History Fact Finder | Economics and Business - What Was Rag Money?

What was rag money?

"Rag money" was the name mockingly given to paper currency made from linen and cotton fibers during the American Revolution (1775–83). At that time the only valid currency was issued in silver or gold coins by established governments in Europe, so many Americans did not believe in the use of paper money. The U.S. Continental Congress (the government established by the colonies) printed paper money to pay for the war of independence from Great Britain because sufficient reserves of gold and silver were not available in America. In 1785 the United States government determined that the paper dollar would be the nation's basic monetary unit.

Further Information: Cribb, Joe. The Coin Atlas. New York: Facts On File, 1990; Museum of American Financial History. [Online] Available http://www.financialhistory.org/, October 30,...

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