Continental Currency (1775–1779)

Continental Currency was the first paper money issued by a unified American government. It was authorized by the Second Continental Congress beginning in June 1775 — just months after the Battles of Lexington and Concord — to finance the Revolutionary War against Great Britain. Its catastrophic collapse gave the English language a lasting expression: "not worth a Continental."

The First Issue: June 1775

The Continental Congress had no authority to levy taxes and no gold or silver reserves to back a currency. It authorized paper notes redeemable "in Spanish milled dollars" — the most trusted currency in colonial North America — to be paid back through future tax revenues from the states. The notes were printed by Hall and Sellers of Philadelphia, using an intricate design by Benjamin Franklin that incorporated unique nature prints (impressions of actual leaves) as an early anti-counterfeiting measure.

The first issue totaled $2 million in Continental dollars. By the end of 1775, $6 million had been issued. By the end of 1776, $25 million. By 1779, $242 million in Continental bills were in circulation. The printing press had become the primary funding mechanism for the war — with predictable consequences.

Hyperinflation and Collapse

With no gold or silver backing and no meaningful mechanism to reduce supply, Continental Currency depreciated rapidly. The depreciation was accelerated by deliberate British counterfeiting: the British government printed large quantities of fake Continental bills and distributed them in colonial cities to undermine confidence in the Continental money supply. This is one of the earliest documented uses of currency counterfeiting as an instrument of warfare.

The exchange rate tells the story:

• 1777: 3 Continental dollars per Spanish dollar
• 1779: 40 Continental dollars per Spanish dollar
• 1781: 500 to 1,000 Continental dollars per Spanish dollar (effectively worthless)

Soldiers of the Continental Army were paid in Continentals, and their wages became virtually worthless by the end of the war. The phrase "not worth a Continental" entered American vernacular as a synonym for worthlessness.

Legacy

The Continental Currency disaster left deep scars on American attitudes toward paper money. The framers of the Constitution, many of whom had lived through the hyperinflation, deliberately barred the states from issuing paper money (Article I, Section 10) and gave Congress only the power to "coin Money" — arguably not including paper notes. This ambiguity would fuel political battles for generations.

Source: Federal Reserve History: Continental Currency · Newman, Eric P. The Early Paper Money of America. 5th ed. Krause Publications, 2008.