1690–1788

The monetary history of the British North American colonies is a story of chronic currency shortage, constant economic experiment, and recurring legislative conflict with the Crown. In the seventeenth and eighteenth centuries the mercantilist framework sent raw materials to England and returned manufactured goods at a premium: the balance-of-payments deficit drained specie — physical gold and silver — the international currency. Without enough coin in circulation, the colonies improvised. In Virginia and Maryland, tobacco and tobacco-inspection receipts served as money; in New England and the Middle Colonies, wampum (legal tender in Massachusetts until 1661), furs, and even nails. Barter and commodity money were costly, perishable, and volatile.

The Crown did not permit colonial minting. The notable exception was the Massachusetts mint of John Hull and Robert Sanderson (c. 1652–1682), with New England, Willow Tree, Oak Tree, and Pine Tree shillings, almost all carrying the frozen date 1652. Otherwise, bills of credit became the practical alternative. British North America was the first Western economy to experiment, on a large and decentralized scale, with public paper money backed by taxes or by assets. All thirteen colonies that formed the United States issued their own paper before the Revolution.

This case already holds five pieces from that arc: the Continental $5 of 14 January 1779 (Fr. CC-91); the Pennsylvania 5 shillings of 1 October 1773 (Fr. PA-166, serial 9733); the 2 shillings and 6 pence from the same emission (Fr. PA-165, serial 21251); the Connecticut 20 shillings of 1 June 1780 (Fr. CT-231, serial 8495); and the Rhode Island 20 shillings of May 1786 (Fr. RI-298, serial 6229). The New Jersey six shillings of 1776 wait for a readable serial or a certificate before a note page is opened.

Chronology of the first emissions

The move from commodity money to paper was usually triggered by wartime costs that immediate taxation could not meet. The Province of Massachusetts Bay authorized £7,000 in bills of credit in December 1690 to pay for the disastrous Quebec expedition in King William’s War. The earliest surviving notes carry the Old Style date “Feb. 3, 1690,” printed in February 1691. It was the first time a Western government passed a statute to issue paper currency that settled public debts and circulated as a medium of exchange.

Earlier precedent: New France card money (1685)

Massachusetts is traditionally credited with the first statutory government paper money in the Western world, but an earlier, non-statutory precedent occurred in New France. In June 1685 intendant Jacques de Meulles, lacking coin to pay troops against the Iroquois, collected ordinary playing cards, signed and sealed them, and cut them to show value: a whole card was worth 4 livres, a half card 2 livres, and a quarter card 15 sols. He promised to redeem them in coin when the ship from France arrived; they were redeemed in full that September. It was a stopgap rather than a tax-backed system — the monnaie de carte of New France — but it is the earliest documented government paper money in North America. According to the Bank of Canada Museum, no genuine example of the original playing-card money is known to survive.

Other colonies adopted the Massachusetts model during Queen Anne’s War (1702–1713). South Carolina issued in 1703 and in 1712 became the first to issue “Bank Bills” meant to stimulate private trade. North Carolina authorized paper in 1712 for the Tuscarora War. Maryland entered in 1733 to move beyond a pure tobacco economy. Virginia did not authorize treasury notes until 1755, under the costs of the French and Indian War. Georgia used “Sola Bills” drawn on London from 1735 and regular bills of credit from 1755.

The Spanish dollar and exchange rates

Sterling was scarce; the Spanish milled dollar (“piece of eight”) was the dominant circulating coin and the reference unit for almost all colonial and Continental paper. Each colony rated the dollar in its own shillings. Queen Anne’s Proclamation of 1704 — given statutory force in 1708 — tried to cap it at 6 shillings (“proclamation money”); most colonies ignored the cap.

That is why many later notes carried both a local-pound value and a Spanish-dollar value, and why Maryland’s 1767 emission — and later Continental Currency — was denominated primarily in dollars. In this collection, the Pennsylvania 5 shillings “promises a crown” in that 7s 6d-to-the-dollar logic.

Bills of credit and land banks

Colonial paper could not be exchanged for coin on demand, but it was not pure fiat either. Each emission was tied by law to a source of retirement: tax-anticipation funds or mortgage loans from the loan office (land bank).

When a legislature authorized an emission, the law normally included a “tax fund”: if £10,000 was printed for fortifications, a tax was levied to collect that sum and burn the notes as they returned. Farley Grubb models those bills as zero-coupon bonds: no interest, redeemable at face only at statutory maturity, with market value shaped by time-discounting. Legislatures also often delayed redemption. New York, for example, pushed the maturity dates of its 1737 land bank year after year until 1765–1768.

The first public loan offices were those of South Carolina (1712), Massachusetts (1714), and Rhode Island (1715). They lent new paper against land mortgages; interest funded the government and principal retired the currency. Pennsylvania waited until 1723: £15,000 that year and £30,000 in 1724, lent at about 5%. A young Benjamin Franklin defended the scheme in 1729 in A Modest Enquiry into the Nature and Necessity of a Paper-Currency. Adam Smith later praised the moderation of the Pennsylvania plan in The Wealth of Nations, while condemning forced acceptance of depreciating paper as legal tender.

In 1740 private investors launched the Massachusetts Land Bank (Manufactory Scheme). Governor Belcher and London merchants opposed it; in 1741 Parliament shut it down by extending the 1720 Bubble Act to the colonies. One of its directors was Deacon Samuel Adams Sr.; the episode was an early demonstration that Parliament could undo colonial financial arrangements on its own authority.

Regional regimes and inflation

Whether paper succeeded depended on each legislature’s fiscal discipline. New England had the worst inflation; Rhode Island was the most notorious over-issuer. In Massachusetts the paper price of an ounce of silver rose from about 7 shillings in 1700 to about 60 by 1750. To manage the depreciation Massachusetts created overlapping “tenors”:

1. Old Tenor — issues from 1690 to 1737, increasingly depreciated.
2. Middle Tenor — 1737, at an official rate of £3 Old Tenor to £1 Middle Tenor.
3. New Tenor — from 1741, £4 Old Tenor to £1 New Tenor.
4. Lawful Money (1750 reform) — after Louisbourg, Parliament repaid Massachusetts £183,649 2s 7½d sterling in silver. That silver retired the paper at fixed rates and, from 31 March 1750, the province reckoned in “lawful money” at 6 shillings to the dollar: in effect a specie standard for about twenty-five years.

Maryland in 1733 issued £90,000 through a loan office and a duty of 15 pence sterling per hogshead of exported tobacco; proceeds were invested in London in Bank of England stock. In 1767 it issued 173,733 dollars redeemable at 4s 6d sterling per dollar, secured by about £32,000 already held in stock. Redemption commitments were honored. Virginia called its paper “Treasury Notes”; the first 1755 issues paid 5% interest. Young George Washington, commanding the Virginia Regiment, depended on those funds to pay and supply his troops.

The epidemic of counterfeiting

Decentralized paper made early America a counterfeiter’s paradise. Penalties were harsh — pillory, ear-cropping, branding, and in some colonies death. Many Pennsylvania, New Jersey, and Delaware bills carried the printed warning “To Counterfeit is Death” (or “’Tis Death to Counterfeit”). In this collection that threat appears on the Pennsylvania pieces; on the Rhode Island 20 shillings of 1786 the variant reads “Death to Counterfeit.”

Mary Peck Butterworth, in Rehoboth, Massachusetts, operated from around 1716 mainly against Rhode Island bills: she pressed starched muslin onto a genuine note with a hot iron, transferred the faint image onto blank paper, and traced it with a crow-quill pen. With no copper plates to seize, a Bristol grand jury refused to indict her in 1723. Owen Sullivan (c. 1720–1756), engraver and former soldier, organized the “Dover Money Club” across New York, Connecticut, and Rhode Island; he was hanged in New York City on 10 May 1756, boasting that he had printed more than £25,000 in counterfeits.

Art, messaging, and security in printing

Colonial printers ran a constant technological race with forgers. Benjamin Franklin and his network printed nearly 2.5 million notes for Pennsylvania, New Jersey, Delaware, and other issuers. By 1737 Franklin and Joseph Breintnall were casting real leaves in plaster for metal blocks: the nature print. Every leaf has a unique vein pattern. A University of Notre Dame study published in PNAS (2023) confirmed, across about 600 notes, further Franklin devices: graphite-based black ink (not bone black), mica-flecked paper (muscovite), and colored threads or fibers — already documented by Eric Newman on Pennsylvania’s 20 March 1773 issue. Much of that paper came from Ivy Mills on Chester Creek, founded by Thomas Willcox in 1729; the Continental Congress later relied on the mill almost entirely.

In Maryland, Anne Catharine Hoof Green took over the Annapolis press when her husband died in 1767 and printed the 1767, 1770, and 1774 emissions, with elaborate border cuts by Thomas Sparrow. As the war began, Hall and Sellers — which printed every Continental emission — produced “Counterfeit Detector” sheets on pink or blue paper, without serials or signatures, so merchants could compare suspect notes. The Continental $5 of 1779 in this collection comes from that same house: a red-and-black face and, on the back, the nature-print leaf (feverfew). The Pennsylvania 5 shillings and 2s 6d of 1773 show the mica-and-blue-fiber paper of that tradition.

On the eve of the Revolution, note design turned openly political. South Carolina’s 1775 emissions, engraved by James Oliphant and largely printed by Peter Timothy, carry twelve arrows bound together (Auspicium Salutis) or a cannon framed by laurel (Ultima Ratio).

Revolution: Continentals and state emissions

Between May 1775 and January 1779 the Continental Congress authorized eleven emissions of Continental Currency totaling $241,552,780. Without direct taxing power, it relied on the states to retire the notes; at the same time every state kept issuing its own. Serious depreciation began in 1777. On 18 March 1780 Congress revalued the currency at 40 to 1 against specie; by early 1781 quotations ranged from about 75 to 1 to 210 to 1 in North Carolina. In May 1781 the notes stopped circulating: “not worth a Continental.” Britain accelerated the collapse by flooding the economy with counterfeit Continentals; on 2 January 1779 Congress recalled the entire emissions of 20 May 1777 and 11 April 1778. The Funding Act of 1790 exchanged Continentals for federal securities at 1% of face value. At the 1787 Constitutional Convention, delegates struck out a proposed congressional power to “emit bills on the credit of the United States,” and Article I, Section 10 provides that no state shall emit bills of credit or make anything but gold and silver coin a tender in payment of debts.

The Connecticut 20 shillings of 1 June 1780 belongs to that wartime state paper — not Continental — signed and numbered in red, now in a PMG 53 holder. The Rhode Island 20 shillings of 1786 is already postwar state paper, before the Constitution’s effective close on state emissions.

The Currency Acts and imperial deadlock

Depreciation alarmed British creditors. The Currency Act of 1751 (24 Geo. II c. 53) limited New England: new bills only for the current year’s expenses or wartime emergencies, with short redemption schedules; land-bank lending of the old kind ended; existing paper could still be legal tender for public debts, not private ones. The Currency Act of 1764 (4 Geo. III c. 34) extended the legal-tender ban to the other colonies: it did not ban printing, but it barred making future emissions legal tender and extending existing legal-tender bills. Franklin, as Pennsylvania’s agent in London, argued in his 1767 Remarks and Facts Relative to the American Paper Money that an elastic paper currency was essential to the internal commerce of colonies with no natural supply of specie.

The Quartering Act of 1765 collided with that restriction: New York argued that it could not fund troops without legal-tender paper. In 1770 Parliament allowed New York £120,000 as legal tender for public debts only; in 1773 the Paper Currency in America Act extended the same concession to all North American colonies. The Pennsylvania emission of 1 October 1773 — source of the two Pennsylvania records in this case — is born in that opening. Historians still disagree about how much weight the currency dispute carried among the causes of the Revolution; currency is absent from the grievances in the Declaration of Independence.

Debates in monetary theory

The colonial monetary experience is a key historical test case. The quantity theory of money (M × V = P × Y) would predict that a large rise in M should raise P in proportion. Bruce Smith (1985) and Farley Grubb showed that in the Middle and Southern Colonies it often did not: doubling or tripling the paper supply did not move prices in step. New England fits the quantity prediction better. Backing theory holds that value turned on the credibility of tax funds or mortgages. Ronald Michener answers with specie displacement (Gresham): new paper pushed out gold and silver, the total money stock stayed roughly constant, and prices did not rise. The debate remains open.

Notaphily and how to read these notes

This case’s catalogue reference is Friedberg (Paper Money of the United States), which numbers colonial issues by colony (CT, PA, RI) and Continentals as CC. Newman, The Early Paper Money of America, is cited as a historical source; Newman catalog numbers are not adopted here. On the 5-shilling record, P# is the Standard Catalog of World Paper Money (Pick) specialized number S-2540; N# is Numista N#406969.

Pre-1740 notes are exceptionally scarce: redemption statutes required retired bills to be destroyed, usually burned. Many early survivors are unsigned remainders or notes cancelled with cuts or punches. Notes from the 1770s — Pennsylvania, New Jersey, Maryland, and Continentals — survive in greater quantity. The 1773, 1779, and 1786 pieces in this collection are described unencapsulated; the Connecticut 20 shillings of 1780 is in a PMG 53 holder. This page does not publish prices.

Five marks of the period (not every one on every record):

• Indented. The hand-cut edge had to match the treasurer’s stub: the first anti-counterfeit system for United States paper.
• Manuscript signatures. Two or three commissioners; on the 1779 Continental and the Connecticut 20 shillings of 1780, numbering and signatures in red.
• Manuscript serial. Neither Pick nor Friedberg identifies the specimen: the handwritten number does, when it can be read.
• Franklin paper. Mica flakes and blue fibers, visible against the light on the Pennsylvania pieces.
• Printed threat. “To Counterfeit is Death” on Pennsylvania; “Death to Counterfeit” on Rhode Island; on the Continentals, the nature-print leaf.

Close

Colonial paper in British North America was born of necessity and produced fiscal and security-printing innovation — from Franklin’s nature print to Anne Catharine Hoof Green’s press. Where fiscal discipline failed, inflation and the Currency Acts followed; where sinking funds were credible, paper supported domestic trade. The lessons of excess were written into the Constitution. The five records in this case are physical objects from that arc, not a type census: a Pick number or a year does not identify the specimen; the serial does, when it can be read.