History of Money, 1780 –– 1834


John Adams has a revelation

By this time the value of the continental currency had fallen 1,000 to 1 and it stopped being accepted for payment.

Later upon analysis John Adams expressed the situation of the paper money as follows:

"The amount of ordinary commerce, internal and external, of a country may be computed at a fixed sum. A certain sum of money is needed to circulate among the society in order to carry on their business. This precise sum is discoverable by calculation and reducible to certainty. You may emit paper or any other currency for this purpose until you reach this rule, and it will not depreciate. After you exceed this rule it will depreciate and no power or set of legislation hitherto invented can prevent it. In the case of paper, if you go on emitting forever, the whole mass will be worth no more than that was which emitted within the rule." — John Adams, from "The Continental Currency", The New York Herald newspaper, January 26, 1863

1787 — 1817

Payment in kind

There is a severe shortage of copper and silver coins in England. So much that firms cannot obtain enough currency to pay wages. This leads to the growth of payment in kind, use of foreign coins, and unofficial tokens. The tokens greatly expanded the amount of currency available.


Laws for the Bankers, it started in England

England passes the Bank Indemnity Act, which gives directors of the bank of England legal immunity for loans to the government. This allows the bank to loan much larger sums for the British war with France.


Guernsey prospers and proves that banks cause inflation

In 1816 its sea walls were crumbling, its roads were muddy and only 4 1/2 feet wide. Guernsey's debt was 19,000 pounds. The island's annual income was 3,000 pounds of which 2,400 had to be used to pay interest on its debt. Not surprisingly, people were leaving Guernsey and there was little employment. Then the government created and loaned new, interest-free state notes worth 6,000 pounds. Some 4,000 pounds were used to start the repairs of the sea walls. In 1820, another 4,500 pounds was issued, again interest-free. In 1821, another 10,000; 1824, 5,000; 1826, 20,000. By 1837, 50,000 pounds had been issued interest free for the primary use of projects like sea walls, roads, the marketplace, churches, and colleges. This sum more than doubled the island's money supply during this thirteen year period, but there was no inflation. In the year 1914, as the British restricted the expansion of their money supply due to World War I, the people of Guernsey commenced to issue another 142,000 pounds over the next four years and never looked back. By 1958, over 542,000 pounds had been issued, all without inflation. [ 1 ]


Forgers get a break

Britain changes the penalty for forging banknotes form death to exile to Australia.


Tally sticks burn down the Houses of Parliament

After the death of the last Exchequer Chamberland in 1826 the tally stick becomes redundant and are stored in the House of Commons. They are used as fuel for the heating stoves but they burn so fiercely that the fire spreads and destroys the Houses of Parliament. Maybe it was a sign?

[ 1 ] Ellen Brown, Web of Debt, March 2008, p100

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