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Early American currency

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Early American currency went through several stages of development during the colonial and post-Revolutionary history of the United States. John Hull was authorized by the Massachusetts legislature to make the earliest coinage of the colony (the willow, the oak, and the pine tree shilling) in 1652.[1]

1652 pine tree shilling
Obverse and reverse of a three pence note of paper currency issued by the Province of Pennsylvania and printed by Benjamin Franklin and David Hall in 1764.

Because few coins were minted in the Thirteen Colonies, which later became the United Colonies and then the United States, foreign coins like the Spanish dollar were widely circulated. Colonial governments, at times, issued paper money to facilitate economic activities. The British parliament passed currency acts in 1751, 1764, and 1773 to regulate colonial paper money.

During the American Revolution, the colonies became independent states. No longer subject to monetary regulations arbitrarily imposed by the British parliament, the states began to issue paper money to pay for military expenses. The Continental Congress also issued paper money during the revolution — known as continental currency — to fund the war effort. To meet the monetary demands of the war, state and continental governments printed large amounts of currency, leading to rapid depreciation. By the end of the war, these paper notes became effectively worthless. Additionally, British counterfeiting gangs contributed further to the decreased value. By its conclusion, only a few counterfeiters had been caught and preemptively hanged, for the crime.

Colonial currency

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There were three general types of money in the colonies of British America: the specie (coins), printed paper money and trade-based commodity money.[2] Commodity money was used when cash (coins and paper money) were scarce. Commodities such as tobacco, beaver skins, and wampum, served as money at various times in many locations.[3]

Cash in the colonies was denominated in pounds, shillings, and pence.[3] The value of each denomination varied from colony to colony; a Massachusetts pound, for example, was not equivalent to a Pennsylvania pound. All colonial pounds were of less value than the British pound sterling.[3] The coins in circulation during the colonial era were, most often, of Spanish and Portuguese origin.[3] For most of the 17th and 18th centuries, the Spanish dollar was one of the few widely accepted denominations by the people, which resulted in it serving as the colonists' interim currency.[citation needed] The prevalence of the Spanish dollar throughout the colonies led to the money of the United States being denominated in dollars, rather than pounds.[3]

One by one, colonies began to issue their own paper money to serve as a convenient medium of exchange. On December 10, 1690,[4] the Province of Massachusetts Bay created "the first authorized paper money issued by any government in the Western World".[5] This paper money was issued to pay for a military expedition during King William's War. Other colonies followed the example of Massachusetts Bay by issuing their own paper currency in subsequent military conflicts.[5]

The oldest surviving bill bears the date "February 3, 1690"[6] and was for 20 Massachusetts shillings, equivalent to one pound.[7]

However, as the colonies began printing their own money, location-based socio-economic issues soon followed. Most of these concerns were rooted in each colony having different values of the dollar, confusing any inter-colony transactions. By the time parliament decided to prohibit the printing of paper money in the colonies, their hired counterfeiters were able to take advantage of the common people, widening the gaps between socioeconomic classes.[citation needed]

The paper bills issued by the colonies were known as "bills of credit". Bills of credit could not be exchanged for a fixed amount of gold or silver coins upon demand, but were redeemable at a time specified in the future.[3][8] Bills of credit were usually issued by colonial governments to pay debts. The governments would then retire the currency by accepting the bills for payment of taxes. When colonial governments issued too many bills of credit or failed to tax them out of circulation, inflation resulted. This happened especially in New England and the southern colonies, which, unlike the Middle Colonies, were frequently at war.[8] Pennsylvania, however, was responsible in not issuing too much currency, offering an example of a successful government-managed monetary system. Pennsylvania's paper currency, secured by land, generally maintained its value against gold from 1723 until the revolution broke out in 1775.[9]

This depreciation of colonial currency was harmful to creditors in Great Britain when colonists paid their debts with money that had lost value. The British parliament passed several currency acts to regulate the paper money issued by the colonies. The Act of 1751 restricted the issue of paper money in New England. It allowed the existing bills to be used as legal tender for public debts (i.e. paying taxes), but disallowed their use for private debts (e.g. for paying merchants).[10] In 1776, British economist Adam Smith criticized colonial bills of credit in his most famous work, The Wealth of Nations.

Another currency act, in 1764, extended the restrictions to the colonies south of New England. Unlike the earlier act, this act did not prohibit the colonies in question from issuing paper money but it forbade them to designate their currency as legal tender for public or private debts. That prohibition created tension between the colonies and the mother country and has sometimes been seen as a contributing factor in the coming of the American Revolution. After much lobbying, parliament amended the act in 1773, permitting the colonies to issue paper currency as legal tender for public debts.[11] Shortly thereafter, some colonies once again began issuing paper money. When the American Revolutionary War began in 1775, all of the rebel colonies, soon to be independent states, issued paper money to pay for military expenses.

Thirteen Colony set of United States colonial currency

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Main article: Bills of credit

The Thirteen Colony set of colonial currency below is from the National Numismatic Collection at the Smithsonian Institution. Examples were selected based on the notability of the signers, followed by issue date and condition. The initial selection criteria for notability was drawn from a list[12] of currency signers who were also known to have attended the 1765 Stamp Act Congress or signed the United States Declaration of Independence, Articles of Confederation, or the United States Constitution.[nb 1]

Complete 13-colony set of United States Colonial currency[13][nb 2]
Colony Value Date Issue First[nb 3] Note (obv) Note (rev) Signatures
Connecticut 40s (£2) 1775-01-02 £15,000[14] 1709[15]     Elisha Williams,
Thomas Seymour,
Benjamin Payne[nb 4]
Delaware 4s 1776-01-01 £30,000[17] 1723[18]     John McKinly,
Thomas Collins,
Boaz Manlove
Georgia $40 1778-05-04 £150,000[nb 5] 1735[20]     Charles Kent,
William Few,
Thomas Netherclift,
William O’Bryen,[nb 6]
Nehemiah Wade
Maryland $1 1770-03-01 $318,000[23] 1733[24]     John Clapham,
Robert Couden[nb 7]
Massachusetts 2s 1741-05-01 £50,000[26] 1690[27]     Robert Choate,
Jonathan Hale,
John Brown,
Edward Eveleth
New Hampshire $1 1780-04-29 $145,000[28] 1709[15]     James McClure,
Ephraim Robinson,
Joseph Pearson,[nb 8]
John Taylor Gilman (rev)
New Jersey 12s 1776-03-25 £100,000[30] 1709[31]     Robert Smith,
John Hart,
John Stevens Jr.
New York 2s 1775-08-02 £2,500[32] 1709[33]     John Cruger Jr.,
William Waddell[nb 9]
North Carolina £3 1729-11-27 £40,000[35] 1712[36]     William Downing,[nb 10]
John Lovick,[nb 11]
Edward Moseley,
Cullen Pollock,[nb 12]
Thomas Swann[nb 13]
Pennsylvania 20s (£1) 1771-03-20 £15,000[40] 1723[41]     Francis Hopkinson,
Robert Strettell Jones,
William Fisher[nb 14]
Rhode Island $1 1780-07-02 £39,000[43] 1710[44]     Caleb Harris,
Metcalf Bowler,[nb 15]
Jonathan Arnold
South Carolina $60 1779-02-08 $1,000,000[46] 1703[47]     John Scott,
John Smyth,
Plowden Weston[nb 16]
Virginia £3 1773-03-04 £36,384[49] 1755[50]     Peyton Randolph,
John Blair Jr.,
Robert Carter Nicholas Sr.(rev)


Continental currency

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See also: Continental currency banknotes
 
Continental One Third Dollar Note (obverse)
 
A fifty-five dollar Continental issued in 1779

After the American Revolutionary War began in 1775, the Continental Congress began issuing paper money known as Continental currency, or Continentals. Continental currency was denominated in dollars from $1⁄6 to $80, including many odd denominations in between. During the Revolution, Congress issued $241,552,780 in Continental currency.[51]

The Continental Currency dollar was valued relative to the states' currencies at the following rates:

Continental currency depreciated badly during the war, giving rise to the famous phrase "not worth a continental".[52] A primary problem was that monetary policy was not coordinated between Congress and the states, which continued to issue bills of credit.[53] "Some think that the rebel bills depreciated because people lost confidence in them or because they were not backed by tangible assets", writes financial historian Robert E. Wright. "Not so. There were simply too many of them."[54] Congress and the states lacked the will or the means to retire the bills from circulation through taxation or the sale of bonds.[55]

Another problem was that the British successfully waged economic warfare by counterfeiting Continentals on a large scale. Benjamin Franklin later wrote:

The artists they employed performed so well that immense quantities of these counterfeits which issued from the British government in New York, were circulated among the inhabitants of all the states, before the fraud was detected. This operated significantly in depreciating the whole mass.[56]

By the end of 1778, Continentals retained from 1⁄5 to 1⁄7 of their face value. By 1780, the bills were worth 1⁄40 of their face value. Congress attempted to reform the currency by removing the old bills from circulation and issuing new ones, without success. By May 1781, Continentals had become so worthless that they ceased to circulate as money. Franklin noted that the depreciation of the currency had, in effect, acted as a tax to pay for the war.[54][52]

For this reason, some Quakers, whose pacifism did not permit them to pay war taxes, also refused to use Continentals, and at least one Yearly Meeting formally forbade its members to use the notes.[57] In the 1790s, after the ratification of the United States Constitution, Continentals could be exchanged for treasury bonds at 1% of face value.[52][54]

After the collapse of Continental currency, Congress appointed Robert Morris to be Superintendent of Finance of the United States. Morris advocated the creation of the first financial institution chartered by the United States, the Bank of North America, in 1782. The bank was funded in part by bullion coins loaned to the United States by France.[58] Morris helped finance the final stages of the war by issuing notes in his name, backed by his personal line of credit, which was further backed by a French loan of $450,000 in silver coins.[59] The Bank of North America also issued notes convertible into gold or silver.[60] Morris also presided over the creation of the first mint operated by the U.S. government, which struck the first coins of the United States, the Nova Constellatio patterns of 1783.[61]

The painful experience of the runaway inflation and collapse of the Continental dollar prompted the delegates to the Constitutional Convention to include the gold and silver clause into the United States Constitution so that the individual states could not issue bills of credit or "make any Thing but gold and silver Coin a Tender in Payment of Debts".[62] However, in Juilliard v. Greenman the Supreme Court of the United States settled an ongoing and very heated debate on whether this restriction of issuing bills of credit was also extended to the Federal government:

By the constitution of the United States, the several states are prohibited from coining money, emitting bills of credit, or making anything but gold and silver coin a tender in payment of debts. But no intention can be inferred from this to deny to congress either of these powers.[63]

See also

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Notes

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  1. ^ Visually attractive and early examples were digitized and additional signer research was conducted later.
  2. ^ Obverse and reverse images have been prepared separately for table preparation purposes. Some of the notes obverse-reverse are not on the same orientation which would make single images containing both distracting.
  3. ^ Date of the first issue of paper currency for each of the colonies
  4. ^ Williams, Seymour, and Payne (among others) were appointed to a committee to print and sign currency for the Colony of Connecticut in the amount of 50,000 pounds.[16]
  5. ^ Newman (2008) indicates the total issue in Pound sterling despite the currency issue in dollars.[19]
  6. ^ O’Bryen, Treasurer of Georgia,[21] was elected to the Continental Congress but did not attend.[22]
  7. ^ Couden served as Mayor of Annapolis from 1785–86 and 1790–91.[25]
  8. ^ Act authorizing Ephraim Robinson and Joseph Pearson to countersign New Hampshire currency.[29]
  9. ^ Waddell was a New York City Alderman (1773–77) with the authority to sign currency issued to fund the "water works" under construction near Broadway and Chambers streets.[34]
  10. ^ Downing served as Speaker of the House of Burgesses from 1735 to 1739.[37]
  11. ^ Lovick was a member of the House of Burgesses.[38]
  12. ^ Pollock was a member of the House of Burgesses.[39]
  13. ^ Swann served as Speaker of the House of Burgesses in 1729.[37]
  14. ^ Hopkinson, Jones, and Fisher authorized to sign Pennsylvania currency.[42]
  15. ^ Act passed June 1780 authorizing Harris and Bowler to sign Rhode Island currency.[45]
  16. ^ Scott, Smyth, and Weston (among others) were appointed commissioners with the authority to print and sign one million dollars of South Carolina currency.[48]

References

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  1. ^ "The Hull Mint - Boston, MA". Waymarking.com. January 20, 2012. Retrieved May 3, 2022.
  2. ^ Flynn 2008
  3. ^ a b c d e f Michener 2003
  4. ^ Andrew McFarland Davis, Currency and Banking in the Province of the Massachusetts-Bay, Volume 1, Issue 4 (American Economic Association, 1900) p.10
  5. ^ a b Newman 1990, p. 11.
  6. ^ based on the English calendar at the time, and equivalent to February 13, 1691 "new style"
  7. ^ Andrew McFarland Davis, and Banking in the Province of the Massachusetts-Bay, Volume 1, Issue 4 (American Economic Association, 1900) p.307
  8. ^ a b Wright 2008, p. 45.
  9. ^ Lester, Richard A. (1938). "Currency Issues to Overcome Depressions in Pennsylvania, 1723 and 1729". Journal of Political Economy. 46 (3): 324–375. doi:10.1086/255233. JSTOR 1824000. S2CID 154264538.
  10. ^ Allen 2009, pp. 96–98.
  11. ^ Allen 2009, p. 98.
  12. ^ Newman 2008, pp. 24–25.
  13. ^ Friedberg & Friedberg, pp. 12–29.
  14. ^ Newman 2008, p. 110.
  15. ^ a b Newman 2008, p. 89.
  16. ^ Public Records, May, 1775, The public records of the Colony of Connecticut 1636–1776, 1890, retrieved April 29, 2014
  17. ^ Newman 2008, p. 125.
  18. ^ Newman 2008, p. 119.
  19. ^ Newman 2008, p. 151.
  20. ^ Newman 2008, p. 130.
  21. ^ Journals of the Continental Congress, 1774–1789, Volume 11, Government Printing Office, 1908, retrieved April 29, 2014
  22. ^ Biographical Directory of the United States Congress, 1774–2005, Government Printing Office, 2005, ISBN 9780160731761, retrieved April 29, 2014
  23. ^ Newman 2008, p. 172.
  24. ^ Newman 2008, p. 167.
  25. ^ Robert Couden, Maryland State Archives, retrieved April 29, 2014
  26. ^ Newman 2008, p. 200.
  27. ^ Newman 2008, p. 183.
  28. ^ Newman 2008, p. 223.
  29. ^ An Act describing the tenor of notes and certificates to be issued by the Treasurer of this state and appointing a committee to counter sign said notes, Laws of New Hampshire: First constitutional period, 1784–1792, 1916, retrieved April 29, 2014
  30. ^ Newman 2008, p. 260.
  31. ^ Newman 2008, p. 247.
  32. ^ Newman 2008, p. 285.
  33. ^ Newman 2008, p. 269.
  34. ^ Colonial And Revolutionary Families Of Pennsylvania, Laws of New Hampshire: First constitutional period, 1784–1792, 2004, ISBN 9780806352398, retrieved April 29, 2014
  35. ^ Newman 2008, p. 315.
  36. ^ Newman 2008, p. 313.
  37. ^ a b North Carolina State House of Representatives – Past Speakers of the House, Colonial and State Records of North Carolina, retrieved April 29, 2014
  38. ^ Letter from George Burrington to the Board of Trade of Great Britain, Documenting the American South, retrieved April 29, 2014
  39. ^ Minutes of the Upper House of the North Carolina General Assembly, Documenting the American South, retrieved April 29, 2014
  40. ^ Newman 2008, p. 346.
  41. ^ Newman 2008, p. 331.
  42. ^ The Statutes at Large of Pennsylvania from 1682 to 1801, Volume 8, State Printer of Pennsylvania, 1902, retrieved April 29, 2014
  43. ^ Newman 2008, p. 399.
  44. ^ Newman 2008, p. 371.
  45. ^ Records of the Colony of Rhode Island and Providence Plantations, in New England, Alfred Anthony, Printer to the State, 1864, retrieved April 29, 2014
  46. ^ Newman 2008, p. 426.
  47. ^ Newman 2008, p. 405.
  48. ^ An ordinance for the printing, stamping and issuing one million dollars…, Statutes at Large of South Carolina: Acts, 1753 – 1786, 1838, retrieved April 29, 2014
  49. ^ Newman 2008, p. 443.
  50. ^ Newman 2008, p. 437.
  51. ^ Newman 1990, p. 16.
  52. ^ a b c Newman 1990, p. 17.
  53. ^ Wright 2008, p. 50.
  54. ^ a b c Wright 2008, p. 49.
  55. ^ Wright 2008, p. 52.
  56. ^ Scott, Kenneth (2000). Counterfeiting in Colonial America. Philadelphia: University of Pennsylvania Press. pp. 259–260. ISBN 978-0-8122-1731-5.
  57. ^ Gross, David M. (2014). 99 Tactics of Successful Tax Resistance Campaigns. Picket Line Press. p. 166. ISBN 978-1490572741.
  58. ^ Nuxoll, Elizabeth. "The Bank of North America and Robert Morris's Management of the Nation's First Financial Crisis" (PDF). Papers of Robert Morris. University of Pittsburgh Press: 162. Retrieved July 27, 2020.
  59. ^ Unger, Harlow (March 12, 2019). "How Robert Morris's "Magick" Money Saved the American Revolution". Journal of the American Revolution. Retrieved July 27, 2020.
  60. ^ Wright 2008, p. 62.
  61. ^ Morris Papers, Volume 7, pp. 761–765
  62. ^ U.S. Constitution, Article I, section 10.
  63. ^ Juilliard v. Greenman, 110 U.S. 421, 4 S.Ct. 122, 28 L.Ed. 204 (1884)

Bibliography

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Further reading

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  • Brock, Leslie V. The currency of the American colonies, 1700–1764: a study in colonial finance and imperial relations. Dissertations in American economic history. New York: Arno Press, 1975. ISBN 0-405-07257-0.
  • Ernst, Joseph Albert. Money and politics in America, 1755–1775: a study in the Currency act of 1764 and the political economy of revolution. Chapel Hill: University of North Carolina Press, 1973. ISBN 0-8078-1217-X.
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