The Continental Dollar: Initial Design, Ideal Performance, and the Credibility of Congressional Commitment

Farley Grubb

No 11-15, Working Papers from University of Delaware, Department of Economics

Abstract: An alternative history of the Continental Dollar is constructed from the original resolutions passed by Congress. The Continental Dollar was a zero-interest bearer bond, not a fiat currency. The public could redeem it at face value in specie at fixed future dates. Being a zero-interest bearer bond, discounting must be separated from depreciation. Before 1779 there was no depreciation, only discounting. In 1779 and again in 1780 Congress passed ex post facto laws which altered the redemption dates of past Continental Dollars in ways that were not fiscally credible. These laws were the turning point. Depreciation and collapse followed.

Keywords: American Revolution; war financing; debt retirement; fiat money; bearer bonds; monetary denominations; congressional spending; currency depreciation; U.S. Constitution; founding fathers; Benjamin Franklin; state tax rates. (search for similar items in EconPapers)
JEL-codes: E42 E52 G12 G18 H11 H56 H60 H71 H83 N11 N21 N41 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2011
New Economics Papers: this item is included in nep-his, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: The Continental Dollar: Initial Design, Ideal Performance, and the Credibility of Congressional Commitment (2011)
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