In 1790, a U.S. paper dollar was widely held in disrepute (something shoddy was not `worth a Continental'). By 1879, a U.S. paper dollar had become 'as good as gold.' These outcomes emerged from how the U.S. federal government financed three wars: the American Revolution, the War of 1812, and...

In a recent NBER paper, Cutsail and Grubb argue that North Carolina's colonial bills of credit were valued like discount bonds, with a current market value largely determined by the discounted value of the bills when paid into the treasury in taxes or other public payments. Grubb has previously...

During the colonial era, the French colonial government in Canada experimented with paper money printed on the back of playing cards. The first experiment lasted from 1685 to 1719. In the first years, there was little inflation in spite of a rapidly expanding stock of playing card money. It is...

We show that decentralized privately created money with unstable values can hinder the traded, more transaction-friction sensitive, sector of the economy. We do so in the context of the NationalBanking Act of 1864 in the United States that created a new federally-regulated, fully-backed currency...

I study the link between real activity and deflation, taking into account measurement problems in 19th century CPI data. Replications based on modern data show that measurement problems spuriously increase the volatility of inflation as well as the number of deflationary episodes, and they lower...

Measurement error in historical data distorts descriptive analyses based on binary classifications. Modern replications of deficiencies in retrospective CPI estimates for the 19th century show that measurement issues cause misclassification of inflationary and deflationary episodes. We therefore...

Farley Grubb has recently published a series of papers addressing the monetary and financial history of colonial New Jersey. These papers purport that the best way to explain the value of colonial currencies in general, and New Jersey’s colonial currency in particular, is to consider them...

The return of inflation has revived some of the policy discussions that typically accompany inflationary episodes. Most of these discussions ignore the more fundamental question of why we operate in a world of unbacked, or fiat, money? This article, after providing a basic introductory model of...

New France, like most European colonies in the New World, suffered from a persistent shortage of metal coins. As Quebec could only legally import from France, their standards of living were constrained by their ability to export a few primary products (mostly fur, cod, timber and wheat)....