Harper's Encyclopedia of United States History
Benson Lossing, Ed.

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Bills of credit.

The first bills of credit, or paper money, issued in the English-American [348] colonies were put forth by Massachusetts, in 1690, to pay the troops who went on an expedition against Quebec,

Fac-Simile of the first American paper money.

under Sir William Phipps. The expedition was unsuccessful. The men had suffered from sickness; had not gained expected plunder; and when they arrived at Boston, disgusted and out of temper, the treasury of the colony had become exhausted, and there was no money to pay them. They threatened a riot. The General Court resolved to issue bills of credit, or treasury notes, varying from five shillings to five pounds, receivable in payment of taxes, and redeemable out of any money in the treasury. The total amount of this paper currency issued was a little more than $133,000; but long before that limit was reached the bills depreciated onehalf. The General Court revived their credit in 1691, by making them a legal tender in all payments. The first issue was in February. 1691, though the bills were dated 1690--the year, according to [349] the calendar then in use, not beginning until March.

When an expedition for the conquest of Canada was determined on in 1711, the credit of the English treasury, exhausted by costly wars, was so low at Boston that nobody would purchase bills upon it without an endorsement, which Massachusetts furnished in the form of bills of credit to the amount of about $200,000, advanced to the merchants who supplied the fleet with provisions. The province issued paper money to the amount of about $50,000 to meet its share of the expenses of the proposed expedition. After the affair at Lexington and Concord, the patriots of Massachusetts made vigorous preparations for war. On May 5, 1775, the Provincial Congress formally renounced allegiance to the British power, and prepared for the payment of an army to resist all encroachments upon

Reverse of a Massachusetts Treasury note.

their liberties. They also authorized (in August) the issue of bills of credit, or paper money, in the form of treasury notes, to the amount of $375,000, making them a legal tender, the back of which is shown in the above engraving. The literal translation of the words is, “He seeks by the sword calm repose under the auspices of freedom.”

In 1755 the Virginia Assembly voted $100,000 towards the support of the colonial

Continental draft.

[350] service in the impending French and Indian War. In anticipation of the taxes imposed to meet this amount, the Assembly authorized the issue of treasury notes — the first paper money put forth in Virginia.

During the war in 1763 Pontiac established a commissary department with a careful head; and during the siege of Detroit (1763-64) he issued promissory notes, or bills of credit, to purchase food for his warriors. These bills were written upon birch bark, and signed with his totem — the figure of an otter; and so highly was that chief esteemed by the French inhabitants for his integrity that these bills were received by them without hesitation. Unlike our Continental bills of credit, these Indian notes were all redeemed.