On this Day in history in February 3, 1690, the Massachusetts Bay Colony printed and released the first ever paper money in the Americas.
Before that day all American settlers used silver coins for transactions.
These new bills were pounds, named after the pound sterling of Britain.
The British government had the idea to issue certificates in place of coins. These pieces of paper were the first American currency to represent the value of coins, the money could be exchanged at a later time for silver.
This new money was called a “bill of credit,” Paper currency was successful and accepted as tender and its popularity grew throughout the colonies. There was faith in this paper currency as the government was trusted to exchange it for coins of precious metals later.
Incredibly counterfeiting of this new currency started happening in the 1690s and there were copies that looked as good as the original money.
This was the birth of the first American paper money but it was not fiat it was backed by coins minted from precious metals.