In 1690, the Massachusetts Bay Colony stared issuing paper money. But tensions between the Colonists and the British began to escalate, and the British passed the Currency Act of 1764, which made it illegal to print Colonial money.
Before the Revolutionary War, with no currency of their own, the colonies had to rely on foreign currencies, and many European coins circulated freely. But the most popular were the Spanish silver dollars called pieces of eight. These coins, which were minted from recently discovered South American silver in Mexico, were legal tender in America up until 1857.
A further hardship for the Colonists was the Currency Act requirement that taxes be paid to Britain in gold or silver. Prior to the Currency Act, poverty and unemployment were virtually unknown in the Colonies. After passage of the Act, many colonists were made destitute by their tax obligations — a condition which paved the way for revolution. In 1775, the Continental Congress started issuing a paper currency called the Continental in order to finance the Revolutionary War.
With inadequate reserves of silver or gold to back up the Continental, it was never widely adopted. Many people, including Thomas Jefferson, did not believe that fiat money — currency which is backed by the promise of the government to accept it for payment of taxes — was truly viable. So when the French promised to send a shipload of silver bullion for coinage, production of the Continental stopped.
The Continental Congress of 1776 authorized the minting of the first silver coins. But when the French bullion didn’t arrive, the initiative was put on the back burner.
Copper coins were being produced by Massachusetts, New Hampshire, Vermont, Connecticut, and New Jersey during the 1780s. But the need for a national currency was critical. And when Congress convened in 1792, it was one of the top items on the agenda.
The Coinage Act of that same year established standards for coins to be minted in America and authorized a Director of the Mint and his salary. The words “United States of America” and the year of the coinage were both to be included on all American coins. In Philadelphia, building of the first U.S. Mint began.
Coin production and circulation was inconsistent at first, due to the lack of a steady supply of bullion. But the U.S. Mint in Philadelphia issued 1,748 Flowing Hair silver dollars in October of 1794. Because the design was discontinued the next year, only about 150 to 200 Flowing Hair silver dollars remain. Consequently, they are very valuable.
A 1794 MS60 coin would fetch more than $500,000. The Draped Bust silver dollars produced between 1795 and 1804 are far less valuable.
In 1834, the U.S. Mint struck several 1804 silver dollars to be used as gifts for foreign dignitaries, including the King of Siam and the Sultan of Oman and Muscat. Today, these are among the most rare and valuable coins in the world.
Seated Liberty Silver Dollars were produced between 1836 and 1873. Trade Dollars were produced from 1873 and 1885. Morgan Silver Dollars were minted between 1878 and 1904, and then again in 1921. And Peace Dollars were produced between 1921 and 1928, and briefly between 1934 and 1935.