$5 Colonial Currency - FR RI-286 - July 2, 1780 - Paper Money

FR RI-286. 5 Dollars. Front and back shown.

There were three primary forms of currency in the Colonies of British America: specie (coins), printed paper money, and trade-based commodity money. Commodity money was utilized when cash (coins and paper money) was in short supply. Items such as tobacco, beaver pelts, and wampum functioned as currency at different times across various locations.

Currency in the Colonies was expressed in pounds, shillings, and pence. The value of each denomination differed from one Colony to another; for instance, a Massachusetts pound was not equivalent to a Pennsylvania pound. All colonial pounds held less value than the British pound sterling. The coins that circulated during the Colonial Era were predominantly of Spanish and Portuguese origin. The widespread use of the Spanish dollar throughout the Colonies resulted in the United States adopting dollars as its monetary unit, rather than pounds.

Gradually, colonies began to produce their own paper money to act as a practical medium of exchange. In 1690, the Province of Massachusetts Bay introduced "the first authorized paper money issued by any government in the Western World." This paper currency was created to finance a military expedition during King William's War. Other colonies subsequently emulated Massachusetts Bay by issuing their own paper currency during later military conflicts.