In a previous article, I made the case that the policy of inflation—both from the Continental Congress and the states—not only led to detrimental consequences, but threatened the cause of independence itself. During the course of researching and writing, I discovered that I was barely scratching the surface of this topic—finding quote after quote, resource after resource. Therefore, this article is dedicated to a presentation of some of those quotes—especially from key participants and primary sources. Below are the quotes about inflation and its consequences during the American Revolution with sparing commentary only to provide context when necessary.
George Washington
But if the men were to be had, a question arises, whether they could be subsisted. The difficulty and expense would be excessive, and it is much to be doubted, whether our money, though aided by every exertion of government, would be able to bring out the resources of the country to answer so immense a demand. (Washington to the Committee of Congress, Philadelphia, January 15, 1779, emphasis added)
The great impediment to all vigorous measures, is the state of our currency. What prospects there are of relieving it, what is to be expected from the measures taken to that effect, the committee to whom the subject is familiar, and by whom it is best understood, will judge. But I fear their operations will be too slow to answer the purposes of the next campaign; and, if the vast expenditures necessary to the plan under consideration were to be made, I should have little hope of the success of any project for raising the value of the currency that can be adopted. (Washington, ibid., emphasis added)
In the last place, though first in importance, I shall ask; is there any thing doing, or that can be done, to restore the credit of our money? The depreciation of it has got to so alarming a point, that a wagon-load of money will scarcely purchase a wagon-load of provisions. (Washington to the President of the Congress, April 23, 1779, emphasis added)
John Adams
The rapid translation of property from hand to hand, the robbing of Peter to pay Paul, alarms and distresses me beyond measure. The man who lent another a hundred pounds in gold four years ago, and is paid now in paper, cannot purchase with it one quarter part in pork, beef, or land, of what he could when he lent the gold. This is fact, and facts are stubborn things in opposition to speculation…. Every man’s liberty and life are equally dear to him; every man, therefore, ought to be taxed equally for the defence of his life and liberty…. But instead of this every man who had money due to him at the commencement of this war, has been already taxed three fourth parts of that money, besides his tax on his poll and estate in proportion to other people. And every man who owed money at the beginning of the war, has put three fourth parts of it in his pocket as clear gain. The war, therefore, is immoderately gainful to some, and ruinous to others. This will never do. (John Adams to Elbridge Gerry, December 6, 1777, emphasis added)
Thomas Jefferson
Every one thro[ugh] whose hands a bill passed, lost on that bill what it lost in value, during the time it was in his hands. This was a real tax on him; and in this way the people of the united states [sic] actually contributed…millions of dollars during the war, and by a mode of taxation the most oppressive of all, because the most unequal of all. (Thomas Jefferson to DéMeunier, June 22, 1786, emphasis added)
Robert Morris
I must add to this gloomy picture one circumstance, more distressing than all the rest, because it threatens instant total ruin to the American cause, unless some radical cure is applied, and that speedily; I mean the depreciation of the continental currency. The enormous pay of our army, the immense expenses at which they are supplied with provisions, clothing, and other necessaries, and, in short, the extravagance that has prevailed in most departments of the public service, have called forth prodigious emissions of paper money, both continental and colonial….
All this amounts to real depreciation of the money. The war must be carried on at an expense proportional to this value, which must inevitably call for immense emissions, and, of course, still further depreciations must ensue. (Robert Morris to Silas Deane, December 21, 1776, as quoted in Bolles, Financial History of the United States (1884), pp. 119-120, emphasis added)
It is very mortifying to me when I am obliged to tell you disagreeable things; but I am compelled to inform congress that the continental currency keeps losing in credit. Many people refuse openly and avowedly to receive it; and several citizens that retired into the country must have starved if their own private credit had not procured them the common necessaries of life, when nothing could be got for your money. (Robert Morris to the president of the Congress, December 23, 1776)
John Jay
Jay wrote to Washington (April 26, 1779), “The state of our currency is really serious. When, or by what means the progress of its depreciation will be prevented is uncertain.” Jay also derided “the doctrine of political transubstantiation of paper into gold and silver.”
Joseph Reed—President of the Supreme Executive Council of Pennsylvania
The paper money has at length found its ne plus ultra [perfect or most extreme example of its kind; ultimate]; a total loss of confidence and credit, arising from a variety of causes, to some of which you cannot be a stranger, gave it an honorable, and, what you will, perhaps, think more extraordinary, a peaceful exit about three months ago. I believe the history of the world affords no instance of such a transition. At this time all dealings, and commerce of every kind are carried on in gold and silver; paper having, in its turn, become a merchandise, and kept for some time at an exchange of four or five for one. You will naturally ask how this has been effected, and where have you found a sufficient and ready substitute. I answer, it was effected really and truly by the people themselves [i.e., instead of blaming the government] gradually depreciating the money till the exchange rose to two hundred and fifty and three hundred for one…. At once, as if by that force which, in days of ignorance, would be ascribed to enchantment, all dealings in paper ceased. Necessity forced out the gold and silver — a fortunate trade opened at the same time to the Havana for flour, all restrictions were taken off, and the Mexican dollars flowed in by thousands; this supported the sinking spirits of those who would have been discontented and uneasy, and in a few days, specie became the universal medium, and so continues. (Joseph Reed to James Searle, spring 1781)
Rev. John Clark to Timothy Pickering
I suffer much from that quarter. It appears to me we are in a far more likely way of being starved; for I doubt whether Egypt, during the seven years of famine, was in greater distress than this unhappy town. We can procure nothing, Sir, for money; barter is the only method of commerce which now prevails…. It is my firm belief, that we are the wretchedest people under heaven. We have depraved every virtuous principle, and, was Britain to remove her troops and leave us to our independence, it seems to me we should be incapable of enjoying it. (Rev. John Clark to Timothy Pickering, October 21, 1779, emphasis add)
James Sullivan—Revolutionary-Era Lawyer and Judge in Massachusetts
In Massachusetts, James Sullivan wrote to Benjamin Lincoln (September 26, 1781) concerning the hopeful end of the war, which was to actuate soon at Yorktown. He provides a fun comment regarding preparation of fireworks before the battle in anticipation of victory, “The people here are preparing fireworks for a day of rejoicing on the surrender of Cornwallis [October 19, 1781]” (p.383). Regarding paper money, he wrote,
There is nothing new here. Paper money is not even mentioned in trade; but one is given for four, in order to pay the present state tax. There is, however, a scarcity of silver that reduces the price of goods very fast, and it seems the general opinion that there shall be no more paper currency. (p. 383)
Pelatiah Webster—Political Essays on the Nature and Operation of Money, Public Finances and Other Subjects (1791)
To end with some wisdom, Pelatiah Webster has been identified by Percy Greaves—a disciple of Mises—as “America’s first economist.” After the Continental Congress first issued Continental paper notes in 1775, Webster was ready to criticize that action and warn of the consequences by 1776. In An ESSAY Or Humble Attempt to Examine And State the TRUE INTEREST Of Pennsylvania With Respect To The Paper Currency (December 13, 1780), he wrote,
I PROPOSE, first, some remarks on the subject of paper money, and, secondly, some particular consideration of the Acts of our Assembly for issuing the new Continental bills, with some reasons why I think the true interest of Pennsylvania requires that those acts should be repealed, and the issuing of those bills should be stopped or suspended for the present… (italics in original)
Two things are essentially necessary to give paper bills a credit and currency equal to hard money. 1. Such certainty of honest and punctual redemption, as shall fully satisfy the mind of the possessor. 2. That the credit and demand for said bills should be so constantly kept up, from the time of their emission to that of their redemption, that the possessor may be able, at any time, to pass them at hard money value. (italics in original)
In describing the events of the war chronologically, in his Political Essays on the Nature and Operation of Money, Public Finances and Other Subjects (1791), Webster later identified the government interventions as the issue. He wrote,
The people of the states had been worried and fretted, disappointed and put out of humor by so many tender-acts, limitations of prices, and other compulsory methods to force value into paper money, and compel the circulation of it, and by so many vain funding schemes, declarations, and promises, all which issued from Congress, but died under the most zealous efforts to put them into operation and effect, that their patience was all exhausted. . . (italics in original)
