The Continental Congress faced serious problems financing the Revolution. Lacking the power to tax, Congress made assessments of the states, but they provided only limited funds. To pay for the war, the Continental Congress began to issue a national currency known as the Continental dollar. Without gold or silver to back the currency, Congress simply printed the money it needed. Rapid inflation resulted. Soon the currency was virtually worthless, prompting the phrase, "Not worth a continental." Since the thirteen states continued to print their own paper money, fourteen different kinds of currency were in circulation, contributing to further confusion.
In this letter, Josiah Bartlett (1729-1795), a signer of the Declaration of Independence and Governor of New Hampshire, blames the rash of wartime inflation on the efforts the Revolution's opponents to circulate counterfeit notes.
Historians estimate that about 20 percent of the population were Loyalists who supported the British cause. Contrary to the common assumption that most Loyalists were wealthy, it now appears that their composition mirrored that of the population as a whole.
We have lately discovered a most diabolical scheme to ruin the paper currency by counterfeiting it, vast quantities of the Massachusetts bill & ours [in Rhode Island], that are now passing are counterfeit, and so neatly done that it is extremely difficult to discover the difference, we are but newly acquainted with the scheme and have not made all the discovery we hope for. But by what appears at present, it is a Tory plan and one of the most infernal that was ever hatched. There are great numbers of people bound together by the most solemn oaths & imprecations to stand by each other & to destroy the persons who betray them; beside ruining the paper currency it seems their design is, this spring, to spread smallpox thro the country.... We have reason to think most of the Tories in New England are in the plan. Last Thursday by agreement Massachusetts & this state seized on a considerable number who are now confined, hope we shall make further discoverys & defeat the plan; no trouble pains or danger will be spared for that purpose....
Since so much money has been found to be counterfeit people begin to be scrupulous of the continental bills and are looking out for marks, but by reason we have no standards of the former emission, we are not able to detect them, if there are any, and I have some reason to suspect there are some & that they came from New-York; I wish you would procure proof sheets of Every Emission & send them forward to be kept in the treasury of this state for that purpose agreeable to a former order of Congress....
We seem to have many difficulties to encounter both from our open & secret enemies within and without, who are meditating our destruction by fraud and deceit as well as open violence. However I trust that by the assistance of that Power who Loves Justices and hates iniquity & oppression the United States will rise Superior to all their Machiavellian plots & schemes and will be soon happy & prosperous, blessed with peace, health & plenty.