The Continental Dollar: What Happened to It after 1779?
Congress financed the American Revolution by issuing paper Continental Dollars. The story of the Continental Dollar is familiar to all -- a lot were issued and hyper-inflation ensued. Emissions were permanently discontinued in 1779. Thereafter, they became worthless and were forgotten. They had no impact on subsequent public finance. The veracity of the last part of this story is challenged here. Evidence is presented to establish that the disposition of the Continental Dollar remained an open question well into the 1790s. Evidence is also presented to establish the exact time path of the retirement of Continental Dollars between 1779 and 1790.
A preliminary version was presented at SUNY-Binghamton and at the 2008 American Economic Association meeting in New Orleans. The author thanks the participants at these presentations and Christopher Hanes and Peter Rousseau for helpful comments. He also thanks Kelly Lynn Perkins, Nathan Richwine, and Zachary Rose for research assistance and Tracy McQueen for editorial assistance. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
“State Redemption of the Continental Dollar, 1779-90,” William and Mary Quarterly, 3d ser., vol. 69, no. 1 (Jan. 2012), pp. 147-180.