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Kris W., Scott A. and Tyler B. Long before the colonists or any explorers came to the Americas, there was no form of money. The Native Americans bartered with each other. Bartering was the exchanging, trading and swapping of goods. Native Americans used bartering for over 6,000 years. As colonists came to the New World, they bartered for goods with the Native Americans. Bartering was important, because the colonists had little or no money. They were able to survive by trading with the Native Americans for goods they needed. During the early colonial years the colonist had very little English money or real money to buy goods. Different shipmasters that came to the colonies brought in foreign money, for example this Spanish Milled Dollar. The Spanish Milled Dollar, called a piece of eight, contained .875 oz. of nearly pure silver. The edges were beaded and milled to prevent anyone from shaving the silver off the edges. Sometimes these pieces of eight were cut into eight equal parts for smaller change. Each section (pieces of eight) was worth 2 bits. England made it a point not to send coins to the colonies. The settlers had to barter or use a money substitute called "country pay" for trading. When a settler bartered for goods, they traded wampum beads, beaver skins, maize, wheat, indigo, tobacco, guns, gunpowder, and other natural and man made products as a means of money. The value of the items was determined by how much a person was willing to trade for one thing, and what the seller was willing to take in trade for that one item. This slowed down the development and expansion of business. The colonists decided to produce their own paper money. Massachusetts-Bay Colony was the first to produce paper money in 1690. The colonial note was printed on one side to save ink. An individual signed each bill personally to make it hard to counterfeit . Later New Hampshire produced its own paper money using the same system. After the French and Indian War from 1754-1763, England had a shortage of money. The king cut all money flow to the colonists. He put a ban on all paper money except for military purposes. The colonists had solved the money problem by first bartering and then producing their own paper money. Paper money, except in emergencies, was restricted in New England as a result of the Currency Act of 1751. The Currency Act of 1764 extended these prohibitions to the other colonies. New Hampshire currency was almost worthless outside NH after Massachusetts banned it in 1750, but before 1750 it circulated freely in all the New England colonies. The American Revolution brought new money problems to the colonies. The colonies had organized a Continental Congress, but they could not collect taxes to support their new government. They had no money to pay for the war. The Continental Congress printed large amounts of paper money to pay for the American Revolution. The bills printed before 1777 read "United Colonies" and later bills had the words "United States". The real value of the colonial $20 bill was less than $20, because so many paper bills were produced. |
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