Why did Massachusetts Invent Modern Currency?

Dror Goldberg ()
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Dror Goldberg: Texas A&M University

No 7011, Working Papers from Economic History Society

Abstract: "In 1690 Massachusetts issued what seemed to be a private-type credit instrument. In fact it was the first inconvertible, legal tender paper money. The unique political considerations of that inter-charter period did not allow the provisional government to support the money in standard ways, such as backing by land, an explicit full legal tender status, or general forced use of the money. The legislature relied instead on the history of local monetary law as an indicator that these features were not necessary, and it also used a seemingly irrelevant commodity money act as a partial substitute. That act – so far ignored by historians – explains precisely the market discount on the notes."

JEL-codes: N00 (search for similar items in EconPapers)
Date: 2007-04
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