GENERAL STATISTICS, PRECIOUS METALS, UNITED STATES

(Amounts in millions of dollars)

Production of silver in the United States for the period, $500,000.

The silver coinage included only 1,017,500 silver dollars.

Domestic coin exports included both gold and silver, but the Mint reports include them with the gold.

available, without claiming accuracy.

The figures are presented as the best

The production of silver in the United States was only $1,150,000.

The silver coinage included only 1,682,080 silver dollars.

Domestic coin exports included both gold and silver, but the Mint reports include them with the gold. The figures are presented as the best

II. THE PAPER CURRENCY

CHAPTER IV

1775 TO 1811

THE history of the United States shows that the people have experimented with every known description of paper currency. The history of the colonial paper issues would form a bulky volume.

Prior to 1775 every one of the colonies had at one The colonial time or another made use of note issues, generally under period. government authority, but in some cases emanating from private banking concerns. In most instances the issues were made to obviate raising revenue by taxation, but the volume was doubtless increased owing to the scarcity of coin, since notes of denominations as low as threepence, issued during that period, are still in existence. Massachusetts appears to have taken the lead in this as well as in many other matters, and as early as 1690 issued "bills of credit" to pay soldiers.1 No adequate provision for the redemption of the notes was made, and depreciation generally followed; and this proved equally true where the currency was given forced paying power. Some of the earlier forms merely certified that the bearer was entitled to receive so many dollars, some promised interest, but later the form "This bill Forced curshall pass current for — dollars" was quite generally adopted.

When an issue had depreciated to such an extent as

1 Knox, United States Notes, I.

rency.

Continental currency.

to be thoroughly discredited it would be redeemed at a percentage, and sometimes a very small percentage, of its par value, in a new issue put forth with solemn pledges for its redemption, which new issue underwent in turn a like depreciation. The losses suffered by New England on account of depreciated paper currency prior to the Revolution were much greater proportionately than the losses sustained by the other colonies. This section was more prolific in schemes with reference to currency.

Gouge reports that in 1748 the quotation for £100 in coin ranged from £120 in Virginia paper to £1100 in that of New England. No definite record of the amounts of such currency is available, but that the values destroyed by depreciation were very great, considering the relative poverty of the colonies, is beyond doubt.

All the bitter experiences which must have resulted were, however, apparently forgotten during the days of the Revolution. As early as May, 1775, the movement to emit bills of credit was begun. Both Massachusetts and New York communicated to the Continental Congress a desire for the issue of paper, the former colony advising that body of an authority given to its receivergeneral to borrow £100,000 "to support the forces," and asking Congress to assist in giving the notes "a currency through the continent."2 The communication from New York urged Congress to issue notes, rather than have separate issues by the colonies, but events moved too rapidly, for we find that New York itself issued $112,500 in that year.3

1 Gouge, Short History of Paper Money and Banking in the United States.

2 Journal, Continental Congress.

8 Schuckers, Finances of the Revolutionary War.

The Continental Congress was powerless to impose taxes, and hence unable to make loans; consequently, burdened with the duty of prosecuting a war, no other recourse than note-issuing seemed possible. Accordingly, on June 22, 1775, but not without considerable opposition, a first issue of what was afterwards known. as Continental Currency was authorized, in denominations from $1 to $8 and of $20, to the amount of $2,000,000.1

notes.

The form adopted was simple. It read: "This bill Form of the entitles the bearer to receive Spanish milled dollars, or the value thereof in Gold or Silver, according to the resolution of the Congress, held at Philadelphia on the 10th day of May, A.D. 1775." The notes were numbered in ink and signed by two persons duly designated by Congress. While no terms of redemption were fixed, Congress pledged the faith of the colonies to such redemption.

issues.

A second issue of $1,000,000 was authorized in July, Further and at this time Congress apportioned the liability for the total issue to the several colonies in proportion to the estimated population.2 Under this act the redemption of the currency was to be provided for in four instalments, beginning in 1779. In November a further issue of $3,000,000 was voted.

It will be observed that the currency bore no legal tender provision. The notes were generally received without objection for a time, but early in 1776 difficulties were encountered and a question arose as to the value of the coins in which the notes were payable. Congress thereupon adopted resolutions fixing the value of these coins. The following portions of the resolution show the status of the paper issues: