Exploring American Currency

The Federal Reserve Bank of San Francisco has an excellent display of American Currency. (www.frbsf.org/currency/index.html) From it, you can get an good summary of the history of paper money in the United States. The review questions below are meant to help you explore the exhibit. Make sure you read the notes for each page in the Historical Context sections.

1. In the colonial period, there was no standard money. Trade was carried out with various forms of barter, coin, and paper. Yet one form of coin emerged as the dominant form of money in the colonies. What was the unofficial currency of the colonies?

2. What backed the continental currency issued to finance the American Revolution?

3. Which individual was the primary force behind the establishment of the First Bank of the United States?

4. Which groups opposed the Second Bank of the United States? Which president killed it? (An irony: This president, whose decision to kill the Second Bank of the United States initiated several decades of monetary chaos, is now pictured on bills issued by our central bank.)

5. After the demise of the Second Bank of the United States, the Free Banking Era begins. In what year does it begin? When does it end? Who issued paper money during the Free Banking Era?

6. How much of the paper money circulating in the Free Banking Era was estimated to be counterfeit?

7. What backed the confederate currency? Why did it quickly fall in value?

8. Why were the fractional currency notes issued? Whose picture appeared on the five-cent note from 1864-9? What legislation did Congress pass as a result?

9. What backed the Legal Tender Notes?

10. After the passage of the National Bank Act in 1863, Congress attempted to limit issuance of paper money to the Treasury or to banks chartered by the Treasury (National Banks). What did Congress do to discourage paper money issued by state banks?

11. How many copies of the $10,000 gold certificate issue of 1882 are in existence?

12. The Bland-Allison Act led to silver certificates, which in the first part of the 20th century were an important part of the money stock. When was the first silver certificate issued? When was the last one issued?

13. A silver certificate issued in 1899 created ill-will among the Sioux and Pawnee tribes. Why?

14. Who are the only two women to have been depicted on American currency (currency issued by the government)?

15. After the establishment of the Federal Reserve System in 1914, a new type of paper money, the Federal Reserve Notes, appeared. They were intended to replace the National Bank Notes, and eventually they did. There was also some (rare) issuance of Federal Reserve Bank Notes, which for some reason are not quite the same things as Federal Reserve Notes. A two-dollar Federal Reserve Bank Note from 1918 shows a battleship on its back. Why would a picture of a ship not appear on a note issued today?

16. In the 1920s the Treasury issued gold certificates, notes that were redeemable in gold. When did it become illegal for Americans to hold these notes?

17. What were Hawaii Notes? Why were they issued?

18. Whose picture was on the $5000 note? When did the Bureau of Engraving and Printing stop printing bills with denominations greater than $100?

19. Whose picture was on the $100,000 note? What color was on the back? What were these notes used for?

The Federal Reserve Bank of Richmond has a display of coin and currency that has broader coverage than that at the Federal Reserve Bank of San Francisco. See the Money Museum at <http://www.richmondfed.org/about_us/visit_us/tours/money_museum/index.cfm#tabview=tab4>. However, the layout of the site is not as user friendly. It is cumbersome going from exhibit to exhibit, and one cannot enlarge the pictures to get a better view. But if you want even more information about story of money, check it out.

The Federal Reserve Bank of San Francisco has a more detailed look at the history of paper money at <http://www.frbsf.org/publications/federalreserve/annual/1995/history.html>