The Blood That Nourishes the Body Politic: The Origins of Paper Money in Early America

In 1690 the government of Massachusetts created the first paper money in the Western world to pay for the unsuccessful invasion of Canada at the opening of King William’s War. So-called bills of public credit were based on radical ideas about money and value that had emerged in England during the Commonwealth and spread to the colonies shortly thereafter, where they were widely implemented in the first half of the eighteenth century. Far from being a neutral medium, paper money was inseparable from colonial politics; its value came from public faith in provincial legislatures to accept the money as payment for taxes. Moreover, it expressed the legislative prerogative to make war, define markets, and, with the establishment of the first public land banks in the 1710s, stimulate commerce. This essay explores the origins of paper money in early America and argues that it became the basis of a colonial political economic order founded on the legislative authority to make such money as well as a notion of value that tied local monetary worth to a colony’s collective political and economic future.