Sep 16, 2022
As the world transitions to more digital forms of currency, and away from paper money, it's worth remembering that there was a time when the world transitioned to paper money away from other things. Much skepticism ensued. Just Press play to hear the whole story. -----
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Podcast Transcript: I’m
Andrew Wanko, Public Historian of the Missouri Historical Society,
and Here’s History on 88-one, KDHX.-----
When was the last time you paid for something with paper money? I still do now and then, but it’s getting rarer by the day. Credit cards and electronic payments have almost completely replaced the slips of green paper and metal coins that once were a part of every purchase I made. Well St. Louisans of the 1810s were also feeling the times change when it came to their purchases – except back then, paper money was just showing up. ———
In 1810s St. Louis, few people trusted what they nicknamed “rag money,” and rightly so – every bank issued their own separate bills. There was no way to guarantee the worth of any of them the next day or next town over. Plus, counterfeiting was incredibly easy on the American frontier. Most people instead relied on bartering, using fur pelts, chunks of lead, whiskey, or bags of grain as payment options. It worked fine, except values swayed wildly from trade to trade. As St. Louis grew, merchants needed a more reliable system for financial transactions. ———
In December 1816 the Bank of St. Louis opened, offering the town’s first formal institution for borrowing and storing money. Unfortunately, it almost immediately ran into catastrophe. Bank cashier John B. Smith wrote huge, unrestrained loans to personal acquaintances, and many early investors turned and ran. But overextended resources weren’t even the full problem. The end of Europe’s decade-long Napoleonic Wars upset the world’s economies, leading to a massive financial panic in the summer of 1819. The Bank of St. Louis collapsed, after less than three years of operation. ———
While the Bank of St. Louis proved a flop and caused many to double down on their belief that paper money was untrustworthy, it did leave behind something pricelessly valuable. At the center of its 1817, ten-dollar banknote is an accurate drawing of St. Louis, with a keelboat lazily floating by on the Mississippi River. The small image is the oldest known depiction of St. Louis that survives today. ———
Here’s history is a joint production of the Missouri Historical Society and KDHX. I’m Andrew Wanko and this is 88.1 KDHX St. Louis. ———