Money and Monetary Problems in Early North Carolina

Most specie that flowed into the colonies through trade quickly flowed back to England in payment for these goods.

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Nor did the colonists have access to specie through any domestic gold or silver discoveries. In order to have a functioning economy, the colonists were forced to turn to other commodities for use as money. Spanish coins, from trade with the West Indies and Mexico, circulated freely in the colonies as legal tender.

While goods were officially valued in British pounds, in their day-to-day transactions colonists more commonly used the Spanish dollar as their unit of account. From to , wampum — the shells prized by local Native American tribes — were legal tender in Massachusetts. This promoted the development of the colony by facilitating trade, but the British did not approve of this monetary system and ended the practice in Throughout the seventeenth century, colonists further south in Virginia and North Carolina employed tobacco leaves as commodity money.

In an effort to address the problem of durability, they later substituted tobacco warehouse receipts for the actual tobacco.

These receipts were like promissory notes: Since the bearer of the receipt had a claim on that exact amount of tobacco, the receipts circulated like currency. But tobacco receipts were not easily divisible, and the supply of both tobacco and wampum in circulation could fluctuate widely, making them inadequate stores of value. Lacking a viable commodity to use as money, local colonial governments of the eighteenth century instead turned to paper money.

Paper money could take one of two forms. When colonial governments issued too many bills of credit or failed to tax them out of circulation, inflation resulted.

Early American Colonists Had a Cash Problem. Here's How They Solved It

This happened especially in New England and the southern colonies, which, unlike the Middle Colonies , were frequently at war. Pennsylvania's paper currency, secured by land, was said to have generally maintained its value against gold from until the Revolution broke out in This depreciation of colonial currency was harmful to creditors in Great Britain when colonists paid their debts with money that had lost value.

The British Parliament passed several Currency Acts to regulate the paper money issued by the colonies. The Currency Act of restricted the issue of paper money in New England.

Early American currency

It allowed the existing bills to be used as legal tender for public debts i. Another Currency Act, in , extended the restrictions to the colonies south of New England. Unlike the earlier act, this act did not prohibit the colonies in question from issuing paper money but it forbade them to designate their currency as legal tender for public or private debts.

That prohibition created tension between the colonies and the mother country and has sometimes been seen as a contributing factor in the coming of the American Revolution. After much lobbying, Parliament amended the act in , permitting the colonies to issue paper currency as legal tender for public debts. When the American Revolutionary War began in , all of the rebel colonies, soon to be independent states, issued paper money to pay for military expenses.

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Examples were selected based on the notability of the signers, followed by issue date and condition. The initial selection criteria for notability was drawn from a list [7] of currency signers who were also known to have signed the United States Declaration of Independence , Articles of Confederation , the United States Constitution , or attended the Stamp Act Congress.

North Carolina Colonial Paper Money

After the American Revolutionary War began in , the Continental Congress began issuing paper money known as Continental currency, or Continentals. Continental currency depreciated badly during the war, giving rise to the famous phrase "not worth a continental". There were simply too many of them. Another problem was that the British successfully waged economic warfare by counterfeiting Continentals on a large scale.

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Benjamin Franklin later wrote:. 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. Congress attempted to reform the currency by removing the old bills from circulation and issuing new ones, without success. Paper money was considered better than no means of exchange, and North Carolina, like the other colonies, relied on a paper money economy for most of the 18th century.

A Brief Description

The paper money habit continued into early statehood, ending with the issues emanating from legislation. The State did not issue more paper money, with the exception of a few issues in the period, until the proliferation of treasury notes during the Civil War. After the colonial period, state and federal governments generally shied away from paper money until the feds began in earnest to print paper money during the Civil War. By then there was no turning back to a hard money-only economy. Issues of North Carolina colonial paper money are identified by the legislation that enabled them.

Usually, but not always, there is reference in the text on the note to that legislation, including a passage or legislative session date. There are 25 different issues, each with several denominations. This introduction divides the issues into seven logical groupings. The short articles that comprise this web site provide a description of North Carolina's paper money from a collector's view.