How is Money Made in America?

Currency from the United States hasn't always looked so well-constructed. In fact, during the country's earlier years, the monetary system could rival that of a school child. Yes, it had that many issues but the nation has learned from its mistakes and it now has one of the most technical monetary systems in the world. Just a few years ago, coins and paper money got a face-lift to help deter counterfeiting issues and it has helped tremendously. The real question that people continue to ask: how is paper money made to be so durable? As we see below, the United States has fought back from its quickly depreciated continental currency to a monetarily global power.

The History of Money

We all have noticed the new American currency that came out over the past few years; the new quarters, nickels and pennies. Even the paper money got a new face-lift, with the redesigned $100, $50, $20, $10 and $5 bills. Since the $100 bill is America's highest-denomination note in circulation, the country found it vital to upgrade it due to counterfeiting concerns. The $1 bill, though, was left out in the cold as the government didn't see fit to upgrade it because of the shelf life (21 months).

American currency is very young compared to many other countries. Its first attempt to disperse currency was during the American Revolution. The only problem with trying to fund a war at that time was that the money depreciated greatly and quickly because the country was in its infancy. However, during the middle of the Civil War, Congress authorized the start of legalizing tender (money).

The only problem with the time period and the type of paper money being legalized is that counterfeiting was easy. History states that a third of all paper money that was circulating during the mid-1860's, was faked. With this huge problem at the government's feet, Congress decided to officially establish the U.S. Treasury Department in 1874.

What Is Money Made Of?

When you were a little younger, did you ever look at a dollar bill and think to yourself, "what is money made of?" The question is asked more than one might think and it is a valid one that goes more in-depth than you could possibly imagine, especially with today's technology. Even in the young days of the Revolutionary War, the 13 colonies had to find a way to fund the war effort. The paper currency they used consisted of the normal parchment they used for everyday writing. However, if you have ever watched the blockbuster movies "National Treasure 1 and 2", you will know that the technology that our forefathers possessed was far from elementary.

Fast forward to today and now you have paper currency being made from 25% linen and 75% cotton fibers. The currency from 200 years ago would fall apart after a month or so if it wasn't properly taken care of. Today, a bill would have to be folded about 4,000 times (backward and forwards) before it will tear. So, (how is money made) to be so durable? Through sheer dedication and steadfast determination-the same kind that won the nation its independence!

How Has It Changed Today?

In 1690, the first Colonial paper money was introduced into America. Things have changed dramatically since then. Massachusetts started the paper currency fad and the other colonies followed suit. The Revolutionary War was a huge step in the country's step for stabilizing some kind of currency. It didn't go as well as the country would have hoped though. In 1775, the Continental Congress passed the limited issuance of certain paper currency to back the war of independence, called "Continentals." These currencies became worthless real quick and in 1777, the first real notes were signed into law giving the country a real type of currency, however they weren't all that great either.

It wasn't until the Civil War that currency really hit its stride and the government finally found the answer to how is money made that can be worth "its weight." This era did see some currency issues though and a lot of it came in the form of denominations. To finance the war, the Federals started to print the first paper currency since the Revolutionary War. Even though the U.S. Treasury wasn't formed until 1874, it had been overseeing the printing of $5, $10 and $20 bill since 1861. Before 1860, there were 8,000 or so state banks that were circulating their own versions of notes ranging from a half a cent to $20,000! This posed a problem to the federal government and that is one of the lesser known reasons for the Civil War.

The question isn't how is paper money made to be better these days, but why. And the answer lies in the problems of the past. The country needed a system that could alleviate all the problems of the past and technology was now allowing us to finally push ahead, and do so further than any country had ever done before. The start of the 20th century had opened up so many possibilities and we can only imagine what the 21st century has in store.

Coins and Notes

History of Money

Money Facts

Economics