From Blood to Profit: Making Money in the Practice and Imagery of Early America

Money, wrote Pennsylvanian Francis Rawle in 1725, is "the vital spirit and blood of the body politick."¹ Is not money, another pamphleteer contended, "the blood of life, which circulates from member to member, throughout the whole body of all living creatures?"² It followed that the tokens acting as the medium of value could be anything, "whether it be pewter, silver, spelter, brass or paper, matters not which."³ Americans in fact used provincial tax credit notes for money, along with other specie substitutes: "bills of credit" were issued to public creditors and could be employed by the holder or others to pay public obligations like taxes. They were "in value equal" to coin and, like coin, could be passed from hand to hand in the meantime. It was their circulating property—"the ready currency of the thing"—that controlled.⁴

Even as they emphasized money's fluidity within a discrete community, Americans were on the edge of a new approach to value. In the midst of a revolution won by American paper money, Robert Morris proposed a radically different way of creating currency, one based on profit, not blood. Morris described a combination of gold and credit, each building on the other. Hard money would provide the necessary anchor of value. Public and private loans would in turn extend value, currently dormant, available to those who needed it while enriching those who lent it. Freed from the anxiety over the security of their treasure, individuals would unlock "the secret hoards" of silver and gold that they held.⁵ Specie would be both more available, as gold and silver provided a currency, and less necessary, as participants used credit wisely and well. Both metal money and the credit that multiplied it, in other words, would become available insofar as individuals followed their immediate interest to make more of it.

When early Americans invoked blood and profit, they were trading more than images alone. Those metaphors captured a major difference in the way that participants paid for the money they held. As a medium of exchange, a store of value, and a unit of account, money costs money to construct and maintain in any period.⁶ But the money that Americans used before and after the constitutional moment was financed by the public in very different ways. Inhabitants in colonial and revolutionary America, long short of the silver and gold coins minted by imperial powers, improvised a paper money based on a common contribution, the tax obligation all owed. By contrast, citizens in the new nation relied on silver and gold minted at government cost, a medium they considered natural. They then engineered the expansion of that medium through a banking system that multiplied it by lending out at a profit banknotes based on a fractional reserve.

This essay sketches the ways that eighteenth-century Americans paid for the money they made, contrasting a monetary system that operated by eliciting contributions from individuals to the government with a system that employed private self-interest to regulate the money supply. Along the way, the essay samples how those promoting each system articulated their practices. Their words, like the images of blood and profit, suggest that Americans had transformed their political economy at a level as basic as its medium.

First, the new practice and its conceptualization redefined the early American political community: colonials had emphasized its "corporal" nature, its distinctive identity as a communal enterprise. After reorganizing their money, Americans embraced their national stature, one that related members as citizens rather than progenitors of a more intimate project. That change was fed by a second: in the earlier system, voters, taxpayers, and legislators self-evidently "made" money by controlling its creation as part of the fiscal process of taxing and spending. That role was displaced by new incentive structures identified with private investment decisions in the later approach. Finally, the dynamics of money fueled different economic policies. Paper money politics had oriented participants toward market access; the commitment to hard money adopted afterward advantaged a concern with market stability as a...