America’s Revolutionary Currency: “Not Worth a Continental”
James Narron and David Skeie, two of the most erudite monetary officials of our era, write at the NY Fed’s Liberty Street Economics about the currency crisis of 1779.
Some choice excerpts:
Crisis Chronicles: Not Worth a Continental — The Currency Crisis of 1779 and Today’s European Debt Crisis
During the late 1770s, a newly founded United States began to run up significant debts to finance the American Revolution. With limited access to credit and little to no tax base, the Continental Congress issued the Continental to finance the war. But by the end of the decade, inflation was nearly 50 percent, a suit cost a million Continentals, and the phrase “not worth a Continental” had entered the national lexicon. With the help of our fourth U.S. president, James Madison, we review why the Continental experiment ended so badly.
Not Worth a Continental
Initially, Continentals were used effectively to equip the army. However, Congress hadn’t prepared for a protracted war and had originally planned on redeeming Continentals beginning in 1779. By mid-1776, despite efforts by Congress to ensure investors that it would redeem the currency in full in gold or silver, Continental currency holders lost confidence in the colonial army’s ability to end the war quickly or for Congress…
