Paper Money History
Continental Currency • Greenbacks • National Bank Notes • Federal Reserve Notes
The Origins of American Paper Money
American paper currency predates the United States itself — Massachusetts Bay Colony issued the first paper money in British North America in 1690 to fund a military expedition against Quebec, establishing a precedent that other colonies soon followed to address chronic coin shortages throughout the colonial period. This colonial paper, generally called "bills of credit," varied enormously in design, backing, and reliability from colony to colony, foreshadowing the fragmented and often unstable paper currency landscape that would characterize American money for much of its early history.
The Revolutionary War produced Continental Currency, issued by the Continental Congress beginning in 1775 to fund the war effort — currency that suffered catastrophic devaluation as the Congress printed increasing quantities without adequate backing, giving rise to the enduring phrase "not worth a Continental" to describe something of negligible value. This early and painful lesson in the dangers of unbacked paper currency profoundly influenced American monetary thinking for generations, contributing to the Constitution's restrictions on state currency issuance and shaping debates over federal monetary authority that would recur throughout the 19th century.
The Civil War and the Birth of Greenbacks
The Civil War fundamentally transformed American paper currency, forcing the federal government to issue nationally backed paper money on a large scale for the first time since the Continental Currency disaster. Demand Notes, authorized in 1861, were the Union's first paper currency of the war, followed in 1862 by United States Notes — universally nicknamed "Greenbacks" for the distinctive green ink used on their reverse, a printing choice partly intended to deter counterfeiting given the technology of the era. These notes were declared legal tender for most debts, a significant and controversial expansion of federal monetary authority that faced constitutional challenges in the years following the war.
The Greenback's introduction sparked intense political and economic debate that persisted for decades after the war ended, centering on questions of currency backing, inflation, and the proper balance between hard-money and paper-money advocates — debates that would echo through the "free silver" movement of the late 19th century and shape American monetary policy well into the 20th century. Confederate currency, issued separately by the Confederate States of America to fund its own war effort, suffered devaluation even more severe than the Union's, ultimately becoming worthless with the Confederacy's defeat — though surviving examples remain widely collected today as tangible artifacts of this pivotal period in American history.
1690 Massachusetts Bills of Credit
The first paper money issued in British North America, predating the United States by nearly a century.
Continental Currency
Revolutionary War currency whose catastrophic devaluation gave rise to "not worth a Continental."
Civil War Greenbacks
United States Notes, nicknamed for their green reverse ink — the first widely circulated federal paper currency.
National Bank Notes
Currency issued by thousands of individually chartered national banks across the country, 1863–1935.
Large Size to Small Size
The dramatic 1928 redesign that shrank U.S. currency to its modern dimensions.
Federal Reserve Notes
The modern currency system established in 1913, still in use across all denominations today.
National Bank Notes and Currency Diversity
The National Bank Act of 1863 (and its 1864 revision) created a genuinely unique chapter in American currency history: rather than issuing all paper money exclusively through the federal government, the system authorized thousands of individually chartered national banks across the country to issue their own currency, each carrying that specific bank's name and charter number alongside standardized federal design elements. This system, which persisted until 1935, produced an extraordinary diversity of paper currency — with over 12,000 individual banks having issued notes at various points, National Bank Notes represent one of the most collecting-rich fields in American numismatics, since collectors can pursue notes by specific bank, state, or region in addition to more traditional date and type collecting.
This decentralized system reflected genuine tensions in 19th-century American banking philosophy — a compromise between full federal currency control and the era's strong tradition of local and state banking autonomy. National Bank Notes gradually declined as the Federal Reserve System, established in 1913, assumed greater currency issuance authority, though the two systems coexisted for decades before National Bank Notes were finally phased out entirely in 1935, closing out one of the most genuinely distinctive periods in the broader story of American paper money.
Large Size Notes and the 1928 Redesign
American paper currency issued before 1928 is collectively known among collectors as "large size" currency, referring to notes measuring approximately 7.4 by 3.1 inches — noticeably larger than the currency Americans use today. This large format persisted across Demand Notes, Greenbacks, National Bank Notes, Silver Certificates, Gold Certificates, and early Federal Reserve Notes for over six decades, featuring elaborate, often ornate engraving that reflected 19th-century design sensibilities and the printing technology of the era.
In 1929, the Bureau of Engraving and Printing introduced the "small size" currency format still used today — measuring approximately 6.14 by 2.61 inches, a reduction driven primarily by cost savings on paper and ink given the enormous volumes of currency the government printed annually. This redesign also standardized the modern portrait-and-seal layout that remains recognizable on U.S. currency today, though individual denominations and design details have continued to evolve through numerous subsequent security updates, particularly accelerating from the 1990s onward in response to advancing counterfeiting technology.
The Modern Federal Reserve Note Era
The Federal Reserve Act of 1913 established the modern American central banking system and, with it, the Federal Reserve Note — the currency type that dominates virtually all U.S. paper money in circulation today. Unlike the fragmented National Bank Note system it eventually superseded, Federal Reserve Notes are issued through twelve regional Federal Reserve Banks but represent a unified national currency, backed by the full faith and credit of the United States government rather than by gold or silver reserves directly, following the country's gradual departure from the gold standard through the 20th century.
Modern currency collecting spans an enormous range, from historic large-size notes and scarce National Bank Notes to modern star notes (replacement notes marked with a star symbol instead of a standard serial number), low serial number notes, and printing errors that continue to captivate collectors. The Paper Money Guaranty (PMG) service has become the standard third-party grading and authentication service for American paper currency, functioning as the paper-money equivalent of PCGS or NGC for coins, and its certification has become increasingly important as collector interest in higher-value paper currency has grown substantially in recent decades.
Where to Buy Historic U.S. Paper Money
eBay — Historic U.S. Paper Money
The largest marketplace for American paper currency across every era — Continental Currency, Civil War notes, National Bank Notes, and modern Federal Reserve Notes. Look for PMG-certified examples on higher-value purchases.
Shop Historic Currency →eBay — National Bank Notes
Search by specific bank, state, or region — one of the richest specialist collecting fields in American numismatics.
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Frequently Asked Questions
What was the first paper money issued in America?
Massachusetts Bay Colony issued the first paper money in British North America in 1690 to fund a military expedition against Quebec — over a century before the United States existed as an independent nation. This colonial paper, generally called "bills of credit," addressed chronic coin shortages and was soon followed by similar issues from other colonies, establishing paper currency as a recurring feature of American colonial economic life.
Why are Civil War-era U.S. Notes called "Greenbacks"?
United States Notes, first issued in 1862 to help fund the Union war effort, earned the nickname "Greenbacks" because of the distinctive green ink used to print their reverse side — a printing choice partly intended as an anti-counterfeiting measure given the era's printing technology. The nickname stuck so thoroughly that it eventually became a broader colloquial term for paper currency in general, a usage that persists in American English to this day.
What is a National Bank Note?
National Bank Notes were currency issued between 1863 and 1935 by individually chartered national banks across the country, each carrying that specific bank's name and charter number alongside standardized federal design elements. Over 12,000 different banks issued such notes at various points, making National Bank Notes one of the richest and most specialized collecting fields in American numismatics, since collectors can pursue notes by specific issuing bank, state, or region.
What is the difference between "large size" and "small size" currency?
Large size currency refers to U.S. paper money issued before 1929, measuring approximately 7.4 by 3.1 inches — noticeably larger than modern bills. In 1929, the Bureau of Engraving and Printing introduced the smaller format still used today, roughly 6.14 by 2.61 inches, primarily to reduce printing costs given the enormous volumes of currency produced annually. This 1929 redesign also standardized the modern portrait-and-seal layout still recognizable on U.S. currency.
What is a Federal Reserve Note?
Federal Reserve Notes are the currency type established by the Federal Reserve Act of 1913 and represent virtually all U.S. paper money in circulation today. Issued through twelve regional Federal Reserve Banks but functioning as a unified national currency, they're backed by the full faith and credit of the United States government rather than direct gold or silver reserves, reflecting the country's gradual departure from the gold standard through the 20th century.
What does PMG certification mean for paper money?
PMG (Paper Money Guaranty) is the leading third-party grading and authentication service for banknotes, functioning as the paper currency equivalent of PCGS or NGC for coins. PMG examines a note's condition and assigns a numeric grade along with special designations for exceptional paper quality, encapsulating certified notes in protective holders that increase buyer confidence — particularly valuable for higher-value historic notes where condition differences translate into substantial price differences.
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