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In France, a far-right party, the National Front has been on the rise. A year ago, the far left party Syriza won in Greece. These European political developments, and many others, have been driven by popular anger over the euro. Both the far left and the far right pillory “the Troika”—a concise name for the European Central Bank, the European Commission, and the International Monetary Fund, the institutions making monetary policy—for being powerful, yet unelected, bureaucrats. People are angry about not having democratic input into decisions about their own currency. Citizens gather in the streets holding signs that read “Troika Go Home!” or “People United Against the Troika.” All this is strikingly reminiscent of American colonial politics in the 1760s.

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Throughout the 18th century, the question of who had the power to issue legal tender, or currency, was a contentious one between the British Parliament and American colonial governments. According to the law, debts could be paid with legal tender at the legal tender’s face value. Recall from the second Treasury Notes column that American colonial money was like a savings bond, so its present value was lower than its face value. Thus, British merchants expecting to be paid in sterling were paid in bills worth much less. Imagine expecting to be paid $100 and instead being forced by a court to accept 100 pesos—it’s understandable that the British merchants were upset.

The difficulty for the British Parliament was that these same paper monies were being used by colonies to pay for manpower and supplies needed to fight various wars. In 1751 Parliament passed an act restricting colonial money. However, a mere three years later, the French and Indian War (also known as the Seven Years’ War) forced the British to loosen those restrictions. The colonies were expected to provide soldiers and supplies to that war effort, and the only way to do this was to print paper money. According to historian Joseph Ernst’s classic account, the Currency Act of 1764 passed precisely because the war was over. Now that they no longer needed the colonies to use paper money to fight the war, British policymakers were most concerned with the interests of the British merchants who were owed debts by colonists. The Currency Act of 1764 returned the restrictions of 1751: banning colonists from printing their own legal tender bills. But, adding insult to injury for the colonists, it also placed new limits on their currency, requiring prior approval of any nonlegal tender bills by the Privy Council, a formal body of royal advisers. Nonlegal tender bills could still be useful because though colonists couldn’t force British merchants (or any private creditor) to accept them, the colonial governments would still accept them in payment of taxes or repayment of land bank mortgages.

In 1770 the Privy Council shocked colonial governments by vetoing multiple bills allowing colonies to print nonlegal tender paper money. In a letter to Benjamin Franklin, Joseph Galloway explained why this ruling was so shocking and outrageous to the American colonists:

I am greatly Surprized at the Conduct of Administration in Relation to the New York and New Jersey Paper Money Bills. The Reason assigned for their Rejections are really rediculous—And can be accounted for on no other Ground, than that they are determined, the Americans shall not have any Paper Medium at all….But How is their Conduct on this Occasion to be reconciled with what has passed heretofore?

Distant bureaucrats were applying inconsistent and economically unworkable rules on a population who had no say in making those rules. These restrictions caused considerable hardship in the colonies and, therefore, revolts, just like in today’s Europe. The most famous revolt related to the 1764 currency act was in North Carolina, where rebels called themselves “regulators” because they were attempting to ensure that the agents of the government themselves followed the law. A combination of local corruption and inability to print money worsened and accelerated a wave of foreclosures. When local courts and the North Carolina legislature brought them no relief, they closed those courts to stop the foreclosures, threatened the corrupt agents of the government, and began arming themselves.

Herman Husband was widely seen as a representative of the North Carolina regulators and explained the revolt this way:

This is a grievous burden on the poor, as matters have been carried on, for money is not to be had: And when a poor man’s goods is distrained [foreclosed on], the practice has been to take double, treble, yes ten times the value has sometimes been taken away. —And if they complain, they are not heard; if they resist, they are belabored like asses.

Merciful Lord, would any people rise in mobs to disturb a peaceable nation if they could help it! Who is more ready than the poor to venture their lives in time of war for the safety of the nation! Nay it is pinching hunger and cold, brought on them by abuse of officers, that is the cause.

Husband’s solution to the shortage of paper money was for people to pay taxes directly in whatever they produced. This was not unprecedented; items such as wheat and tobacco had been used to pay taxes in some colonies.

Ultimately the regulators were crushed—fittingly by soldiers paid in newly printed paper money. Their political legacy, however, lived on, and some historians argue the pressure they and other social movements put on colonial elites helped move their fellow colonists closer to breaking with the British Empire.

The Troika could learn something from early American history: when decisions about currency are made by unelected, distant elites, outrage and revolt is not usually far behind.



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The William and Mary Quarterly , Vol. 18, No. 4 (Oct., 1961), pp. 485-518
Omohundro Institute of Early American History and Culture
The William and Mary Quarterly, Vol. 22, No. 1 (Jan., 1965), pp. 33-74
Omohundro Institute of Early American History and Culture
The Pennsylvania Magazine of History and Biography , Vol. 88, No. 2 (Apr., 1964), pp. 174-198
Historical Society of Pennsylvania
The Journal of Interdisciplinary History, Vol. 34, No. 1 (Summer, 2003), pp. 97-98
MIT Press
The American Economist, Vol. 12, No. 2 (Fall, 1968), pp. 38-47
American Economist
The North Carolina Historical Review, Vol. 40, No. 2 (April, 1963), pp. 183-199
North Carolina Office of Archives and History
The South Carolina Historical Magazine, Vol. 114, No. 2 (APRIL 2013), pp. 132-154
South Carolina Historical Society