Anne Mayhew writes in response to Mary Schweitzer, 
 
"(1)  Your suggestion that Pennsylvania took the landbank route to issuing  
paper currency in part because "Pennsylvania policymakers were very  
familiar with the experiences of New England with regard to fiat moneys  
issued in wartime" bothers me.  I am no expert in this area but my  
understanding (based on such work as that of E. James Ferguson, "Currency  
Finance: An Interpretation of Colonia Monetary Practices," William and  
Mary Quarterly, X: 153-180) was that bills of credit issued in New  
England often depreciated against hard money or bills of exchange 
but that inflation (in any modern sense) was by no means a universal 
problem. 
I do not quarrel with Mary's description of the Pennsylvania policy as  
successful but suggest that New England's system may have worked better  
than she suggests." 
 
  I'm not sure how the recent dispute over the efficacy of bank credit has got 
us to the long-standing debate over colonial currency practices, but I am 
moved 
to offer, for what it's worth, an observation on this latter point: 
 
  Judging from the exchange rate data reported by Roger Weiss, "The Issue of 
Paper Money in the American Colonies, 1720-1774," JEH (Dec, 1970, Table 2, 
p. 
778) and by John Mccusker, Money and Exchange in Europe and America, 
1600-1775, 
inflation "in any modern sense" was seldom a problem anywhere, though it 
could 
reach annual rates of 11% or12% in Mass. and RI during the Seven Years War 
and 
apparently in South Carolina in the 1720s--rates that would command the 
attention even of jaded 20th-century eyes.  Nevertheless, there does seem 
to 
have been a regional difference in experience:  over the half-century from 
1720, Rhode Island currency depreciated against Sterling at an average 
annual 
rate of about 5% or 6%, about the same rate of depreciation achieved by 
Mass. 
currency over the 30 years from 1720.  But Pennsylvania and New York 
currencies 
managed almost no such depreciation whatever over that period.  For a 
fascinating, and I find persuasive, analysis of these differences, I 
recommend 
Ronald Michener, "Fixed Exchange Rates and the Quantity Theory in Colonial 
America," in the Carnegie-Rochester Conference Series on Public Policy, ed. 
by 
Karl Brunner and Allan Meltzer, vol. 27 (1987), 233-308.  As Michener (and 
Mayhew, too) points out, Smith had something useful to say on this matter 
as 
well.   
 
Glenn Hueckel 
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