210 Annals of the Carnegie Museum. 



five-penny bit or the fip in Pennsylvania, and four-pence in New Eng- 

 land (and Virginia): McMaster's History, Vol. I., p. 189. 



Now, as to the depreciation of this early currency : 



It will be remembered, as already stated, that prior to the adoption 

 of the Constitution of the United States in 17S7, no paper money or 

 currency was issued either by the United Colonies, or by any of the 

 colonies separately, payable in their own coin, for they had none. 

 True, the confederacy, and as well some of the colonies or separate 

 states, perhaps, sometimes issued notes or bills of credit payable in 

 " dollars " or parts thereof, but the coin meant was the Spanish coin. 

 Usually, however, notes and bonds were issued payable in pounds, 

 shillings, and pence, but, there being no pounds, shillings, and pence 

 existing in coin, when debts were to be paid in coin the pounds, etc., 

 were turned into dollars and their subdivisions, and all accounts were 

 kept in pounds, shillings, and pence. Hence, the constant issue by 

 the United Colonies during the War of the Revolution of paper money 

 irredeemable according to its terms, resulted in an immense deprecia- 

 tion, which was one of the greatest sources of evil to the young nation. 



The extent and the causes of this depreciation of the currency dur- 

 ing the Revolution is best shown by the paper of Albert Gallatin on 

 "The Currency and Banking System of the United States," first pub- 

 lished in 1831, and contained in "The Writings of Albert Gallatin," 

 edited by Henry Adams, Vol. III., p. 260, as follows: 



" The paper money issued by Congress during the war of the Amer- 

 ican independence experienced no sensible depreciation before the 

 year 1776, and so long as the amount did not exceed nine millions of 

 dollars. A paper currency equal in value to that sum in gold or silver 

 could therefore be sustained so long as confidence was preserved. The 

 issues were gradually increased during the ensuing years, and in April, 

 1778, amounted to thirty millions. A depreciation was the natural 

 consequence ; but had the value of the paper depended solely on its 

 amount, the whole quantity in circulation would have still been equal 

 in value to nine millions, and the depreciation should not have been 

 more than 3^ to i ; instead of which it was then at the rate of six 

 dollars in paper for one silver dollar, and the whole amount of the 

 paper in circulation was worth only five millions in silver. It is ob- 

 vious that the difference was due to lessened confidence. The capture 

 of Burgoyne's army was followed by the alliance with France, and her 

 becoming a party to the war against England. The result of the war 



