The Massachusetts Paper Money of 1690

Dror Goldberg ()

The Journal of Economic History, 2009, vol. 69, issue 4, 1092-1106

Abstract: Modern currency originates in the inconvertible, legal tender paper money that Massachusetts devised in 1690. The circumstances that led to its creation are more complex than the typical story of wartime specie shortage. Due to temporary political constraints of that turbulent period, the currency could be neither backed by land nor imposed on anyone, as was then standard. Instead, it had to be disguised from England as a simple, private-seeming IOU. By pleasing both its pay-demanding troops and England, the government maximized its probability of survival subject to the constraints. “Monetary innovation, the development of new forms of money, has not received much systematic study from economic historians.”1

Date: 2009
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