetts Bay, formalised by a Royal Charter granted in 1629. Some were forced out due to religious differences with the Puritans and spread out into other parts of New England. These eventually became the separate colonies of New Hampshire, Rhode Island, Connecticut and Maine.

Further colonies were founded in Maryland in 1632 and in Manhattan in 1664 by ousting the Dutch from the island they had purchased from Native Americans. This became the Colony of New York. Swedish settlers had first arrived in the lower Delaware Valley in 1638, only to be overpowered by first the Dutch and then the English. In 1681 William Penn was granted the charter for the Province of Pennsylvania and founded the city of Philadelphia the year after.

With the founding of the Colony of Carolina in 1663 and the Colony of Georgia in 1733 an unbroken chain of English settlements was created from New England in the north to the borders of then Spanish Florida in the south. The colonies, while populated mainly by English settlers, were not uniform in character or religion, and began to coalesce only as a result of increasingly unpopular and restrictive laws imposed by the British Parliament in distant London (England had become Great Britain following the 1707 Act of Union with Scotland). following the 1707 Act of Union with Scotland). In the background throughout this period was the intense rivalry between France and England, which played out in North America just as it did in Europe and elsewhere. Following the Treaty of Paris in 1763, at the end of the Seven Years’ War, France was finally forced to abandon her huge territories in Canada and east of the Mississippi to Britain, whose supremacy in North America appeared to be secure. Yet, just thirteen years later, in 1776, Britain had lost all thirteen of its colonies in the American Revolution which gave birth to the United States of America. Although armed conflict continued until 1783, the British were henceforth confined to the Maritime Provinces north of Maine who had remained loyal to Britain and the former French territories along the St Lawrence River and north of the Great Lakes.

How had this happened? In a word, taxes, or the threat of them. The cry was “No taxation without representation”. Restrictive trade practices, labelled “Mercantilism” in Britain, were also widely resented – the colonists were expected to sell agricultural products and raw materials to Britain and buy expensive manufactured goods in return. Not to be overlooked were the many restrictions Britain also attempted to impose on the issue of colonial paper money. Many issues were approved by local assemblies but later disapproved in London, far too late to stop them but causing extra resentment when news of the ban came through. The punitive Coercive Acts of 1774 (known as the Intolerable Acts to the colonists) were probably the final straw. They were aimed at punishing Massachusetts following the Boston Tea Party but were detested in the other colonies too.

These developments pushed the originally separate and occasionally quarrelsome colonies into cooperating more closely from the 1750s onwards, finding they had enough in common in terms of shared heritage political systems, religious practices and legal and constitutional arrangements to work together against the common enemy, seen as a distant government ignorant of and insensitive to their rights and concerns. With a growing population estimated at 2,500,000 in 1776 they had sufficient muscle to take on British attempts to maintain tight control using their military might. The die was cast. The French, it might be added, got a measure of revenge by forming a military alliance with the colonists in their fight for independence.


Money in the American Colonies 

Money as a medium of exchange and a store of value was never a straightforward matter in the new colonies. Initially, barter was common and while some English coins entered local circulation, many foreign, generally Spanish, coins were more often seen. The first colonial coin was the silver “Pine Tree” Shilling issued in Massachusetts in 1652 but it did not circulate for very long while other coins such as copper tokens were only occasionally issued. All these coins had however been issued without the formal consent of the British authorities who eventually declared them illegal. “Commodity money”, where beaver skins or tobacco were used as money or in payment of taxes, also made an appearance from time to time without offering a lasting solution. Formally, the currency, or “money of account” of each colony was the Pound Sterling (£1 = 20 Shillings, 1 Shilling = 12 pennies), but each one issued its own pounds which did not necessarily trade at par to Sterling or indeed to each other. In fact, quite often a colony’s pound ended up trading at a significant discount to Sterling. Many colonies issued notes (or bills, to use American terminology) in pounds but these were often stated to be payable either in “Spanish Milled Dollars” or in gold or silver at a given exchange rate. The Spanish (or Mexican) coin most often used was the large silver coin known as “Ocho Reales” (8 Reales or Pieces of Eight), generally valued at 4s 6d Sterling (though valuations up to legal maximum of 6s set by the British parliament in 1709).

With no gold or silver mines of their own, and the shortage of coinage exacerbated by the practice of the English merchants importing produce from the colonies demanding payment in coin, the colonists’ solution to having a usable medium of exchange was paper money. Most but not all of this paper money was issued on the legal authority of the colonial governments though some private issues by local banks and merchants have also been recorded. The government issues were known as “bills of credit” in recognition of their role as a fund-raising device, used to finance military campaigns (mostly against Native Americans), or for public works such as fortifications, lighthouses, bridges and roads. Some but by no means all were interest bearing but all functioned as currency.

Now, for the first time, the money itself had no intrinsic value other than the value of the paper on which it was printed. Rather, the value of the bills came from the fact they were issued by and accepted by the government of the colony in payment of debts. “Fiat” currency had been born, with its inherent temptation to over-issue and generate inflation. The bills of many colonies, especially those issued during the Revolutionary Wars of 1775 onwards, did indeed devalue sharply and if redeemed at all it was only at a fraction of their face value.

As we explore the diversity of colonial paper money issues we will see that bills were redeemable in a number of different ways: 

In gold or silver coin, usually at a fixed rate stated on the bill (though this was a device to set value rather than a promise to pay in specie) In the widely accepted standard Spanish Milled Dollars In Sterling bills of exchange drawn on London banks In payment of taxes In “lawful money”, meaning the holder was entitled only to new bills issued by the same colonial authorities. In several colonies shopkeepers and businesses issued bills for use as small change, such was the lack of coinage.

The phrase “indented bill”, often seen in the promissory text of colonial paper money, is unfamiliar to many UK readers; it means a bill literally indented by having one wavy, or indented, edge where it was separated from its counterfoil. This practice of cutting bills from the counterfoil was intended as a check against forgery – when a bill was presented it was checked against the uneven cut to verify it. Later this practice ceased but the phrase stayed in use. Colonial bill issuance continued into the 1780s before a common currency, the United States Dollar, was eventually created by a Federal Law passed on 2nd April 1792.


Colonial Emissions (Issues) – a Chronological Survey Massachusetts – from 1690 

The first colony to issue its own paper money was the Colony of Massachusetts Bay. £7,000 was raised in December 1690 to pay for military action in King William’s War against French invaders and their Native American allies. The bills were printed from an engraved copper plate and apart from the promissory text featured only a small oval vignette of a Native American saying “COME OVER & HELP US”. A follow-up is sue of £40,000 was authorised in February 1691 with the additional right conferred on holders to a 5% discount if used in payment of taxes. Nearly all these bills were redeemed and the few rare survivors have all had their denominations fraudulently altered. The Colony, now formally constituted as the Province of Massachusetts Bay in New England, made several further issues between 1702 and 1744 of bills in denominations ranging from 1 Shilling to £5 or 100 Shillings “equal in value to money”. These now carried the Royal Arms with the motto “HONI SOIT QUI MAL Y PENSE”. Counterfeiting was evidently rife and the bills were withdrawn and reissued several times as a result.

Inflation during this period led to new issues being designated New Tenor to distinguish them from the preceding issue or Old Tenor bills. For example, the 1736 issue was valued at three times the previous one. A further new issue, now called the Three Fold Tenor, was worth four times its predecessor. Bills of all three tenors circulated together which must have resulted in some confusion. It took the arrival of a shipment of coin from England in 1750 to regularise the situation and no new paper money was issued for 25 years.

A famous series of bills engraved by Paul Revere, who became famous during the American Revolution, appeared in August 1775 whose reverse depicted an American Revolutionary holding a sword in one hand and the Magna Charta in the other, with surrounding text stating “ISSUED IN DEFENCE OF AMERICAN LIBERTY” and the Latin motto “ENSE PETIT PLACIDAM SUB LIBERTATE QUIETEM” (= “By arms he seeks peace with freedom”). The final issues by what was now the State of Massachusetts Bay were in 1781.

New Jersey – from 1709 

The Province of New Jersey was also an early issuer, its first bills appearing in 1709 and as in many other cases the purpose was to raise funds for military actions. Bills issued between 1711 and 1733 were denominated in shillings and pence but redeemable in silver at a fixed rate, for example a bill for 1s 6d was to pass for four penny-weight and nine grains of silver. Calculations for everyday commerce using such bills must have been very time-consuming! 

New Jersey had been one of the first colonies to experiment with bi-coloured bills as seen with the 1733 issue which combined red and black ink to print the promissory text – a tricky undertaking to get the registration right. All New Jersey bills prominently displayed the Royal Arms, right up to the last series issued in March 1776 even though the Revolutionary War had already started at that point. These bills continued to circulate until they were replaced in 1780 by New Jersey’s final issues which used the State Seal instead.


Connecticut – from 1709 

1709 also saw the first bills issued by the Connecticut Colony. They carried the Colony’s seal, as did most subsequent issues – three grapevines in an oval border with the Latin motto “SUS TINET QUI TRANSTULIT” (= “He who transplants sustains himself” ). Early bills carried a large red monogram “AR” for “Anna Regina” or Queen Anne, who reigned from 1702 to 1714. All pre-1770 Connecticut bills are rare and even the ½ or ¼ portions that survive are collectible – a local habit arose of halving or quartering bills to create small change, indeed some bills were printed to indicate the value of ¼ of the full note, as happened in 1733.

Some bills were also reissued and redated and New Tenor bills worth 3½ times the previous ones were issued in 1740. Issues from 1755 to 1780 were of a very similar design and can be found in denominations ranging from 6d to 40s (£2). In 1777 300,000 Small Change Bills to a total value of £5,250 were issued in denominations from 2d to 7d.


New Hampshire – from 1709 

Very similar in style to Connecticut’s first bills, New Hampshire’s first issue also appeared in 1709 and also carried the “AR” monogram in red. The Royal Arms appeared on all the bills until 1745 with the next issue of 1755, intended for use on the Crown Point expedition. This depicted a tree with a fort behind, the tree labelled “PRO ARIS & FOCIS” or “For hearth & home”. Original issued bills are rare but in the 1850s copies were made from the original plates. Later “lawful money” issues were simple designs mostly with no vignette and limited ornamentation. 


New York – from 1709 

1709 also saw the Colony of New York issue its first bills, these being £5,000 of Indented Bills “in value equal to money” to be used in payment of taxes. The 1711 issue paid interest though the rate set must have been difficult to calculate, for example the 25s bill promised interest of ¼ farthing (i.e. 1/16th of a penny) per day. Another issue was denominated in ounces of silver with interest payable at 2½% per annum. The equivalent amount in Lyon Dollars (a silver coin used by Dutch traders in New York City even after the English had taken over) was stated at the rate of one Lyon Dollar for 13 pennyweight 18 grains of silver.

From 1717 most bills carried the New York City seal, inherited from the Dutch, comprising a four-sailed windmill supported by images of a sailor and a Native American and surmounted by the Royal crown (later replaced by the American eagle). In a way this symbolises the enduring Dutch influence over New York City’s growth into America’s most powerful city and its international gateway.

1774 saw the first issues by City of New York itself in the name of the Mayor, Alderman and Commonalty of the city. This was the first time any municipality had issued its own bills in the colonies, to raise an initial sum of £2,400 for the city’s water works. Bills for 1s, 2s, 4s and 8s were issued. The City & County of Albany followed suit in 1775, issuing just £500 in “New York currency”.

While New York, as in other colonies, denominated their bills in both Sterling and Spanish Milled Dollars, they were one of the last to issue bills in Sterling with an issue of £200,000 in 1788 in denominations from 5s to £10 printed in red and black. By then, of course, the Colony had become a State. In the years from 1789 to 1799 a large number of small change bills in New York City and elsewhere in the state were issued by a wide range of local businesses, shopkeepers and municipalities. Nearly 60 issuers have been recorded. Private banks also began to issue bills from 1789 onwards, freed from pre-independence British restrictions on such activities.

Rhode Island – from 1710 

The Colony of Rhode Island & Providence Plantations, to give it its full name, first issued its own bills in 1710, known as the Old Tenor issue once New Tenor bills were introduced in 1740. Both Old and New Tenor bills were replaced in 1763 by “lawful money” at a rate of 1 shilling to 6⅔ New Tenor shillings or 26⅔ Old Tenor shillings. Many Rhode Island bills were distinctive for their elaborately engraved reverses, some printed in red, which acted as useful though not wholly successful forgery deterrents. The colony’s crest appeared on many bills – an anchor and chain with the motto “IN TE DOMINE SPERAMUS” (= “In you, Lord, we have hope”) – and on the 1743 issue was joined by an elaborate engraving of the Royal Arms.

When Statehood was attained in September 1776 the full formal name of the State was seen on its bills for the first time. These included the tiny small change bills issued in 1777 for amounts from $1/36th to $1/3rd, expressed in fractions of a Dollar even though the lawful currency of the state remained pounds until 1792.


North & South Carolina – from 1712 

The Colony of Carolina was founded in 1663 but split into North and South Carolina in 1712 following ruinously expensive military campaigns against both the Spanish to the south and local Native American tribes who fought against the constant encroachment by colonists on to their lands. Both colonies were early adopters of paper money to help raise finance for these military actions. North Carolina’s first bills were entirely hand-written and only a few counterfeits have survived. Their first printed bills appeared in 1734 but were replaced in 1748 by a new series intended to redeem all outstanding issues at the rate of 7½ old bills for a new one of equivalent value.

 A particular feature of North Carolina bills is seen to its greatest extent in its issue of April 1776: the use of a wide range of small vignettes, often of animals, birds or fish, on all the denominations, sometimes up to eight different ones on a single denomination, creating no fewer than 56 varieties of this one issue – a paradise for the specialised collector! This appears to have been an effort to deter counterfeiters. A different tactic was used in their August 1778 issue: different mottos for each denomination, most in English but several in Latin. Secret marks were also deployed to deter forgers, but they soon spotted them and faithfully copied each one, whether an inflection over a certain letter or an apparent ink smudge on the paper.

The first South Carolina issues followed a similar path to those in the North with some £29,000 being raised between 1703 and 1711 to raise funds for the failed expedition against the Spanish and then for further fighting with Native American tribes. In 1712 South Carolina became the first colony to issue bills for the express purpose of stimulating economic activity (these were called “Bank Bills” and were issued through a Loan Office, a fundraising method adopted by several other colonies). Later South Carolina issues were notable for some delightfully elaborate engravings on the backs of the bills.

Ultimately both North and South Carolina issued bills to such an extent that local inflation reached very high levels. In South Carolina by 1776 the local exchange rate had fallen from 6s to 32s 6d per Spanish Milled Dollar while in North Carolina their final issue of bills in 1780 totalling £1,240,000 depreciated much more alarmingly to 1/800th of ostensible face value.


Pennsylvania – from 1723 

The Province of Pennsylvania had been founded in 1681 by William Penn who had obtained a Royal deed from King Charles II to become its Proprietor. He intended the colony as a refuge for his fellow Quakers but many others of different religious persuasions settled there as the colony expanded.

The first bills were issued in 1723 through a newly established Loan Office. Apart from the lengthy promissory text the key distinguishing feature was a large engraving of the Penn family crest. Most of the colony’s bills carried this until 1775, though a few used the Royal arms instead (but never together).

From 1731 until 1767 bills were printed by the Pennsylvania-born polymath and inventor Benjamin Franklin, also known as “The First American”, later working with his partner and former employee David Hall. The reverses used his invention of nature printing from leaf casts (lead casts were made from plaster casts of real leaves and were then used to print the bill), an effective anti-forgery device. Franklin’s nature prints also appeared on the bills of New Jersey and Delaware.

After 1767 the printing firm was known as Hall & Sellers and they went on to print bills not only for Pennsylvania and other colonies but also the Continental Congress. One of the devices used to prevent alteration of the bills (typically revising the denomination upwards) was the placing of small crowns in the promissory text, each intended to denote 5s, so three crowns on a 15s note, for example. This approach is seen on the bills of several colonies.


Delaware – from 1723 

The issuer of the first bills in what became the State of Delaware was stated on the bills to be the Government of the Counties of New Castle, Kent & Sussex upon Delaware. These were effectively self-governing counties within the Colony of Pennsylvania and they first turned to paper money in April 1723, just weeks after Pennsylvania itself. The early issues were crudely printed from woodcuts and few have survived for collectors. Only the final issues from 1776 and 1777 are easily obtainable. On 7th December 1787 the State of Delaware became the first state to ratify the US Constitution, thus becoming known as “The First State”.


Maryland – from 1733

The Colony of Maryland first issued bills in 1733, through a Loan Office established for the purpose. Unusually these were printed in England on fine watermarked paper. The bills carried an elaborate engraving of the Arms of Maryland, comprising the arms of Lord Baltimore, the colony’s founder, supported by a farmer and a fisherman and bearing the motto “CRESCITE ET MULTIPLICAMINI” (= “Increase and multiply”). Examples of the 1733 issue are now only to be found in the form of unissued remainders. These issues were unusual in that the colony established a sinking fund at the Bank of England to ensure there was money available to redeem the bills.

The 1767 issue was the first colonial issue denominated simply in Dollars (as distinct from Spanish Milled Dollars). They were to be redeemed in bills of exchange payable in London (and in part backed by what was left of the sinking fund at the Bank of England) at the rate of 4s 6d Sterling per Dollar (equating to 7s 6d in devalued local pounds).

The well-known 1775 series of bills featured an elaborate if poorly engraved vignette replete with propaganda images. An image of King George III is seen trampling on a scroll labelled “M Charta” (for the Magna Carta) as he sets fire to an American city. To his left the allegorical figure Britannia receives a petition from an allegorical America, who leads an advancing army of patriots. America tramples a scroll labelled “SLAVERY”. In stark contrast the reverse side shows Britannia and America holding an olive branch between them. The inscription “PAX TRIUMPHIS POTIOR” (= “Peace is preferable to victory”). These 1775 bills are highly sought after by collectors today. 


Virginia – from 1755

 The first circulating paper money in the Crown Colony of Virginia was in the form of tobacco receipts. The first bills issued by the Colony appeared in 1755 and were intended to pay for wars against the French and local Native American tribe. They depicted the Colony’s Arms with the motto “EN DAT VIRGINIA QUARTAM” (= “Behold Virginia contributes one quarter of the strength”). Early designs were very simple while some issues between 1758 and 1776 were uniquely denominated in multiples of Crowns, although payable in “current money of Virginia”. The Crown was an English coin worth 5s but there is no indication such coins circulated in Virginia.

Bills issued in 1773 and 1775 were engraved and printed in London by Ashby & Co on large sized good quality watermarked paper and stood very much in contrast to the much smaller locally produced bills. The final issues by Virginia in 1781 are remarkable for the high denominations involved – they ranged from $10 right up to $2,000, this being by far the highest denomination of any colonial issues and indicative of the extent to which the local currency had depreciated.


Georgia – from 1755

 From 1735 to 1750 the only paper currency in the Province of Georgia was sola bills of exchange drawn by the “Trustees for Establishing the Colony of Georgia in America” and payable at their Westminster office in London. It was not until 1755 that locally prepared and locally payable bills were issued. Designs were simple and unadorned while a red coloured element to the promissory text was first featured in 1765.

The Colony’s 1776 and 1777 issues are notable (and highly collectible as a result) for using a large number of different coloured seals on the bills. Each seal has a different Latin motto and the various seals can be found in light blue, maroon, orange and green. Well over 100 varieties have been recorded.


Continental Currency – from 1775

 While the indiscriminate issue of “fiat” paper money had caused inflation in some colonies it was the bills issued by the Second Continental Congress between May 1775 and 1780 that really drove inflation to dangerous and damaging levels. A grand total of $241 million was issued over six years, all these funds needed of course
to pay the troops fighting the British during the Revolution although some was used to redeem
earlier issues. Redemption of the first bills to be issued in May 1775 was intended to come from
taxes raised by the thirteen colonies, now known as the United Colonies. From May 1777 the
bills were issued in the name of the United States rather than the United Colonies and from January 1779 they were in the name of the United States of North America.

The bills were all denominated in Spanish Milled Dollars in amounts ranging from $1/6th
to $80 and promised redemption in gold or silver. This was never going to materialise. Instead,
inflation took its toll and the bills changed hands at ever smaller fractions of face value.
Large scale British-sponsored counterfeiting did not help despite the production of counterfeit
detector sheets on blue paper distributed by the printers (Hall & Sellers throughout). Issuance
of Continental currency ceased in April 1780 but the paper remained in circulation for several
years longer. By October 1787 $250 face value of bills was worth $1 in silver. In August 1790
Congress agreed a refinancing whereby $100 of bills would buy $1 of a new federal bond. The
bills had effectively become worthless. This unfortunate period of financial history created phrases such as “Not worth a Continental” and even George Washington was quoted as saying “A wagon load of money will scarcely purchase a wagon load of provisions”.

The designs used on the bills are rich with patriotic symbolism and most include patriotic
mottos in Latin. The first $8 bill featured a harp with 13 strings, a later $40 bill had an all-seeing
eye looking down on 13 stars in a circle; the $50 bill showed a stepped pyramid with 13 steps; and
the reverse of the 1/6th fractional issue used the famous ring of 13 interlocking circles, each one
named after one of the founding states just in case the meaning was not obvious. 

Anti-counterfeiting devices were deployed (with limited effect) including the use of paper
containing blue fibres and mica flakes and reverses using Franklin’s nature prints. The first
$20 issue had highly distinctive “polychromed marbling” along the left-hand margin and dual
red and black printing was also brought in for the final 1779 issue.


 This article can serve only as a brief introduction to a complex and fascinating subject. Further study is highly recommended and there is a wealth of research material available. The best starting point is Eric P Newman’s “The Early Paper Money of America”, now in its 5th edition.


 My thanks to Mark Anderson and Bruce Smart
for their ever-helpful guidance and support.

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