Currency Act


Currency Act

The Currency Act is the name of several acts of the Parliament of Great Britain that regulated paper money issued by the colonies of British America. The acts sought to protect British merchants and creditors from being paid in depreciated colonial currency. The policy created tension between the colonies and Great Britain, and was cited as a grievance by colonists early in the American Revolution.

Contents

Act of 1751

The first act, the Currency Act of 1751 (24 Geo. II c. 53), restricted the emission of paper money by the colonies of New England. These colonies had issued paper fiat money known as "bills of credit" to help pay for military expenses during the French and Indian Wars. Because more paper money was issued than what was taxed out of circulation, the currency depreciated in relation to the British pound sterling. The resultant inflation was harmful to merchants in Great Britain, who were forced to accept the depreciated currency from colonists for payment of debts.

The act limited the future emission of bills of credit to certain circumstances. It allowed the existing bills to be used as legal tender for public debts (i.e. paying taxes), but disallowed their use for private debts (e.g. for paying merchants).[1]

Act of 1764

The Currency Act of 1764 (4 Geo. III c. 34) extended the 1751 act to all of the British colonies of North America. Unlike the earlier act, this statute did not prohibit the colonies from issuing paper money, but it did forbid them from designating future currency emissions as legal tender for public or private debts. This tight money policy created financial difficulties in the colonies, where gold and silver were in short supply.[2] Benjamin Franklin, a colonial agent in London, lobbied for repeal of the act over the next several years,[3] as did other agents.

The colonial government of the Province of New York insisted that the Currency Act prevented it from providing funds for British troops in compliance with the Quartering Act. As a result, in 1770, Parliament gave permission (10 Geo. Ill c. 35) for New York to issue £120,000 in paper currency for public but not private debts.[4] Parliament extended these concessions to the other colonies in 1773 by amending the Currency Act of 1764 (13 Geo. III c. 57), permitting the colonies to issue paper currency as legal tender for public debts.[2] According to historian Jack Sosin, the British government had made its point:

After nine years, the colonial agents had secured a paper currency for the provinces. But the Americans had tacitly, if not implicitly, acknowledged the authority of Parliament. And in the final analysis this was all the imperial government wanted.[5]

Legacy

The Currency Acts created tension between the colonies and the mother country, and were a contributing factor in the coming of the American Revolution. In all of the colonies except Delaware, the acts were considered to be a "major grievance".[6] When the First Continental Congress met in 1774, it issued a Declaration of Rights, which outlined colonial objections to certain acts of Parliament. Congress called on Parliament to repeal the Currency Act of 1764, one of seven acts labeled "subversive of American rights".[7]

However, according to historians Jack Greene and Richard Jellison, the currency debate was no longer really a "live issue" in 1774, due to the 1773 amendment of the act. The controversy's most important impact was psychological, in that it helped convince many colonists that Parliament did not understand or care about their problems. Colonial leaders came to believe that they, rather than Parliament, were better suited to legislate for the colonies.[8]

See also

References

Notes
  1. ^ Allen, 96–98.
  2. ^ a b Allen, 98.
  3. ^ Morgan, 128.
  4. ^ Sosin, 196.
  5. ^ Sosin, 198.
  6. ^ Greene and Jellison, 517.
  7. ^ Reid, 265.
  8. ^ Greene and Jellison, 518.
Bibliography
  • Allen, Larry. The Encyclopedia of Money. 2nd edition. Santa Barbara, Calif: ABC-CLIO, 2009. ISBN 9781598842517.
  • Greene, Jack P. and Richard M. Jellison. "The Currency Act of 1764 in Imperial-Colonial Relations, 1764–1776". The William and Mary Quarterly, Third Series, Vol. 18, No. 4 (October 1961), 485–518.
  • Morgan, David. The Devious Dr. Franklin, Colonial Agent: Benjamin Franklin's Years in London. Macon, Georgia: Mercer University Press, 1999.
  • Reid, John Phillip. Constitutional History of the American Revolution, III: The Authority to Legislate. Madison: University of Wisconsin Press, 1991. ISBN 0-299-13070-3.
  • Sosin, Jack M. "Imperial Regulation of Colonial Paper Money, 1764–1773". Pennsylvania Magazine of History and Biography, Volume 88, Number 2 (April 1964), 174–98.
Further reading
  • Brock, Leslie V. The currency of the American colonies, 1700–1764: a study in colonial finance and imperial relations. Dissertations in American economic history. New York: Arno Press, 1975. ISBN 0405072570.
  • Ernst, Joseph Albert. Money and politics in America, 1755–1775; a study in the Currency act of 1764 and the political economy of revolution. Chapel Hill: University of North Carolina Press, 1973. ISBN 080781217X.

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