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Although experiments with paper money did occur throughout the early history of the country, they were largely unsuccessful. People, for good reason, didn't trust the notes and preferred gold and silver coin. In 1861, needing money to finance the Civil War, Congress authorized the issuance of Demand notes in $5, $10 and $20 denominations. The Demand notes were so named because they were redeemable in coin "on demand." The notes were nicknamed Greenbacks, a name which is still in use today to refer to United States currency.

The first $1 bill was issued in 1862 as a Legal Tender Note with a portrait of Salmon P. Chase, the Treasury Secretary under President Abraham Lincoln.Gold certificates, were first issued in 1863 and put into general circulation in 1865. The severe economic crisis of the 1930s - better known as the Great Depression - resulted in runs on the banks and demands by the public for gold. In 1934 all Gold Certificates were called in from the Federal Reserve Banks and between the years 1934 and 1974 it was illegal for US Citizens to hold gold bullion or certificates.

Silver certificates were first issued in exchange for silver dollars in 1878. For many years silver certificates were the major type of currency in circulation. However, in the early 1960s when rising silver prices threatened to undermine the currency system, Congress eliminated silver certificates and also discontinued the use of silver in circulating coinage such as dimes and quarters.