ABSTRACT
Sources: Boston: MCCUSKER [1978], pp. 138-142 (1660-1775). Philadelphia: Ibid., pp. 183-186 (1683-1775). New York: Ibid., pp. 162-165 (1680-1775). Maryland/Baltimore: Ibid., pp. 197-204 (1702-1775).
Currency of the colonial era: During the colonial era the pound of 20 shillings at 12 pence was the unit of account in all British colonies in North America, as in the mother country, whereas the main coin in circulation was the Spanish dollar, i.e. the peso de ocho reales or the piece of eight (at 24.43 grammes of fine silver). The variations between the currencies of the different colonies “were determined by the different legal valuation each colony gave to that coin” (MCCUSKER [1978], p. 132). So the Spanish dollar had been fixed in Massachusetts, with its capital and its economic centre Boston, at 5 shillings colonial currency since 1642, so that 100 pounds sterling corresponded to 111.11 pounds Massachusetts currency. This relation was changed in 1672 to 100:133.33, in 1692 to 100:136.60 and in 1705 to 100:154.78 to the disadvantage of the colonial currency, because colonial paper money was circulating in Massachusetts increasingly from 1690, when paper bills of credit were issued for the first time in Massachusetts on the occasion of the expedition against Quebec. The paper money – designed as legal tender – actually constituted the real money of the colony from 1710 to 1750 and was also used to pay bills of exchange. The value of this paper money, later called ‘Old Tenor’, dropped drastically in the following decades until 100 pounds sterling were worth more than 1,000 pounds Massachusetts currency at the end of the 1740s. On March 31st 1750 the silver standard was introduced again on the basis of the Spanish dollar, the parity to sterling being fixed at 133.33 pounds Massachusetts currency to 100 pounds sterling. As this rate reverted to that of the Royal Proclamation in 1704 and the subsequent Act of 1708, the new money was called the ‘Lawful Money’, 7.5 pounds Old Tenor being of equal value to 1 pound Lawful Money and consequently 1,000 pounds Old Tenor being equal to 100 pounds sterling. Since the Old Tenor paper money was cashed in at the same time, the currency conditions in Massachusetts remained stable until the end of the colonial era (MCCUSKER [1978], pp. 132s.). In New York, too, the rates of exchange were expressed in terms of the New York money of account during the British colonial era. As the Spanish dollar had been fixed there at 6 shillings colonial currency in 1672, 133.33 pounds New York currency corresponded to 100 pounds sterling from then on. With the reevaluation of the Spanish dollar in 1684, this ratio increased to 150 pounds New York currency to 100 pounds sterling and even to 154.83:100 in October 1708. After the introduction of paper bills of credit in 1709, “over the next thirty years the currency of New York inflated in value, just as did that of New England, but to nowhere near the same extent” (ibid., p. 158). From the 1740s until the end of the colonial era the par of exchange between the New York currency and sterling lay at 177.77:100, because the Spanish dollar had a market value of 8 shillings colonial currency then. In around 1770 the New York currency was important as a means of payment also for Connecticut, Rhode Island, New Jersey and Canada (ibid., pp. 156-158).
