Howdy neighbor!
The subject of today’s column is derived from a presentation I gave to the Fryeburg Historical Society, on the history of a sordid little counterfeiting operation which once called this section of Maine home back in the 1830s. Since the earliest days of our Republic, banks and financial institutions chartered by state and federal authority have existed as repositories for the nation’s wealth. Until the later adoption of the Federal Reserve and fiat currency in the 20th century, such banks issued paper money in common denominations $1, $5, etc., the credit of which was founded upon the sale of stock in the bank to investors, and later secured by the strength of deposits of specie (gold and silver) in the bank’s vault. These notes were considered legal tender, and could be exchanged by the bearer for their face value in gold or silver, provided the bank that issued them had sufficient funds on hand. The greatest of these banks was the Bank of the United States, a federal institution whose banknotes drew their strength from the fact that the U.S. Treasury deposited the nation’s revenue in their vaults for safe keeping.
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