State 'Currencies' and the Transition to the U.S. Dollar: Clarifying Some Confusions
54 Pages Posted: 23 Jan 2004
Date Written: 2004
If they could be believed, Farley W. Grubb's recent papers on the early U.S. monetary system would be important contributions to scholarship and public policy. This paper shows, however, that Grubb's papers should not be believed. Grubb's key assumption, that the medium of exchange can be inferred from the unit of account, is erroneous, rendering his data analyses nugatory. State-issued bills of credit did not play the role Grubb attributes to them in the years after 1781, when most Americans had eschewed government paper money in favor of full bodied coins and convertible bank liabilities. Bankers did not foist the Constitutional clause banning state emissions onto an unsuspecting public.
Keywords: Monetary union, exchange rates, United States of America, Pennsylvania, history
JEL Classification: N110, N210, N410, E590
Suggested Citation: Suggested Citation
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By Farley Grubb