The Second Continental Congress issued America’s first-ever paper currency on May 10, 1775. This was more than just a footnote in the history of money. It was how the American Revolution got its financing.
The First Continental Congress, a gathering of delegates from the Thirteen Colonies, had been formed to appeal to King George III to change the more intolerable policies the British government had enacted in the colonies. After it became clear that the King would do no such thing, a Second Continental Congress was called to figure out what the Colonies should do next. While the delegates were meeting, war broke out with the unplanned Battles of Lexington and Concord. So the Second Continental Congress became the provisional American government for the duration of the war, and however long after the war was necessary for a more permanent government structure to be created.
On May 10, 1775, the Second Continental Congress passed a resolution to print $3,000,000 of paper currency (which was worth a lot more then than it is today) to provide money for the war effort. It was backed by taxes collected from the colonists. The currency was issued on behalf of “The United Colonies,” which was what the country was originally referred to before the colonists instead decided to go with The United States.
While this was the first paper currency issued by America, it was not actually the first paper currency in America. The colonies had each long been issuing their own paper currencies, each valid within its own state. The Second Continental Congress’ currency functioned as a medium of exchange between the various colonies’ currencies, allowing the colonies to pool their resources for war-related purchases. It gave the Revolution a big boost just when it was needed most. The Revolution may not have succeeded without it. However, by the end of the war, inflation had so devalued the currency that the phrase “not worth a Continental” entered the popular vocabulary to indicate anything that was almost completely worthless.