Since the paper notes were backed by British rule, the demise of paper notes was in 1775 when the British declared the colonial notes illegal. This was mainly due to the fact that the colonies were preparing for the Revolutionary War against the British. The Continental Congress at this time introduced the Continental currency. Unfortunately, the currency did not last long as there was inadequate financial backing and the notes themselves were effortlessly counterfeited.
The little backing that the continentals received was from tax revenue and the anticipation of greater taxes from the colonies. Without the solid financial backing and the fact that the notes were easily counterfeited, the notes quickly became devalued, giving rise to the phrase “not worth a Continental.”
After the United States victory over the British in the Revolutionary War, the issue of a domestic currency was still in the process. In 1782 Congress opened the Bank of North America through the first national bank in Philadelphia. The Bank of North America officially became the nation’s first de facto central bank; in law...