During the Revolutionary War, funds were needed to finance the war, so each of the individual states and the Continental Congress issued paper money. So much of this paper money was printed that by the end of the war it was virtually worthless. As a result, trade in goods and the use of foreign coins still flourished.
By the time the Revolutionary War had been won by the American colonists, the monetary system was in a state of total disarray. To remedy this situation, the new Constitution of the United States, approved in 1789, allowed only Congress to issue money. The individual states could no longer have their own money supply. A few years later, the Coinage Act of 1792 made the dollar the official currency of the United States and put the country on a bimetallic standard. In this bimetallic system, both gold and silver were legal money, and the rate of exchange of silver to gold was fixed by the government at sixteen to one.