Prohibited the Colonies from Making Their Currency Legal Tender

Monetary laws created tensions between the colonies and the mother country and contributed to the advent of the American Revolution. In all colonies except Delaware, the laws were considered a “major grievance.” [15] When the first Continental Congress met in 1774, it issued a Bill of Rights outlining colonial objections to certain acts of Parliament. Congress called on the House to repeal the Currency Act of 1764, one of seven laws described as “subversive to American rights.” [16] The Currency Act exacerbated tensions between the colonies and Britain and is considered one of the many grievances that led to the American Revolution and the Declaration of Independence. The law prohibited colonial paper money as legal tender in private transactions. Settlers generally viewed printing their own money as positive, despite the problems, as it left bankers out of the mix. Of course, British bankers did not like this and preferred that colonial legislators borrow huge sums of money from them and pay them back with interest. The bankers and their allies in parliament succeeded in passing the Currency Act of 1764 to remedy the problem. This happened shortly after Franklin`s statement of colonial currency before the Board of Trade and some blame the passage of the Monetary Act for his speech before them. II. In 1751, Parliament attempted to remedy this problem by passing the Currency Act of 1751. This law prohibited the New England colonies from issuing paper money to reduce inflation caused by the devaluation of these currencies. The law only allowed the printing of paper money in certain circumstances. It allowed paper money already spent to be used only for the payment of public debts such as taxes and not for private debts such as merchants.

All these variations created a confusing system of financial transactions that caused many people to distrust them because they were not sure of the real value of currencies. Especially in England, these colonial currencies were unreliable. British manufacturers did not like to be paid for their colonial paper money because they were never sure what they were worth, if they were worth anything at all. In 1764, Parliament passed a new version of the Currency Act, which contained two basic provisions. It forbade all colonies to issue new notes and to make them legal for the payment of any debt. Second, it prohibited the use of invoices already issued beyond their original expiry date. At that time, the money issued by the government had a call date, which meant that the bill had to be returned to the government by a certain date. This helped the money retain its value, because when it was delivered, the value was repaid to the holder in another form of money. While the Currency Act of 1751 allowed the New England colonies to continue to use their existing bills to pay public debts such as British taxes, it prohibited them from using the bills to pay off private debts, such as to merchants. The period immediately following the French and Indian War marked a profound change in relations between Britain and its American colonies.

The British national debt skyrocketed during the war, which was fought to keep the French and Indians out of British territory in the colonies. After the war, 10,000 soldiers were still stationed in America to provide extra protection if needed. The newly elected Prime Minister, George Grenville, sought to reduce the national debt and pay for the expenses of troops still in America by passing a series of laws aimed at increasing revenues, gaining greater control over colonial trade, reducing smuggling, and reducing debt. Massachusetts was the first colony to issue paper money in 1690, and by 1715 ten of the 13 colonies had issued their own currency. But the lack of money in the settlements was far from over. The Currency Act generated so much resentment in the colonies that ten years later, in September 1774, the First Continental Congress explicitly mentioned the Currency Act as one of their complaints against the crown. The Continental Congress issued a document entitled “Declaration and Resolutions”, in which representatives set out their rights as British citizens, their complaints against the Crown, and the actions they intended to take. In the complaints section, they explained the following: Stamp Act.

Parliament`s first direct tax on the American colonies, this law, like those passed in 1764, was enacted to raise money for Britain. He taxed newspapers, almanacs, pamphlets, leaflets, legal documents, dice, and playing cards. Stamps issued by Britain were placed on documents or parcels to show that the tax had been paid. The Sugar Act was passed to reduce the smuggling of molasses and sugar products, one of the most commonly traded commodities at the time, and to generate revenue from the collection of taxes on these and other items. You can read more about the Sugar Act here. The Currency Act was passed to control the printing and use of paper money by the colonies, which caused problems due to inflation and a confusing system of different valuations and expenditures from different colonies. Finally, the Stamp Law was passed to create an additional source of revenue by imposing a small tax on all paper documents such as licenses, contracts, newspapers, brochures, etc. Of particular concern was the paper money issued by colonial legislators. Some papers could only be used for public debt, such as military supplies or taxes. Some could only be used for private debt, such as purchases from a merchant.

Some had different expiration dates, which meant they had to be returned on a certain date and exchanged at the government. This fiat currency had different values depending on where it was spent and where someone was trying to use it. An invoice issued from Pennsylvania could be worth something in Pennsylvania and nothing in Massachusetts. The British government acted quickly at the end of the long war with the France to regain control of its finances. In April 1763, George Grenville replaced Lord Bute as Prime Minister. Grenville, a former first Lord of the Treasury, wanted the American colonies to contribute to the cost of maintaining a British army in North America after the war. Grenville considered this fair, as taxes on the British people had risen dramatically during the war. One of the first measures adopted to increase the revenues of the American colonies was a sugar tax. Grenville drafted the American Revenue Act of l764, commonly known as the Sugar Act, to replace the Sugar and Molasses Act of 1733, which was about to expire.

The previous law imposed a tax of six pence per gallon on molasses imported from the French Antilles or the Netherlands Antilles. Molasses was an important ingredient in rum production, one of New England`s most important enterprises. The Sugar and Molasses Act of 1733 was not intended as a tax law, but as a means of regulating commerce.