In his book History of Colombian Money Guillermo Torres Garcia tells us that the "first paper money experiment" of what is today Colombia was carried out by the Provisional Government of Thomas Cipriano Mosquera on August 24, 1861.  Prior to that time the government circulated Payment Orders and Promissary Notes as mediums of exchange.  Using as a base Colombian legislation, the Legislative Assembly of the State of Panama (in 1861 Colombia was experimenting with the Federal System of government) approved the Law of October 28, 1861 authorizing the emission of Treasury Bills:

'... for a value of twenty-five thousand pesos.  The Bills shall be of twenty, ten and five pesos, in the amount of each class that the Executive considers convenient."

These Bills, according to Article 3 of the Law, '...shall be compulsorily admissible in payment of all debt to the Treasury of the State' and shall be guaranteed by State land in the ratio of one hectare for every two pesos in bills. The Decree of December 24, 1861 regulated the original law, amended by the Decree of March, 1862 and stipulated that the Bills shall be 'lithographed in a foreign country.'  This first emission was printed by Snyder, Black & Strum of New York.  Only one sample is known.

In 1865 the Constituent Assembly approved Law #17 of August 24, ordering a new issue of Treasury Bills '...in the amount necessary to pay all compulsory Government Loans...'.  These Bills would be in denominations of one, two, three and ten pesos, in sheets of all four denominations together, or of 16 pesos; and were engraved by the American Bank Note Company in 1866 and numbered to 10,000.  A picture of General Thomas Herrera appears on one side of the Bills.  a second unnumbered printing of 10,000 sheets was effected in 1869.  There are many fine examples of this issue still available.

It was not until 1873, when by the Decree of June 23 by the President of the Sovereign State of Panama ordered: "First, that recent disturbances in the City have caused considerable burden to the State so that ordinary obligations cannot be met.  Second, that salaries are owed to the military and civilians..." and an issue of 6,500 pesos was authorized, comprising of 700 five-peso bills and 150 20-peso bills.  We have not been able to locate any examples of this issue.

Two years later, because of "...a lack of funds to meet the most urgent needs...", the Executive by its Decree of October 28, 1875 authorized another issue of 15,000 pesos comprising 400 five-peso bills and 650 20-peso bills.  This issue was oriented toward "...those businesses, merchants and well-to-do people of the Capital City...".  There is only one example of this issue available, a 20-peso note, on display at the National Historical Museum.

The last Treasury Bill emission that we know of ... Law #12 of January 27, 1880 wherein 20,000 pesos were authorized in three different series.  The first series was 20,000 fifty-cent bills, the second series was six thousand one-peso bills; and the third series was 4,000 two-peso bills.  Copies are only known of the fifty-cent and one-peso bills.  These were printed by the Star & Herald Company, Panama.

All Treasury Bills, the same as Bond issues, Promissory Notes, etc., had by law to be incinerated once they had been redeemed.  Affidavits of these incinerations were published in the Official Gazette as they occurred.

According to Law #25 of December 23, 1878, as the State retired Treasury Bills it was authorized to reissue them in amounts of one, three, seven and ten pesos.  Nothing ever came of this and there is no evidence of any bills having been issued.  Under Decree 98 of May 22, 1882 the Presidency of the State authorized the issuance of 50,000 pesos as capital for the formation of the "Banco del Estado de Panama."  Nothing ever came of this either.