If this were a valid test of the theory, one would be forced to reject it, because the specie stock fell little, if at all, in the Middle colonies in as bills of credit increased, and when bills of credit began to decrease after , specie became scarcer. Merchants played an active role in introducing shop notes into circulation. This valuation of bills of credit made each seven pounds of New York bills of credit in principle worth six pounds in proclamation money. The issue is further complicated by the fact that the total amount of cash in circulation fluctuated considerably from year to year, depending on such things as the demand for colonial staples and the magnitude of British military expenditure in the colonies Sachs, ; Hemphill, When Hillsborough drafted a report for the Board of Trade intended to support the abolition of legal tender paper money in the colonies he rested his argument on the inflationary experiences of these colonies printed in Whitehead, , vol. Where the currencies of neighboring colonies were of equal value, as was the case in New England between and , bills of credit of neighboring colonies could be credited and debited in book accounts at face value.
Set in late seventeenth-century Maryland, the poem is a first-person account of the tribulations and humiliations a newly-arrived Briton suffers while seeking to enter the tobacco trade. Grubb then uses contract registrations in the early Republic , and runaway ads in colonial Pennsylvania to develop time series for hitherto unmeasurable components of the money supply and draws many striking conclusions from them. Sugar was used in the British Caribbean, tobacco was used in the Chesapeake, and rice in South Carolina, each being the central product of their respective plantation economies. Once the bills of credit were placed in circulation, no distinction was made between them based on how they were originally issued. The cent has become tolerably familiarized to the tongue, wherever it has been made by circulation familiar to the hand. The same foreign specie coins most notably the Spanish dollar continued to be legal tender in the United States in the first half of the nineteenth century as well as a considerable portion of the circulating specie Andrews, , pp. Late in the seventeenth century Massachusetts briefly operated a mint that issued silver coins denominated in the local unit of account Jordon, This valuation of bills of credit made each seven pounds of New York bills of credit in principle worth six pounds in proclamation money. Patterson believed he had unearthed evidence of outrageous fraud during the Massachusetts currency reform, whereas he had, in fact, simply failed to convert a sum in an official document stated in new tenor terms into appropriate old tenor terms. The almanacs, printed in , include the revised coin ratings. You may emit paper or any other currency for this purpose until you reach this rule, and it will not depreciate. An example from modern times suggests how the ancient system worked. However, when one examines other cases, the hypothesis breaks down. The issue has been clouded, however, by the existence of many contradictory and internally inconsistent estimates in the literature. Perhaps the person drawing the bill was writing a bad check, or perhaps the person on whom the bill was drawn was himself a deadbeat. This has been taken as evidence that colonial interest rates were stable. So high was the opinion of the people raised, that often an advance was given for paper on account of the convenience of carriage. For several years, however, aged persons inquiring the price of an article in West Jersey or Philadelphia, required to told the value in shillings and pence, they not being able to keep in mind the newly-created cents or their relative value. I believe Grubb is proceeding on a mistaken premise. Peter Lindert , p. Crediting careful administration of tax and loan funds for the steady value of some colonial currencies, and haphazard administration for the depreciation of others looks superficially appealing. The following graph, however, illustrates the fundamental importance of war finance; the dramatic spike marks the French and Indian War Brock, , Tables 4, 6. Guineas are the unit of account, but the medium of exchange accepted in payment is something else entirely. Those who have wanted to defend the use of bills of credit in the colonies have focused on the Middle colonies, where inflation was practically nonexistent. Apart from evidence cited in the text, see for Massachusetts, Michener , p.
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