Faith and Freedom

Not Worth a Continental

[Previously unpublished online; Faith and Freedom 1, no. 3 (February 1950).]

When the war of the American Colonies against the British Crown broke out in 1775, the money supply of the Colonies consisted of about ten million dollars in gold and silver coins — “specie.” The taxation was difficult for the newly-formed Continental Congress and its credit was shaky. The new government turned eagerly to the printing press to finance its military expenditures, and issued two million dollars of paper to be redeemable, dollar for dollar, in specie. In need of money quickly at the start of the emergency, Congress intended to print only this initial amount. The idea was to collect taxes and redeem the credit money between 1779 and 1782.

But a clamor arose for more and more issues of paper money. The public’s confidence in the currency remained strong, and the government had apparently financed its expenditures with no visibly harmful effects. The public seemed to enjoy the bonanza of new money.

As a result, the Continental Congress stepped up the paper money issues. The result was a steady depreciation of the paper dollar, the “continental.” Prices rose rapidly, and continentals fell in value, as compared to the specie dollar.

The Congress issued six million dollars of continentals in 1775, and the issues increased each year. One hundred and forty millions were issued in 1779. As prices rose, the government found that it needed more and more dollars to finance its expenditures. More money was printed. This added supply of dollars led to further depreciation in the infamous spiral of inflation. At the outset, the continental had circulated at par with a dollar of specie. By 1780, over one hundred continental dollars were required to exchange for one specie dollar; Congress had printed continentals until they were worth almost nothing.

The Continental Congress and the state governments tried every coercive means available to prevent the persistent trend of rising prices. Stringent price-control laws were passed; other laws compelled creditors and merchants to accept continentals on par with specie. In 1775, the Continental Congress resolved: “That if any person shall hereafter be so lost to all virtue and regard for his country as to refuse [to accept the Continentals] ... such person shall be deemed an enemy of his country.” But to no avail.

For the troubles, the Congress officially blamed the “monopolistic merchants,” “inflamed with the lust for gain.” The people were disposed to agree.

Hazardous Exchange

General Putnam decreed that every one refusing to accept continentals at par would have his goods seized and be imprisoned. The Council of Safety of Pennsylvania, functioning as an executive and judicial body throughout the Revolution, was particularly zealous in trying to outlaw inflation. The Council decreed that any violator of these control laws was a dangerous member of society; that the penalty for first offense would be the seizure of the goods and a heavy fine, and for the second offense would be exile from the state. Yet, this too proved ineffectual in stopping the depreciation and price rise.

Price control, particularly in Pennsylvania and New England, led to acute shortages and widespread violations. Self-appointed committees of citizens in New England looted stores at will, selling the goods from the shelves at fixed prices. All the while, owners were accused of conspiracy to raise prices and charged with being secret Tories, speculators, and enemies of the country.

Informed that a cargo of salt had been “monopolized” and that its price had been increased as a result, the Council of Safety of Pennsylvania seized the salt and ordered it sold at a low price. From then until the end of the war, salt was almost unobtainable in Pennsylvania, because merchants were unwilling to ship salt to Pennsylvania where salt cargoes were in danger of arbitrary seizure. The Council also authorized the Justices of the Peace to seize property if they were informed that any person held more goods than he needed for his personal use.

The Rhode Island State government decreed that if some people were in want and others were deemed to have too much wealth, the Justices of the Peace might order the constables to break open the houses of the “haves” and supply the “have nots” with the goods at lawful prices. (The state was to pocket the proceeds.)

The price control laws could not stem the tide of rising prices. Statesman John Adams reasoned that the laws actually raised prices, since they created a scarcity of goods.

But this experience, instead of leading to repeal of the laws or the ending of the currency inflation, led to demands for even more stringent enforcement. Connecticut decreed a rationing scheme prohibiting any person from buying more than a stipulated amount of food and other necessities. Purchases could not be made without a license from the state. These licenses were to be granted only to “men of good character and friends of independence.” All violators of the control laws were considered to be of bad character, and deprived of their licenses.

An influential citizen of Pennsylvania recommended that a “party of soldiers seize any person accused of depreciating or refusing the Congress currency, .. Let them, immediately after seizing such persons, take an inventory of the person’s estate ... and let the person so seized be immediately sent to state prison, there to remain without bail till trial for treason, and let the punishment be equal to the crime.” Such proposals evidence the extent of the reign of terror throughout Revolutionary America.

Despite such tyrannical measures adopted during a war for liberty, prices sky-rocketed and the continental became worthless.

Engines of Oppression

Peletiah Webster, a discerning contemporary of the Revolution, summed up the effects of the American experiment with the continental. “Paper money,” said Webster, “polluted the equity of our laws, turned them into engines of oppression, corrupted the justice of our public administration, destroyed the fortunes of thousands who had confidence in it, enervated the trade, husbandry, and manufactures of our country, and went far to destroy the morality of our people.”

In 1780, Congress repudiated its solemn dollar-for-dollar promises and announced specie redemption at a rate of one specie dollar for forty dollars of continentals. The result of this ignominious end of the continental was a surprisingly quick return to a specie circulation, and a rapid fall of prices to a stable level.

Here Lies

A courageous American contemporary wrote a fitting epitaph to the continentals:

It becomes rulers to learn from the catastrophe of our Continental Currency, that money is upon a footing with commerce or religion. They all refuse to be the subject of law. It becomes the rulers of free men to learn further that money is property, and that the least attempt to lessen its value in our pockets and chests is taxing us without our consent. It is the highest act of tyranny. We have tried every art and device to keep up the credit of paper money except one — we have never yet tried the effects of being honest.


Murray N. Rothbard, “Not Worth a Continental,” Faith and Freedom 1, no. 3 (February 1950): 9–10.

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