Financial History 145 Spring 2023 - Page 19

in Dutch Brazil and French Canada and on a regular basis in English Antigua . However , they were all legally tied to intrinsically valuable goods and services . In most cases , they relied on the issuer ’ s promise to provide definite amounts of goods to the bearer , be it gold and silver coins in Canada or tobacco in Antigua . In some cases , the provision of goods and services for paper money was imposed on private sellers under penalty , be it a fine as in Canada , or the death penalty as in Mongol-occupied China .
In 1690 , Massachusetts devised an alternative that legally relied only on the paper ’ s circulation into and out of the treasury of the state . This paper money was , in modern terms , legal tender for taxes . In 1692 , the money ’ s status was expanded as legal tender for debts . Why 1690s Massachusetts ? The colony of 50,000 people at the edge of Western civilization is infamous for stern Puritanism and the Salem witch trials . It was not quite the natural place for a revolution in the very nature of money . That might have been expected to happen in the veteran , contemporary and emerging financial centers of Europe — Venice , Amsterdam and London , respectively . The explanation of this odd anomaly is a combination of other anomalies : The economic circumstances of early colonialism , the turbulent 17th century in England and the unusual population that settled in Massachusetts .
The beginning of orderly economic activity in English America , after the Roanoke failure and the travails of Jamestown , was when John Rolfe , the English explorer and Pocahontas ’ s husband , succeeded in growing commercial tobacco in 1610s Virginia . In the ensuing tobacco rush , planters were desperate for European goods and food . Therefore , when European ships came for their tobacco , the planters exchanged it , as well as most of their coins , for European products . As a result , very few coins remained for domestic circulation . Tobacco quickly emerged as an alternative currency .
The only surviving example from the first batch of currency , dated December 10 , 1690 .
Even the colony ’ s budget was expressed in pounds of tobacco . The pattern repeated itself in all the non-Iberian colonies : maize in Plymouth , sugar in Barbados , boards in Maine , beaver furs in Canada and whalebones in Long Island . Each colony adopted its main product as money .
Massachusetts , formally a chartered company , began in 1630 with the same pattern , adopting both grains and beaver furs as official currencies . However , it quickly began to seek out better forms of money , as well as currency alternatives . Why ? Because these Puritans were different immigrants . They did not consist of a few adventurers and many poor people seeking economic opportunity . They belonged to the middle class and had everything in life except for religious freedom . They founded a market society with mostly wage earners , rather than servants and slaves . They included merchants who were disappointed by depleted beaver sources ; thus , they turned Boston into North America ’ s trade hub where goods from all across the Atlantic were exchanged .
They had many ministers and other college graduates who quickly founded Harvard College with a library and a printing press — the first of their kinds in English
Peabody Essex Museum www . MoAF . org | Spring 2023 | FINANCIAL HISTORY 17