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

NBER Working Paper No. 21728

Issued in November 2015, Revised in December 2015

NBER Program(s):Development of the American Economy, Monetary Economics



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.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w21728

Published: 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.

Users who downloaded this paper also downloaded* these: