In response to Anne Mayhew's points about early America. The depreciation on the New England currencies was prettty substantial in the 1600s. Later, Massachusetts and Connecticut did okay, but Rhode Island went whacko, practicing what I jokingly call public finance by arbitrage by issuing lots of paper currency and taking advantage of the circulation throughout New England and the lag until the other colonies readjusted (don't ask me why they didn't take all RI currency at a discount to begin with; I haven't spent time analyzing this, I'm just going by the price movements and the political infighting up there). The supposed indebtedness of the colonies with regard to the Continent and Britain is grossly exagerated. The Chespeake colonists were in a lot of debt -- but that was a GOOD thing, not a BAD thing. That is, their contacts in Britain were carrying them because it was profitable -- if a person takes out a very very big mortage for a very very big house, we don't say that they must be in bad shape financially -- that could be a sign that their income/wealth position is very high. Right? And that was true through most of the colonial period for the Chesapeake. There were specific problems with debt collection toward the end of the colonial period, but that is a separate issue. The middle colonies did fine with their paper money emissions. Pennsylvania had less inflation that at any other period in its history. The point that is often missed is that the DOMESTIC economy was flourishing in this region during this period. In terms of a learning curve, what I found fascinating then, and still find fascinating, is the discussion in pamphlets and letters to the newspapers about how you decide how much is enough. So Adam Smith was right about the rise in value of the colonial wealth -- but wrong about colonial currency in general. Not the only one. (Oh -- the experience with the Continentals was very different -- there was about 4 years of hyperinflation followed by three years of hyperdeflation, and then it all settled back into the same arrangement as before.) -- Mary Schweitzer