The History of U.S. Paper Money
During the Revolutionary War, the states and Continental Congress continued to issue paper money, but its backing in hard currency was spotty at best. Inflation ensued, and the notes’ values plummeted. Some were called “shinplasters” because early Americans put them in their boots to help keep their feet warm. The saying “not worth a Continental” had its roots in the devaluation of Continental currency.
Designs on state notes varied, but most featured inscriptions within elaborate borders. Coats of arms and crowns were also common. During the mid-1770s, designs became more elaborate; farm scenes and buildings were popular design subjects.
Most Continental currency bore intricate circular seals of allegories.
To deter counterfeiting, leaves were used in the printing process. The fine detail of a leaf on a note was difficult for counterfeiters to duplicate. Each note was hand signed, sometimes by important figures in early American history. The significance of a note’s signatures can enhance its value. Because of the devaluation of paper money during the Colonial and Continental Congress eras, the Constitution specified that “no state shall … make anything but gold and silver coin a tender in payment of debts.” This provision, however, still allowed banks and other private institutions to issue paper money, which circulated solely on the people’s trust in the issuing entity. Sound banks kept enough hard money reserves to redeem their notes on demand; less scrupulous banks didn’t............
Excerpted from Warman’s Coins and Paper Money by Arlyn G. Sieber, available from https://www.ShopNumisMaster.com.
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