The proposal I have made for a shift to an electronic money standard. Leaving the paper standard is comparable in magnitude to the earlier departure from the gold standard. But over the centuries there have been many monetary systems. I think it is useful to realize that monetary systems come and go. So I was glad when Owen Nie, a PhD student at the University of Michigan, volunteered to conduct a summer research project looking into alternative historical monetary systems. Owen will report what he learned in a series of guest posts. This is the first. This is a distillation from a chapter “Playing Card Currency of French Canada” from Richard Lester’s book Monetary Experiments: Early American and Recent Scandinavian. (Also see the Wikipedia article on “Card money in New France.”) Here is Owen’s summary:
The North American colonies were a great laboratory for monetary economics. In 1685 the French Canadian authorities were forced by an emergency (the yearly allotment didn’t arrive in a timely way and left the troops and officials unpaid) to issue paper money made of ordinary playing card, made a legal tender and redeemable in cash or bills of exchange (later in silver coin in France, which is effectively a silver exchange standards) as the King’s vessel’s next arrival with the colonies’ yearly appropriation. The practice was repeated a number of times and considered a success in the early 18th century except for the period of Queen Anne’s War. The King, previously opposed to the monetary experiment, started issuing playing card money in 1730. However, the afterwards excessive supply of this currency, issued to defray mounting military expenditures, together with a relative scarcity of goods as manpower were directed towards wartime efforts and a deterioration of French finances caused inflation and delayed redemption at a large discount of face value by the time Canada was ceded to England in 1763. In its sixty-five years of existence, the system collapsed only twice, both because warfare money in excess of government funds destined for the colony.