George Washington’s Money War
How finance almost lost the Revolutionary War
In September 1778, George Washington was trying to rebuild the Continental Army. The French had just entered the war and three months before, the Americans had defeated the British at the Battle of Monmouth.
Things were looking up. But as the British were on the back foot, another enemy was threatening Washington and his army. More frightening than the shot of the British: the enemy was hyperinflation. Ironically, the man who would eventually be the face of the one dollar bill spent a lot of time worrying about the value of the Continental dollar, and how its collapse endangered the American Revolution.
The problem was how to entice new recruits to join. Several in congress suggested to Washington that they provide him with silver coins to pay new recruits. Yet Washington wasn’t keen on the idea, because by 1778 the gap in value between paper Continental dollars and specie (gold and silver coins) had widened sufficiently that he worried about the “pernicious consequences” of his existing troops discovering that their paychecks were becoming worthless.
“They would cast their views to desertion (at least)”, Washington wrote in a letter. As the young United states started to get a grip on the military situation, they needed to shift their focus…
