The Issue of Paper Money in the American Colonies, 1720–1774

Weiss, Roger W.

doi:10.1017/s0022050700106692

Cited by 26 publications

(7 citation statements)

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“…This 3 See Grubb (2003Grubb ( , 2004Grubb ( , 2005aGrubb ( , 2005bGrubb ( , 2006aGrubb ( , 2006bGrubb ( , 2010Grubb ( , 2012bGrubb ( , 2013b; Hanson (1979); McCallum (1992); Michener (1987Michener ( , 1988; Michener and Wright (2005, 2006a, 2006b); Officer (2005); Perkins (1988, pp. 163-86); Rousseau (2006Rousseau ( , 2007; Rousseau and Stroup (2011);Smith (1985aSmith ( , 1985bSmith ( , 1988; Sumner (1993); Weiss (1970); West (1978); Wicker (1985). assumption has permeated past modeling of colonial monetary performance, regardless of monetary ideology.…”

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A New Approach to Solving the Colonial Monetary Puzzle: Evidence from New Jersey, 1709-1775

Grubb

2014

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The market value of colonial New Jersey's paper money is decomposed into its real asset present value and its liquidity premium. Its real asset present value accounted for over 80 percent, whereas its value as money per se accounted for under 20, percent of its market value. Colonial paper money was not a fiat currency. Its liquidity premium was driven by the quantity of paper money in circulation and the method of injection. The quantity theory of money performs poorly when using prices and exchange rates, but performs well when using real asset present values, to measure paper money's expected value. The market value of colonial New Jersey's paper money is decomposed into its real asset present value and its liquidity premium. Its real asset present value accounted for over 80 percent, whereas its value as money per se accounted for under 20, percent of its market value. Colonial paper money was not a fiat currency. Its liquidity premium was driven by the quantity of paper money in circulation and the method of injection. The quantity theory of money performs poorly when using prices and exchange rates, but performs well when using real asset present values, to measure paper money's expected value. Farley GrubbThe British North American colonies were the first western economies to emit sizeable amounts of colony-specific paper money, also called bills of credit. These bills were emitted directly by their respective colonial legislatures and not by banks. No specie-based commercial banks issuing paper banknotes exchangeable for specie on demand existed in British North America in this era. 2Explaining how colonial paper money regimes performed has proven controversial.Scholars have found that the statistical relationships between the quantity of paper money in Colonial legislatures had paper money printed and placed in their respective colonies' treasuries. They directly spent this money on soldiers' pay, military provisions, government salaries, and so on. In some cases, they loaned it out on interest to their respective subjects who secured these loans by pledging their lands as collateral. This legislatureissued paper money formed an important part of the circulating medium of exchange in many colonies (Brock 1975;Newman 2008 A new approach to explaining the market value of colonial paper money is offered here.It relies on the distinctive character of colonial paper money as bills of credit. The market value of a bill is decomposed into its real asset present value when used as just another barter good or non-money tradable bond, and its liquidity premium or "moneyness" value, namely its unique value as a medium of exchange. Bills of credit had legally defined future redemption dates when they would be paid off at face value in specie equivalents by the issuing government. Their real present value, under certainty of redemption as just another barter asset, can be calculated. The difference between these present values and the bills' valuations in the marketplace measures their liquidity premium.This...

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A New Approach to Solving the Colonial Monetary Puzzle: Evidence from New Jersey, 1709-1775

Grubb

2014

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“…For example, seeGrubb (2004Grubb ( , 2006aGrubb ( , 2006b;Hanson (1979);McCallum (1992);Michener (1987Michener ( , 1988;Michener and Wright (2006a, 2006b); Officer (2005); Perkins(1988, pp. 163-86);Rousseau and Stroup (2011);Smith (1985a Smith ( , 1985b Smith ( , 1988;Sumner (1993);Weiss (1970);West (1978);.…”

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Colonial New Jersey's Paper Money Regime, 1709-1775: A Forensic Accounting Reconstruction of the Data

Grubb¹

2013

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Forensic accounting is used to reconstruct the data on emissions, redemptions, and bills outstanding for colonial New Jersey paper money. These components are further separated into the amounts initially legislated, and the amounts actually executed. These data are substantial improvements over what currently exists in the literature. They also provide a more complete and nuanced accounting of colonial New Jersey's paper money regime than what has been done previously for any British North American colony. Enough detail of the forensic accounting exercise is given for scholars to reproduce the data series from the original sources.

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“…at the prices sett by the General Court that Year; mony is pieces of Eight, Ryalls, or Boston or Bay shillings (as they call them) or Good hard money, as sometimes silver coin is termed by them; also Wampom viz "Pay" is also called "country pay" in other sources and is like the goods category mentioned earlier. Weiss (1970) speculates that the distinction between "pay" and "pay as mony" (sic) arose when the prices set by the General Court were not in line with market prices, but they both clearly involve the merchant accepting goods as payment. Knight's "mony" (sic) category is limited to minted coins, foreign and domestic, and Indian beads.…”

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Merchant Account Books, Credit Sales, and Financial Development

Schwartz¹,

Flynn²,

Karahan³

2018

AFR

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Credit in colonial New England, including the credit practices used by merchants, invites study beyond that in the existing literature which largely limits investigation to an individual merchant. Textual analysis of 56 merchant account books from Connecticut and Massachusetts across a breadth of the eighteenth century and conversion to Lawful Money allows a common quantification of the financial extent of merchant transactions throughout the century. Through some descriptive statistics and non-parametric tests, we find that use of book credit is ubiquitous and in amounts that imply that merchants were de facto financial intermediaries essential for the development of the economy.

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The Issue of Paper Money in the American Colonies, 1720–1774

Cited by 26 publications

References 3 publications

A New Approach to Solving the Colonial Monetary Puzzle: Evidence from New Jersey, 1709-1775

A New Approach to Solving the Colonial Monetary Puzzle: Evidence from New Jersey, 1709-1775

Colonial New Jersey's Paper Money Regime, 1709-1775: A Forensic Accounting Reconstruction of the Data

Merchant Account Books, Credit Sales, and Financial Development

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