Following up on “Owen Nie: Playing Card Currency in French Canada,” Owen Nie offers here another guest post on monetary history. This one is drawn from Richard Lester’s “Currency Issues to Overcome Depressions in Pennsylvania, 1723 and 1729.” Monetary Experiments: Early American and Recent Scandinavian. New York: Augustus M. Kelley, 1970. 56-111.
This chapter provides a detailed account of the two attempts, in 1723 and in 1729, to combat depression by monetary expansion in Pennsylvania prior to the Revolutionary War. Before this monetary experiment, the scarcity of metallic money, a result of the lack of mints in North America and the prohibition by the British government of exporting gold and silver to the colonies, was widely considered a cause for business depression in Pennsylvania as well as in other North American colonies in various historical accounts. In answer to the scarcity of a medium of exchange, the Pennsylvania Assembly passed an act in 1723 to issue 15,000 pounds of paper money as a remedy. This soon brought about a remarkable recovery in business conditions and trade activities (mostly British imports into Pennsylvania) without engendering inflation and runaway speculation. By 1729 the necessity for additional monetary expansion was becoming apparent and hence a bill to issue an additional 30,000 pounds was passed and a new round of revival of business soon ensued. The two monetary expansions enabled Pennsylvania to enjoy more favorable price levels and exchange rates in the following years. Pennsylvania’s success and prosperity was such that the colonists protested vehemently when the British Board of Trade prohibited the American colony from issuing paper money in 1764. There seem to be general agreement that these currency expansions, with combating depression as their sole objective, had been a remarkable success.