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History of Banking
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Colonial Notes Formed
In 1690, the first Colonial Notes were formed by the original 13 colonies. Each colony had different notes that could be used as a medium of exchange. -
Continental Currency
American colonists issued paper currency for the Continental Congress to finance the Revolutionary War. The notes were backed by the “anticipation” of tax revenues. Without solid backing and because they were easily counterfeited, the notes quickly became devalued, giving rise to the phrase “not worth a Continental.” -
The Nation's First Bank
The Continental Congress chartered the Bank of North America in Philadelphia as the nation's first “real” bank to give further financial support to the Revolutionary War. -
The Dollar is Founded
The Continental Congress adopted the dollar as the unit for national currency. At that time, private bank-note companies printed a variety of notes. -
US Mint was Created
The Federal Monetary System was established with the creation of the U.S. Mint in Philadelphia. The first American coins were struck in 1793. -
The Second US Bank was Founded
The charter of the First Bank of the United States expired in 1811. The War of 1812 had proven expensive and difficult to finance so with its end President Madison sought to create the Second Bank, which would help finance the federal debt. Many in Congress opposed the establishment of the bank, but Madison prevailed. -
State Bank Notes
With minimum regulation, a proliferation of 1,600 state-chartered, private banks issued paper money. State bank notes, with over 30,000 varieties of color and design, were easily counterfeited, which combined with bank failures to cause confusion and circulation problems. -
Cival War
On the brink of bankruptcy and pressed to finance the Civil War, Congress authorized the United States Treasury to issue paper money for the first time in the form of non-interest bearing Treasury Notes called Demand Notes. -
Greenbacks
Demand Notes were replaced by United States Notes. Commonly called “greenbacks” because of the green tint introduced to discourage photographic counterfeiting, they were last issued in 1971. The Secretary of the Treasury was empowered by Congress to have notes engraved and printed by private bank note companies. The notes were signed and affixed with seals by six Treasury Department employees. -
The Design
The design of U.S. currency incorporated a Treasury seal, the fine-line engraving necessary for the difficult-to-counterfeit intaglio printing, intricate geometric lathe work patterns, and distinctive cotton and linen paper with embedded red and blue fibers. -
Secret Sevice is founded.
The Department of the Treasury established the United States Secret Service to control counterfeiting. At that time, one-third of all circulating currency was estimated to be counterfeit. -
National Bank Notes
National Bank Notes, backed by U.S. government securities, became predominant. By this time, 75 percent of bank deposits were held by nationally chartered banks. As State Bank Notes were replaced, the value of currency stabilized for a time. -
The Bureau of Engraving and Printing is Founded
The Department of the Treasury's Bureau of Engraving and Printing started printing all U.S. currency. -
Federal Reserve Act
After the 1893 and 1907 financial panics, the Federal Reserve Act of 1913 was passed. It created the Federal Reserve System as the nation's central bank to regulate the flow of money and credit for economic stability and growth. The System was authorized to issue Federal Reserve Notes. Now the only U.S. currency produced, Federal Reserve Notes represent 99 percent of all currency in circulation. -
Standardized Design
Currency was reduced in size by 25 percent, and a consistent design was introduced with uniform portraits on the front and emblems and monuments on the back. -
In God We Trust
Paper currency was first issued with the inscription “In God We Trust” in 1957. The inscription appears on all currency Series 1963 and later. -
Security Thread and Microprinting
A security thread and microprinting were introduced to deter counterfeiting by advanced copiers and printers. The features first appeared in Series 1990 $100, $50 and the $20 notes. By Series 1993, the features appeared in all denominations except $1 notes. -
Currency Redesign
The Secretary of the Treasury announced that U.S. currency would be redesigned to incorporate a new series of counterfeit deterrents. The newly designed $100 was introduced in 1996, the $50 in 1997, and the $20 in 1998. The new $50 was the first to incorporate a low-vision feature, a large dark numeral on a light background on the lower right corner of the back, to help people with low vision identify the denomination. -
50 State Quarters Program Act
The program is scheduled to run from 1999 until 2008, with five new quarters released every year over ten years. The 50 new quarters will feature a design that honors each state's unique history and tradition. The quarters are being released in the order that the states joined the union. -
Redesign of $5 and $10 bills
The U.S. Treasury introduced redesigned $5 and $10 bills to make counterfeiting more difficult. The new notes feature oversized pictures of Abraham Lincoln and Alexander Hamilton that are slightly off-center. Other anti-counterfeiting measures include watermarks that can be seen under a light, security threads that glow when exposed to ultraviolet light and tiny printing that’s visible with the help of a magnifying glass. The $100, $50 and the $20 bill underwent similar makeovers in 1996, 1997 a
