Paper money has no intrinsic value and is easy to counterfeit. As a result, massive amounts of paper money were printed and distributed. The market had more money than goods and services, thus resulting in higher prices for goods and services, in the process it devalued the paper money.
The currency wasn't actually backed by anything other than the government's assertion that it was, in fact, money. This is, essentially, the same situation we have now, but at the time Fiat money was a novel concept. Also, the government made no real efforts to reduce or even maintain stable the amount of paper currency in circulation, meaning that it just kept increasing.
Financing for the American War for Independence included loans and subsidies from the French government as well as the modest sums Congress received as a result of its requisitions upon the states. But paper money played a central role in Revolutionary War finance.
When Congress first began printing bills of credit (irredeemable paper money that would be received as payment for taxes) in 1775, the idea was that the states would levy taxes and collect the bills in payment of the taxes, thereby retiring them. Not only did the states not levy those taxes, but they also began printing paper money of their own. The result was that more and more paper continued to be printed, leading in turn to a level of depreciation that has become legendary.
there wasn't enough silver or gold to back it up
The Continental Congress didn't have the power to tax; therefore, the currency it distributed had mass inflation and relied on private donations and loans from France.
The Congress negotiated with foreign nations, established a postal system, borrowed money to support the army, and printed currency known as "continentals." However, the government's poor finances led to the expression "not worth a continental." Since the Continental Congress lacked any formal constitution,
Economic issues were highly discussed in the Second Continental Congress as they needed a plan to fund the new country that they were anticipating. One of the key economic issues was the printing of currency that would be needed for this country.
Some continental coins were made of pewter, others of bronze or silver. The 1776 "continental currency" (dollar) is one of the rarest US coins and many were made from pewter, consequently suffering from corrosion of the tin.
In addition to initially being out-manned, outgunned, and out-maneuvered by the British Army, George Washington was handicapped by a worthless currency (the Continental Dollar gave rise to the expression "not worth a Continental'), traitors like Gen Benedict Arnold, and citizens who were ambivalent to victory (New Jersey- 'a den of rascals').
The dollar
Depends on which part of the 18th century about which you are talking. Pre-Revolutionary War or post? Pre-Revolutionary War - Colonial governments issued paper currency; foreign coins were also used. Revolutionary War - Colonies continued to issue paper currency to cover military expenses. The Continental Congress also issued Continental currency. Both were practically worthless by the end of the war. Post-Revolutionary War - The Constitution barred states from issuing their own currency and the federal government took on currency issuance. The government began to issue currency after ratification of the Constitution.
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Most of their funding came from foreign nations such as France and Spanish Louisiana (Spanish territory). The Continental Congress tried printing many money notes, but the currency lost its value.
issue a national currency
"continental" paper money "continental" paper money
The Continental Congress didn't have the power to tax; therefore, the currency it distributed had mass inflation and relied on private donations and loans from France.
that would be the Continental, made famous by the expression, " Not worth a Continental", after it became worthless.
The Congress negotiated with foreign nations, established a postal system, borrowed money to support the army, and printed currency known as "continentals." However, the government's poor finances led to the expression "not worth a continental." Since the Continental Congress lacked any formal constitution,
The Congress negotiated with foreign nations, established a postal system, borrowed money to support the army, and printed currency known as "continentals." However, the government's poor finances led to the expression "not worth a continental." Since the Continental Congress lacked any formal constitution,