An example of colonial era paper money.
Courtesy of the Federal Reserve Bank of San Francisco’s Website.
The idea of using paper currency in colonial America is not something that came about quickly or easily. For a long time the common method of transaction was a simple barter system. When the colonies grew big enough, however, a more advanced method of trade was required. Using paper money sourced from England was not a practical idea; they were too far away to immediately deal with any problems. So the colonies needed to source their own form of paper currency; this idea met with a lot of resistance. The main contributor of that resistance was the mother country, England. They feared the colonies becoming economically independent, which could potentially cut off trade from the colonies and cripple England’s economic dominance at the time. Yet due to America’s quickly dwindling gold and silver reserves, the use of paper money was becoming essential.
South Carolina first instituted paper money very early in the 18th century. Richard M. Jellison describes the rollout of paper money in two phases for South Carolina: “The first period, from 1703 to 1731, was one of much experimentation with paper money and may be characterized by depreciation. The years following 1731 witnessed not only complete acceptance of the medium but also stability in its value” (134). The stability was very important to South Carolina’s economy. Merchants finally had something to trade in that would not randomly lose value, and with Charlestown being such a massive port city at the time, this was invaluable.
The two selections I have pulled for our examination of this topic offer a wide view of the currency debate in Charlestown. “An Essay on Currency” was printed in the Charlestown Gazette in 1734, and showcases a strong argument for the adoption of paper money. This was crucial for the time as many colonies were struggling with the same issue. Every colony had to decide how to handle trade when their supply of British currency ran out. Legal tender bills were considered an extreme solution that required an immediate return on investment through either taxes, or interest on the bills. The essay clearly lays out many different reasons for the use of paper money, and tackles important counter-questions like using the barter system, or gold/silver instead of paper. The other source comes from a collection of the statutes of South Carolina, a legal act for an actual issue of paper money, including all the details on how they actually intended to get the funds back.
Bibliography
“An Essay on Currency.” Charlestown [S.C.]: Printed and sold by Lewis Timothy, in Church-Street, 1734. Early American Imprints, Series I: Evans, 1639-1800. Web. 3 Apr. 2014.
Dunn, Elizabeth E. “‘Grasping at the Shadow’: The Massachusetts Currency Debate, 1690-1751.” The New England Quarterly, Vol. 71, No. 1 (Mar. 1998), pp. 54-76. JSTOR. Web. 30 Apr. 2014.
Jellison, Richard M. “Paper Currency in Colonial South Carolina: A Reappraisal.” The South Carolina Historical Magazine, Vol. 62, No. 3 (Jul., 1961), pp. 134-147. JSTOR. Web. 21 Apr. 2014.
Sosin, Jack M. “Imperial Regulation of Colonial Paper Money, 1764-1773.” The Pennsylvania Magazine of History and Biography, Vol. 88, No. 2 (Apr., 1964), pp. 174-198. JSTOR. Web. 23 Apr. 2014.
“The Statutes at Large of South Carolina (1838).” Ed. Thomas Cooper. Printed by A.S. Johnson, Vol. 3. Archive.org. Web. 23 Apr. 2014.
Wait, Wofford B. “Paper Currency in Colonial South Carolina.” The Sewanee Review, Vol. 5, No. 3 (Jul., 1897), pp. 277-289. JSTOR. Web. 23 Apr. 2014.
Weiss, Roger W. “The Issue of Paper Money in the American Colonies, 1720-1774.” The Journal of Economic History, Vol. 30, No. 4 (Dec., 1970), pp. 770-784. JSTOR. Web. 23 Apr. 2014.
Weir, Robert M. Colonial South Carolina: A History. New York: University of South Carolina Press, 1997. Print.