http://www.philadelphiafed.org/publications/economic-education/ben-franklin-and-paper-money-economy.pdf
Basically Franklin supported paper money as a medium of exchange. Pennsylvania in the Colonial Period had used paper money for decades, without a problem. One of the restrictions the British Government wanted to impose on the Colonies was to forbid them from issuing paper money. Franklin commented that that policy lead to a shortage of cash and a drop in business activities due to a lack of a medium of Exchange. This caused a huge reduction in trade and with it a decline in the Economy. To "Fix" that problem the Colonies had to fight for their independence so they could print money.
Now, the US Constitution that Franklin wrote, restricted the States from printing money, but the reason for that restrictions was they now had a FEDERAL GOVERNMENT that could do so for them AND such Federal money could be used nation wide. It took till the Civil War for the Federal Government to print Paper money, but once it did the advantages of having a medium of exchange was so clear that it continued even after the massive inflation of the Civil War Years.
Side note: By the end of the Civil War, paper money was being printed for values as low a 3 cents, which was the postage rate of that time period. No Gold or Silver coins could be found till long after the end of the Civil War and the return to $20 to an ounce of gold. During this time period you had a MASSIVE EXPANSION OF THE ECONOMY, you had the Federal Government fight a very expensive war. All done with Paper money.
The problem was the economic dogma of the time period was that money should NOT lose value, but hold its value and that value was how much gold it would buy. This dogma ignored the rules of Supply and Demand, for a massive Gold discovery (as in California in 1849 and South African, Alaskan and Australia gold finds around 1898) could lead to a massive economic expansion due to the increase amount of money due to the massive influx of newly mined gold. This expansion of the Supply of Gold, reduced Gold's value in relations to anything else and thus was inflationary. A slight inflation of the Economy leads to expansion of that economy and the creation of a economic boom as seen in the 1850s and again after 1898. These expansions were due to inflation due to massive influx of gold.
Now during the Civil War the US Government left the US Dollar off the Gold Standard, but while doing so saw a continued massive expansion of its economy due to the increase spending due to the war. At the end of the War, this expansion continued till Congress Decided it was time for the US to return to the pre Civil War Gold Standard of $20 to an ounce of gold. Most of California gold had been discovered by then, thus you had a more "fixed" amount of gold in the world. Congress's decision to return to $20 to an ounce of Gold, (This was achieved by 1874) is considered one of the worse economic mistakes the US ever made. This move lead to what is now called the "Long Depression" of about 1870-1898 (Prior to the 1930s it was called the "Great Depression", but the Depression of the 1930s took over that name).
In the period of 1870 to 1898 what the economy needed was expansion, an expansion that could only be achieved with an influx of currency. The "Free Silver" movement of the 1870s, 1880s and 1890s was an attempt to create such an influx of currency by replacing Gold with Silver. Such an influx of currency (in the Free Silver Movement Silver Coins, today it would be paper money) would lead to mild inflation and thus an expansion of the economy. The Free Silver Movement only died out with the influx of Gold from South African, Alaskan and Australia achieved the same economic result, with a new influx of gold (and one of the reason for WWI, was those Gold deposits were drying up, and the world wide economy was returning to the economy of the 1880s with its massive deflation due to a lack of an ability to expand the medium of exchange). WWI ended the problem of using gold, as all countries at war except the US, dropped the Gold Standard (And one of the reason for the Great Depression was England's return to it in 1926, to early so it forced the British economy into a tell spin it took decades to recover from).
If everyone had stayed with Paper money, as Ben Franklin advised them to do in the 1750s till his death in 1790, a lot of the economic problems of the last 200 years would have been avoided. It took the Great Depression for most economists to accept that Gold was to much of a restriction on the economy for it could NOT expand when needed, or to shrink when needed, something Ben Franklin saw in Pennsylvania 200 years before. That is the problem with Gold as a "Standard". Thus we should never again see Ben Franklin on a Coin (and then he was on the old Silver Half Dollar never a Gold Coin) and should always see him on paper, for that is what he advocated as the best medium of exchange for it can be expanded when economically needed, something any other standard can NOT do, especially one based on a metal like Gold.
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