3 February 1690: America’s first paper money is issued

On this day in 1690, the Massachusetts colony began circulating the first paper money on North America, printed to finance England’s war against France.

To some people, paper money isn't worth the paper it's printed on. It simply isn't money in any real sense. But to everyone else, a wad of folding stuff is what they desire.

It first made an appearance, as far as we know, during the Tang Dynasty in China in the 7th century. It lasted in one form or another for 650 years or so, but was abandoned around the middle of the 15th century, after the inevitable inflationary booms and busts got too tiresome to deal with.

Over two centuries after China abandoned paper money, the West began experimenting with it.

In 1689, Massachusetts was still an English colony, and used the pound as currency. Back home in England, the Glorious Revolution had recently taken place. England was a protestant nation once again, and business carried on as usual. Business as usual, of course, meant war with the French.

The Nine Years' War had spread out of Europe and in to the American colonies. One of the many troubles with war, of course, is that it is an expensive undertaking, and often requires novel financial solutions. Paying for war with France is responsible for the creation of the Bank of England and the imposition of income tax, for example.

So to pay for its troops, Massachusetts decided it would print paper notes to give to the soldiers in lieu of pay, which could be redeemed later. And on this day in 1690, they went into circulation.

Initially, a note of six Massachusetts shillings would buy you one Spanish dollar. But it didn't take long for inflation to get a grip. By 1737 so much money was floating around it was virtually worthless. To buy a Spanish dollar by then, you would need 22 shillings and sixpence.

Nevertheless, other colonies, such as Pennsylvania, followed suit. But it would be another 107 years before the Bank of England printed its first pound note (again, to finance war with France).

Recommended

Early repayment charges: should you abandon your fixed-rate mortgage for a new deal now?
Mortgages

Early repayment charges: should you abandon your fixed-rate mortgage for a new deal now?

Increasing numbers of homeowners are paying an early repayment charge to leave their fixed-rate mortgage deal early, and lock in a new deal now. Shoul…
30 Sep 2022
Energy meter reading day: why you need submit your gas and electricity readings now
Personal finance

Energy meter reading day: why you need submit your gas and electricity readings now

Energy meter reading day - you need to submit your gas and electricity readings as soon as possible ahead of the October energy price increase
30 Sep 2022
Should you fix your mortgage? Here are the best rates available now
Mortgages

Should you fix your mortgage? Here are the best rates available now

Rising interest rates look set to spring a nasty surprise on millions of homeowners next year. You need to take steps today to protect yourself from a…
30 Sep 2022
Why the Bank of England intervened in the bond market
Government bonds

Why the Bank of England intervened in the bond market

A sudden crisis for pension funds exposed to rapidly rising bond yields meant the Bank of England had to act. Cris Sholto Heaton looks at the lessons …
30 Sep 2022

Most Popular

What to do as the age of cheap money and overpriced equities ends
Investment strategy

What to do as the age of cheap money and overpriced equities ends

The age of cheap money, overpriced equities and negative interest rates is over. The great bond bull market is over. All this means you will be losin…
29 Sep 2022
Why everyone is over-reacting to the mini-Budget
Budget

Why everyone is over-reacting to the mini-Budget

Most analyses of the chancellor’s mini-Budget speech have failed to grasp its purpose and significance, says Max King
29 Sep 2022
Mini-Budget: will Kwasi Kwarteng’s gamble on growth work?
Budget

Mini-Budget: will Kwasi Kwarteng’s gamble on growth work?

The government has launched the biggest dash for growth in 50 years, relaunching an approach known as supply-side economics. What is the plan – and wi…
30 Sep 2022