The Paper Money of Colonial North Carolina, 1712-1774

Cory Cutsail and Farley Grubb

No 23783, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Beginning in 1712, North Carolina’s assembly emitted its own paper money and maintained some of its paper money in public circulation for the rest of the colonial period. This paper money has been reviled as an archetype of what was bad about the paper monies issued by American colonial legislatures. Yet little systematic analysis of North Carolina’s paper money has been undertaken. We correct that here. We reconstruct North Carolina’s paper money regime from original sources—providing yearly quantitative data on printings, net new emissions, redemptions and removals, amounts remaining in circulation, denominational structure, as well as the paper money’s current market value in pounds sterling. We identify different paper money regimes based on how the assembly structured and executed its paper money laws. We model and estimate how the market value of this money was determined. We compare the quantity theory of money with an asset-pricing model that treats the money as zero-coupon bonds to see which explains the observed market value of the paper money better. The asset-pricing model wins by a mile. Finally, we explore counterfactual redemption architectures to show how redemption affected monetary performance in periods of value collapse.

JEL-codes: E42 E51 G12 N11 N21 (search for similar items in EconPapers)
Date: 2017-09
New Economics Papers: this item is included in nep-his, nep-hpe, nep-mac, nep-mon and nep-pay
Note: DAE
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Published as Cory Cutsail and Farley Grubb, “Colonial North Carolina’s Paper Money Regime, 1712-1774: Value Decomposition and Performance,” Journal of Post-Keynesian Economics, 44, no. 3 (2021), pp, 463-491.

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Working Paper: The Paper Money of Colonial North Carolina, 1712-1774 (2017)
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