The Founding of the American Republic 12; C. Carson

- COU NT DESTUTT TRACY MEN AT EASE and in comfortable circumstances must find it difficult to comprehend the sufferings of the Patriot armies during the War for Independence. These armies had to· suffer, in addition to those tribulations incident to war, from lack of clothing, blankets, suffi cient food, drink, transport, and many other of the necessities of life. Yet it is the judgment of the generality of historians that most of this deprivation was unneces sary and unwarranted. There was food aplenty in the states, and there was at least the potentiality of enough clothing. It may be added that there were enough men of the right age to' have consti tuted overwhelming forces against Dr. Carson shortly will join the faculty of Hillsdale College in Michigan as Chairman of the Department of History. He is a noted lecturer and author, his latest book entitled Throttling the Railroads. 419 420 THE FREEMAN July those the British actually sent to America, and there was a poten tiality for manufacturing adequate munitions for the war. (For ex ample: "In 1775 the Union pro duced 30,000 tons of crude iron one seventh of the world's total output.") 1 It is quite probable that the war could have been brought to a successful conclusion long be fore it was had these resources been devoted to the effort in suf ficient amounts. They were not.

The main reason why men and materials were not brought to focus adequately on the war effort was the method used to finance the war. The successful prosecution of a war - any war - requires that a sufficient amount of energy and resources be diverted from other uses in order to accomplish the end of winning the war. To ac quire the -necessary goods and services, government enters the market. (This is not to deny that a government may acquire services, and sometimes goods, voluntarily from those who are actuated by principle or other motives. To the extent that this is the case, neither force nor the market may have come into play in the acquisition. But neither the War for Independence, nor any other known to this writer, were fought primarily with such re sources.) Government may enter the marketplace in such a way as to take advantage of the services offered in a market, or it may in tervene in the market in such ways as to make that instrument virtu ally useless for its purposes. The market is a place where voluntary exchanges are made, where goods and services are sold to the high est bidder. When government en ters the marketplace it becomes a bidder among bidders for the sup ply of goods and services available.

What the government acquires there, others are denied, or vice versa. Government Takes Goods Before government can become a bidder in the market it must ac quire goods and services, or their equivalent, for making exchanges. This necessity poses what is the most enduring problem of govern ment: the government, as govern ment, is not a producer of goods nor provider of services, and has none of these to offer in exchange. Before it can operate in the mar ket, then, government must ac quire these, or their equivalent, from those who own or produce them. In effect, government must take goods and services from those who provide and produce them. For this to be done equitably and justly, experience indicates that this appropriation should be spread over and apportioned among the producing citizenry.

1972 THE SCOURGE OF INFLATION 421 Money has afforded a means for apportioning taxes and a way for government to enter the market place for trading without interfer ing destructively with the func tion of the market. In. short, money can enable a government to use the marketplace asa major source of goods and services which it needs, particularly in war. For this to happen, however, govern ment must respect the nature and character of money. Money is a medium of exchange, i.e., it is that through which are made ex changes of goods for goods, serv ices for services, or any other combinations of these. What a given unit of money will command in goods and services in the mar ketplace is a ratio between the quantity of money and quantity of ,buods and services, as modified by the strength of the desires of all who have any of these in their possession or wish to acquire them. To put the matter con cretely, if a bushel of wheat brings one dollar this means that the quantity of money is such, the quantity of wheat is such, the de sire for wheat is such, and the desire for money is such, that one dollar is the price that will effect an exchange. If the quantity of money .is increased, and all else remains the same, the .price of wheat may be expected to rise in proportion to the increase of money. A money tax enables the government to reduce the supply of money available to private bid ders, and thus to become an effec tive bidder for its needs in the market.

Monetary Manipulation It is theoretically clear, then, what the consequences would be if the government attempted to get its needs by simply increasing the money supply. It would reduce the quantity of goods and services a given unit of money would com mand. But why could the govern ment not do this as a means of taxation, thus avoiding the oner ous necessity of a direct appro priation of money? Of course, it could do this. Thomas Paine de clared that this is just what the Congress did during the War for Independence. It would have cost ten or twelve million pounds ster ling, he estimated, to have financed the war by ordinary taxation.; "and as while this money was is suing, and likewise depreciating down to nothing, there were none, or few valuable taxes paid; con sequently the event to the public was the same, whether they sunk ten or twelve millions of expended money, by depreciation, or paid ten or twelve millions by taxation; ... And therefore ... [the] debt, has now no existence; it having been paid, by everybody consent422 THE FREEMAN July ing, to reduce as his own expense, from the value of the bills con tinually passing among themselves, a sum, equal to nearly what the expense of the war was for five years."2 Thomas Paine was, as usual, an adept pleader of special causes, but he was no scholar, and certainly not an economic histor ian. His statement that everybody consented is simply not true, and he ignores both the ruinous train of consequences following upon the inflation and the question of whether or not it was effective in its object of providing for the armed forces.

It is not necessary, however, to explore the theoretical impact of the inflation further; it unfolds in the story of the financing of the war. The 'Congress and the states did attempt to finance the war effort primarily by the issu ance of paper money. Congress issued what is known as Conti nental currency. The notes did not bear interest, as such currency sometimes did, but they were sup posed to be redeemed by the states at a later date. Just how much was issued from the first issue in 1775 until an entirely new currency was issued in 1780 is in doubt. The estimates range from $191,552, 3803 to $242,100,176 4 • It is com monly believed today to have been over $200 million 5 • Even if an ex act figure could be agreed upon, however, we would still not know how much of the currency was in circulation, for it was extensively counterfeited. There were domes tic counterfeiters; and the British government, as a matter of policy, attempted to destroy the currency by introducing counterfeit money.() All accounts agree, however, that Congress issued more and more of the currency over the years through 1779. A recent es timate of the sums issued goes as follows :7 1775 $ 6,000,000 1776 19,000,000 1777 13,000,000 1778 63,500,300 1779 90,052,380 This process of issuing more and more set in early. The initial issue was to have been for $2 mil lion, but before it had been accom plished Congress authorized an other $1 million. R Before the end of the year $3 million more was issued.!) This despite the fact that Congress had intended only one issue at the beginning. And, there were those who attempted to pre vent the escalation. Benjamin Franklin said : "After the first emission I proposed that we sholl1d stop, strike no more, but borrow on interest those we had issued. This was not then ap proved of, and more bills were issued."lo The process of issuing more and 1972 THE SCOURGE OF INFLATION 423 more of the currency and raising the amounts of single issues is easily explained. Once the money had been issued, it fell into pri vate hands in return for goods and services. The government no longer had _. access to the currency.

Congress then made further issues in order to have money to spend. The more it issued, the less the money was worth; larger and larger issues were made in the attempt to get the results that could be obtained by smaller is sues earlier. Reliance on paper money has - for these reasons, and more complex ones where there are combinations of taxa tion and fiat money financing - a pyramiding effect. Money vs. Currency Why did the government not recover the money in some way? In general, this could have been done eithe-r by taxation or by bor rowing, or some"combination of these methods. The government did not retrieve the money for about the same reason it was is sued in the first place, namely, to avoid taxes and because the credit of the Congress was not good. Before examining into the ques tion of taxation and borrowing, however, one justification offered for issuing paper money needs to be explored.

Curtis Nettels, a present-day historian, describes the j ustifica tion for a Continental currency this way: "The Union as a whole suffered from an acute shortage of hard money; all the coin in circulation in 1775 would not have paid a year's expenses of the Con tinental Army." Some men at the time of the revolution held that a certain indeterminate amount of money is necessary to facilitate commerce. They thought that money could be issued up to the point of meeting the need with out depreciating, but that once the point of sufficiency had been passed, the currency would begin to decline in value. It may not be an adequate reply to Professor Nettels to say that Congress could have issued $10 trillion in paper money and it would not have been enough to pay "a year's expenses of the Continental Ar my," but the statement is correct. The only way I can make sense of the earlier idea is to suppose they believed that price is something inhering in the item offered for sale rather than being determined by supply and demand. Some clar ity may be brought to the subject by distinguishing between money and currency. Money may be any thing which serves as a medium through which some transactions are made. Currency is that which serves generally in an area to effect transactions. All currency 424 THE FREEMAN July is money, but not all money is cur rency. Money becomes currency in one of two ways: either because it is wanted by traders and is in sufficient supply to effect trans actions, or because it has been made legal tender by some gov ernment. The only purpose for making a money legal tender is to force it into currency when it would not be the currency on its own merits. The very fact that Congress relied upon tender laws and used even harsher measures to give their bills currency should dispose of the argument that they were issued because of a shortage of hard money.

The real reason for the Conti nental currency issues, then, was that Congress and the states were attempting to finance the war without levying taxes directly. They are entitled to some sympa thy for the difficult situation in which they were trying to func tion, but no amount of sympathy alters the consequences of actions. Congress had no authority to levy taxes. With equal validity, it can be said that Congress had no au thority to issue money. The truth of the matter is that Congress had as little and as much power as it could manage to exercise during the period under consid eration. It had no constitution, hence, no constitutional limits on what it could do. Its members, however, were delegates from the states. It may well be that had Congress attempted to levy taxes it would have been repudiated by the states or by the people. At any rate, Congress did not even at tempt to levy taxes. It was not that the members could see no need for taxes. Congress declared, on many occasions, that the states should levy taxes. Elaborate sche dules were devised for apportion ing the costs of the war among the states. Solemn proclamations were issued urging the states to tax. For example, in 1777 Con gress admonished the states to "raise by taxation in the course of the ensuing year, and remit to the treasury such sums of money as they think will be most proper in the present situation of the in habitants. . .."11 States Under Political Pressure All this was of little· avail. The states were not much more in clined to levy taxes to pay for the war than Congress was. One historian sums the matter up in this way: "Before 1780, most of the states shrank from collecting taxes for any. purpose. Massachu setts did not vote any levy in 1776, and in 1778 resorted to a lottery to raise $2,000,000. Virginia wait eduntil 1781 before making a se rious attempt to obtain revenue from taxes. The performances of 1972 THE SCOURGE OF INFLATION 425 the other states were not much better."12 There are several rea sons for this state of affairs. For one, ~he hold of the state govern ments over the citizenry was some times precarious, particularly in states where Loyalists were numer ous. Extensive taxation might have jeopardized the tenuous at tachment which many had for their state governments. For an other, the objection to taxation without representation by the British must have turned into a more general objection to tax ation. This appears from the difficulty of collecting the taxes that were levied. "In Pennsyl vania, for example, from 1778 to 1781, less than half the taxes as sessedwere collected; it was not uncommon for citizens to slam the door in the tax-collector's face and get away with it."l;~ But, above all, legislators were curry ing favor with their constituents by avoiding taxati~n. Sumner said that the "governors of the States could not urge taxation and zeal upon the legislatures without a painful and unpopular contest.

The members of a legislature who laid taxes must expect to return to their constituents to face grum bling and popular dissatisfac tion." H Instead of taxing to retire the Continental currency, the states issued large amounts of paper money themselves. "The emission 'of all the states exceeded $200, 000,000. Virginia led the way, fol lowed by North Carolina; then came South Carolina. Georgia, Delaware, and New Jersey exer cised the most restraint."1;' A minor stream that added to this flood of paper. currency is sued by Congress and the states was provided by domestic loans. Loan office certificates and certif icates of indebtedness were issued to the extent of $20 million. III The loan office certificates circulated generally, one writer notes, "ef fecting essentially the same con sequences as would have attended the issue of an equal quantity of paper money."17 Paper Declared Legal Tender Successive interventions were made in the market, interventions which followed logically from the use of fiat money to finance the war. The first of these interven tions was to make the paper legal tender so that it would circulate as money. The specific actions to do this were by the states. For ex ample, the Council of Safety of Pennsylvania declared in 1776 that anyone who refused to accept the Continental currency would for feit whatever he refused to sell and be subject to a penalty besides - all this for a first offense -, and be banished from the state for a 426 THE FREEMAN July second offense.l 8 In the same year, Rhode Island made both state and Continental notes legal tender. In addition to providing penalties for not accepting this paper, that state prohibited the buying of specie with paper or differentiating in prices of goods when offered gold or silver instead of paper .19 Sometimes even more drastic measures were authorized to make people take the paper money.

When he was in command of forces at Philadelphia, General Putnam made this announcement: "In future, should any of the in habitants be so lost to public vir tue and the welfare of their coun try, as to presume to refuse the currency of the American states in payment for any commodities they may have for sale, the goods shall be forfeited, and the person or persons so refusing, committed to close confinement."2o In a similar fashion, George Washington was authorized to take goods from those who refused the Continental currency and to arrest and con fine them. 21 Rising Prices - and Controls With such Draconian measures to support it, the Continental paper money did circulate. But the more of it that was issued, the more it depreciated. The most no ticeable effect of this to the public was a general rise in prices. (Prices of particular goods and services rise and fall as demand and supply fluctuate even if the amount of money in circulation re mains stable. And, given blockades and the kinds of demands incident to war, some prices would have risen inevitably during these years., However, the price in creases were not only general but some of them are rises in Con tinental currency in relation to what they could be bought for in specie, which indicates that it was the currency which occasioned some of the increases.) Some of the state governments intervened in the market further by attempt ing· to fix prices. As frequently happens, the legislators sought to control the effect - the rise in prices - rather than the cause the increase in the money supply.

Congress recommended tha t re gional conventions be held to set prices for particular areas. The New England and Middle states held such contentions, but the Southern states south of Mary land steered clear of price con trols. After a convention had agreed upon the general features of prices, it was up to the indi vidual states to enforce the tariffs. The following is a description of penalties adopted by Rhode Island in 1777: The penalty of demanding more than the tariff price was set at the 1972 THE SCOURGE OF INFLATION 427 value of the article,- half to the State, and half to the informer. Any one who refused for his commodities the tariff price, and afterward sold them for any other goods, was to forfeit the value thereof, half to the State, and half to the informer. If complaint was made that articles necessary for the army or navy were withheld by monopolizers,· the State officers and Judges or any two J us tices of the Peace might issue a war rant to impress and seize the same, breaking open buildings. the goods were to be appraised by two indif ferent men at prices not to exceed those of the tariff. Anybody who contracted to receive for labour or goods more than the tariff rates was to be counted an enemy of the coun try, and fined twenty shillings for every article sold of the price of twenty shillings or under, and a sum equal to the value of the article, if it was worth more than that. 22 The price controls, where they were at all effective, resulted in shortages. John Eliot wrote from Boston in June of 1777 : "We are all starving here, since this pia guy addition to the regulating bill.

People will not bring in. provision, and we cannot procure the com mon necessaries of life. What we shall do I know not."23 What they did, of course, is what people ever do: evade the regulations, barter, blackmarket, produce a money that will purchase goods, and find a va riety of means to perpetuate the market, however inadequate they are compared to the opportunities in a free market. Army Requisitions By 1778, the armed forces were finding it increasingly difficult to acquire goods with paper money. "Though paper money was taken, with more or less reluctance, in return for most things, some serv ices were rendered only upon promises of receiving specie."24 George Washington wrote in 1779 that "a wagon load of money will scarcely purchase a wagon load of provisions."25 The country was in the grip of a runaway inflation. Every man of intelligence knew that the root cause was the in crease of the money supply (much as this is known in our day),· yet there was not the will to deal ef fectively with it.

To get supplies and transport, the army had to resort to its equivalent of barter, I.e., impress ment and requisition from the surrounding populace. There had been some impressment, particu larly of transport, from the be ginning of the war; but by the time of the Yorktown campaign in 1781 this method seems to have been relied upon almost exclu sively.26 There was more and more of this done before 1781, how ever. By the latter part of 1779, supplies in general were being 428 THE FREEMAN July requisitioned. On December 11, 1779, Congress "voted requisitions on the States for specific supplies of flour and Indian corn. Decem ber 14, they established a system of requisitions and contributions of this kind, Maryland alone vot ing no. February 25, 1780, an elaborate apportionment of req uisitions for such supplies was made. . . . Each State was called upon for the staples which it pro duced."27 The most drastic impact of in flation is that it tends to disin tegrate and divide society, to turn employee against employer, the governed against the governors, the creditor against the debtor, the prod ucer against the consumer, the populace against speculators, and so forth. Inflation tends· to re verse the rules of economic be havior: where once it was prudent to save money, it becomes expedi ent to spend it; where once it was good business to supply consumers with durable goods, it becomes profitable to delay the sale; where once creditors were those who were better off, it now becomes good business to borrow money and repay it with a currency that is less valuable than when the loan was made. The solid citizen who is cautious and prudent can do well over the years by hard work, care ful investments, and saving, when the money supply is stable.

His prosperity may well be de scribed as virtue rewarded. Infla tion sets the stage for wealth to be gained in a different fashion: by borrowing, by holding on to goods for the inevitable higher prices, and by attending closely to the swift changes in the value of the money. Such means of gaining riches are widely resented, par ticularly during a war. Unhappy Consequences of Rampant Inflation Men contemporary with events frequently described the conse quences of the inflation as well as could be done. Josiah Quincy wrote these words to General Washington: I am firmly of the opInIon, and think it entirely defensible, that there never was a paper pound, a paper dollar, or a paper promise of any kind, that ever yet obtained a general currency, but by force or fraud, generally by both. That the army has been grossly cheated; that creditors have been infamously de frauded; that the widows and father less have been oppressively wronged and beggared; that the gray hairs of the aged and the innocent, for want of their just dues have gone down with sorrow to their graves, in consequence of our disgraceful de preciated paper currency .... 28 By 1778, John Adams could say that "every man who had money 1972 THE SCOURGE OF INFLATION 429 due to him at the commencement of this war, has been already taxed three-fourth parts of that money.

. . . And every man who owed money at the beginning of the war, has put three-fourth parts of it in his pockets as clear gain. The war, therefore, is immod erately gainful to some, and ruin ous to others."2D A historian who lived through that period has written: The aged who had retired from the scenes of active business, to en joy the fruits of their industry, found their substance melting away to a mere pittance, insufficient for their support. The widow who lived comfortably on the bequests of a de ceased husband, experienced a frus tration of all his well-meant tender ness. The laws of the country inter posed, and compelled her to receive a shilling, where a pound was her due. The blooming virgin who had grown up with an unquestionable title to a liberal patrimony, was legally strip ped of every thing but her personal charms and virtues. The hapless or phan, instead of receiving from the hands of an executor, a competency to set out in business, was obliged to give a final discharge on the pay ment of 6d. in the pound. In many instances, the earnings of a long life of care and diligence were, in the space of a few years, reduced to a trifling sum. . . .

That the helpless part of the com munitywere legislatively deprived of their property, was among the lesser evils which resulted from the legal tender of the depreciated bills of credit. The iniquity of the laws estranged the minds of many of the citizens from the habits and love of justice. The nature of obligations was so far changed, that he was reckoned the· honest man, who from principle delayed to pay his debts. The mounds which government had erected, to secure the observance of honesty in the commercial intercourse of man with man, were broken down. Truth, honor, and justice were swept away by the overflowing deluge of legal iniquity .... 30 Decay of Public Virtue George Washington wrote: "Speculation, peculation, engross ing, forestalling, with all concomi tants, afford too many melancholy proofs of the decay of public vir tue .... " And a writer to a New Jersey paper assessed the blame for this: "I do not say that the abundance of money is the only ca use of the decay of virtue or in crease of vice, but I say it is a very principal cause, it operates more this way than any other, yea, than all other causes put to gether ."31 The inflation contributed much to the ~ss of confidence in the Congress, the state governments, and the very cause they were com mitted to at the time. The idea was advanced, when the first issues of paper money were made, that 430 THE FREEMAN July its becoming currency would help to tie people to the cause of inde pendence. Since the fate of the money - its eventual redemption - would depend upon the success of the revolt, those who came into possession of it would be commit ted to victory. So it might have been, I suppose, if the Congress had been content with one or two issues, if the states had refrained from issues, and if the governments had then turned to direct taxation. But the effect of issuing more and more was not only to re duce the value of the money but also to undermine confidence in the governments which issued it.

In fact, people began to suspect rather quickly that Congress would eventually repudiate its paper. To counter this fear, time and time again Congress reiter ated the determination to redeem The Function of Price .THE PRICE SYSTEM is the control board, the regulator, the ther mostat - as it has been variously put - by which economic conduct is determined in a private-enterprise economy. The guidance provided by prices has two main aspects. In the first place, by setting up judgments as to the significance of each factor the price system calls forth and allocates the available pro ductive resources. Under the influence of price each factor flows into the channel which - according to the market's evaluation promises the greatest result. In the second place, through the same market appraisal that directs the utilization of productive factors, the price mechanism awards shares in output to those who furnish personal services of various kinds, to those who - by accumulating and investing - provide the tools, and to all others who make con tributions in the opinion of the market. Moreover, prices chart the course of the consumer as he utilizes the general claim to output which has been awarded to him.

From Shirtsleeve Economics: A Commonsense Survey by William A. Paton 1972 THE SCOURGE OF INFLATION 431 it and denounced those who said that it would be otherwise. In 1778, Congress adopted the follow ing resolution: "Whereas a re port hath circulated in' divers parts of America, that Congress would not redeem the bills of credit issued by them to defray the expenses of the war, but would suffer them to sink in the hands of the holder, whereby the value ,of the said bills hath, in the opin ion of many of the good people of these States, depreciated ; and lest the silence of Congress might give 'strength to the said report; resolved that the said' report is false and derogatory to the honor of Congress."~::! One writer notes that "as paper money depreciated more ,and more, the pledges of Congress in respect to its redemption were more frequent and intense in form of expression."33 They Tried to Stop Congress resolved in September 1779 to issue paper money only to the total of $200 million. "Upon this mountain of paper," a mod ern historian has written, "Con gress resolved to make its final stand. . . . But . . . the defiant proclamation of September 1779 proved the signal for another sharp selling wave in Continental money. By January 1780, the army was paying for supplies twice what it had paid in September 1779; and by March 1780, prices had risen four times above the level of September 1779."34 At that point, Congress began the outright repudiation of its paper, though the culmination was to come later. In March of 1780, Congress devalued the currency by proclaiming that it should now trade at forty to one of gold or silver. To finance this exchange, new paper money was to be issued to be redeemed by the states by taxation. An elaborate plan was contrived for the retiring of the old currency and replacing it with the new. The plan did not work.

There was no reason why it should. If the new money was more valuable than the old, it would not circulate, according to Gresham's Law, assuming the old money was still legal tender. In fact, the new money quickly fell to the same value as the 01d,35 and the whole became virtually worth less by 1781. In March of 1781, Congress abandoned the accept ance of its own paper money as legal tender. It was now to be ac cepted only on a sliding scale that was supposed to represent its de preciation. Thereafter, it depreci ated so rapidly that it shortly ceased to circulate at al1.3G Specie came out of hiding and replaced paper money as the currency of the land. All these untoward events might 432 THE FREEMAN July be accepted as the cost of the war, but only if the currency had enabled the Congress to bring the resources of the country to bear on the war effort. That, however, was emphatically not the case. On the contrary, the paper money plus the absence of significant tax ation tended to disperse the re sources of the country and the energies of the people. Congress and the states were continually short of money, whereas the pop ulace had an abundance. In con sequence, the production, trans port, trading, and provision of goods and services were concen trated on the civilian population, and the armed forces received short shrift.

Suppliers Refuse to Cooperate In the later stages of the war, as already noted, the army had to abandon the use of the paper mon ey substantially and turn to direct methods to get goods and services. This was not only an inconvenient and inefficient method of gather ing material but also made people resent the army. For example, here are reports of the situation in Vir ginia in 1781 - at a time when a major British army was concen trated there and Washington was about to win his greatest victory. An agent sent to impress trans port reported: "I have been much perplexed, for after having impressed them, the owners of some, by themselves or others, have taken, in the nighttime, a wheel or something to render them use less; and I don't recollect any law to punish them, if it could be proved." The Quartermaster wrote to the war office: "Let me entreat, sir, that something may be done to draw the people with their means of transportation into the service willingly. I find them so opposed to every measure that is oppressive that it is almost im possible to effect anything of con sequence that way. Many of the' teamsters upon the late occasion have deserted with their wagons after throwing their loads out at improper places .... "37 Nor were taxes in kind a way to get goods where they were wanted.

General Washington wrote to the President of Pennsylvania in 1782: "A great proportion of the specific articles have been wasted after the people have furnished them, and the transportation alone of what has reached the army has in numberless instances cost more than the value of the articles themselves."38 It is not difficult to explain why this was so. The com modities had been taken without reference to a particular need, had been stored where no army might appear, except by accident, and were often spoiled when they were wanted. By contrast with this poor 1972 THE SCOURGE OF INFLATION 433 form of barter, the market is an efficient and felicitous device when acceptable money is in cir culation; the market tends to make the goods available where and when th~y are wanted, and .moneyis flexible: it can call forth a variety of goods. The American cause was not lost as a result of the inflation.

It was won despite the inflation. But victory was almost certainly delayed for several years; much suffering resulted; and the peopIe's confidence had been sorely tried. Indeed, we have not finished yet in this work with the conse quences of the inflation, for they followed into the Confederation period. But the lessons of the ex perience were not lost on the leaders of that generation. In time, they were used to try to prevent a recurrence of the mis takes. Unfortunately, we cannot report that these lessons are still remembered to the seventh gen eration. t) • FOOTNOTES • 1 Curtis Nettels, The Emergence of a National Economy (New York: Holt, Ririehart and Winston, 1962), p. 42. :2 Quoted in Albert S. Bolles, The Fi nancial History of the United States, I (New York: D. Appleton, 1896, 4th ed.), p.208. :~ See N ettels, Ope cit., p. 24. -Ie See William G. Sumner, The Finan cier and the Finances of the American Revolution, I (New York: Dodd, Mead, and Co., 1891), p. 98. Sumner indicates that one estimate runs well over $300 millions, but that it includes reissues.

5 See John R. Alden, A History of the American Revolution (New York: Alfred A. Knopf, 1969), p. 255. G See Bolles, Ope cit., pp. 150-57. 7 N ettels, Ope cit., p. 24. 8 Bolles, Ope cit., p. 39. !) Ibid., p. 43. 10 Ibid., p. 39. 11 Ibid., p. 193. 12 Nettels, Ope cit., p. 24. 13 John C. Miller, Triumph of Freedom (Boston: Litt1e~ Brown and Co., 1948), p.458. H Sumner, Ope cit., p. 274. Hi Nettles, Ope cit., p. 25. 16 Samuel E. Morison, The Oxford His tory of the United States (New York: Oxford University Press, 1965), p. 230. 17 Bolles, Ope cit., p. 260. 18 Ibid., pp. 121-22. II) Sumner, Ope cit., pp. 46-47. ~o Bolles, Ope cit., p. 119. :n I bid., p. 121. ~2 Sumner, op. cit., pp. 56-57. ~:{ Ibid., p. 61. ~-Ie Bolles, Ope cit., p. 68. ~G Ibid., p. 132. ~() See Sumner, op. cit., pp. 142-52. ~7 Ibid., p. 239. ~8 Bolles, Ope cit., p. 139. :29 Ibid., p. 128. 30 Ibid., pp. 176-78. :n Ibid., p. 216.

32 Ibid., p. 206. 33 Ibid. 34 Miller, Ope cit., p. 463. 35 See Sumner, Ope cit., p. 86. 36 Ibid., pp. 94-95. 37 Ibid., pp. 152-53. 38 Ibid., p. 243. Next: The American Triumph., The PineIree Shilling KEVIN CULLINANE BOSTON was a hustling frontier trading center in 1652 when a young goldsmith, at the urging of hard-pressed merchants and arti sans, began minting coins of value they could trust. Only 32 years had passed since the landing of the Mayflower, but already the industrious frontiersmen suffered from having debased European coinage traded off to them before they could learn of the latest cur rency inflations being worked by the rulers of Europe. Dutch ducators, guilders, rix dollars and ryals; Portuguese j 0 annes, moidores, reis, and crusa does; French livres; and Spanish doubloons, rials, dollars and pis toles circulated side by side with English coins in the colony whose merchants were eager to trade with all comers.