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Miscounting Money of Colonial America

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  • Ronald W. Michener
  • Robert E. Wright
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    Abstract

    Farley Grubb has developed an ambitious new money-stock time series for colonial Pennsylvania that uses the ingenious method of examining newspaper advertisements promising rewards (e.g., for help in catching runaway slaves) to estimate monies in circulation (Grubb 2004). Grubb asserts that promises of reward payments in “pounds†refer to bills of credit. We contest his interpretation, arguing that “pounds†denotes merely a unit of account. Similarly, ads promising “dollars†cannot be taken to refer to silver coins. Grubb mistakes the mention of a unit of account for the specification of a medium of exchange. We also show that Grubb’s methods are riddled with misinterpretations and inconsistencies, some of which arise from rather serious errors in basic scholarship. For example, Grubb denies that bills of credit readily passed current across the Middle Colonies, although it is a well-established fact. To concede it, however, would upset both his colony-level money supply estimates and his argument that the Constitutional ban on state-issued paper money had nothing to do with seigniorage. Grubb’s time series differs significantly from spot estimates of the money supply arrived at using methods that Grubb himself champions elsewhere, as well as estimates based on archival data.

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    Bibliographic Info

    Article provided by Econ Journal Watch in its journal Econ Journal Watch.

    Volume (Year): 3 (2006)
    Issue (Month): 1 (January)
    Pages: 4-44

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    Handle: RePEc:ejw:journl:v:3:y:2006:i:1:p:4-44

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    Related research

    Keywords: money supply; specie; paper money; bills of credit; Pennsylvania; Maryland; Delaware; New Jersey; New York; colonial American history;

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    Cited by:
    1. Farley Grubb, 2012. "Chronic Specie Scarcity and Efficient Barter: The Problem of Maintaining an Outside Money Supply in British Colonial America ," Working Papers 12-08, University of Delaware, Department of Economics.

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