The US Precedent for Multiple Currencies

Much has been made of the multiplicity of cryptocurrencies: they have different backing; they have different functions. It is all too confusing, some say. However, the US Government was guilty of the same multiplicity and confusion in the past. At one point in US monetary history, someone’s wallet could have held five or more types of US currency.

We are all familiar with Federal Reserve Notes. These are the only notes printed and issued today. But, in the 1880s, for example, here were the currencies available in the US with their backing and general function:

United States Notes: low-denomination fiat notes without backing (until 1879) and used for everyday transactions

Fractional Currency: unbacked notes ranging in denomination from 3 cents to 50 cents, replacing scarce silver coin

Gold Certificates: higher denomination notes backed by gold and used mainly for interbank transfers

National Bank Notes: mid-denomination notes backed by Government securities and used in everyday business

Silver Certificates: low-denomination notes backed by silver and used for everyday transactions

Looking at this picture of US currencies, the present cryptocurrency situation does not look all that extraordinary.