A Common Currency: Early U.S. Monetary Policy and the Transition to the Dollar

Peter L. Rousseau

NBER Working Paper No. 10702
Issued in August 2004
NBER Program(s):Development of the American Economy, International Finance and Macroeconomics, Monetary Economics

The transition of the U.S. money supply from the mixture of paper bills of credit, certificates, and foreign coins that circulated at various exchange rates with the British pound sterling during the colonial period to the unified dollar standard of the early national period was rapid and had far-reaching consequences. This paper documents the transition and highlights the importance of this standardization in bringing order to the nation's finances and in facilitating the accumulation and intermediation of capital. It describes how the struggle of the colonies to maintain viable substitutes for hard money set the stage for the financial leaders of the Federalist period, led by Alexander Hamilton, to settle upon the dollar, attach it to a convertible metallic base, and create a national Bank that issued notes denominated in the new monetary unit. It also presents recently-constructed estimates of the U.S. money stock for 1790-1820 and relates them to measures of the nation's early modernization.

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Document Object Identifier (DOI): 10.3386/w10702

Published: Rousseau, Peter L., 2006. "A common currency: early US monetary policy and the transition to the dollar," Financial History Review, Cambridge University Press, vol. 13(01), pages 97-122, April. citation courtesy of

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