The U.S. Constitution and Monetary Powers: An Analysis of the 1787 Constitutional Convention and Constitutional Transformation of the Nation's Monetary System Emerged

Grubb, Farley

doi:10.3386/w11783

Cited by 3 publications

(8 citation statements)

References 30 publications

(46 reference statements)

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“…Constitution in 1789 ended the sovereign power of states to issue their own currencies, thus paving the way toward a true currency union for the new nation (Grubb 2006).…”

Section: No Exchange Agreements Betweenmentioning

confidence: 99%

“…33-9). However, many of the people lauded as founding-father geniuses for creating the U.S. Constitution in 1787, especially regarding how monetary powers were structured, were the same people who created the Continental dollar currency system in 1775 (Grubb 2006). Being declared geniuses on one occasion and ignoramuses on another, when dealing with the same monetary issues, is incoherent history.…”

Section: No Exchange Agreements Betweenmentioning

confidence: 99%

“…States lost the constitutional power to issue their own currencies. This paved the way toward forming a true currency union for the new nation (Grubb 2006 (v. 2, pp. 105, 207; v. 3, p. 398; v. 4, pp.…”

Section: Epiloguementioning

confidence: 99%

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

Grubb

2015

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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.

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“…Constitution in 1789 ended the sovereign power of states to issue their own currencies, thus paving the way toward a true currency union for the new nation (Grubb 2006).…”

Section: No Exchange Agreements Betweenmentioning

confidence: 99%

Section: No Exchange Agreements Betweenmentioning

confidence: 99%

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

Grubb

2015

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“…Heckelman and Dougherty (2010) argued that it has other interpretations "regarding direct financial incentives." Relying on Grubb's (2006) work, they go on to note that including both in the model "provides an indirect test of rent-seeking among delegates who were also shareholders in banks" (220). The idea is always the same: we would expect that on both private and public securities the coefficients would be positive.…”

mentioning

confidence: 99%

Voting for a Founding: Testing the Effect of Economic Interests at the Federal Convention of 1787

Pope

Treier

2015

The Journal of Politics

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Previous work measuring the voting patterns of the delegates to the Constitutional Convention largely focused on either individual delegate positions for a handful of key votes or on state delegation positions for a far broader set of votes. We remedy this limitation by modeling the key first two months of the Convention including both some individual-level and all delegation-level voting, while simultaneously estimating the effect of various economic interests on that voting, controlling for various cultural and ideological factors. The findings suggest that economic factors mattered a great deal at the Convention. The effect of such interests vary however by the dimension of debate-representation, national institutional design, or federalism. We conclude that economic interests exerted a powerful influence on the deep structure of voting at Convention, though not consistently by issue or dimension. Specific interests only mattered on specific dimensions. U nderstanding the voting patterns of the Federal Convention of 1787-more popularly known as the Constitutional Convention-has been a preoccupation of historians, political scientists, sociologists, and economists for well over one hundred years. 1 There is inherent interest in the views of such famous statesmen as James Madison, Benjamin Franklin, and George Washington, among others, but social scientists want to go beyond simply learning their respective views or even measuring their issue positions to a clearer explanation of what interests or ideas could have motivated them. To tackle this complex problem, we must realize that the Convention proceeded in stages. The early period-May through July-focused on key issues for creating a new government: the nature of representation, the internal design of a new national government, and how power would be distributed between the national and the state governments. These decisions had to be resolved before the Committee of Detail could pull together a draft of the compromises. Only then could the delegates proceed to other matters like trade, war powers, and other issues. Without disputing the key role of ideas and and philosophies of government (e.g., Lockean liberalism or republican virtue), we focus on interests that may have shaped debate. Charles Beard (1913) first offered an "economic," or interestbased, theory of the Convention, arguing it was a conflict between two classes: the "personalty" and the "realty." Though Beard's specific thesis has fallen out of favor, the spirit of explaining the Constitution by examining the relationship between key groups and the pattern of votes remains strong whether via a historical narrative or a social science model. In the empirical literature, these efforts typically focus either on modeling coalitions (Jillson 2002; Slez

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“…Supposedly the Federalists argued that those who wanted states to issue paper money were simply debtors out to defraud their creditors by causing inflation so they could pay back their nominal debts in depreciated money-lowering the real value of their debts. The Federalist used this argument effectively to constitutionally take monetary powers away from state and national legislatures in 1787 (Grubb, 2003(Grubb, , 2006 Even if the primary asset of the National Government is taken to be the public domain, estimating the amount of acres the National Government possessed and their value year by year over this period is not straightforward. 19 First, the cession of lands from the states to the National Government did not occur all at once, but at different times by different states from 1781 through 1802.…”

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confidence: 99%

The Net Asset Position of the U.S. National Government, 1784-1802: Hamilton's Blessing or the Spoils of War?

Grubb¹

2005

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The War for Independence left the National Government deeply in debt. The spoils from winning that war also gave it an empire of land. So, post-1783, was the National Government solvent? Was its net asset position, land assets minus debt liabilities, positive or negative? Evidence is gathered to answer this question by constructing a yearly time series of its net asset position, including time series of the subcomponents of that position, from 1784 through 1802. The answer to this question may help explain the constraints that determined why the National Debt was funded in the particular way that it was. The results from the data series constructed indicate that the National Government was solvent, had more than enough land assets to cover its debt liabilities, in this period but only if it maintained the default on the Continental Dollar (its non-interest-bearing debt). To do this and not ruin its creditworthiness it had to distinguish, legally and in the marketplace, between its interestbearing and its non-interest-bearing debt. It did this, in part, by only paying interest and no principal on its debts and by curtailing direct swaps of land for debt.

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The U.S. Constitution and Monetary Powers: An Analysis of the 1787 Constitutional Convention and Constitutional Transformation of the Nation's Monetary System Emerged

Abstract: The author thanks an anonymous correspondent on a related project and discussions with Christine Desan for planting the seeds of the current paper and thanks the editor and referees for this journal and Howard Bodenhorn for helpful comments on an earlier draft.

Cited by 3 publications

References 30 publications

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

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

Voting for a Founding: Testing the Effect of Economic Interests at the Federal Convention of 1787

The Net Asset Position of the U.S. National Government, 1784-1802: Hamilton's Blessing or the Spoils of War?

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