The Case of Colonial New Jersey’s Paper Money: The Redemption Theory's Resurrection or Its Death Rattle
61 Pages Posted: 25 Apr 2017 Last revised: 27 Jan 2018
Date Written: January 12, 2018
Farley Grubb has recently published a series of papers addressing the monetary and financial history of colonial New Jersey. These papers purport that the best way to explain the value of colonial currencies in general, and New Jersey’s colonial currency in particular, is to consider them discount bonds. Grubb’s work revises and restates the redemption theory championed by other economists before him. This paper argues that there is no historical, theoretical, or empirical basis for the claim and that Grubb’s work highlights the inescapable shortcomings of redemption theories.
Keywords: colonial, New Jersey, currency, bills of credit, redemption theory, backing theory, money, monetary history
JEL Classification: N11, N21, N41, E59
Suggested Citation: Suggested Citation