The Indicator from Planet Money - The Birth Of The Greenback

In the mid-1800s, the US had 8,370 kinds of money. How that happened, and what it meant for the US economy.

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Content Keywords: Bank Orange bank thing

Stacey Vanek Smith Jacob Goldstein

Planet Money Money the true story of a made-up thing a new book

5th Santa brought props for us to do the indicator

Okay, come down.



it's been months.

I think that guy's been talking a whole 8 months.

I have props I came over so I can give you these props.

Go ahead and look at them. All right, it's okay.

So this is like a really high-quality Xerox of an old piece of money.

Oh, yeah, it's $3 bills $3 bills really cool, even a real thing. There's a lady standing next to it in like a ball gown sitting next to a cow to have a cow. Keep going the orange Bank Orange because it's from the orange bank and this is a $1 bill real paper money that was printed by private banks in the United States in the 1840s and 50s. This is one of the most interesting. I found in the history of money when I was working on my book. It's this moment when the United States government did not print money. There was no single National Paper currency, but if you wanted to, you know, open up Stacy's Bank of New York and print your own paper money. You could I don't know if I would try that dollar from that bank was a real problem. That was a real problem. We'll get to that mean they were just so many different kinds of money at one point the Chicago Tribune counted 8370.

Different kinds of paper money in America for everyone involved 8370 the indicator. Yes today on the show. How can you even have that many kinds of money and what does it tell us about how money Works let's just go. Let's just go like a block away to get away from the heart.

Support for NPR in the following message come from Sunrise Sunrise makes it easy for anyone to invest in high-quality real estate by building you a portfolio with there more than 1 billion dollars in assets get started at indicator to have your first 90 days of advisory fees waived. This message comes from NPR sponsor Microsoft teams. Now, there are more ways to be a team with Microsoft teams. Bring everyone together in a virtual room collaborate live on the same page and see if the 49 people on screen learn more at teams. So can we hear Jacob? This is the 19th century America lots of cows apparently also this was the era when gold and silver were money and Jacob you say in the book that the government minted gold and silver coins, but it did not make paper money that I'm exactly right. So the only paper money in America was printed by all of these different private Banks people called paper money. In fact banknotes right too late. They fought of it.

That's like a piece of paper from a bank and they thought of paper money in particular as like a receipt or a coat check ticket as a thing that you could substitute for gold and silver and if you look at at the bills, I gave you they all have this kind of cursive writing like they are just grab a different one for fun so we can see what it looks like Moby Dick or something and a whale Bill they're just blower to Stonington $92 to the bearer On Demand on them, but they all say that will pay however many dollars to the bearer on demand and so sick and I are you interested because the interesting thing is it's telling you the paper money is not the real money right there saying we will give you $2 in gold and silver for this paper, man.

Rights of the real money in this world is the underlined gold or silver. The paper is just like dust and it and I guess all these beings can issued their own money. That's right. And it's kind of evolving in this. Like at the beginning of this era the 1830s if you wanted to open a bank. Typically you had to go to your state legislature and get special approval special law that would let you open your bank and this was problematic because I was a different Choice open a bank and print money. Then you're going to bribe. Whoever you have to drive in St. Albany all due respect to get them to let you open your bank, right and 1840 a little earlier this new idea became popular. The new idea was called Free banking.

Any idea Free banking was anybody who is willing to follow a few basic rules could open their own deck and wanted to print money. This is how we get 8000 different kinds of money. How do you know if the building someone handing you is real money or if it's literally just a piece of paper from the First Bank of Stacey Vanek Smith, maybe these special periodicals kind of like magazines that were privately published called banknote reporters and what they were in tiny font of every kind of money it so I actually have a reproduction hear another prop from a page. This one's called Thompson's Bank snow report her today. So the people that subscribe to this our Merchants people who need to accept money belts.

Say I'm running a bar and I got my Thompson's banknote reporter. Okay, so you have that feel real and it's a $1 bill right? When do I find Orange Bank here in my Tango report? And it says okay for orange bank and that list of different doses ones and then under one's it describes what the bill was supposed to look like two horses. Take heart blacksmith shop meal portrait. So it's at least told me something else that's important and that explains a lot about how many works at this time typically would tell me whether I should accept that paper money at full face value. I can buy my dollar whiskey Sprite whether you can get your dollar whiskey because remember what we care about is whether I can turn in that paper money from gold or silver and two if the bank is shaky or even if it's just really far away.

Termites just knocked $0.05 off $2 give Stacey $0.95 worth of whiskey instead of a dollar absurdly inconvenience, Right and for a long time when people look back at this. The basic story of Free banking was just that was a horrible idea, right but much later like in the 1970s this generation of economic historians started going back and looking more closely at the banks and how money Works in this. And what they say when they really went through the numbers was basically like it wasn't that bad Banks and go bus that often people didn't usually lose money when they used were no 2 no overall. They would lose like a few percent, you know, which is

I don't like what you pay today say when you take money out of the weird off-brand ATM at the corner store right now when you do that, right?

So obviously we do not have a thousand different kinds of money. Now this ended and it ended after the Civil War was the Civil War. So during the Civil War that old American argument of can we have National Banks are not came up again and Congress passed a few important banking laws. One of them basically packed all those thousands of kind of State Bank notes out of existence and then the other one created these new National Bank that printed much more reliable much more uniform pay per month when country and it seems like the same thing happened with Chrissy maybe not a coincidence idea at least in the kind of modern world that money is part of what makes a country a country and I think you do see that happening at this moment in the United States when we go from thousands of kinds of money toward one uniform kind of paper money.

Because you know Jacob I have a fever more cowbell.

peekaboo story in like a whole bunch of other like really cool stories like this are in your new book edited by Patty Hearst and the production of NPR
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