Rag Money
RAG MONEY
Rag money is a derisive term for paper currency. The name comes from the early days of paper money, when paper itself was predominately made from the cotton and linen fibers of rags. Since valued currency was issued in silver or gold coins by the established governments of Europe, it is not surprising that Americans greeted with skepticism paper currency that was little more than a promise of future payment in silver. The first bills that were issued by the U.S. government became worthless shortly after the Declaration of Independence (1776). In its effort to fund the American Revolution (1775–1783), the Second Continental Congress printed so many bills, called Continentals, that there was not enough silver to back them up. The expression, "that's not worth a continental" reflected that reality. The financial crisis that emerged did nothing to inspire American confidence in paper currency. So-called rag money continued to have its detractors even after the Revolution had been financed by European loans and the U.S. government had established the dollar as its unit of currency (1785).
See also: American Revolution, Continental Congress (Second), Continentals, Currency