Two comments on Mary Schweitzer's posting re Pennsylvania and Scotland:
(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.
2) Adam Smith wrote of the American colonial experience with paper money:
"The balance of produce and consumption may be constantly in favour of a
nation, though what is called the balance of trade be generally against
it. A nation may import to a greater value than it exports for half a
century, perhaps, together; the gold and silver which comes into it
during all this time may be all immediately sent out of it; its
circulating coin may gradually decay, different sorts of paper money
being substituted in its place, and even the debts too which it contracts
in the principal nations with whom it deals, may be gradually increasing;
and yet its real wealth, the exchangeable value of the annual produce of
its lands and labour, may, during the same period, have been increasing
in a much greater proportion. The state of our North American colonies,
and of the trade which they carried on with Great Britain, before the
commencement of the present disturbances, may serve as a proof that this
is by no means an impossible supposition." (This occurs at the end of
Book 4, Chapter 3, WEALTH of NATIONS.)
Anne Mayhew
1101 McClung Tower
University of Tennessee
Knoxville, TN 37996-0411
PH: 615-974-1689; FAX: 615-974-3915; E-MAIL: [log in to unmask]
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