Common Currency versus Currency Union: The U.S. Continental Dollar and Denominational Structure, 1775-1776

No 21728, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: I use denominational structure (the spacing and size of monetary units) to explain how the Continental Congress attempted to manage a successful common currency when sub-national political entities were allowed to have separate currencies and run independent monetary policies. Congress created a common currency that was too large to use in ordinary transactions. Congress hoped this currency would be held for post-war redemption and would not circulate as money during the war. As such, it would not contribute to wartime inflation. By contrast, individual state currencies were emitted in small enough denominations to function as the domestic medium of exchange.

JEL-codes: E42 E52 H77 N11 (search for similar items in EconPapers)
Date: 2015-11
New Economics Papers: this item is included in nep-his, nep-mac and nep-mon
Note: DAE ME
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Published as Farley Grubb, “Common Currency versus Currency Union: The U.S. Continental Dollar and Denominational Structure, 1775-1779,” in Nathalie Champroux, Georges Depeyrot, Aykiz Dogan, and Jurgen Nautz, eds., Construction and Deconstruction of Monetary Unions: Lessons from the Past (Wetteren, Belgium: MONETA, 2018), pp. 15-34.

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