From pounds and pence to dollars and cents
Reader David Watson poses a terrific question:
“The US government established the U.S. dollar as the unit of currency in 1792,” he writes. “Nevertheless, I’ve seen marriage bonds where the bond is expressed in ‘pounds’ well into the first several decades of the 19th Century. Do you know why the bonds were expressed in a currency that was no longer standard? If it was necessary to pay the bond, how would the transaction have been handled in terms of currency?”
The Legal Genealogist has seen that same issue, and not just in marriage bonds. I’ve seen court records well into the 19th century that use pounds interchangeably with dollars as well.
So why didn’t the whole country switch over to dollars when Congress voted for it?
The answer is easy — because the pound as a measure of currency was still standard well into the first several decades of the 19th Century. And it’s very complex: the reason why it remained a measure of currency is because the whole currency situation was, well, to put it mildly, a mess.
A bit of history here.
The dollar as a currency in America didn’t begin in 1792. The term was widely used for the Spanish dollar, one of the most commonly used means of exchange in colonial times even in British North America.1 Then it was used to express the value of currency issued by the Continental Congress during and after the Revolutionary War.2
1775 Three Dollar Continental Currency.
Colonial Currency Project, Department of Special Collections, University of Notre Dame Libraries.
The Constitution of the United States, signed by the delegates to the Constitutional Convention in Philadelphia in 1787, included a reference to an immigration tax or duty “not exceeding ten dollars for each person.”3
But if you asked the average merchant in those early years what a dollar was worth, measured in local terms, you’d get a lot of different answers: “The units of account in colonial times were pounds, shillings, and pence (1£ = 20s., 1s. = 12d.). These pounds, shillings, and pence, however, were local units, such as New York money, Pennsylvania money, Massachusetts money, or South Carolina money and should not be confused with sterling. To do so is comparable to treating modern Canadian dollars and American dollars as interchangeable simply because they are both called “dollars.” All the local currencies were less valuable than sterling. A Spanish piece of eight, for instance, was worth 4 s. 6 d. sterling at the British mint. The same piece of eight, on the eve of the Revolution, would have been treated as 6 s. in New England, as 8 s. in New York, as 7 s. 6 d. in Philadelphia, and as 32 s. 6 d. in Charleston.”4
And bringing those values into some sort of order was part of what was intended when, in 1792, Congress passed the Coinage Act. The new Mint was to produce coins representing ten dollars (the Eagle), five dollars (the Half Eagle), $2.50 (the Quarter Eagle), the dollar, half dollar, quarter dollar, disme (no, that’s not a misspelling — that’s the way it’s spelled in the statute), half disme and cent. And the value of that first official dollar of the United States: “each to be of the value of a Spanish milled dollar as the same is now current.”5
Except of course that in the first years of the new Republic, there just weren’t enough coins, or enough faith in those coins, or enough banks to use those coins, to convince people to replace what they were used to. And what they were used to — yep, it was a mess.
As the University of Virginia’s Professor Ron Michener explained:
Terms such as money and currency did not mean precisely the same thing in colonial times that they do today. In colonial times, “money” and “currency” were practically synonymous and signified whatever was conventionally used as a medium of exchange. … “The Word, Currency,” Hugh Vance wrote in 1740, “is in common Use in the Plantations . . . and signifies Silver passing current either by Weight or Tale. The same Name is also applicable as well to Tobacco in Virginia, Sugars in the West Indies &c. Every thing at the Market-Rate may be called a Currency; more especially that most general Commodity, for which Contracts are usually made. And according to that Rule, Paper-Currency must signify certain Pieces of Paper, passing current in the Market as Money.” Failure to appreciate that the unit of account and medium of exchange were quite distinct in colonial times, and that a familiar term like “currency” had a subtly different meaning, can lead unsuspecting historians astray. They often assume that a phrase such as “£100 New York money” or “£100 New York currency” necessarily refers to £100 of the bills of credit issued by New York. In fact, it simply means £100 of whatever was accepted as money in New York, according to the valuations prevailing in New York. … At various times and places in the colonies, such items as tobacco, rice, sugar, beaver skins, wampum, and country pay all served as money (along with) bills of exchange … (and) small denomination IOUs, called “notes of hand”…6
And if that’s not bad enough, remember that the United States didn’t have anything remotely resembling a national banking system that could push the general economy into the new currency system. There was one singular Bank of the United States, created in 1791, which ceased operations in 1811 when its charter expired. It wasn’t until 1816 that a second Bank of the United States was chartered, for a 20-year period.7 A whole raft of local and state banks operated instead, often on their own terms.8
And if that’s not bad enough, the values set on those new American dollars and other coins didn’t quite match up to the values of foreign currencies. You could buy an Eagle for one price in the United States and sell it for more in Europe. And though one Administration after another told Congress it needed to do something, there were other little matters like the War of 1812 and the like to attend to, and nothing got done for decades. As a result, foreign coins continued to circulate, people traded IOUs, records were recorded in currencies folks knew and understood, and life went on. It wasn’t until 1857 that foreign coins were officially barred as legal tender in the United States, and even that law allowed Spanish and Mexican dollars to be accepted at post offices and land offices of the United States.9
The bottom line is that people used what they were used to. They measured the value of things in terms they understood. And until there was enough general acceptance of the dollar as defined by Congress and as represented by coin and paper, and until there were enough coins and paper in circulation, that tended not to be in Congressionally-defined dollars.
Aren’t you glad David asked?
Cite/link to this post: Judy G. Russell, “That long switchover,” The Legal Genealogist (https://www.legalgenealogist.com/blog : posted 2 June 2021).
SOURCES
- See Wikipedia (https://www.wikipedia.com), “History of the United States dollar,” rev. 25 May 2021. ↩
- See Wikipedia (https://www.wikipedia.com), “Early American currency,” rev. 4 Jan 2021. ↩
- Constitution of the United States, Article I, section 9; transcription, Archives.gov (https://www.archives.gov : accessed 2 June 2021). ↩
- Ron Michener, “Money in the American Colonies,” EH.Net Encyclopedia of Economic and Business History, via Wayback Machine (https://web.archive.org/ : accessed 2 June 2021). ↩
- “An Act establishing a Mint, and regulating the Coins of the United States,” 1 Stat. 246 (2 Apr 1792). ↩
- Michener, “Money in the American Colonies.” ↩
- See “Bank of the United States,” Encyclopaedia Britannica (https://www.britannica.com/ : accessed 2 June 2021). ↩
- See “Disorders of the Currency,” Chapter 30 in John Bach McMaster, A History of the People of the United States, 6 vols. (New York: 1896), 4: 282 et seq.; digital images, HathiTrust Digital Library (https://www.hathitrust.org/ : accessed 2 June 2021). ↩
- “An Act relating to Foreign Coins and to the Coinage of Cents at the Mint of the United States,” 11 Stat. 163 (21 Feb 1857). And see “The History of U.S. Circulating Coins,” U.S. Mint (https://www.usmint.gov/ : accessed 2 June 2021). ↩
As another example of “people used what they were used to” this country is still using inches, feet, miles and lbs. long after the rest of the world has gone metric. You would think that given we have a metric currency, people would see the merit of being metric in other things as well.
You are so right! And the system metric is so easy to use and understand. Luckily the Military, engineers and other professions already use it. Hope it will go from there. We could start by doing like in Canada, where they post distances in both miles and km.
I am just turning 70! I lived in France when the New Francs replace the Old Francs (it took 100 old one to make a new Franc). Even though the calculations were really easy, it took forever for people to talk in New Francs. When the Euro came in 2000, this was an all different kettle of fish. I was living in Italy at the time and Italians were besides themselves as they believed that all the prices had suddenly increased, since the everyday person would not be able to make the complicated conversion calculations. My parents in France complained of the same. Conversion is really not easy and takes time!
Excellent synopsis on something that I have always found mysterious and confusing! This makes sense; I can imagine my ancestors using whatever units were convenient for their local purpose or trade.
I have featured a recommendation of this article at our blog, mcgenealogists.org. Thanks!
Yes, it takes time. The UK changed from pounds, shillings and pence (20s to £1, 12 pence to 1 shilling) to decimal currency (100 new pence to £1) in 1971.
Roll forward to 1998 / 99, when the euro was beginning to make its appearance as a currency for large financial transactions in international trades.
Banking systems had to be updated to allow transactions to be recorded in pounds and paid in euros, and vice versa. Which was when it was discovered that one bank had a front end system that took in sterling transactions in pounds and (new) pence and wrote the debits or credits in the bank’s main accounts in pounds, shillings and pence.
I thought I remembered there being some of the new coins in use when I was there in ’68. Along with the old ones. Half crowns – yikes.
Minting coins and printing notes was expensive and took time. The early years of any country around that time involved the acceptance of coins (particularly as notes were often scarce) from a variety of sources until local official sources had built up sufficient stocks. And as you say, custom was important. Money only has value if people accept those metallic or paper tokens. And if they accept them long after the state would like them gone, then they still have value.
Fascinating! Thank you.
What you call an “immigration tax” is better described as a slavery tax. “Migration or Importation of such Persons as any of the States now existing shall think proper to admit” is an oblique reference to slavery. The ability of Congress to levy such a tax was in exchange for prohibiting a ban on the importation of slaves before 1808, to satisfy the Southern states. Congress later passed such a ban beginning on 1 January 1808.
Australia did not change to a Dollar until 1966. However, in the early period of the settlement they used Spanish dollars with a hole punched in them and the associated penny dump that was punched out as currency. Most currencies were pegged to the gold standard until Bretton Woods after the second world war.