In 1764 Parliament passed the Currency Act, which effectively ended the growing colonial practice of printing money. Known as ‘new tenor,” the paper notes were not backed completely by bullion. Silver and gold coins had been the only source of accepted currency for use within British trade and financial policies; the colonies had been forbidden to mint their own coins since 1684. Although British coins formed the basis of accepted colonial currency practices, foreign equivalencies were allowed, based on Queen Anne’s so-called scale of 1704 called “proclamation money.” This added to the complexity of exchange and finance, promoting the barter system in rural settlements.
New World Bullion Changes European Currency Values
Anthropology professor Jack Weatherford, quoting from a thesis written by Walter P. Webb, writes that, “At the time of the discovery of America, Europe had only about $200 million worth of gold and silver, approximately $2 per person. By 1600 the supply of precious metals had increased approximately eightfold.” The Spanish milled dollar, produced in Spain with silver coming from Potosi in South America, was the most trusted foreign coin. It was alternately known as the real or rial and contained 77 oz of silver. 8 reals equaled a Spanish peso, also known as a piece of eight.
In the colonies, unscrupulous money changers often shaved the edges of coins thereby reducing the overall value of the coin itself. This could not be done with milled dollars. Because Spanish presence in the New World pre-dated English and French settlements, Spanish coins were well known. The doubloon, for example, was worth 16 silver dollars while the pistole (peso) was worth 8.
Types of Colonial Currency
Colonial currency was based on the value of ready money, the chief valuation found in the British pound sterling which was worth 20 shillings. Each shilling was worth 12 pence while a quarter of a pence was called a farthing. In the 1730s and 1740s several colonies began to issue paper currency at rates of 25-1 and 11-1, creating inflationary results. In 1740, Britain closed the Land and Manufacture Bank in New England, ruining many investors including the father of Samuel Adams.
Non-British currencies came from Spain, Portugal, France, Germany, the Netherlands, and Scotland. The rix dollar was a silver coin of German origin. The term “rix” derived from the German reichsthaler. The English word “dollar” derives from the German term “thaler,” a large silver coin. In the English colonies, the term dollar was most often applied to the Spanish dollar or pieces of eight. The Dutch, originally settled in New Netherlands colony (New York), contributed the Dutch silver doller, also referred to as a “dog dollar” because of the picture of a “Lyon” (lion) resembling a dog on its face.
The guilder was the name of a Dutch gold coin. The Dutch word gulden means golden, hence the term “gild” or “gilded” referring to the use of gold as architectural adornment. The French contributed the livre which was measured as a pound of silver. The Scottish mark or merk was an accepted silver coin. The term is derived from the Old English marc, referring to the unit of weight of gold or silver. The Portuguese half joe or Johannes coin was also traded.
Currency, Sovereignty, and Empire
Once the American Revolution ended in 1783 the economic condition of the former colonies deteriorated. In 1774 the Continental Congress had issued paper notes known as continentals. Not backed by bullion, they became worthless. Trade with Europe could only be conducted in gold or silver. Not until the first Secretary of the Treasury Alexander Hamilton pressured the Congress to fund an appropriation consolidating all colonial and post-war debts did the new United States achieve financial stability.
References:
- Richard M. Lederer, Jr., Colonial American English (Essex, CT: Verbatim, 1985)
- Dale Taylor, Everyday Life in Colonial America From 1607-1783 (Cincinnati: Writer’s Digest Books, 1997)
- Jack Weatherford, Indian Givers: How the Indians of the Americas Transformed the World (New York: Fawcett Books, 1988)
Join the Conversation