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Banknotes
Banknotes
A currency commonly issued by private banks in the 1800s to match newly created goods and services; often to help create new businesses. Banknotes were usually never backed by gold or silver, but rather, they matched newly created goods and services. Banknotes were often used alongside other currencies such as state currency and US currency. New banknote currency was often printed and lent directly into the construction of a new business or expanding industry. Some local banks printed too many banknotes too quickly. Those banknotes would suffer inflation and their banks would fail. Usually there were constraints as to how many new banknotes a bank could print, often determined by the bank's Board of Directors. Most banks printed banknotes prudently, however, only to match the creation of valuable new goods and services for the town (i.e.: new farms, blacksmiths, general stores, tanneries, log mills, etc). People could buy and sell using these banknotes as currency, which thereby allowed people in a local town to have more money. The more new goods and services created in a town, the more new currency could be printed without causing inflation. Likewise, more new people arriving in a town allowed for more banknote currency to be printed without causing inflation. |
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