Colonial Paper Money
"Death to Counterfeit": Colonial Virginia Paper Money
During the colonial era there was a constant shortage of ready money in Virginia. The amount of British coin and currency circulating in the colony was small compared to the volume of business that had to be transacted. Virginians made do with a mixture of foreign coins, mostly from Spain’s American colonies, some paper money printed for other British colonies, and various sorts of bills of credit, that is, private fiscal obligations backed by individual merchants. Large planters in particular shipped their tobacco to British-based trading firms, who by and large paid not in money but in credit.
Some other colonies began to both issue paper currency and mint coins in the 17th century, but Virginia didn’t start making its own money until the latter part of the 18th century. Virginia’s first paper money came out in 1755 to help finance the colony’s involvement in the French and Indian War. Strictly speaking, Virginia paper notes weren’t really currency; they were bills of credit backed by the colony, to be paid off out of future tax revenues. They functioned like currency though, and were used to pay public and private debts.
The use of paper money in Virginia and other colonies created a whole new set of problems however. By the 1750s there were several different colonial paper currencies circulating in North America. Even though these currencies typically were denominated in pounds, shillings and pence, they were not all equivalent in actual value. Merchants might offer different rates for two notes of the same face value because some colonies’ money was considered to be more valuable and trustworthy than others.
Paper notes also were very easy to counterfeit. This is a problem even today, and the U.S. treasury periodically changes the design of our money in order to make counterfeiting more difficult. In the 18th century, governments did not have access to the kinds of special inks, paper and computerized printing techniques that make money difficult to copy. Anyone with access to a printing press and a variety of typefaces could produce a reasonable facsimile of colonial paper notes. As a result, a great deal of the currency circulating in late 18th-century Virginia was counterfeit.
Detecting bad money was made especially difficult by the fact that there were several different issues of money being used in Virginia at the same time. A Virginia merchant might be offered payment in a mixture of coins and paper money that included silver in the form of Spanish pieces of eight, German thalers and Portuguese cruzados, as well as Virginia paper money of different issue dates and other paper currencies such as Maryland four-dollar bills, North Carolina six-pound notes, and Pennsylvania five-shilling bills of credit. The merchant was not obliged to accept all of these different non-Virginia currencies, but if he did not, his customers might not be able to pay.
Silver coins could be weighed to determine their approximate value as silver bullion. Paper notes had no intrinsic value, so in the end it all came down to the merchant’s faith in a particular colony’s willingness to stand behind its money.
By the early 1770s there was a growing reluctance to accept even Virginia paper money. In particular, many counterfeits of the treasury note issues of November 1769 and July 1771 were being passed in the colony. Virginia’s government decided that it had to take emergency action to restore confidence in its paper money. In early 1773, Virginia decided to recall immediately the paper money issues of 1769 and 1771 and replace them with a brand-new issue of paper notes. These new notes really were just promissory notes that the Virginia government pledged to pay off in 1775.
This currency replacement was done so quickly that there was not time to print completely new notes. Instead Virginia acquired a stock of already printed “Virginia James River Bank” notes and modified them to make them an official issue of the colony. The James River Bank notes had been printed in England as part of a failed attempt to establish a private bank of that name. The bank’s charter was never granted, so the bank could not issue notes in its own right. The Virginia government simply took the bank note forms and filled them in by hand, putting any inappropriate text in parentheses to show that it was not valid.
Each of the bank notes was signed by representatives of the Virginia government as a guarantee that it was genuine. One of the signatories was Peyton Randolph, who a year later would become the first president of the Continental Congress. Each James River Bank note was also marked on the back with the phrase “Death to Counterfeit” to convey just how seriously the colony took the issue of printing illegal money. Virginia’s problems with counterfeiting were not over however. The Revolutionary War years were to prove even more challenging to Virginia’s goal of producing paper money that would retain its value in the face of rampant counterfeiting.
By Thomas E. Davidson, Ph.D.
Jamestown-Yorktown Foundation Senior Curator