The Life Of George Holcomb – Funny Money

by Alex Brooks
One of the difficulties of being a businessman in the early 1800s is that there are many different kinds of money and some of them are shakier than others. The Federal Government did not print any money during George Holcomb’s lifetime. The first Federal money, known as “greenbacks,” was printed in 1863 to finance the Civil War.
Some examples:
On 27 July, 1816, a merchant’s charge was “7 shillings York money, and Holcomb agreed to pay him in cider brandy.  
In September of 1817, a Mr. Enos Baldwin paid Holcomb $15, but when Holcomb tried to pay same to Sean Wylie, “he would not receive it, because he did not like the bank it was on.”  When Holcomb goes back to Baldwin to return the money, Baldwin will not take it back, but he agrees to pay the remainder of his reckoning in “good current money.”  The money arrived the next day.
In colonial times, the money circulating in the colonies was a motley crew of European coins, and there was a shortage of money. A Spanish silver dollar, for instance, was quite a lot of money, so to enable smaller transactions, they used to cut up the coins. So a half dollar was literally a dollar cut in half, and a quarter was a quarter of the coin. If you cut a quarter in half, that was called a bit, which is why people sometimes still call a quarter two bits. A bit was worth 12.5 cents, which is why the prices George mentions often are figured in 12.5 cent increments.
More money trouble:
June 11, 1817: George has $5 of “Hudson money” but the attorneys will not take it, because  “The bank is now shut and it stagnates the circulating of it”
June 16  George goes to  see Reuben Andrews about a  $5 bill Andrews paid to Holcomb’s wife.  It is drawn on a Pennsylvania bank. But Andrews is not home.
The U.S. mint was the first federal building ever built. It was built in Philadelphia the same year that George Holcomb was born, 1791. But its machinery was primitive, and it was powered by a horse until 1836. In its first forty years of operation, it made only one coin for every man woman and child in the country.
In order to have enough money to do any business, people had to use bank notes, which were promises to pay the holder of the note in gold or silver on demand.
June 27: “Mr Ichabod Morton came and paid me $20 on a note that my wife held against him for $50. I took the money on condition that if it passed current.”
June 28: “This morning I rode to Lebanon to try to put off the said money that I had of Morton, but it would not pass. I came back and returned fifteen dollars of it to Morton and took a note of that amount.”
Anyone who did business had to be prepared to assess the value of bank notes offered to him in payment. In George Holcomb’s Stephentown, bank notes from Albany, Troy, or Pittsfield banks were familiar and their value well-known, but accepting notes from farther afield was very risky. An 1839 guide to bank notes lists 54 banks that had failed although their notes were still in circulation, 20 fictitious banks, 43 banks whose notes had no value, and hundreds of banks whose notes were known to have counterfeits in circulation. Issuing notes on thin collateral was a common practice and it was often hard to know which banks were solid and which were playing fast and loose.