North America

There was money in North America before any European settlers ever reached the continent. American Indians used a system of barter and had ornamental clam shell necklaces they called "wampum." To the south, in what now is Mexico, the Incan and Mayan cultures used gold dust that could be portioned out as payment of debts and purchases. For larger payments, they kept sacks of cocoa beans.

When colonists did arrive on the continent, official forms of currency often were in short supply. This led to other commodities, such as tobacco or corn, being used to conduct business. Evidence of this official money shortage was seen in North Carolina, which in 1775 recognized 17 different types of legal tender. All these forms of legal tender were tied to the officially recognized English currency.

Wampum

As with currency in Europe, wampum fluctuated in value based on its availability. The native tribes had their own "money changers," tribes who specialized in the collection and "manufacture" of strung beads of shells. The colonists also used this medium of exchange. Workers in New York at one time were paid in wampum, in amounts based on their worth in Dutch guilders.

There also was a factory in New Jersey that employed sophisticated drilling techniques to produce wampum, an activity that flooded the market and drove down the value of the currency. Still, the plant – essentially a mint – remained in business for more than 100 years.

Coins and Paper Money

In the early days of the United States, it was difficult to get people to accept paper money. There were paper notes, called "bills of credit," that could be exchanged for gold or silver. They also could be used to pay taxes and were official legal tender. Still, for the most part, people preferred coins that contained gold or silver in amounts equal to how much the coin was worth.

The Federal Reserve Bank minted official United States currency but there was a time when state banks, especially during the western expansion, printed their own currencies. Some of these paper notes would prove to be worthless if the bank went under or the person was far away from the bank. By 1860 some 8,000 state banks produced these worthless certificates, called "broken" or "wildcat" notes.