New Money: The American Revolution and the National Origins of the Politicization of Money, 1775-1857

Historians of American finance and political economy have long asserted that the money question was a defining feature of eighteenth and nineteenth-century politics. But when and why did the United States’ nation-building project envelop longstanding anxieties over the security and legitimacy of paper currency? Building on this historiography, this paper—and the first chapter of my dissertation—argues that the American Revolution was the historical event wherefrom competing individual and social interests formed the basis of the money debates of the nineteenth century. One reason is that the use of legal and social coercion by provincial and national governing bodies during the American Revolution forced merchants, consumers, legislators and their agents to view the money question as a national issue, rather than an imperial one. These conflicts brought forth a nation-building project within a nation-building project, one in which Americans competed to build a monetary system with a moral foundation. Secondly, the economic crisis precipitated by deflation and other market events further weakened the state’s ability to impose a singular value system through issuing money. By 1787, the American public had developed a lasting aversion to a national money. Such a system came to be viewed as a hindrance to commerce and the flow of sound money and credit. (Currency speculators were more opportunistic.) Although the Constitution reserves the right to issue money to the federal government and denies that right to the individual states, dysfunction, a lack of enforcement power, and historically persistent cash shortages made it possible for social and moral value systems to inform and drive money’s politicization. Monetary sovereignty in the revolutionary era was, essentially, up for grabs. The state had no more authority to issue money than the people had to reject it.