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The Continental Dollar
How the American Revolution Was Financed with Paper Money
Language:
English
Published/Copyright:
2023
About this book
An illuminating history of America’s original credit market.
The Continental Dollar is a revelatory history of how the fledgling United States paid for its first war. Farley Grubb upends the common telling of this story, in which the United States printed cross-colony money, called Continentals, to serve as an early fiat currency—a currency that is not tied to a commodity like gold, but rather to a legal authority. As Grubb details, the Continental was not a fiat currency, but a “zero-coupon bond”—a wholly different species of money. As bond payoffs were pushed into the future, the money’s value declined, killing the Continentals’ viability years before the Revolutionary War would officially end.
Drawing on decades of exhaustive mining of eighteenth-century records, The Continental Dollar is an essential origin story of the early American monetary system, promising to serve as the benchmark for critical work for decades to come.
The Continental Dollar is a revelatory history of how the fledgling United States paid for its first war. Farley Grubb upends the common telling of this story, in which the United States printed cross-colony money, called Continentals, to serve as an early fiat currency—a currency that is not tied to a commodity like gold, but rather to a legal authority. As Grubb details, the Continental was not a fiat currency, but a “zero-coupon bond”—a wholly different species of money. As bond payoffs were pushed into the future, the money’s value declined, killing the Continentals’ viability years before the Revolutionary War would officially end.
Drawing on decades of exhaustive mining of eighteenth-century records, The Continental Dollar is an essential origin story of the early American monetary system, promising to serve as the benchmark for critical work for decades to come.
Author / Editor information
Farley Grubb is professor of economics at the University of Delaware and a research associate at the National Bureau of Economic Research.
Reviews
“Well written and convincing, The Continental Dollar proposes a new view of the early American monetary system, representing an impressive scholarly effort that advances our understanding of how money works.”
— Christopher M. Meissner, University of California, Davis“Bringing together the author’s important, and even controversial, work, future generations of financial historians will benefit from this book—yet one need not be a monetary historian to follow The Continental Dollar because it makes this material clear and accessible.”
— Jane Knodell, University of Vermont"The Continental Dollar provides an innovative, painstakingly thorough study of how the Americans used paper money to finance their War of Independence. While these events happened long ago under very different economic conditions, Grubb demonstrates valuable information about the flexible nature of the boundary between money and government debt and how money and debt influence the economy. All future studies of the financing of the Revolution, and many studies of other macroeconomic events, will lean heavily on this masterful analysis."
— Hugh Rockoff, Rutgers University"Understanding how and why the continentals circulated and were valued lies at core of the early American experience and how the nation won its independence nearly 250 years ago. Professor Grubb’s new treatise and career achievement is an authoritative account of Revolutionary War finance that distills the essence of the continental dollars as money and the rationale for and risks of holding them. A result of in-depth archival research and analysis over many years, the work will be of great interest to historians and others seeking a comprehensive guide to and fresh perspective on this classic tale."
— Peter Rousseau, Vanderbilt University"Farley Grubb has performed a massive historical reconstruction of the dollar and its history. In the process, he has overturned myths and misconceptions about the financing of the American Revolution and cast new light on how the fourteen governments of the new republic attempted to finance a war with the world's greatest military power. This is an enormous achievement, one that historians, economic historians, and economists will want on their shelves."
— John Joseph Wallis, University of Maryland"In this arresting account, Farley Grubb overturns existing interpretations of the Continental dollar. Unmatched in his erudition on early American money, Grubb adds immeasurably to our knowledge about how Americans financed the Revolution and how they redesigned money in its aftermath. This book is a game-changer."
— Christine A. Desan, Harvard University"Grubb has written a splendid book that explains a great deal about the financing of the Revolution that we did not know. It will be a cornerstone of future research."
— EH.Net"Grubb’s analysis brings together new evidence on the amount and timing of Continental emissions and an insightful theoretical model of what determined their value. . . .This masterful work brings together decades of research and explains its insights in a clear, convincing manner."
— Choice"Economists and historians have been telling us the wrong story about Continental currency for two centuries. . .Farley Grubb [sets] the record straight on Continental currency. . .an interesting and valuable contribution to our understanding the Revolutionary War."
— Journal of the American Revolution"[Grubb's] analysis in The Continental Dollar is a heterodox tour de force. . . . Examining the contradictions of the Continental dollar, he goes so far as to upend common economic understandings of money itself, using history to challenge the assumptions of his field rather than the other way around."
— William and Mary Quarterly"Leaving no stone unturned, Grubb has sought out every scrap of extant information on the Continental dollars that served as the main source of funding for the American Revolution. And then in painstaking detail, he analyses both how these Continental dollars were intended to function (and why) as well as how they actually functioned in practice."
— Economic History Review"Leaving no stone unturned, Grubb has sought out every scrap of extant information on the Continental dollars that served as the main source of funding for the American Revolution. And then in painstaking detail, he analyses both how these Continental dollars were intended to function (and why) as well as how they actually functioned in practice."
— The Economic History ReviewTopics
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Frontmatter
i -
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Contents
v -
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List of Tables
vii -
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List of Figures
ix -
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A Note on Citation Format
xi -
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Preface
xiii -
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Introduction
1 - Part I What Was the Continental Dollar? The Intended Structural Design
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Chapter 1 Emitting Continental Dollars
15 -
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Chapter 2 Richard Smith and New Jersey’s Influence
24 -
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Chapter 3 Denominational Spacing and Value Size
29 -
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Chapter 4 Informing the Public
45 -
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Chapter 5 Descriptions by Contemporary Leaders
49 -
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Chapter 6 Congressional Spending
57 -
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Chapter 7 Legal Tender
74 -
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Chapter 8 Loan Office Certificates
86 - Part II Value and Performance
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Chapter 9 Modeling Value
105 -
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Chapter 10 Rational Bond Pricing
114 -
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Chapter 11 The Current Market Exchange Value
136 -
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Chapter 12 Time-Discounting versus Depreciation
150 -
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Chapter 13 1779: The Turning Point
160 -
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Chapter 14 1780–1781: The Road to Abandonment
172 - Part III Epilogue
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Chapter 15 State Redemption of Continental Dollars
197 -
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Chapter 16 The 1790 Funding Act and Final Default on the Continental Dollar
208 -
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Chapter 17 The Constitutional Transformation of the US Monetary System
224 -
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Acknowledgments
239 -
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Appendices: Getting the Numbers Right
241 -
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Appendix A. Reconciling the Disparate Statements in the Secondary Literature Regarding Continental Dollar Emissions
243 -
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Appendix B. The Denominational Structure of American Paper Monies, 1755–1781
265 -
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Appendix C. The Cumulative Value of Continental Dollars Emitted, 1775–1780: Face Value versus Present Value
277 -
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Appendix D. The Redemption of Continental Dollars by Individual States over Time
285 -
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Notes
295 -
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References
315 -
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Index
325
Publishing information
Pages and Images/Illustrations in book
eBook published on:
July 12, 2023
eBook ISBN:
9780226826042
Pages and Images/Illustrations in book
eBook ISBN:
9780226826042
Keywords for this book
bond redemption; congressional budgets; constitutional convention; denominational structure; depreciation tables; fiscal credibility; legal tender; loan-office certificates; war finance; zero-coupon bonds
Audience(s) for this book
For an expert adult audience, including professional development and academic research
