Andrew David Edwards, in Money and the Making of the American Revolution, offers what his publisher describes as “a new interpretation of the American Revolution as a transformative monetary contest.” While many books and articles have examined the monetary arrangements of the American colonies and the financing of the Revolution, Edwards shows a solid command of much of this scholarship as well as the primary sources. While at times his writing can be eloquent, the book is necessarily ponderous and dense. Unfortunately, Edwards’ understanding of the nature of money and finance can be superficial at best.
Building upon the earlier contention of historian Joseph Albert Ernst that British restrictions on colonial paper money were a major grievance leading to the Revolution, Edwards goes further. He contends that the colonies and the mother country had fundamentally distinct monetary systems, and the resulting war was primarily a conflict over money rather than taxes. Moreover, because Americans had to ultimately abandon their reliance on the Continental currency and instead turn to foreign loans in specie (gold and silver coins) and create the Bank of North America, they won their independence only at the cost of losing control over their money. Edwards then finds conflict over the appropriate monetary system still lingering domestically into the Confederation period until its final settlement embodied in the Constitution.
Overlaying this narrative is Edwards’ open hostility to capitalism. In recounting the history, Edwards suggests he is unveiling a self-interested monetary motive for going to war, undermining Bernard Bailyn’s ideological approach to the Revolution’s initiation. He does not seem to consider the possibility that both motivations could have been at play.
In the book’s introduction, entitled “The Burning Question,” Edwards makes much of the fact that colonial paper money — called “bills of credit” — was issued temporarily, usually in anticipation of future taxes that would retire them. This, he claims, makes the colonial monetary system entirely different from that of Britain. Edwards is correct that, during the colonial period, there were many other ways of making exchanges: direct credit, as well as barter and simple commodity exchanges, such as wampum, rice, or tobacco. But bills of credit still could and often did serve all those functions, and as Edwards mentions, colonial governments issued bills of credit to make temporary loans, earning interest against real estate. Only bills that could easily be re-spent on goods and services, like dollars today, would have been accepted.
That bills of credit were retired and burned did not make them unique, as Edwards contends. Colonial governments did often issue bills of credit to finance transitory wartime expenditures, but sometimes, future taxes were insufficient to retire and burn all bills in a particular issuance. And even when taxes were sufficient, new bills were issued. Pennsylvania, which consistently maintained the purchasing power of its bills of credit, always made overlapping issues, keeping some bills continually in circulation from 1725 until the Revolution’s outbreak. Retiring the bills of credit, then, was not a feature limiting their use but analogous to the US Treasury retiring worn dollar bills and replacing them with new ones.
Edwards also seems not fully aware of specie’s role as the unit of account in colonial America. True, gold and silver coins were not widely used for domestic exchanges within the colonies. Britain’s mercantilist Navigation Acts had discouraged the importation of English coins into the colonies. What coins the colonists did obtain from trade with the West Indies and southern Europe were often exported to purchase British goods. Nonetheless, nearly all colonial bills of credit were denominated in pounds, shillings, and pence. Although the market value of the bills often declined below their printed specie value while in circulation, the bills tended to be anchored to that value upon retirement. This does make bills of credit very different from US dollars and other fiat currencies today, in which there is no distinction between the unit of account and the medium of exchange; they are identical. But this also makes the colonial monetary system more similar to that existing in Britain at the time, in which the market value of many different coins in circulation could and often did depreciate with respect to their face value, including through physical clipping and defacing.
Of course, just as today a US dollar is different from a Canadian dollar, a Massachusetts pound was different from a British pound, and both were different from a Virginia pound. The colonies overvalued coins relative to their metallic value in Britain in a feeble effort to encourage their importation. But bills of credit were never intended to entirely displace specie. They were designed as convenient substitutes for specie. Admittedly, bills of credit issued in the Massachusetts Bay Colony in 1690 were the first paper money in the West, while in Britain, taxes were paid primarily with coins. But another similarity between Britain and the colonies is that merchants on both sides of the Atlantic extensively relied on bills of exchange. Not to be confused with bills of credit, bills of exchange were genuine credit instruments, with the holder of the bill owing a debt to the issuer at some future date. They could be traded before their maturity and pass through several hands. Sometimes their final settlement was specified as colonial bills of credit or even commodities such as tobacco, but nearly all the bills of exchange used in foreign trade were sterling silver bills, in which the issuer could demand repayment in specie.
The British government did impose restrictions on colonial bills of credit in a series of Currency Acts. Here again, Edwards omits or downplays a critical detail. The first Currency Act was passed in 1751 and applied only to the New England colonies. It did not prohibit bills of credit, something Edwards points out. But he leaves out the most important restriction stated explicitly in the 1751 act: “no Paper Currency, or Bills of Credit, of any Kind or Denomination … shall be a legal Tender in Payment of any private Bargains, Contracts, Debts, Dues or Demands whatsoever.” When the colonies did make their bills of credit legal tender, it allowed debtors to legally pay off debts even with bills that had depreciated. This benefitted debtors at the expense of creditors. Edwards does briefly allude to legal tender subsequently, off and on, and mentions it with respect to the Currency Act of 1764, extending to all the colonies similar restrictions to those in the 1751 act. But rather than showing any sympathy for creditors, Edwards instead exclusively treats these acts as onerous limitations on the colonies.
When the Continental Congress first authorized the issue of the Continental currency in June 1775, it adopted as the bill’s unit of account the Spanish silver dollar, the most common coin available within the colonies. Congress voted to retire the Continentals through taxation from November 1779 through November 1782, at which point Congress expected the war to be over. But since Congress had no authority to tax, the tax withdrawals were allotted among the united colonies based on their population. Edwards covers this well, with one caveat. Each bill had printed on it: “This bill entitles the bearer to receive . . . Spanish milled dollars, or the value thereof in gold or silver.” Congress also provided that if a state did not collect enough bills through taxation or other means to meet its requisition quota, it could substitute specie for its quota, which would then be available for private citizens to redeem bills at the Continental Treasury beginning in 1779.
Edwards labels these last two features as “a contradiction” causing “confusion,” because they allegedly constituted a major and unfortunate, albeit perhaps necessary, deviation from how previously colonial bills of credit had worked.
But Edwards’ supposition is not strictly true. On occasion, some colonies did redeem their bills with specie, notably Massachusetts when it revalued its currency in 1750 after King George’s War. And the bills New York issued in 1774 promised on their face to be “payable on Demand” for specie. Most other colonial bills explicitly stated the bills should “pass current.” Edwards is again exaggerating the uniqueness of colonial paper money, having failed to recognize the extent to which the pound, however defined, provided a genuine unit of account within the colonies. His confusion is clearest when he complains that Congress, after issuing the Continental currency, “rather than issuing traditional legal tender laws, which made money, by law, pass at face value in payment of a public or private debt, Congress decreed that its ‘dollars’ should pass as if they were gold and silver, leaving the actual tender laws to the states.” This is a distinction without much of a difference. Trying to make the Continentals equivalent to coins is exactly what the colonial legal tender laws were designed to do for bills of credit.
Despite Edwards’ weak grasp of monetary theory, much of the book is an excellent and informative narrative, displaying deep research and original insights. Any work that covers such a long span of time faces an inevitable trade-off between offering a broad summary of events or detailed specifics. Money and the Making of the American Revolution is heavily weighted toward the latter. As Edwards explains in the introduction, “I decided, wherever possible, to let the analysis emerge from the story itself, as told by the historical actors” so that the book “tells its story through the lives of individuals rather than through statistics or broad social surveys.” While this requires a certain selectivity, among the score of those whose lives are woven throughout the narrative are Thomas Paine, John Dickinson, Benjamin Franklin, Pelatiah Webster, and Robert Morris.
Edwards’ account also goes into extensive detail about what was going on in Britain during this period, unveiling a lot about the politics, motives, and players responsible for the Parliamentary acts that brought on the Revolution. His chapter on the Stamp Act is one of the book’s best, persuasively arguing that the severity of the colonists’ reaction to the Act owed to its provision that taxes had to be paid exclusively with scarce specie. He concludes that, without that requirement, colonial resistance would have been more muted. The Stamp Act in turn helped stiffen opposition to the Townshend duties, passed after the Stamp Act was repealed, despite the fact that these taxes fell mainly on merchants who had easier access to specie. And when dealing with the Tea Act, Edwards interweaves a long account of British East India Company’s depredations that were ultimately responsible for that act. When the book gets to the beginning of the war, Edwards gives an exceedingly complete account of the bills of credit initially issued by the individual colonies before Congress authorized the Continental currency.
Given Edwards’ fixation on the fact that Congress initially offered to redeem the Continentals with silver dollars, it is surprising that he never brings up the important detail that Congress in March 1780 had instituted a currency reform that officially devalued the Continental at 40 to 1 for a specie dollar. By ignoring this, Edwards makes Congress’s steadily increasing requisitions on the states for Continental bills appear to be a greater burden than they were. The Continental’s depreciation and devaluation actually made it easier for the states to start meeting those requisitions. Edwards’ observation that the war’s burden upon the population was steadily increasing is correct, but not primarily from heavy state taxation, as he suggests. Other factors were involved, including the Continental’s depreciation. Direct state taxation would not significantly increase until after the war was over, as the states tried to pay down their own wartime borrowing.
Edwards is not a fan of Robert Morris, who was appointed by Congress to the new post of Superintendent of Finance in February 1781. He credits Morris with bringing about a “sea change” in American finance, and to an extent that is correct. After all, the collapse of the Continental currency had made it necessary to find other ways to pay for the war. Although the French had been assisting since 1776 with modest subsidies and then a loan, only after France and the United States began negotiating a treaty of alliance, signed in 1778, did the French loans become more substantial. Edwards says little about their financial contribution, only detailing the later negotiations. Edwards gives greater attention to Morris’s creation of the Bank of North America. Yet here again he displays another misunderstanding of finance, asserting that “the bank could have used its specie … to multiply the means of payment by issuing more notes than the gold and silver it had in its vault, but it did not.” In fact, rarely if ever have banks held 100 percent specie reserves. The Bank of North America certainly never did, even during its initial capitalization. In fact, the bank’s specie reserves were critically low at its opening in January 1782 and during the recession of 1784-1785.
In summary, Edwards’ thesis that the United States lost a war over money with the British hinges on misconceptions about how different their monetary systems were. But this does not mean that Money and the Making of the American Revolution is not worth reading. Scholars will still find much that is interesting and informative.
