In 1652, Massachusetts began striking silver coins for public use.
(Images courtesy Heritage.)
The United States dollar was based on the Spanish silver 8 reales coin.
In 1794-1795, silver coins, as shown by this Flowing Hair dollar, were struck at the illegal fineness of 900/100.
(Images courtesy Stack’s Bowers.)When the first settlers from Britain came to what is now the United States, there was little in the way of coined money to use in the marketplaces. Barter was the order of the day, and crops, such as tobacco in Virginia, were often used to pay taxes.
By 1652, this lack of a circulating coinage had become serious enough that Massachusetts began minting its own silver coins, suitably debased from the legal English standard. This reduced weight kept the silver at home and provided a measure of relief for hard-pressed merchants. In 1684, however, the coinage was halted when the London government refused to tolerate it any longer.
By the early 1700s, a continuing shortage of gold and silver forced colonial governments to issue paper money in ever-increasing amounts, which soon depreciated when measured against specie. Parliament repeatedly passed laws forbidding such issues but made little effort to provide colonial marketplaces with sufficient coinage.
One of the underlying causes of the American Revolution was the second-class status of the American economy. Political leaders, such as Benjamin Franklin, wanted the colonists to manage their own affairs, including the monetary system, without interference from the British Crown.
It took money to fund the Revolutionary War and the colonists had little of that. So, like the alchemists of old, they created a paper currency backed by the Spanish milled dollar. But it would have been a rare citizen indeed who could have persuaded the government to honor that pledge.
The Continental