The Currency Act is the name given to several Acts of British Parliament that regulated paper currency issued by the colonies of British America. The Acts were designed to protect British banks from being paid in devalued colonial currency. This policy created financial hardships in the Colonies and resentment towards Great Britain. This Act was the main catalyst in the American Revolution.
During the mid-1700s, the colonies were well established and fairly prosperous. There was no unemployment, no income tax, and the price of goods was generally stable. When Benjamin Franklin traveled to London in 1763, he saw a completely different situation. "The streets are covered with beggars and tramps," he wrote. (Binderup 1941) He was dismayed to find England, with all its wealth, suffering with poverty and unemployment. He was informed that England had too few jobs to employee greater numbers. The business owners were overtaxed, and were unable to pay their employees better wages. In a meeting with merchants and bankers at the British Board of Trade, members asked Benjamin Franklin how the American colonies managed to maintain sufficient funds to support their poor. Franklin replied,
That is simple. In the Colonies, we issue our own money. It is called Colonial Scrip. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers. In this manner, creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay to no one. (Binderup 1941)
Paper money that was issued by the colonial government was a concern. Certain paper money could only be used for paying public debts, including military supplies or taxe...
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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. Pg. 6 ISBN 0-8078-1217-X.
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.
Owen, Robert Latham. National Economy and the Banking System of the United States. Washington: U.S. Gov. Print. Off., 1939. Print.
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. http://www.revolutionary-war-and-beyond.com/currency-act.html U.S. Representative, Charles Binderup, Unrobing the Ghosts of Wall Street, July 5, 1941
Leading up to the time of the Revolutionary War, seven policies were passed by Britain in hopes of controlling the colonies. These acts culminated in the Quebec Act which persuaded many Americans into supporting the revolutionary effort. The Proclamation of 1763 was the first policy passed by the British. This forbid any settlement west of Appalachia because the British feared conflicts over territory in this region. The proclamation, however, infuriated the colonists who planned on expanding westward. The Sugar Act was passed shortly after in 1764. This act sought harsher punishment for smugglers. The next act to be passed was possibly the most controversial act passed by Britain. The Stamp Act passed in 1765 affected every colonist because it required all printed documents to have a stamp purchased from the British authority. The colonist boycotted British goods until the Stamp Act was repealed but quickly replaced by the Declaratory Act in 1766. The British still held onto the conviction that they had the right to tax the Americans in any way they deemed necessary. The Declaratory Act was followed by the Townshend Acts of 1767. This imposed taxes on all imported goods from Britain, which caused the colonies to refuse trading with Britain. Six years passed before another upsetting act was passed. In 1773, the Tea Act placed taxes on tea, threatening the power of the colonies. The colonies, however, fought back by pouring expensive tea into the Boston harbor in an event now known as the Boston Tea Party. The enraged Parliament quickly passed the Intolerable Acts, shutting down the port of Boston and taking control over the colonies.
With differing economies and the growth of specie and paper money, Brands argues that the basis of knowledge about the money system of this time lays a foundation for how Carnegie, Rockefeller, and others were able to manipulate the market and gain wealth. Leading into price manipulation by those in corporate
When the first Europeans settled in what would become the United States, the need of a currency to make trade easier rapidly arose. Before the US Dollar as we know it, the American Colonies went through several currency systems. Since most settlers were from the United Kingdom, the colonies were under the authority of the crown, and used the British system of pounds, shilling and pence. The use of Spanish dollars was also very widespread, and the name of the country’s official currency comes from this common practice. While the first trades took place with British or Spanish currency or commodities, the Massachusetts Bay Colony was the first to issue some paper currency, which it denominated in British terms at first, and then in both British and Spanish terms. For the first time in the colonies, a colonial authority delivered a piece of paper, regardless of the Crown’s opinion, which people trusted would be worth money. This was therefore the first fiat currency of the colonies, which would later become the United States of America. In this paper, we will explore the evolution of fiat currency in the United States, and the process that led to the adoption of the US Dollar still in use today. It will cover the period from 1690 to 1863, separated in three parts that correspond to currency evolution: Colonial currency from 1690 to 1775, the Revolution and the first banks from 1775 to 1860, and finally the US Dollar, the Legal Tender Act and the National Banking Act from 1860 onwards.
The Proclamation of 1763 established a boundary running along the crest of Appalachian Mountains in an effort to keep the colonists and tribes separated, and to manage the westward expansion. This attempt of Britain to exercise greater control over the colonies failed, the colonies saw this as a challenge, ineffectively controlling the colonies they continued to expand westward. Following in 1764 was the first Currency Act, restricted the colonies from designating future currency as legal tender for debts and the Sugar Act, and was an effort to raise money for Britain during an economic depression in the American Colonies. The Currency Act effectively made financial difficulties in the colonies worse, pushing them further to an economic depression. The Sugar Act’s impacted the economy with the problem of taxation without representation. "Now the colonial boycotts spread, and the Sons of Liberty intimidated those colonist to were reluctant participate in it." (Brinkley 119) The Stamp Act in 1765 like the Sugar Act was in effort to raise money, it was a disaster, greeted with protestors in the streets. This Act, unlike the others, required the...
habit of printing new paper money to cover the new republic’s war debt and the
To start, the Stamp Act was a tax on the American colonies by the British Parliament. This act was formed in order to raise revenue to pay the costs of governing and protecting the American colonies. This act was supported by Britain’s Chancellor of the treasury department, George Greenville. Paul Gilje points out that, “Since Great Britain had accumulated a debt over £135 million the British first minister, George Greenville, thought it only appropriate that the colonies contribute to their own defense. Maintaining an army in North America would cost about £200,000 per year” (Gilje, Paul A). This act required stamps to be put on all legal and commercial documents such as licenses, liquor permits, newspapers, almanacs, advertisements, papers that were issued in the colonies and various articles like dice and playing cards. Colonists could not participate in any business without the stamped paper. Gilje also explains that, “Anyone interested in any transaction—whether it was buying a ...
The Sugar Act of 1764 was the first act used by the British to channel revenue into Britain. The British specifically stated in the Sugar Act, "…a revenue be raised in your Majesty's said dominions in America, for defraying the expenses of defending, protecting, and securing the same" (The Sugar Act). This proves that the British were using this act just to raise revenue because they needed it to defray the cost of fighting against the French. The act forced tariffs on goods being imported into the colonies. Examples of these goods were sugar, molasses, foreign indigo, and coffee. This angered the colonists because they were depending heavily on trade with other colonies and countries outside of the North American continent. The colonists specifically stated in a petition from the Massachusetts House of Representatives to the House of Commons on November 3, 1764 that a "prohibition will be prejudicial to many branches of its trade and will lessen the consumption of the manufactures of Britain" (King, Peter. Petition from the Mass...
Friedman, Milton and Jacobson Schwartz, Anna. A Monetary History of the United States, 1867-1960. Princeton, 1963
Many people have the misconception that the American Revolution occurred because British colonists did not want to be British citizens any longer. This may have been the case for a select few, but many British colonists desired to maintain their status as British colonists and citizens. The foremost reason that the colonists began protests, boycotts, and petitions against the British was because they believed their innate rights as British citizens were being violated. The American Revolution occurred due to a chain of events and a complex set of intertwined reasons.
During the late 1700’s, rules and regulations were placed to subdue the colonies and raise money after the French-and-Indian war, as too Britain’s Seven-Year-War. In replace of the Stamp Act of 1765, a new act, under the financial leader, Charles Townshend, the Townshend Acts were added to place a tax upon certain imported goods. The Townshend Acts was implemented to raise revenue for the civil government. This act placed a tax onto glass, lead, painters, colors, paper, and tea imported into the colonies. These “external” taxes would raise 40,000 Euros to pay commissioners of customs. People argued toward the act for raising revenue, or used to pay royal officials in the colonies. Britain sent a seven-hundred pocket army to protect those customs, which angered the colonists. Later, the Massachusetts legislature wrote the Circular Letter to send to Britain, issuing that one cannot be taxed without direct representation. Adding on to the Townshend Acts’ mayhem was the ...
Benjamin Franklin, Causes of the American Discontents before 1768, January 1768, in Skemp, Benjamin and William Franklin, 171.
Sanderlin, George William. "Chapter 2: The New Stamp." In 1776: Journals of American Independence. New York: Harper & Row, 1968.
Counterfeiting money in the United States has been going on since the very beginning of the nation. The craft can be traced back to men in Europe who counterfeited coins and then brought their art to the New World. Records will prove that colonial Americans were arrested for reproducing counterfeit money or spending it. Replicating coins was a laborious task, but fortunately for counterfeiters it was facilitated with the presentation of paper money. Close to the period of the American Revolution, a shift from coins to paper money occurred for counterfeiters. Paper money was first printed in 1775 at the beginning of the Revolutionary War. Although the colonies were mostly reliant on gold coins, the utilization of paper currency had become an increasingly more common practice. This innovative paper money was lighter and easier to carry. The primary reason for switching medians of currency was not to prevent counterfeiters, but instead simply for consumer convenience. Over the ages the government became weary of these counterfeiters and further developed money in order to prevent the creation of imitation bills, but as money evolved so did the counterfeiters. Counterfeiting remains a viable crime regardless of the security measures and technology created to prevent it.
So the government decided to place taxes in. The Stamp Act was taxes, the Stamp Act it states, “Right and Power to lay Taxes and Impositions upon the inhabitants of this Colony.” It was hard for the merchant to trade because they had to pay taxes to people. In Zinn it said that merchants helped start a protest against the stamp act, “A political group in Boston called the Loyal Nine-merchants, distillers, shipowners, and master craftsmen who opposed the Stamp Act-organized a procession in August 1765 to protest it.” This shows that they didn’t like being tax. In “We are equally Free,” in said “Two years earlier, some merchants had organized boycotts against certain products imported from Great Britain (a strategy known as nonimportation) to resist British taxation measures aimed at the rebellious Americans.” As shown by this tried to protest
Taxation with out representation was a new set of problems, from the Stamp Act in 1765 to the Tea Act in 1773. Tensions started growing when Britain started placing the first taxes on every single colonial written document. The documents had to be stamped to show that the tax o...