It wasn't really even that long ago and technically it isn't the first time the USA tried to issue paper currency but this is the first one that stuck. In the past various forms of paper money were issued but people quickly lost faith in them or certain inconveniences like the Civil War got in the way of their being any sort of unification as far as currency is concerned. Despite the fact that the Civil War was currently going on then, the official first day the USA started using paper money is today.
The Year was 1862
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Like I said before, there had been attempts to make currency widespread before but the idea behind it was less of a method of personal exchange but rather an easier method than individuals bartering for goods or directly exchanging silver or gold, which is what basically everyone in the world then, and now, considered to be truly valuable. Problems arose when previous note-holders would go to the banks where they were meant to be able to exchange said notes for the paper money's value in gold or silver and the banks would frequently not have the precious metals to exchange. I find this kind of funny because banks today are only obligated to keep something crazy like 10% of the actual cash they are meant to control on hand. They are not obligated to keep ANY gold or silver anymore.
During the Revolutionary War, a lot of money was necessary to continue the fight and this paper money was called "Continentals" that were a true gamble for anyone to accept as payment since it having any value at all was basically a guarantee on future taxation from a government that technically didn't exist yet.
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If you have one of these today it isn't worth as much as you think, normally they only go for around $2000 at auction :(
In order for this value to be fulfilled there was the tiny little problem of the then considered separatists actually winning against the British, which was by no means guaranteed at the time. Many of the people who had these notes never saw their value returned to them by the new government of the United States and therefore the people became very hesitant for nearly 100 years to accept the idea of a paper currency. I'm not sure exactly why this all changed in 1862. Perhaps the government guaranteed the value of the notes in precious metals instead of leaving it up to the banks which we all know is bullcrap and probably always was, but for whatever reasons, the idea stuck and paper currency has been used since that day although many years later the "gold standard" was dropped and basically gave the government the ability to manipulate the value of the currency at will. This of course is what basically happens in every country around the world today.
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In addition to the usual values that we are accustomed to today, they also issued $1000 notes and while you are very unlikely to ever receive this as payment it was in circulation until it was discontinued in 1969, the $500 note was also discontinued in the same year.
The idea behind a $1000 note in 1862 was a little ludicrous and it wouldn't be something that the average person would just be carrying around in their wallet. In 1862 $1000 was worth more than $25,000 today. Imagine trying to get a minimart to make change on that! As you might imagine there were not many of these printed and therefore if you have one of these 1862 notes today you are holding on to something that is worth quite a lot in the collector's market. This is because it is currently thought that there are only 4 of them remaining in existence.
I personally have a love/hate relationship with cash. I realize the necessity for it because we couldn't all just go running around with gold and silver in our pockets and eventually some other method of exchange was going to be necessary. That being said I do not like the way that the governments of the world and some of the shady folks behind the reserves can manipulate the value of what you are paid for your labor at will. The departure from the "gold standard" (which is a long and difficult thing to explain so I'll just presume you know what it means or are willing to look it up) didn't happen until 1973 if you can believe that!
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I haven't lived in the United States for quite some time and these days when I get my hands on some USD it has evolved a LOT over the years because of forgery purposes. Other countries' currency used to seem "weird" to me but now when I return to the states the fact that all notes are the same color and size seems weird to me. Every other country I have lived in has either differing colors, different sizes, or both.
Before any Americans out there start to get arrogant about being the first to use paper currency you need to know that this is definitely not the case.... not by a long shot. The first use of paper currency can be traced back to 1023 under the Song Dynasty in China. Scotland, Germany and Japan also got there first.
However, as someone who has lived overseas outside of their own country for probably longer than you, I can assure you that the USD is the most sought after currency in the world (at least for now - the US government has been working on screwing that up for quite some time now.) If you don't believe me I encourage you to try to exchange Euros or Pounds in a currency exchange in Vietnam - many of them are not interested in this money at all. In many of the countries in this part of the world, they prefer to USD over their own currency and will give you better prices if you pay with it.