Currency Act
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The Currency Act or Paper Bills of Credit Act
Economic climate of the colonies
From their origin, the colonies struggled with the development of an effective medium of exchange for goods and services. After depleting the vast majority of their monetary resources through imports, the first settlers strained to keep money in circulation. They could not find a suitable medium of exchange in which the value did not depreciate. The colonists generally employed three main types of currency. The first was commodity money, using the staple of a given region as a means of exchange. The second was specie, or gold or silver money. Lastly, paper money (or fiat money), issued in the form of a bill of exchange or a banknote, mortgaged on the value of the land that an individual owned.[4]
Each year, the supply of specie in the colonies decreased due to international factors. The dearth of specie rendered it ineffective as a means of exchange for day-to-day purchases. Colonists frequently adopted a barter system to acquire the goods and services they required. Essentially, this method proved to be ineffective and a commodity system was adopted in its place. Tobacco was used as a monetary substitute in Virginia as early as 1619.[4] A major shortcoming of this system was that the quality of the substitutes was inconsistent. The poorer qualities ended up in circulation while the finer qualities were inevitably exported. This commodity system became increasingly ineffective as colonial debts increased.
In 1690, Massachusetts became the first colony to issue paper currency. This currency was employed as a means to finance its share of the debt from
Act of 1751
Currency Act 1751 | |
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Act of Parliament | |
Territorial extent | Colonies of Rhode Island, Providence, Connecticut, Massachusetts, and New Hampshire. |
Dates | |
Royal assent | 25 June 1751 |
Other legislation | |
Repealed by | Statute Law Revision Act 1867 |
Status: Repealed | |
Text of statute as originally enacted |
The first Act, the Currency Act 1751 (
The Act limited the future issue of bills of credit to certain circumstances. It allowed the existing bills to be used as legal tender for public debts (i.e. paying taxes), but did not allow their use for private debts (e.g. for paying merchants).[9]
Act of 1764
Currency Act 1764 | |
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Act of Parliament | |
Other legislation | |
Amended by | Paper Currency in America Act 1772 |
Repealed by | Statute Law Revision Act 1867 |
Status: Repealed | |
Text of statute as originally enacted |
Colony of New York Act 1770 | |
---|---|
Act of Parliament | |
Territorial extent | Colony of New York |
Other legislation | |
Repealed by | Statute Law Revision Act 1867 |
Relates to | Currency Act 1764 |
Status: Repealed |
Paper Currency in America Act 1772 | |
---|---|
Act of Parliament | |
Other legislation | |
Amends | Currency Act 1764 |
Repealed by | Coinage Act 1870 |
Status: Repealed | |
Text of statute as originally enacted |
The Currency Act 1764 (
The colonial government of the
After nine years, the colonial agents had secured a paper currency for the provinces. But the Americans had tacitly, if not implicitly, acknowledged the authority of Parliament. And in the final analysis this was all the imperial government wanted.[14]
Legacy
Currency Acts created tension between the colonies and the mother country, and were a contributing factor in the coming of the American Revolution. In all of the colonies except Delaware, the Acts were considered to be a "major grievance".[15] When the First Continental Congress met in 1774, it issued a Declaration of Rights, which outlined colonial objections to certain Acts of Parliament. Congress called on Parliament to repeal the Currency Act of 1764, one of seven Acts labeled "subversive of American rights".[16]
However, according to historians Jack Greene and Richard Jellison, the currency debate was no longer really a "live issue" in 1774, due to the 1773 amendment of the Act. The controversy's most important impact was psychological, in that it helped convince many colonists that Parliament did not understand or care about their problems. Colonial leaders came to believe that they, rather than Parliament, were better suited to legislate for the colonies.[17]
See also
- Early American currency
- Gold Standard Act of the United States (1900), also sometimes called the "Currency Act"
- Mercantilism
- Navigation Acts
- Sugar Act 1764
- Stamp Act1765
References
- Notes
- ^ Britain, Great (1995). Current Law Statutes Annotated. Sweet & Maxwell. p. 131.
- ISSN 0021-9371.
- S2CID 145691938.
- ^ a b Finkelstein, 39.
- ^ Finkelstein, 39–40.
- ^ Ward, 462.
- ^ "Review: Money and Politics in America, 1755–1775: A Study in the Currency Act 1764 and the Political Economy of Revolution," 462."
- ^ Allen, 96.
- ^ Allen, 96–98.
- ^ a b Allen, 98.
- ^ Morgan, 128.
- ^ Walton & Rockoff, p. 105
- ^ Sosin, 196.
- ^ Sosin, 198.
- ^ Greene and Jellison, 517.
- ^ Reid, 265.
- ^ Greene and Jellison, 518.
- Bibliography
- Allen, Larry (2009). The Encyclopedia of Money (2nd ed.). ISBN 978-1598842517.
- Finkelstein, Stanley S. "The Currency Act of 1764: A Quantitative Reappraisal." The American Economist 12.2 (1968): 38–47.
- Greene, Jack P. and Richard M. Jellison. "The Currency Act of 1764 in Imperial-Colonial Relations, 1764–1776". The William and Mary Quarterly, Third Series, Vol. 18, No. 4 (October 1961), 485–518.
- Morgan, David. The Devious Dr. Franklin, Colonial Agent: Benjamin Franklin's Years in London. Macon, Georgia: Mercer University Press, 1999.
- Reid, John Phillip. Constitutional History of the American Revolution, III: The Authority to Legislate. Madison: University of Wisconsin Press, 1991. ISBN 0-299-13070-3.
- Sosin, Jack M. "Imperial Regulation of Colonial Paper Money, 1764–1773". Pennsylvania Magazine of History and Biography, Volume 88, Number 2 (April 1964), 174–98.
- Walton, Gary M., and Hugh Rockoff. History of the American Economy. 11th ed. Mason, OH: South-Western/Cengage Learning, 2010.
- Ward, Harry M. "Review: Money and Politics in America, 1755–1775: A Study in the Currency Act of 1764 and the Political Economy of Revolution." The Journal of Southern History 40.3 (1974): 460–462.
- Further reading
- 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.