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

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.

The Paper Money of Colonial North Carolina, 1712-1774

“…Denominational structure comprises the monetary sizes of the units to be emitted, the spacing between these units, and the number of each unit so designated to be printed. The denominational structure of colonial paper monies has been used to infer that colonial legislatures intentionally created small denominational units of paper monies to facilitate trade, aid in making change, and ease the paying of taxes (Grubb, 2015(Grubb, , 2017Hanson, 1979Hanson, , 1980aHanson, , 1980b. The denominational structure of colonial North Carolina's paper money has not been studied before.…”

“…This finding is similar to what John Hanson found for other colonies (Hanson, 1979(Hanson, , 1980a(Hanson, , 1980b, except that it was even more the case for North Carolina. North Carolina bills Grubb (2015Grubb ( , 2017.…”