Saturday, March 23, 2019

Jefferson's money

From The Colonial Roots of American Taxation, 1607-1700:
A few words on the means of payment are required to understand the difficulties of collecting taxes. Public accounts were kept in English sterling, in pounds (£), shillings (s.), and pence (d.). However, few sterling coins circulated in the colonies. The colonies lacked an indigenous supply of gold or silver from which to mint coins. They acquired coins largely through trading with Spanish and French colonies in the Americas...

Throughout the seventeenth century, the American colonies depended on imports for a wide range of consumer goods. The cost of imports invariably exceeded the value of colonial exports. As a result, much of the specie that found its way into the colonies was shipped to England and other European countries to settle the colonists’ bills...

The chronic shortage of specie required the colonists to improvise alternative means of payment. They resorted to barter, payment in commodities, and such paper instruments as private promissory notes and bills of exchange drawn on London merchants.

My exploration of the internet while writing the two previous posts brought me to several links on Thomas Jefferson. I've taken a few pieces from some of the Jefferson links, and assembled them into one tale. Out of respect for my sources, I didn't edit the text I'm quoting. So you'll see some repetition where different sources overlap.
Thomas Jefferson came of age in a confusion of currency. The gold and silver of many kingdoms filled the gap created by a chronic scarcity of British coins in the American colonies. [1]
After the American Revolution, the thirteen colonies were still trying to figure out a currency system. Up to that point, the colonies used Spanish, Portuguese, and English coins for financial transactions. A few of the colonies minted their own coins, but most weren’t officially recognized. All of these coin’s denominations were based on a silver dollar, in a monetary system from Spain, known as a real. But once the colonies got ahold of these coins, each colony assigned the coins a different value. This made trade between colonies incredibly difficult. [2]
The first time that Jefferson dealt with the colonies’ disorderly monetary system was in 1776. (Dumas Malone, Jefferson the Virginian, 1948, p. 416). He drafted a report for Congress on the value of various monetary values in the states. This was vital since each state could issue its own specie, and it was common practice to also use foreign coinage. [3]
Jefferson began advocating decimal reckoning as an orderly alternative to the currency chaos in 1776. [1]
Jefferson saw standard American monetary and measuring units as a unifying aspect for the new nation; a way of completely severing all ties to its English past... He wished to get rid of all state and foreign monies, not have a system which integrated them. He felt a common currency would bind the country together... [3]
Jefferson believed that a coin based on the Spanish Dollar (what we know of as “pieces of eight”) would fit the bill. It was convenient in size and weight to be used in everyday commerce. This coin was easily divided by tens, a ratio that almost everyone could deal with and was known. And, it was a coin that was very familiar. A major portion of American business had been using the Spanish Dollar for transactions for many years. [3]
In April of 1784, Jefferson put these recommendations down on paper in a document titled, “Notes of the Establishment of a Money Unit and a Coinage for the United States.” His suggestions were given to the government, which, after extensive discussion, decided to use Jefferson’s ideas. And his ideas are still used today. [2]
In 1786 (some sources state 1785), ten years after Jefferson first took up the issue, Congress established a new monetary system. [3]

Sources:
  1. Currency at monticello.org
  2. How Thomas Jefferson Changed U.S. Currency at libertycoinandcurrency.com
  3. Jefferson On Money at varsitytutors.com

Part 3 of 3
Link to Part 1
Link to Part 2

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